Commerce and Industry Insurance Company v. Watts Water Technologies, Inc. et al

Filing 73

ORDER GRANTING DEFENDANTS WATTS WATER TECHNOLOGIES, INC. AND WATTS REGULATOR CO.'S MOTION FOR SUMMARY JUDGMENT (ECF No. 52 ). Signed by JUDGE HELEN GILLMOR on 10/31/2016. (afc) WRITTEN ORDER follows hearing held o n August 11, 2016 re: Watts defendants' M/SJ. Minutes of hearing: doc. no. 66 .CERTIFICATE OF SERVICEParticipants registered to receive electronic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF). All participants are registered to receive electronic notifications.

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
COMMERCE AND INDUSTRY INSURANCE
COMPANY, as subrogee of Charles
and Jennifer Kelley,
Plaintiff,
vs.
WATTS WATER TECHNOLOGIES, INC.;
WATTS REGULATOR CO.; JOHN AND
JANE DOES 1-20; DOE
CORPORATIONS 1-20; DOE
PARTNERSHIPS 1-20; DOE
GOVERNMENTAL ENTITIES 1-20; DOE
ENTITIES 1-20,
Defendants.

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Civ. No. 15-00324 HG-KJM

ORDER GRANTING DEFENDANTS WATTS WATER TECHNOLOGIES, INC. AND
WATTS REGULATOR CO.’S MOTION FOR SUMMARY JUDGMENT (ECF No. 52)

Plaintiff Commerce and Industry Insurance Company has filed
a Complaint alleging claims of strict products liability and
negligence against Defendants Watts Water Technologies, Inc. and
Watts Regulator Company.

Plaintiff alleges that in August 2002

Defendants manufactured a toilet connector, which they sold and
distributed in 2003 with a one-year limited warranty.

Plaintiff

asserts that more than ten years later, the toilet connector
malfunctioned and caused water to flow into the home of Charles
and Jennifer Kelley, resulting in over $350,000 in damages.
Plaintiff insured the Kelleys and reimbursed them for the
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damage to their home.

Plaintiff seeks to recover the payments it

issued to the Kelleys as it is subrogated to the Kelleys’ right
of recovery against Defendants.
Defendants filed a Motion for Summary Judgment asserting
that both tort causes of action in Plaintiff’s Complaint are
barred pursuant to the economic loss rule.

Defendants argue the

Plaintiff is precluded from bringing tort causes of action to
recover purely economic damages.
Defendants’ Motion for Summary Judgment (ECF No. 52) is
GRANTED.
PROCEDURAL HISTORY
On July 17, 2015, Plaintiff Commerce and Industry Insurance
Company, as subrogee of Charles and Jennifer Kelley, filed a
Complaint in the Circuit Court of the First Circuit, State of
Hawaii.

(ECF No. 2-2).

On August 13, 2015, Defendants Watts Water Technologies,
Inc. and Watts Regulator Company removed the state court action
to the United States District Court, District of Hawaii.

(ECF

No. 2).
On June 7, 2016, Defendants filed DEFENDANTS WATTS WATER
TECHNOLOGIES, INC. AND WATTS REGULATOR CO.’S MOTION FOR SUMMARY
JUDGMENT (ECF No. 52) along with DEFENDANTS WATTS WATER
TECHNOLOGIES, INC. AND WATTS REGULATOR CO.’S SEPARATE AND CONCISE

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STATEMENT IN SUPPORT OF THEIR MOTION FOR SUMMARY JUDGMENT.

(ECF

No. 53).
On June 16, 2016, the Court issued a briefing schedule.
(ECF No. 54).
On June 28, 2016, Plaintiff filed PLAINTIFF COMMERCE AND
INDUSTRY INSURANCE COMPANY’S OPPOSITION TO DEFENDANTS WATTS WATER
TECHNOLOGIES, INC. AND WATTS REGULATOR CO.’S MOTION FOR SUMMARY
JUDGMENT (ECF No. 55) along with PLAINTIFF COMMERCE AND INDUSTRY
INSURANCE COMPANY’S RESPONSE TO DEFENDANTS WATTS WATER
TECHNOLOGIES, INC. AND WATTS REGULATOR CO.’S SEPARATE AND CONCISE
STATEMENT IN SUPPORT OF THEIR MOTION FOR SUMMARY JUDGMENT.

(ECF

No. 56).
On June 30, 2016, Plaintiff requested a continuance for the
scheduled hearing date for Defendants’ Motion for Summary
Judgment, which was granted.

