We hope that you all are doing well and are adjusting to your new work environment, whether it be working exclusively from home or a hybrid arrangement with some time spent in the office. Just a few months ago, no one would have thought that virtual Court appearances, depositions and mediations would become the norm.
We’re pleased to announce a recent defense win on a property damage subrogation case involving products liability and engineering issues handled entirely through virtual or remote interactions with the Court and opposing counsel.
We represented a plumbing and heating company based in New York City. Our client installed a hot water heater several years ago that leaked and caused damages in the Plaintiff’s subrogor’s basement. Plaintiff’s subrogor’s residence is a high-end home located on Long Island. The Plaintiff, a large personal lines property & casualty insurer, claimed that its subrogor sustained damages due to a flood caused by the water heater.
The Plaintiff insurer did not name our client as a defendant. Instead, the insurer named the manufacturer of a pressure relief valve that was installed in connection with the installation of the water heater. The pressure relief valve was supposed to actuate when the temperature or pressure of the water reached a certain level.
Long before our client was named in the matter as a Third-Party Defendant, the Plaintiff insurer had the pressure relief valve inspected by a forensic professional engineering firm. The engineering firm evaluated the cause of the failure of the pressure relief valve. The engineer sought to determine whether it failed due to the actions of the homeowner/Plaintiff’s subrogor; the manufacturer of the valve; or, the installer, our client.
The engineer concluded that the valve did not function properly, and allowed water to flood out of the heater due to a fracture inside the valve. The part of the valve that malfunctioned was not accessible by the installer or the homeowner. The engineer concluded that the valve failed as a result of a manufacturing defect inside the valve.
Despite the opinion rendered by the insurer’s expert, the manufacturer nevertheless brought our client into the case years after the main action had been commenced. Our client was named long after discovery was supposed to have been completed. The case had been languishing on the docket for four years before our client was brought in.
We immediately took steps to jump start the case. When we were assigned the case, our client was in default, with a motion for default judgment pending against it. We persuaded opposing counsel to voluntarily vacate the default. We initially engaged in settlement negotiations to avoid the cost of defense, and based on our negotiations, the Plaintiff insurer was willing to significantly decrease its demand in order to resolve the case. However, the manufacturer steadfastly refused to offer any money to settle the case and sought to begin the expensive process of conducting depositions.
In our view, the matter did not warrant proceeding with depositions, particularly in light of the expert report that undermined the claim against our client.
Because the valve manufacturer refused to negotiate, we filed a motion to dismiss. While it was pending, we informed the Court at a conference that we were willing to make a costs-of-defense settlement contribution, but only if the manufacturer would also contribute. The manufacturer adhered to its “no-pay” position.
We sought to settle directly with the Plaintiff insurer who refused to entertain such negotiations, and insisted upon a global settlement. No parties were willing to cooperate. We did inform the Court that we had strong defenses, but, if our motion was denied, we were planning to waive any further discovery and certify the case ready for trial, without further delay.
In our motion to dismiss, we argued based on New York’s Civil Practice Law and Rules Sections 3211(a)(1) and (a)(7) that the Third-Party Complaint filed by the manufacturer failed to state a cause of action for contribution or indemnification. In addition, we argued that the engineer’s expert report was documentary evidence that definitively and conclusively showed that our client had no liability.
We anticipated that perhaps the manufacturer would respond with its own expert report, but it failed to do so. Instead, the manufacturer relied only on its own counsel’s interpretation of various plumbing codes and mechanical and plumbing drawings in order to attempt to rebut our argument. We argued that the manufacturer’s counsel could not properly advance its argument without an expert to opine on the plumbing issue at hand. We relied on the case of Delair v. Gaudet, 4 A.D.2d 736 (3rd Dep’t. 1957).
We argued that this was a case that primarily sounded in products liability, and that our client should not be involved in this matter in any way. We further argued that the claim against our client should be dismissed with prejudice.
We argued that there was no basis for indemnification, because this was not a situation in which the main defendant, i.e., the manufacturer, had no liability and was being held liable as a matter of law. We argued that in fact the expert report showed that the manufacturer bore full liability. We argued that as such there was no claim for indemnification. We also argued that our client did not owe any legal duty to the manufacturer in this case.
The Court agreed with our position and issued a detailed 14-page decision granting our motion to dismiss the Third-Party Complaint, with prejudice. The Court held that the manufacturer had failed to state causes of action that fell within a cognizable legal theory, and could not succeed on any reasonable view of the facts stated. The Court noted that the manufacturer’s legal conclusions were not presumed to be true on a motion to dismiss, and cited the case of Felix v. Stachecki, 107 A.D.3d 664 (2nd Dep’t. 2013).
We are pleased that the Court dismissed the claim against our client, the plumbing and heating contractor, before any depositions or other costly discovery had to be conducted. Only a minimal amount of paper discovery had been conducted. This allowed us to keep costs down.
