Betz et al v. Highlands Fuel Delivery, LLC et al
Filing
208
OPINION AND ORDER granting in part and denying in part 150 Ditech Testing Corporations's Motion for Summary Judgment. Signed by Chief Judge Christina Reiss on 1/31/2013. (pac)
UNITED STATES DISTRICT COURT
FOR THE
DISTRICT OF VERMONT
PAULBETZ,
CATHERINE CAMILLETTI, and
COOPERATIVE INSURANCE COMPANIES,
Plaintiffs,
v.
HIGHLANDS FUEL DELIVERY, LLC,
DITECH TESTING CORPORATION,
AMERICAN WELDING & TANK, LLC,
HARSCO CORPORATION, and
TAYLOR-WHARTON INTERNATIONAL LLC,
Defendants.
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Case No. 5:10-cv-l02
OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANT
DITECH TESTING CORPORATION'S MOTION FOR SUMMARY JUDGMENT
(Doc. 150)
This matter comes before the court on the motion for summary judgment filed by
Defendant Ditech Testing Corporation ("Ditech"), seeking judgment in its favor with
regard to Plaintiffs Paul Betz's and Catherine Camilletti's negligence claims and with
regard to its co-defendants' amended crossclaims (Doc. 150). Ditech's motion is
opposed.
The case arises out of a 2009 explosion of a propane tank (the "Propane Tank")
owned by Defendant Highlands Fuel Delivery, LLC ("Highlands"), refurbished and
recertified by Ditech, and originally manufactured by the predecessor in interest of
Defendants American Welding & Tank, LLC, Harsco Corporation, and Taylor-Wharton
International LLC (the "Harsco Defendants"). After Ditech refurbished and recertified
the Propane Tank in November of2004, Highlands placed it on Plaintiffs' property where
it exploded and caught fire, destroying Plaintiffs' home and other property.
In their Fourth Amended Complaint, Plaintiffs assert separate negligence claims
against Highlands and Ditech (Counts One and Two, respectively); a res ipsa loquitur
claim and strict product liability claims against Highlands (Counts Three and Four,
respectively); a strict product liability claim against "Chemitrol"l (Count Five), and
breach of warranty and negligence claims against all defendants (Counts Six and Seven,
respectively).
Ditech seeks summary judgment in its favor with regard to Plaintiffs' negligence
claims against it, 2 contending that Plaintiffs do not have an expert opinion on the
applicable standard of care and cannot establish the essential element of causation.
Ditech seeks summary judgment with regard to the amended crossclaims of Highlands
and the Harsco Defendants against Ditech, contending, as a matter of law, neither
Highlands nor the Harsco Defendants has a cause of action against Ditech arising out of
the explosion of the Propane Tank.
Plaintiffs are represented by Daniel P. Richardson, Esq., David A. Camilletti, Esq.,
Mark E. Dtke, Esq., and Richard Pastene Foote, Esq.3 Ditech is represented by Barbara
R. Blackman, Esq. and Pietro J. Lynn, Esq. Highlands is represented by John A. Hobson,
Esq. The Harsco Defendants are represented by Potter Stewart, Jr., Esq.
The court heard oral argument on the pending motion on October 24,2012.
I.
Factual Background.
A.
Undisputed Facts.
On April 9, 2009, the Propane Tank, a 500 gallon American Society of
Mechanical Engineers ("ASME") tank exploded on Plaintiffs' property, destroying their
1 The Harsco Defendants have assumed the defense of Plaintiffs' claims against Chemitrol
Chemical Co. ("Chemitrol").
2 Ditech identifies Count Two of Plaintiffs' Complaint as the only negligence claim against it
(Doc. 150 at 4), however, Count Seven alleges a negligence claim against all Defendants so the
court assumes that Ditech seeks summary judgment with regard to that claim as welL
3 Plaintiff Cooperative
Insurance Companies is represented by Daniel P. Richardson, Esq. and
Richard Pastene Foote, Esq.
2
home, greenhouses, and other property. Chemitrol, a company subsequently acquired by
the Harsco Defendants, manufactured the Propane Tank in 1970. Highlands, which
owned the Propane Tank, hired Ditech to refurbish and recertify it. There is no written
contract documenting their agreement. Ditech refurbished the Propane Tank on
November 26, 2004 in its refurbishing plant and recertified it for continued use.
Ditech's employee, Stephen Melanson, had primary responsibility for refurbishing
the Propane Tank and was also designated by Ditech to testify on its behalf pursuant to
Fed. R. Civ. P 30(b)(6). Mr. Melanson held the title of "Responsible Inspector" in
November 2004. According to Mr. Melanson, in refurbishing AMSE propane tanks,
Ditech has adopted ASME Standard, Appendix H from the National Board Inspection
Code as its policies and procedures for the refurbishment of propane tanks. On its cover
sheet, Appendix H states that it is a "Recommended Guide for the Inspection of Pressure
Vessels in LP Gas Service - Nonmandatory." (Doc. 204-3 at 2.) Appendix H sets forth
several steps for examining a propane tank to determine whether it is appropriate for
refurbishing or is too damaged to be reused. It first calls for a "review of the known
history" of the tank,4 id. at 3, followed by a visual inspection of the tank. With regard to
the type of inspection required, Section H-3000 of Appendix H provides:
The type of inspection given to pressure vessels should take into
consideration the condition of the vessel and the environment in which it
operates. The inspection may be external or internal, and use a variety of
non-destructive examination methods. Where there is no reason to suspect
an unsafe condition or where there are no inspection openings, internal
inspections need not be perfonned. The external inspection may be
perfonned when the vessel is pressurized or depressurized, but shall
provide the necessary infonnation that the essential sections of the vessel
are of a condition to operate.
(Doc. 204-3 at 3.) (Section H-3000). According to Mr. Melanson, Ditech is not a
licensed ASME refurbisher although he does not know what that tenn means or whether
This includes a review of the tank's: "(a) Operating conditions"; "(b) Normal contents of the
vessel"; "(c) Results of any previous inspection"; "(d) Current jurisdictional inspection
certificate, if required"; "(e) ASME Code Symbol Stamping or mark of code of construction, if
required"; "(t) National Board and/or jurisdictional registration number, if required." (Doc. 204
3 at 3.)