(ECF Nos. 59, 60).

On July 27, 2016, Defendants filed DEFENDANTS WATTS WATER
TECHNOLOGIES, INC. AND WATTS REGULATOR CO.’S MOTION FOR LEAVE TO
FILE DEFENDANTS WATTS WATER TECHNOLOGIES, INC. AND WATTS
REGULATOR CO.’S REPLY MEMORANDUM IN SUPPORT OF ITS MOTION FOR
SUMMARY JUDGMENT.

(ECF No. 62).

On July 28, 2016, the Court issued an Order granting
Defendants’ Motion for Leave to file a Reply.

(ECF No. 63).

On the same date, Defendants filed DEFENDANTS WATTS WATER
TECHNOLOGIES, INC. AND WATTS REGULATOR CO.’S REPLY MEMORANDUM IN

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SUPPORT OF ITS MOTION FOR SUMMARY JUDGMENT.

(ECF No. 64).

On July 29, 2016, Plaintiff filed a Response that it did not
oppose Defendants’ Motion for Leave to file a Reply.

(ECF No.

65).
On August 11, 2016, the Court held a hearing on Defendants’
Motion for Summary Judgment.
BACKGROUND
The Parties agree to the following facts:
In August 2002, Defendants Watts Water Technologies, Inc.
and Watts Regulator Company manufactured a toilet connector that
it distributed and sold in 2003.

(Declaration of Gregory Gyorda,

Director of Marketing and Communications for Defendants Watts
Water Technologies, Inc. and Watts Regulator Company, (“Gyorda
Decl.”) at ¶¶ 1, 5, attached to Def.’s Concise Statement of Facts
(“CSF”), ECF No. 53-2).

A toilet connector is a small hose with

a coupling nut that connects a toilet to a home’s interior
plumbing for the purpose of supplying water to the toilet.
(Gyorda Decl. at ¶ 3, attached to Def.’s CSF, ECF No. 53-2;
Photograph of toilet connector, attached as Ex. E to Def.’s CSF,
ECF No. 53-7).
The toilet connector manufactured and distributed by
Defendants was used to connect a toilet to the interior plumbing
in the home of Jennifer and Charles Kelley in Honolulu, Hawaii.

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(Toilet connector, attached as Ex. E to Def.’s CSF, ECF No. 53-7;
Complaint at ¶¶ 7-8, attached as Ex. A to Def.’s CSF, ECF No. 533).
At the hearing, Plaintiff’s counsel stated that the Kelleys’
home was built in the 1930's and was purchased by the Kelleys in
the 1990's.

The installation of the toilet connector occurred

sometime after its manufacturing date of August 2002.
Although the Kelleys have owned the home since the 1990's,
Plaintiff has not provided any information as to when the toilet
connector was purchased, when it was installed or who installed
it.

While the product was manufactured in 2002, Plaintiff stated

in its First Supplemental Answers to Interrogatories that “it has
no information regarding who installed or assisted in installing
the toilet connector.

Plaintiff consulted with the Kelleys and

the Kelleys do not know who installed the toilet connector.”
(Pla.’s First Supp. Answers at p. 4, attached as Ex. F to Pla.’s
CSF, ECF No. 57-1).
The toilet connector was sold with a limited one-year
warranty provision by Defendant Watts Regulator Company.
(Warranty attached as Ex. D to Def.’s CSF, ECF No. 53-6).
The warranty provided, as follows:
Limited Warranty: Watts Regulator Company warrants each
product to be free from defects in material and
workmanship under normal usage for a period of one year
from the date of original shipment. In the event of
such defects within the warranty period, the Company
will, at its option, replace or recondition the product
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without charge. This shall constitute the sole and
exclusive remedy for breach of warranty, and the
Company shall not be responsible for any incidental,
special, or consequential damages, including without
limitation, lost profits or the cost of repairing or
replacing other property which is damaged if this
product does not work properly, other costs resulting
from labor charges, delays, vandalism, negligence,
fouling caused by foreign material, damage from adverse
water conditions, chemical, or any other circumstances
over which the Company has no control. This warranty
shall be invalidated by any abuse, misuse,
misapplication or improper installation of the product.
THIS WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES,
EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
Any implied warranties that are imposed by law are
limited in duration to one year.
Some States do not allow limitations on how long an
implied warranty lasts, and some States do not allow
the exclusion or limitation of incidental or
consequential damages. Therefore the above limitations
may not apply to you. This Limited Warranty gives you
specific legal rights, and you may have other rights
that vary from State to State. You should consult
applicable state laws to determine your rights.
(Warranty, attached as Ex. D to Def.’s CSF, ECF No. 53-6).
Plaintiff Commerce and Industry Insurance Company insured
Jennifer and Charles Kelley for their property located in
Honolulu, Hawaii.
On July 18, 2013, more than ten years after the toilet
connector was manufactured, Jennifer and Charles Kelley filed a
claim, entitled a report, with Plaintiff for damages incurred.
(Damage Summary submitted to Plaintiff Commerce and Industry
Insurance Company, attached as Ex. C to Def.’s CSF, ECF No. 535).

