Illinois Expands Reach of Implied Warranty of Habitability to Subsequent Purchasers

House.1In deciding an issue of first impression, an Illinois appellate court expanded in early May the application of the implied warranty of habitability. “Implied warranty of habitability” is a group of words that fails to roll smoothly off the tongue and that may send some readers running for the hills knowing that the words that follow will likely be legal-ish and, well, boring. As a nod to coolness and to cut down on the Ugh Factor in reading this post, I’ll refer to the warranty as the IWH in this brief post.

The IWH is a good thing for home buyers, home owners and, in turn, subrogating property insurance carriers. The IWH is also an American thing—at the time its application was first gaining traction, the 1950s, it represented a departure from property laws that had been imported and derived from the “buyer beware” laws of Great Britain.[1]

While the IWH is a baby boomer in U.S. law, it’s a Gen X-er in Illinois, being first recognized in the early 1970s. Illinois courts describe the IWH (in what some may take as fightin’ words) as a “creature of public policy” and “judicial innovation.”[2]  The purpose of the IWH is geared towards protecting innocent purchasers of new homes from harm caused by construction defects that the purchasers couldn’t have discovered at the time the home was purchased.

For the last 3 decades, the protections for homebuyers built into the IWH have extended to subsequent purchasers of a home. Illinois recognizes that, like the first purchaser of a home, subsequent purchasers of the same home “rely on the expertise of the person who built the home to a substantial degree.” However, Illinois courts have traditionally allowed builders to disclaim and home buyers to waive the IWH despite the strong public policy behind the doctrine. Such waivers, if not prevalent, are commonplace in home purchase and home construction contracts.

The Illinois First District Appellate Court recently held in Fattah v. Bim that an otherwise “good” waiver of the IWH between a home’s builder/seller and the home’s first purchaser may not bar an IWH claim made by a subsequent purchaser against the builder/seller. In Fattah, Buyer #1 purchased a newly constructed home from Bim. The purchase contract included a waiver of the IWH but it did not include language extending the application of the waiver to purchasers beyond Buyer #1. Fattah then bought the home from Buyer #1 three years after the home was first sold. Only 5 months after the second sale of the home, portions of the structure started to collapse.

The appellate court rejected the notion that the waiver of the IWH extended to Fattah because there was no evidence that Fattah was aware of the waiver or otherwise made a party to the waiver by its terms. Illinois’ previous extension of the IWH to subsequent purchasers, coupled with the lack of language in either the original sales contract or the sales contract between Fattah and Buyer #1 that would have notified Fattah of the waiver’s existence, mandated the favorable outcome for Fattah. Even the presence of an “as-is” clause in the contract between Fattah and Buyer #1 failed to trigger the waiver in favor of the builder. In remanding the case for further proceedings, the appellate court noted that “[i]nterestingly, while lack of privity defeats the waiver, lack of privity does not defeat the warranty.”

The Fattah case illustrates an avenue of recovery around a contractual waiver, lends legitimacy to pursuing contractors based on implied warranty theories, and begs you to consider the IWH theory of liability even when your insured is a second or third purchaser and agreed to an “as-is” clause in buying a home.

[1] Michael A. Brower, The “Backlash” of the Implied Warranty of Habitability: Theory vs. Analysis, 60 DePaul L. Rev. 849 (2011); Roger L. Price & M. Ryan Pinkston, The Implied Warranty of Habitability in Illinois: A Critical Review, 98 Ill. Bar J. 92, 93 (Feb. 2010).

[2] Fattah v. Bim, 2015 IL App (1st) 140171 ¶ 21 (May 1, 2015).

 

 

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International Recovery Spotlight: Recovery Rights of Insurers in China for Medical Expenses

international.1The Chinese Insurance Law provides that subrogation rights are not available to the insurer of an insurance policy concerning life or bodily injury, if the insurer has paid the insured or the beneficiary for death, bodily injury or illness suffered by the insured due to a third party’s action. The rationale behind such rule is believed to be that the right of claim relating to the loss of life or bodily injury is specific to the victim and shall not be assigned. Furthermore, the “unjust enrichment” which subrogation is originally designed to prevent (among other things) shall not apply to the loss of life or bodily injury because such type of damages cannot be measured by monetary terms.

It has been an area of controversy, however, whether an insurer may acquire subrogation rights for medical expenses paid to the insured in such context. Due to the lack of specific legal provisions and clear official interpretations, practices vary from locale to locale. In some instances, the insurer’s payment of medical expenses incurred related to death, bodily injury or illness suffered by the insured due to a third party’s action is deemed to be a type of compensation within the nature of “making whole”, and therefore could result in appropriate subrogation rights. Most of the insurance companies, however, would categorize such type of medical expenses as a part of the payment under the insurance concerning life or bodily injury, and exclude them from the benefits of subrogation rights. Such inconsistent practices often result in dispute among parties to an insurance policy as well as dramatically different outcome for lawsuits with similar facts.