4
3
licensing is required as a condition precedent to ASME tank refurbishment. Mr.
Melanson was given a copy of Appendix H by Ditech and was instructed to read and
follow it, but he does not recall receiving any specific training regarding it.
In reviewing a propane tank's known history, Ditech's practice is to record
information from the tank's data plate, which contains information such as the tank's
manufacturer and date of original manufacture. Mr. Melanson acknowledged that the
accuracy of the information recorded is important and that it is contrary to Ditech's
policies and procedures to record this information inaccurately. If the data plate on a tank
cannot be found, or is illegible, Ditech's policy is to remove the tank from service and to
not refurbish it. It is also Ditech's practice to notifY the customer or owner. Mr.
Melanson acknowledged that an "unsafe condition" is any condition that would give rise
to the rejection of the tank for refurbishment.
Ditech's practice is to refrain from performing internal tank inspections unless this
type of inspection is requested by a customer. Mr. Melanson acknowledged that Ditech's
policies and procedures governing tank inspections are contrary to Appendix H. He
acknowledged that without an internal inspection, it is impossible to determine whether
an unsafe condition exists inside the tank. Mr. Melanson was not qualified in 2004 to
perform an internal inspection of an ASME tank.
During refurbishment of the Propane Tank in 2004, Mr. Melanson recorded the
tank's manufacturer as "AWT," shorthand for American Welding and Tank. He recorded
the date of manufacture as 1962. This information was incorrect, as a subsequent
forensic examination of the data plate revealed that the manufacturer was Chemitrol and
the date of manufacture was 1970. Mr. Melanson admitted that he was not aware of his
mistake in recording the information until recently. Because the data plate was illegible,
Mr. Melanson had no knowledge of the Propane Tank's history at the time of
refurbishing, including the normal contents of the vessel or whether there had been a
previous inspection. He also did not know what the Current Jurisdictional Inspection
Certificate consisted of, and had no knowledge regarding what an ASME Code Symbol
Stamping, as referenced in Appendix H, meant.
4
After recording the incorrect information, Mr. Melanson removed the existing
valves to the Propane Tank, and sandblasted the tank to bare steel. He visually inspected
the tank's exterior, and found no visible signs of corrosion, dents or gouges. He did not
conduct an internal inspection.
After inspecting the exterior of the Propane Tank, Mr. Melanson installed new
valves and re-painted the tank. He then filled the Propane Tank with methanol,
consistent with Ditech's internal policies, in order to minimize future internal tank
corrosion. If a tank is consistently charged with methanol or propane, it will not
significantly incur rust, corrosion, or internal damage. In November of 2004, Ditech
recertified the Propane Tank and Highlands installed it on Plaintiffs' property on July 29,
2005. Between that time and the explosion on April 9, 2009, the Propane Tank was
continuously charged with propane.
There is no evidence to suggest that Ditech's refurbishment of the Propane Tank
contributed to the tank's explosion or that the valve that Ditech installed was in any way
defective or contributed to the explosion.
B.
Disputed Issues of Fact.
There is a disputed issue of fact as to whether the Propane Tank was in above
average condition prior to its refurbishment in 2004. There is also disputed expert
testimony regarding the applicable standard of care and causation.
Plaintiffs' expert metallurgist, Joseph Parse, Ph. D., has opined that the Propane
Tank failed due to various manufacturing defects which could only have been discovered
by destructive metallurgical testing of the steel. 5 Dr. Parse does not hold himself out as
an expert on the standards governing propane tank refurbishment or recertification and
has not examined Ditech's role in refurbishing the Propane Tank.
Specifically, Dr. Parse opines that the Propane Tank failed due to "defects of manufacture"
because "[t]he steel of the failed head did not meet the specifications provided in ASTM [A285]:
possessing excessive Yield & Tensile Strength, and substandard Ductility (consistent with
Strain-Aged material)" and "[t]he manufacturing process introduced residual stresses in the
region near the weld which caused cracking and crack growth, leading to the failure." (Doc. 150
1 at ~ 7.)
5
5
Plaintiffs' fire cause and origin expert, David Eliassen, refers to Dr. Parse's theory
that the Propane Tank failed due to a manufacturing defect and opines that due to a
sudden and massive failure ofthe tank, the explosion preceded the fire. Mr. Eliassen is
also not an expert in the standards governing propane tank refurbishment.
Dr. Parse's and Mr. Eliassen's expert opinions are disputed by Ditech's expert
metallurgist, Jean Bigoney, Ph. D., who has also been cross-designated as an expert by
Highlands and the Harsco Defendants. 6 Dr. Bigoney opines that "[t]he most likely
scenario to explain the explosion of the tank on April 9, 2009 is that corrosion owing to
moisture which had settled to the lowest portion of the tank had caused pits to form."
(Doc. 203-1 at ~ xx.) She further opines that:
The root technical cause of failure is deemed to be related to corrosion of
the tank interior. Given the age of the tank and its unknown history for at
least 30 years, the possibility of improper storage at some period during
that time and/or the accumulation of dissolved water in propane could
easily have led to ingress of water. Once water is present, it would settle to
the bottom of the tank. The fracture origin coincides with the lowest
portion of the tank. Furthermore, evidence for corrosion in the form of pits
and cracks was found at the bottom of the tank.
Id. at ~ xxi.
Ditech, while not proffering an expert on the applicable standard of care for
refurbishment and recertification of propane tanks, relies on Section H-3000 of Appendix
H, and asserts an internal inspection was not required.
Michael Sadowski has been designated and cross-designated, by the Harsco
Defendants and Highlands, respectively, 7 as an expert in industry standards and practices
regarding the refurbishment and conversion of ASME propone tanks. According to Mr.
Sadowski, industry standards do not simply require compliance with Appendix H, but
Plaintiffs have not cross-designated Dr. Bigoney as an expert and they have not included her
opinion in their response to Ditech's statement of undisputed material facts.
6
Plaintiffs have not cross-designated Mr. Sadowski as an expert and they have not included his
opinion in their response to Ditech's statement of undisputed material facts.
7
6
rather mandate that an interior inspection be performed prior to refurbishment of an
ASME propane tank.
