Regent Insurance Company et al v. Cincinnati Insurance Co et al

Filing 21

ORDER denying 9 Motion for Summary Judgment. The Clerk of Court shall set a telephone conference in this case for further scheduling. (cc: all counsel) (Griesbach, William)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN

REGENT INSURANCE COMPANY,
Plaintiff,
and
Case No. 14-C-1434
ROMO, INC.,
Involuntary Plaintiff,
v.
THE CINCINNATI INSURANCE COMPANY
and BRISKHEAT CORPORATION,
Defendants.

DECISION AND ORDER DENYING DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT

Plaintiff Regent Insurance Company (Regent Insurance) and its insured, involuntary plaintiff
Romo Incorporated (Romo), filed this suit against The Cincinnati Insurance Company (Cincinnati
Insurance) and its insured, Briskheat Corporation (Briskheat), for negligence and strict product
liability in the Circuit Court for Brown County on October 21, 2014. Plaintiffs claim that Briskheat
negligently manufactured, tested, and/or serviced a barrel heater. Plaintiffs allege Briskheat’s
negligence caused a drum of polymer to overheat and vaporize, resulting in damages to Romo’s
property. In the alternative, Plaintiffs claim that Briskheat is strictly liable for the damages because
the barrel heater had a manufacturing defect at the time it was purchased by Romo. Plaintiff Regent
Insurance paid Romo $280,305.34 to cover clean up costs from the malfunction and seeks recovery
of this amount along with its insured’s deductible from Cincinnati Insurance and Briskheat.