Many Chinese scholars are of the opinion, which is supported by some Chinese courts, that if the insured dies or becomes permanently disabled due to an insurance incident caused by a third party’s action, the insured or the beneficiary shall have the right to receive both the insurance payment and the third party’s compensation. Since a person’s life or disability may not be measured by monetary terms and the interests lost due to the death or disability may not be compared with the compensation received, there won’t be unjust enrichment even if the insured or the beneficiary is compensated by both the insurer and the third party tortfeasor. Consequently, the insurer shall not have the subrogation rights. On the other hand, if the insured’s loss is limited to medical expenses or other related expenses, she/he shall not be entitled to compensation by both the insurer and the third party tortfeasor. Accordingly, to prevent possible unjust enrichment, the insurer may acquire subrogation rights after paying such expenses.

Some practitioners go even further on this issue. They believe that even if the insured dies or becomes permanently disabled due to an insurance incident caused by a third party’s action, a case by case analysis is still necessary while determining the availability of subrogation rights. According to these practitioners, if the insurance payment under a life insurance policy is of the nature of “making whole”, subrogation rights shall be available. For example, accident insurance possesses the characteristics of both a life insurance and a property insurance, and the insurance payment thereunder sometimes may be of the nature of “making whole”. Therefore, subrogation rights may be available to insurers of accident insurance policies. Furthermore, although subrogation rights may not be available for death payment or permanent disability payment, the payment for medical expenses and lost work which is made as a part of the compensation for death or permanent disability shall be allowed to be recovered by the insurer using acquired subrogation rights.

In China, the primary source of law is the published laws and regulations and the official interpretations thereof. The prior court decisions are not given precedential authority in China. Therefore, the controversy over subrogation rights on medical expenses payment may continue unless and until a published law (or an official interpretation) clarifies this issue.

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Are “Sound Waves” the Future for Fighting Fires?

firefighter.1For their senior research project, two young engineering students at George Mason University came across an experiment conducted by the Defense Advanced Research Projects Agency (“DARPA”) in 2012 called “acoustic suppression of flame.” In a nutshell, the experiment focused on whether sound waves could disrupt flames. The research was ultimately abandoned after the agency was unable to effectively analyze whether the use of sounds waves could disrupt flames on a large scale.

After reviewing the research, the two engineers became interested in whether something portable and affordable could be created that would generate sound waves to suppress flames. Their original concept was a hand-held device that would extinguish kitchen fires and perhaps fires in small, confined spaces. If they could develop such a device, an obvious benefit would be the elimination of toxic and messy chemicals commonly found in commercial fire extinguishers. After much skepticism was expressed regarding their proposal, the two students began controlled experiments to determine whether the idea was commercially viable.

The engineers first placed flaming rubbing alcohol next to a large subwoofer. This approach was unsuccessful so they then tried ultra-high frequencies which made the flames vibrate but not go out. They finally used very low frequencies in the 30 to 60 hertz range and noticed that fires began to extinguish. After replicating this scenario many times, the engineers discovered that the sounds would “vibrate” the oxygen away from the flames. Once the small fires no longer had oxygen to keep them going, the fire would suffocate and die.

A prototype “sound extinguisher” was then created. It is basically a large can that is connected to a ventilated amp. A bass speaker installed inside the can emits sound which is then directed into a tube with a hole at the end which narrows the sound waves to a small area. The end of the tube and accompanying low frequency bass is what is projected at the flames. While the students have had success with extinguishing small alcohol-fueled fires, they are optimistic that it can work for other flammable chemicals as well. A local fire department has requested further testing of the sound extinguisher on structure fires, and the students are applying for a provisional patent. While this technology is still in its infancy, it at least provides the prospect of yet another alternative to effectively fight fires.

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Recent NY Decision Discusses the Scope of Limitations of Liability Contained in an Electric Utility’s Tariff and Other Affirmative Defenses

 

gavel.1On February 27, 2015, District Judge Joanna Seybert of the Eastern District of New York issued a significant and informative Decision on the issue of striking a defendant’s affirmative defenses in Allstate Ins. Co. v. Long Island Power Authority, 14-CV-0444, NYLJ 1202719533249 (E.D.N.Y., Decided February 27, 2015). The decision discusses the legal standard for moving to strike affirmative defenses, as well as explains in detail the Court’s rationale in either granting or denying the motion as to several common defenses asserted in tort actions. As discussed below, the Decision is particularly informative with respect to the scope of the limitations of liability contained in a New York power company’s Tariff. The decision also clarifies that spoliation of evidence is a discovery issue rather than an affirmative defense.