Mr. Sadowski opines that the applicable standard of care incorporates the National
Boiler Inspection Code which he contends requires that a tank be presented for
refurbishing with a legible data plate. If the data plate is not fully legible, he opines that
industry practices and the applicable standard care require the tank not to be refurbished
unless and until the owner of the tank provides sufficient information for the issuance of
a new data plate. Mr. Sadowski further opines that the failure to perform a non
destructive interior inspection of the tank constitutes a breach of accepted industry
standards. He notes that an internal inspection of a tank is nondestructive, takes very
little time, has almost no cost, and is performed to look for signs of moisture, corrosion,
or pitting in the interior. If an interior inspection of a tank reveals moisture, corrosion, or
pitting, he asserts that industry standards of care require that the tank not be refurbished.
II.
Conclusions of Law and Analysis.
The court has diversity jurisdiction over this case pursuant to 28 U.S.C. §
1332(a)(I) and is thus required to apply Vermont law to the substantive issues. See Erie
R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938); In re Coudert Bros. LLP, 673 F.3d 180,
186 (2d Cir. 2012).
A.
Standard of Review.
Summary judgment must be granted when the record shows 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). "[AJ party seeking summary judgment always bears the
initial responsibility of informing the district court of the basis for its motion, and
identifying those portions of the pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, which it believes demonstrate the
absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323
(1986) (internal quotations and citation omitted). In deciding the motion, the trial court
must resolve all ambiguities and draw all reasonable inferences in favor of the non
moving party, and deny the motion if a rational juror could decide in favor of that party
7
under the applicable law. Scott v. Harris, 550 U.S. 372, 378 (2007). "There is no
material fact issue only when reasonable minds cannot differ as to the import of the
evidence before the court." Commander Oil Corp. v. Advance Food Serv., 991 F.2d 49,
51 (2d Cir. 1993).
To avoid summary judgment, the non-moving party must offer more than "mere
speculation and conjecture[,]" Harlen Assoc. v. Inc. Vill. ofMineola, 273 F.3d 494, 499
(2d Cir. 2001), as the "mere existence of some alleged factual dispute between the parties
will not defeat an otherwise properly supported motion for summary judgment; the
requirement is that there be no genuine issue of material fact." Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 247-48 (1986). In other words, only "disputes over facts that
might affect the outcome of the suit under the governing law will properly preclude the
entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not
be counted." Id. at 249.
B.
Ditech's Motion for Summary Judgment Re: Plaintiffs' Negligence
Claims.
Ditech seeks summary judgment with regard to Plaintiffs' negligence claims,
arguing that Plaintiffs have failed to proffer an expert opinion that establishes the
applicable duty of care and which provides any basis for concluding that Ditech caused
the Propane Tank's explosion. Plaintiffs counter that Ditech's own Fed. R. Civ. P.
30(b)(6) witness, Mr. Melanson, establishes that Ditech breached an applicable duty of
care and contends further that there is sufficient evidence in the record that Ditech caused
or contributed to the explosion to leave the determination of causation to the jury.
1. Duty of Care.
Plaintiffs allege that Ditech had a duty to "test, inspect, discover, remedy, restore,
repair and/or warn of any defects in the strength, integrity and suitability" (Doc. 120 at
,35) of the Propane Tank before it released the tank to Highlands for continued
commercial use. Plaintiffs further allege that in releasing the Propane Tank to Highlands,
Ditech certified the strength, integrity and suitability of the tank for its intended purpose,
and Ditech assumed a legal duty to all users of the tank, including Plaintiffs.
8
As Ditech points out, Plaintiffs have not disclosed an expert on tank refurbishing.
Ditech contends that Vermont law governing the manner of establishing the standard of
care for "professionals" such as lawyers, Estate ofFleming v. Nicholson, 724 A.2d 1026
(Vt. 1998), and physicians, Wilkins v. Lamoille Cnty. Mental Health Servs., Inc., 2005
VT 121, 179 Vt. 107, 889 A.2d 245, applies in this case. Vermont law does not appear to
require that result. See Fila v. Spruce Mtn. Inn, 2005 VT 77,
~
20, 178 Vt. 323, 333, 885
A.2d 723, 730 (Vt. 2005) (observing defendant "has adduced no persuasive authority to
support the proposition that expert evidence was required to show the level of care
required of a residential care facility to protect its residents from rape.") (collecting
cases); see also Stagl v. Delta Airlines, Inc., 52 F.3d 463,473 n.6 (2d Cir. 1995) ("We do
not mean to suggest that [plaintiff] necessarily had to submit expert evidence in order for
her [negligence] claim to survive summary judgment. Other evidence could have done as
welL") (citing Harper & James § 17.1, at 547) ("Except for malpractice cases (against a
doctor, dentist, etc.) there is no general rule or policy requiring expert testimony as to the
standard of care, and this is true even in the increasingly broad area wherein expert
opinion will be received.").
Without deciding the issue, the court agrees that the standard for refurbishment
and recertification of ASME propane tanks is not something within the knowledge of the
average layperson. See S. Burlington Sch. Dist. v. Calcagni-Frazier-Zajchowski, 410
A.2d 1359,1363 (Vt. 1980) ("It is the function of the jury as the trier of fact to draw the
logical inferences from the evidence in light of their experience and knowledge. Where,
however, the jury is incompetent to draw those inferences because they are distinctively
related to a profession beyond the understanding of the average layman, it is necessary to
introduce expert testimony."); see also FFE Transp. Servs., Inc. v. Fulgham, 154 S.W.3d
84, 91 (Tex. 2004) ("Few people not involved in the trucking industry are familiar with
refrigerated trailers, the mechanisms for connecting them to tractors, and the frequency
and type of inspection and maintenance they require. While the ordinary person may be
able to detect whether a visible bolt is loose or rusty, determining when that looseness or
rust is sufficient to create a danger requires specialized knowledge. Therefore, the
9
layman does not know what the standard of care is for the inspection and maintenance of
the upper coupler assembly, kingpin, and base rail of a refrigerated trailer.") (footnote
omitted).