The damage report asserted that on July 18, 2013, the

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Defendants’ toilet connector malfunctioned, flooded the Kelleys’
home, and caused damage.

(Id.)

The damages were listed as follows:
$ 13,352.69
for water restoration services
$325,110.72
for home reconstruction and repairs
$ 1,190.21
for replacement of an area rug
$
142.93
for repair of a picture frame
$ 18,900.00
for lost rental income
$ 1,139.12
for electric bills for drying equipment
$359,825.77
total claimed loss
(Damage Summary and invoices, attached as Ex. C to Def.’s
CSF, ECF No. 53-5).
Plaintiff Commerce and Industry Insurance Company asserts
that it approved the damages claim made by the Kelleys and paid
them for their losses.

(Plaintiff’s First Supplemental Answers

to Defendants’ First Request for Answers to Interrogatories at
pp. 3-4, attached as Ex. F to Pla.’s CSF, ECF No. 57-1).
Plaintiff seeks to recover damages from Defendants Watts
Water Technologies, Inc. and Watts Regulator Company, as subrogee
of Jennifer and Charles Kelley.

The Plaintiff Insurance Company

asserts tort claims of negligence and strict products liability.
(Id.; Complaint at ¶¶ 21-37, attached as Ex. A to Def.’s CSF, ECF
No. 53-3).
STANDARD OF REVIEW
Summary judgment is appropriate when there is no genuine
issue as to any material fact and the moving party is entitled to
judgment as a matter of law.

Fed. R. Civ. P. 56(c).
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To defeat

summary judgment there must be sufficient evidence that a
reasonable jury could return a verdict for the nonmoving party.
Nidds v. Schindler Elevator Corp., 113 F.3d 912, 916 (9th Cir.
1997).
The moving party has the initial burden of “identifying for
the court the portions of the materials on file that it believes
demonstrate the absence of any genuine issue of material fact.”
T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass'n, 809
F.2d 626, 630 (9th Cir. 1987) (citing Celotex Corp. v. Catrett,
477 U.S. 317, 323 (1986)).

The moving party, however, has no

burden to negate or disprove matters on which the opponent will
have the burden of proof at trial.

The moving party need not

produce any evidence at all on matters for which it does not have
the burden of proof.

Celotex, 477 U.S. at 325.

The moving party

must show, however, that there is no genuine issue of material
fact and that he or she is entitled to judgment as a matter of
law.

That burden is met by pointing out to the district court

that there is an absence of evidence to support the non-moving
party’s case.

Id.

If the moving party meets its burden, then the opposing
party may not defeat a motion for summary judgment in the absence
of probative evidence tending to support its legal theory.
Commodity Futures Trading Comm'n v. Savage, 611 F.2d 270, 282
(9th Cir. 1979).

The opposing party must present admissible

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evidence showing that there is a genuine issue for trial. Fed. R.
Civ. P. 56(e); Brinson v. Linda Rose Joint Venture, 53 F.3d 1044,
1049 (9th Cir. 1995).

“If the evidence is merely colorable, or

is not significantly probative, summary judgment may be granted.”
Nidds, 113 F.3d at 916 (quoting Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 249-50 (1986)).
The court views the facts in the light most favorable to the
non-moving party.

State Farm Fire & Casualty Co. v. Martin, 872

F.2d 319, 320 (9th Cir. 1989).

Opposition evidence may consist

of declarations, admissions, evidence obtained through discovery,
and matters judicially noticed.
477 U.S. at 324.

Fed. R. Civ. P. 56(c); Celotex,

The opposing party cannot, however, stand on

its pleadings or simply assert that it will be able to discredit
the movant’s evidence at trial. Fed. R. Civ. P. 56(e); T.W. Elec.
Serv., 809 F.2d at 630.