Noting federal jurisdiction under 28 U.S.C. § 1332 based on the diverse citizenship of the
parties and the amount in controversy, Defendants removed the case to federal court pursuant to 28
U.S.C. §§ 1441 and 1446. The case is before the Court on Defendants’ motion for summary
judgment. For the reasons that follow, Defendants’ motion will be denied.
BACKGROUND
Plaintiff Regent Insurance is a Wisconsin corporation with its principal place of business in
Sun Prairie, Wisconsin, and is engaged in the business of providing property and casualty insurance.
Prior to December 21, 2012, Regent Insurance issued an insurance policy to Romo, a printing
company, covering damages to real estate, real property, fixtures, other personal property, and
business as a result of any negligence of third parties. Romo is also Wisconsin corporation with its
principal place of business in De Pere, Wisconsin. Between August and November of 2011, Romo
purchased five barrel heaters from Briskheat, a Delaware corporation with its principal place of
business in Columbus, Ohio. Briskheat is insured by Cincinnati, an Ohio corporation with its
principal place of business in Cincinnati, Ohio.
A barrel heater is a piece of industrial equipment which wraps around a barrel and allows the
user to keep the contents of the barrel heated to a set temperature. Barrel heaters have four main
components: a large flexible wrap heating element, a temperature controller, a temperature sensor,
and a high-temperature indicator light. During operation, the temperature controller and hightemperature indicator light are attached to the wall, while the flexible wrap element remains movable
and may be wrapped like a belt around the bottom of a 55-gallon barrel. The temperature sensor and
bellows are housed in an attachment on the temperature controller and are connected to a capillary
tube by a solder joint. The capillary tube contains a liquid which expands as the temperature of the
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barrel increases to the desired temperature. Once the desired temperature is reached, the expansion
of this fluid triggers the temperature controller to turn off heat to the wrap.
On December 21, 2012, one of the five barrel heaters purchased by Romo malfunctioned,
causing the contents of the barrel to vaporize and resulting in large clean-up costs for Romo. The
parties’ experts agree that the malfunction occurred because of a cracked solder joint between the
barrel heater’s capillary tube and bellows. Fluid was released because of the crack in the solder joint
and, as a result, the pressure in the capillary tube could not rise high enough to trigger the heat shutoff. As a further result the heat continued to rise past the set temperature until the resin in the barrel
was vaporized. The parties disagree on the cause of the crack in the solder joint and neither party
has offered evidence definitively answering the question of when the solder joint cracked.
At the time of the malfunction the barrel heater at issue had been running continuously for
“a couple of months.” The device had been wrapped around a 55-gallon drum of resin in Romo’s
facility. Viewing the evidence in the light most favorable to Plaintiffs, Theodore (Ted) and Nicholas
McGee installed the barrel heaters and were the only Romo employees who would have operated
or used the barrel heater at issue. Some time before the incident, Ted McGee serviced the
temperature controller on one of the barrel heaters owned by Romo. Romo denies, however, that
Ted McGee ever serviced the temperature sensor part of the device. Yet, at some point either Romo
or Briskheat serviced the temperature sensor. This fact is evidenced by tool marks on parts of the
temperature sensor and a missing screw on the temperature sensor housing. Both parties deny that
their employees ever had the opportunity or motive to service the temperature sensor. The parties
do not know whether the device was serviced before or after the malfunction at issue. Plaintiffs’
expert witness opined that the improper servicing of the temperature sensor most likely caused the
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damage to the solder joint that lead to its failure. March 6, 2013 Report of Edward Chow, P.E., and
Jon Peterson at 4 (ECF No. 12-9).
The barrel heater at issue had twice been returned to Briskheat for repairs because the device
had been failing to maintain a stable temperature. Instead, the heater would heat up to the set
temperature of 150º F but then, rather than maintaining that temperature, the heater would turn off
and the temperature would drop to 90º F. The first time the device was sent in, Briskheat could not
replicate the malfunction and no action was taken. The second time the device was sent in, Briskheat
discovered that the device had the wrong model of thermostat (TS) and replaced it with the correct
model. That was more than a year prior to the failure, however, and Briskheat denies that the
temperature sensor was ever tested or serviced either time it was returned, noting that the sensor
housing has nothing to do with the thermostat.
DISCUSSION
A. Summary Judgment Standard
Summary judgment is proper “if the movant shows that there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56.; see
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Celotex Corp. v. Catrett, 477 U.S. 317,
324 (1986); McNeal v. Macht, 763 F. Supp. 1458, 1460–61 (E.D. Wis. 1991). “Material facts” are
those under the applicable substantive law that “might affect the outcome of the suit.” See
Anderson, 477 U.S. at 248. A dispute over “material fact” is “genuine” if “the evidence is such that
a reasonable jury could return a verdict for the nonmoving party.” Id. In deciding a motion for
summary judgment, the court will view the facts in the light most favorable to the non-moving
parties. Crull v. Sunderman, 384 F.3d 453, 460 (7th Cir. 2004).
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B. Negligence
To establish a claim of negligence in Wisconsin, “a plaintiff must prove: (1) the existence of
a duty of care on the part of the defendant, (2) a breach of that duty of care, (3) a causal connection
between the defendant's breach of the duty of care and the plaintiff's injury, and (4) actual loss or
damage resulting from the injury.” Gritzner v. Michael R., 2000 WI 68, ¶ 19, 235 Wis. 2d 781,
790–91. Manufacturers have a duty to “exercise ordinary care in the design, construction, and
manufacture” of their products. 3240 Wis. JI-Civil (negligent manufacturing); see Restatement
(Second) of Torts § 395 (1965). Manufacturers have the further duty in the exercise of ordinary care
to make all reasonable and adequate tests and inspections “so as to guard against any defective
condition which would render such product unsafe when used as it is intended to be used.” 3240
Wis. JI-Civil. “Negligence is ordinarily an issue for the fact-finder and not for summary judgment.”
Lambrecht v. Estate of Kaczmarczyk, 2001 WI 25, ¶ 2, 241 Wis. 2d 804, 807.
As an alternative to showing a specific instance of negligence a plaintiff may attempt to prove
negligence through application of the doctrine of res ipsa loquitur, Latin for “the thing speaks for
itself.” Res ipsa loquitur is “meant to bridge an evidentiary gap when an injury could not have
happened but for the defendant's negligence.” Buechel v. United States, 746 F.3d 753, 765 (7th Cir.
2014). Instruction on res ipsa is appropriate only when:
(a) either a laymen is able to determine as a matter of common knowledge or an
expert testifies that the result which occurred does not ordinarily occur in the absence
of negligence, (b) the agent or instrumentality causing the harm was within the
exclusive control of the defendant, and (c) the evidence offered is sufficient to
remove the causation question from the realm of conjecture, but not so substantial
that it provides a full and complete explanation of the event.
Peplinski v. Fobe's Roofing, Inc., 193 Wis. 2d 6, 17 (1995).