As Plaintiffs point out, however, in Lewis v. Vermont Gas Corp., 151 A.2d 297
(Vt. 1959), the Vermont Supreme Court arguably addressed the applicable standard of
care where the service at issue involves propane. In Lewis, the plaintiff brought a claim
against a public service corporation for injuries suffered in a propane explosion which
occurred when the plaintiff attempted to light his hot water heater. In upholding a jury
verdict in favor of the plaintiff, the court observed that a company that supplies natural
gas and equipment related thereto knows that "it is dealing with a dangerous agency, and
if it knows, or should have known, the consumer's lines and equipment are unsafe, it is
its duty to require the lines to be repaired or else to shut off the gas at the curb." Id. at
306. The court further observed:
Defendant concedes ownership of the meter and the responsibility for its
inspection and maintenance. Propane air gas is an inherently dangerous
substance. Well considered cases take the view that those who distribute a
dangerous article or agent owe a degree of protection to the public
proportionate to and commensurate with the dangers involved. Stated
differently it has been held that a company which produces and furnishes
gas is bound to use such skill and diligence in its operations as is
proportionate to the delicacy, difficulty and nature of that particular
business. As to its lines a gas company is not an insurer, but if the gas
company fails to exercise care and injury results therefrom it is liable. In
using the degree of care to prevent damage commensurate to the danger
which it is its duty to avoid, generally this requires an efficient system of
inspection, oversight and superintendence of its lines and equipment.
Notice or knowledge of defects in pipes, etc., will be presumed where the
circumstances are such that the company, by the exercise of proper and
reasonable diligence might have known of the defect which caused the
damage complained of. The duty of proper installation, maintenance and
inspection of a meter furnished, owned and exclusively controlled by a
public service corporation engaged in supplying natural gas, and all of the
fittings by which it is attached to the service pipe, rests upon the
corporation. Negligence, consisting of omission of such duty, and causing
injury, imposes liability upon it.
10
Id. at 306 (internal citations omitted).
As applied to this case, Lewis required Ditech, which knew it was refurbishing and
recertifying a tank that would be used for propane, to exercise a degree of care
commensurate with the potential for danger posed if a defect or unsafe condition in the
tank remained undetected. In accordance with this standard, a jury could rationally
conclude that an inspection, refurbishment, and recertification process based upon
inaccurate or missing information regarding the propane tank's age, origin, and prior
history breached the applicable duty of care, even in the absence of expert testimony. See
Calcagni-Frazier-Zajchowski, 410 A.2d at 1365 ("It is true, as defendant argues, that
when a physical process is obscure, abstruse or so far outside common experience that
lay jurors can only speculate about it expert testimony is required to explain the process.
But when the facts proved are such that any layman would know, from his own
knowledge and experiences, that the breach of duty was the proximate cause of the injury
expert testimony is not necessary.") (internal citation omitted). Moreover, this is not a
case in which there is no other evidence ofthe applicable standard of care. Ditech's
designated corporate witness, Mr. Melanson, testified that Appendix H set forth the
applicable standard of care and that in refurbishing and recertifying the Propane Tank, he
neither complied with Appendix H, nor complied with Ditech's own internal safety
policies. 8
Examining the evidence in the light most favorable to Plaintiffs, Plaintiffs have
adduced sufficient evidence of the applicable standard of care and Ditech's breach of that
standard to survive summary judgment.
2. Causation.
In a similar vein, Ditech contends that because Plaintiffs have not cross-designated
Dr. Bigoney and Mr. Sadowski as experts, Plaintiffs cannot rely on their opinions to
8 See Schwartz v. Hasbro, Inc., 2012 WL 1414094, at *9 (N.J. Super. ct. App. Div. April 25,
20 12) (court properly admitted evidence of breach of company's internal safety standards in suit
involving negligence claim); Brewster v. King Cnty., 2011 WL 4553156, *5 (Wash. ct. App.
October 4,2011) (affirming denial of summary judgment where there was evidence that
defendant "breached the standard of ordinary care by failing to properly locate the bus shelter in
accordance with its own internal safety standards[.]").
11
establish causation. Without those opinions, Ditech points out that Plaintiffs are left with
a theory of causation that asserts that the Propane Tank's explosion was caused by a
manufacturing defect in the tank's steel that could not have been detected by Ditech
through a non-destructive inspection. Accordingly, had Ditech complied with the alleged
applicable standard of care, the alleged defect in the tank's steel would have remained
undetected. Plaintiffs counter that they have adduced sufficient evidence of causation to
render the issue a question for the jury.
Although Plaintiffs do not explicitly rely on the testimony of Dr. Bigoney and
Mr. Sadowski, those expert opinions remain in the record and create a disputed issue of
fact regarding causation. See Fed. R. Civ. P. 56(c)(3) ("The court need consider only the
cited materials, but it may consider other materials in the record."); Lyons v. Lancer Ins.
Co., 681 F.3d 50,57 (2d Cir. 2012) ("[i]n ruling on a motion for summary judgment, the
district court may rely on 'any material that would be admissible' at a trial."); Adler v.
Wal-Mart Stores, Inc., 144 FJd 664, 672 (lOth Cir. 1998) ("The district court has
discretion to go beyond the referenced portions of [the record], but is not required to do
so."). In addition, Plaintiffs may be permitted to rely on the opinions of other parties'
experts at trial even in the absence of cross-designation. See Vandenbraak v. Alfieri,
2005 WL 1242158, at *4 (D. DeL May 25,2005) (holding that "an opposing party [may]
use as substantive evidence an opinion propounded by the sponsoring party's expert");
Kreppel v. Guttman Breast Diagnostic Inst., Inc., 1999 WL 1243891, at *1 (S.D.N.Y.
Dec. 21, 1999) (finding that a party may use the report of an opponent's expert as
substantive evidence under Fed. R. Evid. 801(d)(2)(B». This, alone, is sufficient to
defeat summary judgment as Dr. Bigoney's and Mr. Sadowski's theories of causation
support a negligence claim against Ditech.