The opposing party cannot rest on mere

allegations or denials.

Fed. R. Civ. P. 56(e); Gasaway v.

Northwestern Mut. Life Ins. Co., 26 F.3d 957, 959-60 (9th Cir.
1994).

When the non-moving party relies only on its own

affidavits to oppose summary judgment, it cannot rely on
conclusory allegations unsupported by factual data to create an
issue of material fact.

Hansen v. United States, 7 F.3d 137, 138

(9th Cir. 1993); see also National Steel Corp. v. Golden Eagle
Ins. Co., 121 F.3d 496, 502 (9th Cir. 1997).

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ANALYSIS
Plaintiff Commerce and Industry Insurance Company has filed
tort causes of action against Defendants Watts Water
Technologies, Inc. and Watts Regulator Company.

Charles and

Jennifer Kelley purchased their home in the 1990's.

Plaintiff

seeks to recover economic damages to the Kelleys’ home based on
alleged defects in a toilet connector manufactured by Defendants
in August 2002 and distributed and sold in 2003.
The toilet connector was sold with a one-year warranty.
Despite the one-year warranty, Plaintiff seeks to recover for
damages that occurred in the home of Charles and Jennifer Kelley
in July 2013, more than ten years after the product was
manufactured.

Neither Plaintiff nor the Kelleys have provided

any history of the purchase or installation of the product.
Defendants assert that Plaintiff’s claims are barred
pursuant to the economic loss rule.

Defendants assert that

Plaintiff’s negligence and product liability claims may not be
brought where there was no physical injury and only consequential
economic damages that occurred more than ten years after the
component part was placed in the stream of commerce.
I.

The Economic Loss Rule
Hawaii follows the majority rule for the economic loss rule.

The economic loss rule precludes recovery in tort for purely
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economic damages.

Association of Apartment Owners of Newtown

Meadows ex rel. its Bd. Of Directors v. Venture 15, Inc., 167
P.3d 225, 294-95 (Haw. 2007).

The crux of the economic loss rule

is that economic interests are protected, if at all, by contract
principles, rather than tort principles.

Id. at 284 (citing

Calloway v. City of Reno, 993 P.2d 1259 (2000)).
A.

The Hawaii Supreme Court’s Decision in Newtown Meadows

The Hawaii Supreme Court applied the economic loss rule in
the context of negligence and products liability claims in
Newtown Meadows, 167 P.3d 225 (Haw. 2007).
Newtown Meadows involved a suit brought by an association of
apartment owners that sought to recover damages from a masonry
subcontractor.

The apartment association claimed that in October

1986 the masonry subcontractor had installed defective concrete
slabs at their residential condominium complex.

Id. at 232-33.

The apartment owners alleged that beginning less than two years
later in January 1988, their buildings and foundations had
shifted, settled, and cracked as a result of the allegedly
defective concrete slabs.

Id.

The apartment owners brought a

number of claims against the masonry subcontractor including
negligence and products liability.

Id. at 239.

The masonry subcontractor argued that the negligence and
products liability claims were barred pursuant to the economic

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loss rule.

Id. at 278.

The apartment owners asserted that the

economic loss rule did not apply because they incurred a variety
of damages including cracked floor tiles, damaged walls, skewed
door jams and windows, and damage caused by termites that entered
through the cracks caused by the allegedly defective slabs.

Id.

at 287.
The Hawaii Supreme Court ruled that the economic loss rule
precluded recovery in tort from the masonry subcontractor for
damages caused by the allegedly defective concrete slabs.
287-88.

Id. at

The Supreme Court found that the damages claimed by the

apartment owners were purely economic consequential damages as a
result of the allegedly defective product.

Id. at 294-95.

The

Court held that the masonry subcontractor could not be liable in
tort for claims that were based on the parties’ underlying
contract.
B.

Id.
Economic Loss is Protected by Contract Rather than Tort

Tort and contract law are two separate and distinct theories
of recovery in civil cases.

Contract law is designed to enforce

the expectations created by an agreement by the parties and seeks
to enforce the standards of quality that were negotiated.

Id.;

East River S.S. Corp. v. Transamerica Delaval, Inc., 476 U.S.
858, 871-73 (1986).

The standard of quality set forth in the

contract establishes what the parties have agreed upon.

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In contrast, tort law is designed to secure the protection
of all citizens from danger of physical harm to their person or
to their property.