When a plaintiff commences litigation by filing a Complaint, the responsive pleading served by counsel for the defendant almost always contains “affirmative defenses” to the plaintiff’s causes of action. When suit is commenced against a New York utility, the utility’s Answer often includes an affirmative defense asserting that the plaintiff’s causes of action are barred by limitations of liability contained in the utility’s tariff. A tariff is document which sets forth and explains the terms and conditions of a utility company’s relationship with its customers. Tariffs are made available to the public and filed with the New York Public Service Commission (“PSC”), the entity which, among other things, is responsible for regulating and overseeing the water, gas, electric and telecommunications industries in New York.

In Allstate Ins. Co. v. Long Island Power Authority, the plaintiff, Allstate Insurance Company as subrogee of Lawrence F. Dooling and Barbara A. Dooling (“Allstate”), moved to strike seven affirmative defenses asserted in the Answer served by the defendants, Long Island Power Authority (“LIPA”) and National Grid (collectively, “defendants”). In this lawsuit, Allstate is seeking to recoup its payments to its subrogors (“the Doolings”) related to property damages sustained as a result of an electrical fire at their property in Hampton Bays, New York. Allstate’s Complaint alleges that the defendants negligently caused the electrical fire by failing to properly supply electricity to the property.

In deciding Allstate’s motion seeking to dismiss the defendants’ seven affirmative defenses, the Court acknowledged that a motion to strike is generally “determinable only after discovery and a hearing on the merits,” and that “[a] court may therefore strike only those defenses so legally insufficient that it is beyond cavil that defendants could not prevail upon them.” Id. at 5. However, in a Memorandum and Order likely to be referenced many times in the future, the Court partially granted and partially denied Allstate’s motion, which resulted in dismissal of four of the defendant’s affirmative defenses.

The Court’s decision and rationale is particularly insightful with respect to the dismissal of two of these affirmative defenses that arise often in tort litigation against utilities in New York. In their Sixth Affirmative Defense, the defendants relied on language contained in Leaf No. 27 of LIPA’s Tariff, which states, in pertinent part: “[LIPA] will not be liable … [f]or interrupted, irregular, defective or failed service if the causes are beyond [LIPA’s] control or are due to ordinary negligence of its employees or agents.” Id. at 8 (citation omitted). However, the Court determined that this Tariff was inapplicable in the present case which seeks to hold defendants liable for their negligent supplying of electricity rather than for an “interrupted, irregular, defective, or failed service.” Id. at 8. For this reason, the Court struck this affirmative defense as being inapplicable in this case. Significantly, the Court also noted that “even if the language of Leaf No. 27 covered liability arising out of the supply of electricity, Section 281.1 of the PSC’s regulations prohibits any such limitation of liability.” Id.

The defendants’ Fifth Affirmative Defense pertains to spoliation of evidence. In granting Allstate’s motion to strike this affirmative defense, the Court clarified that spoliation of evidence is not an affirmative defense, but rather a discovery issue. Specifically, the Court cited to New York case law holding that the rule dealing with spoliation of evidence “does not prevent recovery by the plaintiff; it merely leads to the exclusion of evidence or to the admission of negative evidence.” Id. at 8 (citation omitted).

In addition to being a resource of information regarding these commonly asserted affirmative defenses, the Court’s decision is important in that a motion to strike is rarely a device that is used by subrogating plaintiffs and is one that should be reviewed and analyzed when an answer to a complaint is interposed. If a motion to strike is appropriate, it can be a useful way to streamline the discovery process and narrow the issues pertinent to obtaining a successful recovery.

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Recent Illinois Case Provides Insight on Avoiding Implied Co-Insured Doctrine

tenant.1The Illinois supreme court case Dix Mut. Ins. Co. v. LaFramboise is often used to argue against landlord-tenant subrogation claims in Illinois. Under Dix, tenants are considered co-insureds under a landlord’s property insurance policy by virtue of making rent payments unless the lease clearly says otherwise. Because an insurer can’t pursue subrogation from an insured, Dix is regularly used as a defense to subrogation claims in situations where a tenant negligently damages a landlord’s property.