Plaintiffs, however, proffer an alternate theory of causation that would allow them
to retain their experts' theory of causation (a manufacturing defect in the Propane Tank's
steel which could not be detected by a non-destructive inspection) while contending
Ditech's alleged negligence was a proximate cause of the Propane Tank's explosion. As
they point out, Mr. Melanson's admissions creates a reasonable inference that had Ditech
12
followed its own internal safety procedures and those required by Appendix H, the
Propane Tank would have never been refurbished and returned to service. In this
manner, Plaintiffs contend that Ditech's alleged breach of the applicable duty of care was
a proximate cause of Plaintiffs' injury. Vermont law explains how such a claim may
exist even where, as here, Ditech neither knew of the alleged defect in the tank's steel,
nor, could reasonably detect its existence:
Where a second actor has become aware of the existence of a potential
danger created by the negligence of an original tort-feasor, and thereafter,
by an independent act of negligence, brings about an accident the first
[actor] ... is relieved of liability, because the condition created by him was
... not its proximate cause. Where, however, the second actor does not
become apprised of ... [the] danger until his own negligence, added to that
of the existing perilous condition, has made the accident inevitable, the
negligent acts of the two ... are contributing causes and proximate factors
in the happening of the accident and impose liability upon both of the guilty
parties.
To put these concepts together, the test for defendant's negligence in this
instance is whether or not he was bound to anticipate the negligence of
another. If not, he is not liable. In instances where he is bound to
anticipate negligence, Johnson [v. Cone, 28 A.2d 384 (Vt. 1942)] provides
that he shall still not be liable if the second actor, once aware of the
particular danger involved, knowingly and negligently proceeds; but he
shall be jointly liable where the negligence of the second acts in concert
with his own negligence, inevitably causing the injury.
Paton v. Sawyer, 370 A.2d 215,217 (Vt. 1976); see also Dodge v. McArthur, 223 A.2d
453, 455 (Vt. 1966) (observing that an "intervening cause" "may act as a mere limitation
on a defendant's responsibility for the total consequences of an accident, or it may
intervene ahead of any injury and become the responsible cause for all damage."). As
applied to this case, Paton instructs that both the manufacturer who allegedly created a
defect in the Propane Tank and Ditech, whose alleged negligence caused the Propane
Tank to be returned to service thereby making the accident inevitable, "are contributing
causes and proximate factors in the happening of the accident" permitting liability to be
imposed on both of them. Paton, 370 A.2d at 217.
13
Under Vermont law, "[d]etermination of proximate cause requires a finding by the
trier of fact except in rare circumstances." Bloomer v. Gibson, 2006 VT 104, ~ 49, 180
Vt. 397,416,912 A.2d 424,437; see also Fritzeen v. Trudell Consulting Eng'rs, Inc.,
751 A.2d 293,297 (Vt. 2000) (mem.) ("Proximate cause is ordinarily an issue to be
resolved by the jury unless the proof is so clear that reasonable minds cannot draw
different conclusions or where all reasonable minds would construe the facts and
circumstances one way.") (quotations and citations omitted). "Thus, it is the fact-finder's
task to find proximate cause, especially where there are various possible causal
contributors to an event, such that '[t]he proof and facts ... do not lend themselves to ...
singular clarity.'" Bloomer, 2006 VT 104, ~ 49, 180 Vt. at 416,912 A.2d at 437 (quoting
Fritzeen, 751 A.2d at 297).
Viewing the evidence in the light most favorable to Plaintiffs and drawing all
inferences in their favor, the cause of the Propane Tank explosion remains disputed.
Because there is admissible evidence that Ditech's own alleged negligence caused or
contributed to the Propane Tank explosion by permitting the Propane Tank to be
refurbished, recertified, and returned to use, the question of causation must be resolved
by the jury. Ditech's motion for summary judgment regarding Plaintiffs' negligence
claims is therefore DENIED.
B.
Ditech's Motion for Summary Judgment Re: the Amended
Crossclaims of Highlands and the Harsco Defendants.
1. Crossclaims for Contribution.
Ditech moves for summary judgment with regard to Highlands's and the Harsco
Defendants' amended crossclaims seeking, among other things, a right of contribution for
the amount of any judgment rendered against them in favor of Plaintiffs. Vermont law
bars a claim for contribution among joint tortfeasors. See White v. Quechee Lakes
Landowners' Ass 'n, 742 A.2d 734, 736 (Vt. 1999) (holding "[t]he right to indemnity ...
is an exception to our longstanding rule barring contribution among joint tortfeasors[.]");
Loli o/Vermont, Inc. v. Ste/andl, 968 F. Supp. 158, 161 (D. Vt. 1997) ("Under Vermont
law, there is no right to contribution among joint tortfeasors"). Summary judgment with
14
regard to Highlands's and the Harsco Defendants' crossclaim for contribution is thus
hereby GRANTED.
2.
Strict Product Liability and Breach of Warranty Crossclaims.
Highlands and the Harsco Defendants allege that Ditech failed to refurbish the
Propane Tank in a safe manner, thereby placing the Propane Tank in the stream of
commerce in a defective condition which caused the Propane Tank explosion, which, in
tum, caused Highlands and the Harsco Defendants to suffer damages, including, but not
limited to, any potential liability to Plaintiffs. On this basis, they assert strict product
liability crossclaims, and Highlands additionally asserts a breach of the implied
warranties of merchantability and fitness for a particular purpose cross claim, against
Ditech. Ditech asserts that summary judgment is mandated because it is undisputed that
it did not "sell" the Propane Tank. Citing New Jersey law, Highlands counters that
reconditioners of products may be held strictly liable under products liability law and
there is no requirement that a reconditioner take title to the product. Without joining in
this argument, the Harsco Defendants argue that "[o]bviously, a defendant may be liable
in strict products liability without being a tort-feasor." (Doc. 203 at 8.)
The Court of Appeals for the First Circuit recently rejected the line of New Jersey
cases on which Highlands relies, noting that the "[t]he 1982 New Jersey case on which
plaintiffs rely, and which does not discuss the Restatement (Second) of Torts § 404, does
not persuade us that Massachusetts would follow its reasoning." Hatch v. Trail King
Indus., Inc., 656 F 3d 59, 70 (1 st Cir. 2011 ) (citing Michalko v. Cooke Color & Chern.