State of Hawaii ex rel. Bronster v. U.S.

Steel Corp., 919 P.2d 294, 302 (Haw. 1996).

Tort law seeks to

enforce standards of conduct that are imposed by society.

Id.

Tort law has not traditionally protected strictly economic
interests related to product quality.
at 293-95.

Newtown Meadows, 167 P.3d

Courts have generally refused to create a duty in

tort to prevent such economic losses.

Id. (citing Washington

Courte Condo. Ass’n-Four, 501 N.E.2d 1290, 1294 (Ill. App. 1986);
Oceanside at Pine Point Condo. Owners Ass’n v. Peachtree Doors,
Inc., 659 A.2d 267, 270 (Me. 1995); Calloway, 993 P.2d at 1268;
Bay Breeze Condo. Ass’n v. Norco Windows, Inc., 651 N.W.2d 738,
745-46 (Wisc. Ct. App. 2002)).
II.

The Economic Loss Rule Applies in this Case
This case involves a toilet connector manufactured by

Defendants in 2002 that was installed in the home of Charles and
Jennifer Kelley sometime after 2003.
The Kelleys purchased the home in the 1990's before the
toilet connector was manufactured.

The Kelleys have provided no

information as to the purchase date or date of installation of
the product.

The toilet connector could not have been installed

in the home before 2003.

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It is not known if the toilet connector was purchased as
part of a toilet or a plumbing system, or if it was a replacement
part.
Plaintiff Insurance Company seeks economic damages in
negligence and products liability for the alleged defect in the
Defendants’ toilet connector.
The economic loss rule prevents a plaintiff from bringing
tort causes of action for purely economic loss stemming from
injury only to the product itself.
278.

Newtown Meadows, 167 P.3d at

Damage to the product itself means that the product has not

met the customer’s expectations, or, in other words, that the
customer received “insufficient product value.”

Bronster, 919

P.2d at 302 (quoting East River S.S. Corp., 476 U.S. at 871-72)).
To recover in tort, there must be a showing of harm above and
beyond an individual’s disappointment that a product did not
perform up to the purchaser’s expectations.

Newtown Meadows, 167

P.3d at 282.
The economic loss rule marks the fundamental boundary
between the law of contracts, which is designed to enforce
expectations created by agreement, and the law of torts, which is
designed to protect citizens and their property by imposing a
duty of reasonable care on others.

Leis Family Ltd. P’ship v.

Silversword Eng’g, 273 P.3d 1218, 1221 (Haw. Ct. App. 2012)
(citing City Express, Inc. v. Express Partners, 959 P.2d 836, 839

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(Haw. 1998)).
The distinction that the law has drawn between tort recovery
for physical injuries and warranty recovery for economic loss is
not arbitrary.

Leis Family Ltd. P’ship, 273 P.3d at 1222.

When

a product injuries only itself the reasons for imposing a tort
duty are weak and those for leaving the party to its contractual
remedies are strong.

Bronster, 919 P.2d at 302.

In Newtown Meadows, the Hawaii Supreme Court explained that
injury to a product itself for purposes of the economic loss rule
includes consequential damages to property other than the
allegedly defective product.

167 P.3d at 287.

The Hawaii

Supreme Court ruled that the claims of damage to the cracked
floor tiles, walls, doors, and windows, that were allegedly
caused by the defendant’s defective product, were consequential
damages that could not be recovered in tort.

Id. at 294-95.

Federal district courts applying the holding in Newtown
Meadows have precluded a plaintiff from recovering in tort when
the only damages alleged were consequential monetary damages.
Burlington Ins. Co. v. United Coatings Mfg. Co., Inc., 518
F.Supp.2d 1241, 1254 (D. Haw. 2007) (finding that the plaintiff
could not recover in tort for damage caused to walls, windows,
and parking lots by the defendant’s allegedly defective wall
coating).
Plaintiff cannot recover in tort in this case. Plaintiff’s

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tort claims based on the toilet connector’s failure to function
as expected is most naturally understood as a warranty claim.
East River S.S. Corp., 476 U.S. at 872.

The toilet connector in

this case was manufactured in 2002, with a one-year limited
warranty.

The warranty provided the terms of the parties’

expectations.
When a product is bought for use in a home, the expectations
of the parties, including the property owner and the
manufacturer, are created by contracts with mutually agreed-upon
terms.

The terms of the contract allow the parties to negotiate

price, duration of warranty, product specifications, and need for
insurance.
The Kelleys were the owners of the home when the product was
installed.