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Here, I conclude that the doctrine of res ipsa loquitur does not apply. “Res ipsa requires
proof that the event in question would not occur in the absence of negligence, and that the
instrumentality causing the harm was within the exclusive control of the defendant.” Minergy
Neenah, LLC v. Rotary Dryer Parts, Inc., 2008 WL 943148, at *6 (E.D. Wis. Apr. 7, 2008). The
idea that res ipsa applies in this case directly contradicts Plaintiff’s own expert, who stated that nonnegligent conditions could have caused the solder joint to break here. For example, normal
expansion and contraction of the liquid in the capillary tube could have caused the break.
Additionally, Plaintiffs fail to establish that the barrel heater was within Briskheat’s exclusive control.
Indeed, for all but a short part of the relevant time period, the device was in Romo’s exclusive
control. Plaintiffs’ argument that the temperature sensor was within Briskheat’s exclusive control
because Romo never took the housing off the temperature sensor to gain access to it assumes a fact
at issue—namely, that Briskheat personnel disassembled the temperature sensor. Furthermore, the
temperature sensor could have been damaged even absent removal of its housing. Plaintiff’s use of
res ipsa is merely an attempt to repeat or bolster Plaintiffs’ specific negligence argument. Because
Plaintiffs have failed to establish the essential elements of res ipsa loquitur, I conclude it does not
apply in this case.
The parties to this case offer three possible explanations for why the barrel heater at issue
malfunctioned. First, the barrel heater could have been defectively manufactured with a weakened
solder joint. Second, the temperature sensor could have been negligently serviced by one of the
parties, creating a defective condition in the temperature sensor and ultimately leading to the solder
joint breaking. Third, the temperature sensor could have been negligently handled, twisted, dropped,
or otherwise impacted, causing the solder joint to weaken or break. None of the experts in this case
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can definitively say which of these explanations is correct. In his initial report, Plaintiffs’ expert
opined that the damage to or weakening of the solder joint probably occurred during the disassembly
and reassembly of the sensor housing. March 6, 2013 Report of Edward Chow, P.E., and Jon
Peterson at 4 (ECF No. 12-9). Both Romo and Briskheat deny that any of their employees
disassembled or mishandled the sensor, and thus each infers that it must have been done by the other.
Defendants argue against Plaintiffs’ negligence claim, alleging that they never had an
opportunity or reason to repair the temperature sensor. Defendants also argue that there is no
evidence that the temperature sensor was even serviced prior to the malfunction in this case. Finally,
Defendants posit that if anyone serviced the barrel heater it was Romo’s employee Ted McGee.
According to Defendants, these facts, taken together, do not leave a genuine dispute about whether
they negligently serviced the temperature sensor.
In reply, Plaintiffs argue that a joint evidence inspection revealed numerous issues with the
condition of the device. According to Plaintiff’s expert Mr. Chow, the temperature sensor was
serviced improperly, likely leading to the malfunction:
The study of the temperature controller and temperature sensor housing reveals that
they were disassembled prior to the loss. The mismatched serial numbers on the
cover and inside body of the controller is evidence that whoever disassembled the
controller did not reassemble it using the same parts. The missing screw and dirt on
the back side of the sensor housing is evidence that the sensor housing was taken
apart and reassembled improperly. The tool marks on the two nuts used to hold the
capillary tube and bellows to the housing is evidence that they were taken apart. It
is probable that the disassembly and reassembly of the sensor housing, and capillary
tube and bellows caused the leak in the capillary tube joint.
March 6, 2013 Report of Edward Chow, P.E., and Jon Peterson at 4 (ECF No. 12-9). According
to Romo, none of its employees ever serviced the temperature sensor. Though Ted McGee serviced
the temperature controllers of one of the heating units, that is a separate part of the device from the
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temperature sensor. Plaintiffs thus reason that because only Romo and Briskheat ever had access to
the device and Romo never serviced the temperature sensor, the defective servicing must have been
performed by Briskheat.
I conclude that the evidence of record raises a genuine dispute of material fact as to whether
Briskheat breached its duty of care to Romo. Viewed in a light most favorable to Plaintiffs, the
evidence would allow a jury to conclude that someone from Briskheat negligently damaged the
solder joint while disassembling and/or reassembling the temperature sensor on the device that
malfunctioned. While it is true that Briskheat vigorously disputes this and denies that its employees
serviced the temperature sensor, Romo likewise denies that any of its employees serviced,
mishandled or tampered with it in any way. Yet, it appears clear from the experts’ analysis that
someone tampered with the temperature sensor before the malfunction that damaged Romo’s plant.
If a jury believes Romo’s evidence that no one associated with it disassembled the temperature
sensor, the jury could reasonably conclude that the disassembly occurred when the device was sent
to Briskheat for repairs. Of course, the jury would also have to conclude that the solder joint was
only weakened during the process and continued to function properly for more than a year when put
back into use until December of 2012. While Plaintiffs’ expert does not explicitly address this
question in his report, the possibility of the device continuing to function for a period of time after
the damage is implicit in his conclusion that damage likely occurred during the
disassembly/reassembly process. Defendants’ motion for summary judgment on Plaintiffs’ claim of
negligence is therefore denied.