Corp., 91 N.J. 386,451 A.2d 179 (1982)). The New Jersey courts have also
distinguished Michalko and its progeny, holding that, there, the defendant rebuilt the
transfer press and manufactured a defective component part and it was on that basis that
strict product liability was imposed. See Potwora ex reI Gray v. Grip, 725 A.2d 697, 703
(N.J. Super. Ct. App. Div. 1999) (observing that "[h]ere, unlike Michalko, the motorcycle
helmet worn by plaintiffwas never in the control of Royal, and Royal did not
manufacture any component part of the helmet. ... Under these circumstances, Royal did
not place the helmet within the stream of commerce and it was not the manufacturer or
15
seller of the helmet"); Ramos v. Silent Hoist and Crane Co., 607 A.2d 667,671 (N.J.
Super. Ct. App. Div. 1992) (finding that electrician, who installed and designed the
electrical system and placement of switches to the capstan which injured plaintiff, did not
sell, manufacture, or supply a defective component part, distinguishing the case from
Michalko where "the principal activity of the defendant was the creation or change of the
product"). Here, no party contends that Ditech manufactured or installed a defective part
that caused the Propane Tank explosion. Accordingly, even under New Jersey law,
Ditech would not be liable.
The Vermont Supreme Court has adopted the doctrine of strict product liability set
forth in the Restatement (Second) of Torts §402A (1965):
(1) One who sells any product in a defective condition unreasonably
dangerous to the user or consumer or to his property is subject to liability
for physical harm thereby caused to the ultimate user or consumer, or to his
property, if
(a) the seller is engaged in the business of selling such a product, and
(b) it is expected to and does reach the user or consumer without
substantial change in the condition in which it is sold.
Darling v. Cent. Vt. Pub. Servo Corp., 762 A.2d 826,827 (Vt. 2000). A claim of breach
of an implied warranty of merchantability or fitness for a particular purpose shares this
same analytical framework. 9
Ditech contends that it provided refurbishment services and was not a "seller" of
goods, and did not "sell" the Propane Tank to anyone. Vermont law requires "seller"
status as an essential component of a strict product liability or breach of implied warranty
claim. See Darling, 762 A.2d at 569 ("Because CVPSC did not sell the electricity that
allegedly caused the fire in this case, the trial court correctly refused to instruct the jury to
apply the doctrine of strict product liability."); 9A V.S.A. § 2-314(1) (providing for an
9
See Wilson v. Glenro, Inc., 2012 WL 1005007, at
* 7 (D. Vt. March 23, 2012) ("Plaintiff's
claims of strict liability [and] breach of warranty ... [are] governed by the same analytical
framework."); Adel v. Greensprings a/Vermont, Inc., 363 F. Supp. 2d 692,699 (D. Vt. 2005)
("Liability for breach of warranty ... is congruent in nearly all respects with the principles
expressed in Restatement (Second) of Torts § 402A (1965), which defines the strict liability of a
seller for physical harm to a user or consumer of the seller's product. ") (quotation omitted).
16
implied warranty of merchantability when "the seller [of goods] is a merchant with
respect to goods of that kind"); 9A V.S.A. § 2-315 (providing an implied warranty of
fitness for a particular purpose when "the seller [of goods] at the time of contracting has
reason to know any particular purpose for which the goods are required and that the
buyer is relying on the seller's skill or judgment to select or furnish suitable goods."); see
also Green Mountain Mushroom Co. v. Brown, 95 A.2d 679, 681-82 (Vt. 1953) ("The
raising of an implied warranty of fitness depends upon whether the buyer informed the
seller of the circumstances and conditions which necessitated his purchase of a certain
character of article or material and left it to the seller to select the particular kind and
quality of article suitable for the buyer's use."); Wing v. Chapman, 49 Vt. 33, 35 (1876)
("If a man sells an article, he thereby warrants that it is merchantable - that it is fit for
some purpose. If he sells it for a particular purpose, he thereby warrants it fit for that
purpose[.]"); Restatement (Second) of Torts § 402(A) cmt. a ("This Section states a
special rule applicable to sellers of products."). 10
At best, Highlands and the Harsco Defendants assert that Ditech's refurbishment
of the Propane Tank was so extensive that it was like the sale of a new product. This will
not suffice where the primary objective of the transaction remains the provision of a
service. See, e.g., Hennigan v. White, 130 Cal. Rptr. 3d 856, 863 (Cal. Ct. App. 2011)
("As a condition precedent to maintaining a strict products liability claim, a plaintiff must
show the transaction in which she obtained the product was one in which the
transaction's primary objective was to acquire ownership or use of a product, and not one
where the primary objective was to obtain a service. Courts have not extended the
doctrine of strict liability to transactions whose primary objective is obtaining services.")
10 Highlands predicts that it is likely that the Vermont Supreme Court will adopt at least some
portion of the Restatement (Third) of Torts (1998) in the future. However, that prediction is
unavailing because the Third Restatement would not dictate a different result. See Restatement
(Third) of Torts §§ 1, 20 (expanding strict liability to those "engaged in the business of selling or
otherwise distributing products" and defining those terms as a business that either "transfers
ownership" or "provides the product" but excluding "persons assisting or providing services to
product distributors" and who thereby "indirectly facilitate[] the commercial distribution of
products"); ld. at § 19(b) ("Services, even when provided commercially, are not products.").
17
(citations and internal quotation marks omitted); Smith v. Alza Corp., 948 A.2d 686, 693
(N.l Super. Ct. App. Div. 2008) ("Irrespective of whatever other activities a seller may
be engaged in, the sale of the product is the defining characteristic for qualification as a
"product seller."); New Texas Auto Auction Services, L.P. v. Gomez De Hernandez, 249
S.W.3d 400,401 (Tex. 2008) (reversing court of appeals' determination that auto
auctioneer could be liable in both strict liability and negligence for auctioning a defective
car and noting that "product-liability law requires those who place products in the stream
of commerce to stand behind them; it does not require everyone who facilitates the
stream to do the same."). The fact that Ditech supplied a new valve or other items in the
processing of refurbishing the Propane Tank does not alter this conclusion. See Meadows
v. Anchor Longwall and Rebuild, Inc., 2006 WL 995842, at *5 (W.D. Pa. Apri117, 2006)
(company hired to refurbish product and replace a valve was "hired to provide a service.
The fact that providing that service required it to replace a valve does not render it a
supplier of valves, a seller of valves or a marketer of valves."); BancorpSouth Bank v.
Environmental Operations, Inc., 2011 WL 4815389, at *5 (E.D. Mo. Oct. 11,2011)
("None of the Defendants were sellers of a product within the meaning of § 402A.