Their failure to provide information about the manner

of purchase and installation of the product does not change the
relationship.
The economic loss rule serves to protect parties’ freedom to
contract when negotiating the purchase of products.

The economic

loss rule encourages the party with the best understanding of the
attendant risks of economic loss, the purchaser, to assume,
allocate, or insure against the risk of loss caused by a
defective product.

Daanen & Janssen, Inc. v. Cedarapids, Inc.,

573 N.W.2d 842, 849-850 (Wis. 1998).
Here, the Kelleys were the party with the best understanding

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of the attendant risks involved with the toilet connector.

The

Kelleys properly purchased insurance to protect themselves
against loss.

Allowing the Plaintiff Insurance Company to

proceed in tort for economic damages ten years after the product
was placed in the stream of commerce, despite the presence of a
one-year limited warranty, would violate the purpose of the
economic loss rule.
Plaintiff contends that an exception to the economic loss
rule applies because the Kelleys suffered damage to their home.
All of the damages incurred by the Kelleys were consequential
damages that were foreseeable.

Burlington Ins. Co., 518

F.Supp.2d at 1254; Launiupoko Water Co. v. J-M Mfg. Co. Inc.,
Civ. No. 14-00303 DKW-KSC, 2014 WL 6685965, *3 (D. Haw. Nov. 25,
2014) (finding economic damages resulting from the defendant’s
leaking pipes were consequential and foreseeable damages that
could not be recovered in tort).
The Kelleys’ injuries were limited to consequential monetary
damages that arose from the alleged defect in the toilet
connector.

(Damage Summary submitted to Plaintiff Commerce and

Industry Insurance Company, attached as Ex. C to Def.’s CSF, ECF
No. 53-5).

Any damage caused by the water flowing into the

Kelleys’ home is economic loss that may not be recovered in tort.
Launiupoko Water Co., 2014 WL 6685965, at *3; Fireman’s Fund Ins.
Co. v. Sloan Valve Co., 2011 WL 5598324, *3-*4 (D. Nev. Nov. 16,

17

2011) (finding water damage caused to a building by a leaking
flush valve was not recoverable in tort pursuant to the economic
loss rule).
The damages are reasonably foreseeable in this case given
the time frame at issue.

The damages caused by water leaking

into the Kelleys’ home are exactly the damages that would be
expected if the toilet connector failed.

In this case, there is

no reasonable basis for the Kelleys to expect the product to
continue to function with no wear and tear over an unknown period
of time.

The product came with a one-year limited warranty.

There was no lifetime guarantee for the product.
The Kelleys assumed the risk that the product may fail after
the one-year limited warranty.

The Kelleys could have attempted

to negotiate a better warranty or could have purchased a
different product with a longer warranty.

In this case, the

Kelleys appropriately sought insurance to protect themselves
against loss.
Just as the damages caused in Newtown Meadows, Burlington
Ins. Co., Fireman’s Fund, and Launiupoko Water Co., the damage to
the Kelleys’ home falls within the economic loss rule because the
damages constitute pecuniary consequential damages.
The economic loss rule encourages parties to negotiate sales
contracts when purchasing products and allows the parties to
estimate the risks and rewards of doing business, to adjust their

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respective obligations, and to satisfy their mutual expectations.
Newtown Meadows, 167 P.3d at 279-82.
The economic loss rule applies in this case.

Plaintiff’s

tort claims for strict products liability and negligence are
precluded pursuant to the economic loss rule.

CONCLUSION
Defendants’ Motion for Summary Judgment (ECF No. 52) is
GRANTED.
The Clerk of Court is DIRECTED to enter judgment in favor of
the Defendants and to CLOSE THE CASE.
IT IS SO ORDERED.
DATED: October 31, 2016, Honolulu, Hawaii.

Commerce and Industry Insurance Company, as subrogee of Charles
and Jennifer Kelley vs. Watts Water Technologies, Inc.; Watts
Regulator Co.; John and Jane Doe 1-20; Doe Corporations 1-20; Doe
Partnerships 1-20; Doe Governmental Entities 1-20; Doe Entities
1-20; Civ. No. 15-00324 HG-KJM; ORDER GRANTING DEFENDANTS WATTS
WATER TECHNOLOGIES, INC. AND WATTS REGULATOR CO.’S MOTION FOR
SUMMARY JUDGMENT (ECF No. 52)
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