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E. Strict Product Liability
Under Wis. Stat. § 895.047, a plaintiff must establish five elements by a preponderance of
the evidence to prevail on a claim of strict product liability. The plaintiff must prove that “(1) the
product is defective in design, manufacture or warnings; (2) the defect rendered the product
unreasonably dangerous; (3) the defective condition existed at the time the product left control of
the manufacturer; (4) the product reached the user without substantial change in condition; and (5)
the defective condition was the cause of the complained-of harm.” Johnson v. Mylan Inc., 2015 WL
3466090, at *3 (E.D. Wis. June 1, 2015).
Plaintiffs have offered no evidence that the barrel heater it purchased from Briskheat was
defective in its design. Instead, Plaintiffs argue that if the jury credits the testimony offered by both
Romo and Briskheat that none of their employees attempted to dissemble or reassemble the
temperature sensor after Briskheat sold it to Romo, and if the jury also credits testimony offered by
Romo that the barrel heater was properly used in the manner intended and not subjected to any
misuse or mishandling, it would be reasonable to conclude that the heater had a manufacturing defect
that caused its failure. In support of this argument, Plaintiffs argue that the mechanical failure of the
solder joint is evidence of a manufacturing defect. Plaintiffs cite Greco v. Bucciconi Engineering
Co., for the proposition that “[a] malfunction evidences a defect.” 283 F. Supp. 978, 984 (W.D. Pa.
1967) aff'd, 407 F.2d 87 (3d Cir. 1969). Greco is also cited in the note on the law of product
liability published by the Wisconsin Civil Jury Instructions Committee in support of its statement that
“[t]he mere showing of product malfunction evidences a defective condition.” Wis. Civil J.I. 3200
Products Liability: Law Note (2012).

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In reply, Defendants argue that Plaintiffs cite outdated and foreign case law in making their
strict liability argument. Plaintiffs never mention Wis. Stat. § 895.047, which sets out the current
legal standard for strict product liability actions in Wisconsin commenced after January 21, 2011.
But the Defendants fail to articulate why Plaintiffs’ lack of citation to the updated statute decisively
turns the case in their favor and makes summary judgment appropriate. While important changes
were made to products liability law in Wisconsin in 2011, that does not necessarily render Plaintiffs’
arguments moot as a matter of law.
Wisconsin’s new product liability states that a “[a] product contains a manufacturing defect
if the product departs from its intended design even though all possible care was exercised in the
design of the product.” Wis. Stat. 895.047(1)(a). Defendants suggest that this language significantly
changes prior law, but they point to no provision that would lead the court to conclude that the fact
that a properly designed product fails prematurely from normal and expected use would not
constitute evidence of a defect in its manufacture. That is essentially what Plaintiffs contend.
Plaintiffs make a straightforward argument for strict product liability and though their
evidence may be limited, I cannot say that it fails for the purpose of summary judgment. Plaintiffs’
argument relies on a set of disputed propositions that, if true, establish the elements necessary to
show that Briskheat is strictly liable. To begin, Plaintiffs argue that nothing happened to the
temperature sensor which could have caused the solder joint to break such as negligent handling,
repair, or use. Plaintiffs put forward witnesses who will testify in support of this claim. This
evidence, if believed, could satisfy the element that the defective condition existed at the time the
product left Briskheat’s control and that the product reached Romo without substantial change.
Next, Plaintiffs argue that the solder joint breaking is evidence of a defect in itself. Plaintiffs’ expert
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will explain how a manufacturing defect could have caused the solder joint to break. This argument
is closely related to the first and is critical to show that the barrel heater contained a manufacturing
defect in departing from its intended design. While it is true that the metallurgical analysis needed
to identify a manufacturing defect, if one existed, was apparently not performed by Plaintiffs’ expert,
this does not eliminate the inference that in the absence of mishandling or a negligent repair effort,
a manufacturing defect is the most likely explanation for the failure.
Defendants do not dispute that the broken solder joint rendered the barrel heater
unreasonably dangerous or that the broken joint was a cause of Plaintiffs’ damages. To be sure,
Plaintiffs have a number of difficult hurdles to leap before proving strict liability, but the evidence
they put forth raises a genuine dispute of material fact as to whether the heater was defective when
it was sold to Romo.
CONCLUSION
For the reasons stated above, Defendants’ motion for summary judgment will be DENIED.
The Clerk of Court shall set a telephone conference in this case for further scheduling.
SO ORDERED this 24th day of November, 2015.

s/ William C. Griesbach
William C. Griesbach, Chief Judge
United States District Court

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