Defendants may have provided [certain items], however, these specifically designed
items were incident to the services provided by defendants[.]").
Because Highlands and the Harsco Defendants cannot establish that Ditech was a
"seller" of the Propane Tank, or furnished a defective component part, summary
judgment on their strict product liability and Highlands's breach of implied warranty
crossclaims is hereby GRANTED in Ditech's favor.
3.
Negligence Crossclaim.
Count III of Highlands's amended crossclaim alleges that Ditech has a duty to
Highlands to refurbish the Propane Tank in a safe manner and that Ditech breached that
duty by, "among other actions or inactions, fail[ing] to inspect properly the Propane Tank
for internal corrosion and fail[ing] to inspect properly the manufacturer's data tag." (Doc.
194 at ~ 23). As a result of the alleged breach, Highlands contends it has suffered
damages, including "being subject to the claims brought by Plaintiffs." Id. at ~ 24.
18
"Common law negligence has four elements: a legal duty owed by defendant to
plaintiff, a breach of that duty, actual injury to the plaintiff, and a causal link between the
breach and the injury." Zukatis v. Perry, 682 A.2d 964,966 (Vt. 1996). In seeking
summary judgment, Ditech argues that it "did not owe Highlands Fuels or the plaintiffs a
duty to ensure against the failure ofthe tank." (Doc. 150 at 12.) Ditech notes that it has
deposed Highlands's standard-of-care expert, Lester MacLaughlin, who allegedly opined
that Highlands was negligent in filling the Propane Tank when the manufacturer's data
plate was illegible. Ditech advised that it would supplement its motion for summary
judgment and statement of facts upon receipt of the MacLauglin deposition transcript; it
has not done so. Accordingly, the court has before it only a partial record and a partial
argument. On this basis alone, denial ofDitech's motion for summary judgment with
regard to Highlands's negligence crossclaim would be appropriate. 11
However, denial ofDitech's motion is warranted for the further reason that there is
ample, albeit disputed, evidence of the applicable standard of care and Ditech's alleged
breach of that standard of care. Highlands has cross-designated Ditech's expert, Dr.
Bigoney, and the Harsco Defendants' expert, Mr. Sadowski, regarding causation and the
applicable standard of care. Dr. Bigoney has opined that the cause of the Propane Tank's
failure was internal corrosion and Mr. Sadowski has opined that Ditech had a duty to
inspect the Propane Tank for internal corrosion, that its failure to do so was a breach of
the applicable duty of care, and that had it refused to refurbish and recertify the Propane
Tank as required by the applicable standard of care, the Propane Tank would not have
been returned to service. Ditech's corporate representative, Mr. Melanson,
acknowledged that Ditech breached its own internal safety standards and Appendix H by
Il See Jimmo v. Sebelius, 2011 WL 5104355, at *22 n.13 (D. Vt. Oct. 25, 2011) (declining to
address grounds for dismissal that were only cursorily addressed in the briefing); Ibarra v. City
o/Chicago, 2011 WL 4583785, at *8 (N.D. Ill. Sept. 28,2011) ("Given the complexity of the
legal issues, the parties' cursory treatment of the issues, and the current stage of the litigation, the
Court declines to dismiss Count II at this time."); Allstate Ins. Co. v. Rei!, 2007 WL 4270355, at
*2 n.2 (D. Haw. Dec. 6,2007) ("Because the parties have not briefed the Rule 702 issue in
anything more than a cursory way as part of their summary judgment arguments, the court
declines to resolve the expert admissibility issues on the record before it.").
19
refurbishing and recertifying a propane tank with an illegible data plate, and that had it
followed those internal standards and Appendix H, the Propane Tank would have been
taken out of service. This is sufficient evidence with regard to each essential element of a
negligence claim to survive summary judgment. 12 Ditech's motion for summary
judgment as to Highlands's negligence crossclaim is therefore DENIED.
4. Indemnification Crossclaims.
Ditech seeks summary judgment with regard to Highlands's and the Harsco
Defendants' indemnification crossclaims, arguing that because Plaintiffs allege that these
parties have active fault, implied indemnification is precluded as a matter of law. Ditech
further argues that because it owed no duty to either Plaintiffs, Highlands, or the Harsco
Defendants to ensure against the Propane Tank's failure; in the absence of such a duty, no
claim for indemnification exists. Highlands and the Harsco Defendants assert that
summary judgment is inappropriate where the facts regarding the parties' alleged fault
and relative fault are disputed.
Under Vermont law, "[t]he right to indemnity, which is an exception to
[Vermont's] longstanding rule barring contribution among joint tortfeasors, exists only
when one party has expressly agreed to indemnify another, or when the circumstances are
such that the law will imply such an undertaking." White, 742 A.2d at 736-37 (internal
citations omitted). The party asserting a claim of implied indemnification has the burden
of establishing its entitlement to it. Id. at 738. Noting that it is "difficult to state a
general rule that will cover all cases," id. at 737, the White court adopted the Restatement
of Restitution § 96 (1937) which provides:
The parties have not briefed the applicability of the economic loss rule to Highlands's
negligence claim. The economic loss rule "prohibits recovery in tort for purely economic
losses." Long Trail House Condo. Ass 'n v. Engelberth Construction, Inc., 2012 VT 80, at ~ 10
(quoting EBWS, LLC v. Britly Corp., 2007 VT 37, ~ 30, 181 Vt. 513,928 A.2d 497). In Long
Trail, the court recognized a "professional services" exception to the economic loss doctrine but
concluded that it did not apply to a construction contractor whose duties were governed by
contract, not tort, where only economic harm was alleged. Id at ~ 21. Because Ditech does not
seek summary judgment on this basis, the court proceeds no further with an analysis without the
benefit of the parties' briefing.
12
20
Where a person has become liable with another for harm caused to a third
person because of his negligent failure to make safe a dangerous condition
of land or chattels, which was created by the misconduct of the other or
which, as between the two, it was the other's duty to make safe, he is
entitled to restitution from the other for expenditures properly made in the
discharge of such liability, unless after the discovery of the danger, he
acquiesced in the continuation of the condition.
Id. at 737. Because "indemnification shifts the entire loss from one party to another, one
who has taken an active part in negligently injuring another is not entitled to
indemnification from a second tortfeasor who also negligently caused the injury." White,
742 A.2d at 737 (internal citation omitted). "Rather, indemnification accrues to a party
who, without active fault, has been compelled by some legal obligation, such as a finding
of vicarious liability, to pay damages occasioned by the negligence of another." Id.
(quoting Morris v. American Motors Corp., 459 A.2d 968, 974 (1982)).
Under Vermont law, there need not be a complete absence of fault on the part of
the party seeking indemnity. DiGregorio v. Champlain Valley Fruit Co., 255 A.2d 183,
186 (Vt. 1969). Rather, a court may find a right to indemnification when the "plaintiffs'
fault in its duty to the injured person was secondary to the initial negligence of the
defendant," DiGregorio, 255 A.2d at 186, or "[w]here the parties are not in equal
fault[.]" Morris v. American Motors Corp., 459 A.2d 968, 974 (Vt. 1982). In general,
"indemnity will be imputed only when equitable considerations concerning the nature of
the parties' obligations to one another or the significant difference in the kind or quality
of their conduct demonstrate that it is fair to shift the entire loss occasioned by the injury
from one party to another." White, 742 A.2d at 737.
Courts examine "the totality of circumstances" to determine whether a party is
entitled to indemnification. Savage v. Walker, 2009 VT 8, ~ 8, 185 Vt. 603, 606, 969
A.2d 121, 125 (citation and internal quotation marks omitted). Because the analysis
requires an examination of the facts to determine the nature of the fault, that
determination cannot be made on the basis of the plaintiffs' allegations alone because
"allegations ... do not, in themselves, prove anything about the true cause of the
accident." Chapman v. Sparta, 702 A.2d 132, 134 35 (Vt. 1997).
M
21
In this case, there remains a factual dispute regarding not only the cause of the
Propane Tank explosion, but regarding whether Ditech could and should have detected
the alleged cause during the refurbishment and recertification process. Until these
disputes are resolved by the finder of fact, the court cannot determine, as a matter of law,
whether Highlands or the Harsco Defendants, or both, were actively at fault in causing
the Propane Tank explosion and, if so, whether that fault was significantly different in
nature and degree from the fault, if any, ofDitech. See White, 742 A.2d at 737.
However, "[a]n obligation to indemnify does not arise merely from the disparate
quality of independent torts[,]" Hiltz v. John Deere Indus. Equip. Co., 497 A.2d 748, 751
(Vt. 1985), and "[t]he law imposes no implicit obligation upon the purchaser of a product
to indemnify the manufacturer." Id. (citing William H Field Co., Inc. v. Nuroco
Woodwork, Inc., 115 N.H. 632, 634, 348 A.2d 716, 718 (1975) (no duty flowing
"upstream" from purchaser to manufacturer giving rise to obligation to indemnify); 2A
A. Larson, Workmen's Compensation Law § 76.84, at 14-752 n.49 (1983 & Supp. 1984)
(citing cases finding no obligation on purchaser to indemnify manufacturer)). "Thus,
under Vermont law, one is not entitled to indemnity from a joint tortfeasor merely
because one may be free from negligence, or another is more at fault." Id.
Here, it is undisputed that Ditech neither supplied a defective component part to
the Propane Tank, nor owed any contractual obligation to the Harsco Defendants in
refurbishing it. The Harsco Defendants fail to cite any other source of a legal duty
flowing "upstream" from the servicer of a product to its manufacturer. In tum, if the
Harsco Defendants have no independent fault they cannot be held liable merely because
Ditech, an unrelated servicer of the product, breached a duty of care. Under Hiltz, in the
absence of a duty, no claim for indemnification lies regardless of the parties' relative
fault. See Hiltz, 497 A.2d at 751. Ditech's motion for summary judgment with regard to
the Harsco Defendants' indemnification claim is therefore GRANTED.
A different result is required for Highlands's claim for indemnification. There is
admissible evidence to support a conclusion that Ditech owed both Highlands, with
whom it contracted, and Plaintiffs, the foreseeable users, a duty of care with regard to
22
Ditech's inspection, refurbishment, and recertification of the Propane Tank. There is also
admissible evidence that Ditech breached this duty of care. If Plaintiffs prevail on their
negligence claims against Ditech, and a jury further concludes that Highlands's only fault
consisted of selecting Ditech as the Propane Tank's refurbisher, the parties' fault would
not be equal. Instead, Highlands's fault would be secondary and derivative of the fault
attributed to Ditech. Consistent with that finding, a jury could nonetheless also conclude
that Highlands remains directly liable to Plaintiffs for furnishing them with a defective
Propane Tank. In such circumstances, a duty to indemnify may be implied. Hiltz, 497
A.2d at 751 (HAn obligation of indemnity has been imposed where the relationship of the
parties is such that the obligations ofthe alleged indemnitor extend not only to the injured
person, but also to the indemnitee."); Prosser and Keeton on The Law of Torts § 51, at
341-42 (5th ed.lawyer's ed. 1984) (indemnity may be implied where a party is held
responsible solely by imputation of law because of relation to actual wrongdoer).
At this juncture, because the facts are disputed regarding whether a duty of care
was breached and by whom, and because causation and relative fault have yet to be
established, it is impossible to determine whether Ditech may owe Highlands a duty of
implied indemnification. In such circumstances, summary judgment is inappropriate.
F or the foregoing reasons, Ditech's motion for summary judgment as to
Highlands's indemnification crossclaim is hereby DENIED.
CONCLUSION
In summary, Ditech's motion for summary judgment is DENIED with regard to
Plaintiffs' and Highlands's negligence claims. Ditech's motion for summary judgment is
GRANTED with regard to the strict product liability crossclaims of Highlands and the
Harsco Defendants. Ditech's motion for summary judgment is GRANTED with regard
to Highlands's breach ofimplied warranty crossclaims. Ditech's motion for summary
judgment is GRANTED as to the indemnification crossclaim of the Harsco Defendants
and DENIED as to the indemnification crossclaim of Highlands.
23
SO ORDERED.
Dated at Rutland, Vermont in the District ofVerrnont this
i
~V
day of January,
2013.
~-
Christina Reiss, Chief Judge
United States District Court
24
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