A recent unpublished opinion from Illinois’ Second District Appellate Court highlights lease terms that may overcome the obstacles to recovery posed by Dix. In Pekin Ins. Co. v. Murphy, the defendant tenants neglected a clogged toilet. The trial flushed the plaintiff’s subrogation lawsuit citing Dix. According to the appellate court, however, the lease “clearly allocated [to the defendants] the risk of water damage caused by defendants’ misuse and neglect of the premises.” The appellate court based its conclusion on clauses in the lease that (1) required the tenants to repair damage to the property resulting from their misuse or neglect and (2) required the tenants to maintain general liability insurance for property damage occurring on the property. Reinstating the plaintiff’s case, according to the court, was “consistent with the notion that subrogation . . . ‘designed to place ultimate responsibility for the loss upon the one on whom in good conscience it ought to fall and to reimburse the innocent party who is compelled to pay.’”

The lesson: be certain to thoroughly review the lease before flushing your next potential subrogation claim against a tenant in Illinois. Pekin v. Murphy illustrates lease language that an Illinois court may find unambiguously defeats the notion that the tenant is a coinsured under a particular lease.

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Establishing the Cause of a Fire Through Process of Elimination

process of elimination.1Establishing the cause of a fire through the process of elimination has been a hot topic in recent years, both among subrogation professionals as well as inside the National Fire Protection Association (NFPA).  In 2011, NFPA explicitly rejected negative corpus as a reliable methodology in fire investigation.  Specifically, NFPA 921-18.6.5 (2011) provided:

Inappropriate Use of the Process of Elimination.  The process of determining the ignition source for a fire, by eliminating all ignition sources found, known, or believed to have been present in the area of origin, and then claiming such methodology is proof of an ignition source for which there is no evidence of its existence, is referred to by some investigators as “negative corpus” …. This process is not consistent with the Scientific Method, is inappropriate, and should not be used because it generates un-testable hypotheses and may result in incorrect determinations of the ignition source and first fuel ignited. Any hypothesis formulated for the casual factors (e.g., first fuel, ignition source, and ignition sequence), must be based on facts. Those facts are derived from evidence, observations, calculations, experiments and the laws of science. Speculative information cannot be included in the analysis.

The NFPA’s rejection of negative corpus sparked much debate and discussion in the fire investigation community.  In the 2014 version of NFPA 921, the NFPA added information to better clarify its actual intent.  Although continuing to reject the use of negative corpus, the 2014 version of NFPA 921 recognizes that the process of elimination is appropriate in certain situations.  Specifically, NFPA 921-19.6.5 (2014) inserts three sentences addressing the appropriate use of the process of elimination:

Appropriate Use.  The process of elimination is an integral part of the scientific method.  Alternative hypotheses should be considered and challenged against the facts.  Elimination of a testable hypothesis by disproving the hypothesis with reliable evidence is a fundamental part of the scientific method.

Section 19.6.5 goes on to state that “the process of elimination can be used inappropriately.”  The remainder of Section 19.6.5 includes the exact language of Section 18.6.5 (2011), rejecting the use of negative corpus as a reliable methodology in fire investigation.

It is important for the subrogation professional to recognize that the process of elimination remains a viable method for determining the cause of a fire in the appropriate circumstances.  Because the 2014 version of 19.6.5 is so recent, it is impossible to determine the courts’ likely interpretation as to what those “appropriate circumstances” are.  We will continue to update this blog as the courts begin to address the application of Section 19.6.5 in future cases.

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Mobile Device Discovery

Cell Phone.1Smartphones and tablets have radically transformed the practice of law in recent years. People are using their mobile devices more frequently today for both business and their personal lives than ever before. However, for many litigators, mobile device discovery remains an unexplored frontier. The proliferation of smartphones and tablets has changed the face of a party’s electronic discovery obligations. Mobile device data can provide critical evidence in various practice areas.

Like any evidence, the starting point to determine whether to collect mobile device data is assessing the potential relevance of the data in light of the facts of your case. Typically, smartphones and tablets can store Short Message Service (SMS) and Multimedia Messaging Service (MMS) data, also known as text messages. The devices also store contacts/phone books, call history, memos/notes, calendars/date books, task lists, voicemail, e-mail, pictures, video and audio files, and application data. Additional data can be stored on a Secure Digital (SD) or microSD media cards. Media cards are typically used for overflow storage of photos, but can also save documents, audio/video and other types of files. The highest volume of mobile phone data collection is generated by routine corporate discovery of text messages. This is an inevitable consequence of text messaging supplanting e-mails as a primary means of business communication for many smartphone users. How a party’s employees and/or representatives use their mobile devices will determine the value of collecting that party’s mobile device data. A forensic analyst should be retained to ensure your collection of mobile device data is thorough and complete.

There are three commonly used mobile device collection programs by forensic analysts. They are Cellebrite, Mobile Phone Examiner, and Oxygen Forensic. Unfortunately, there are still technical limitations on mobile device data collection even with these programs. The forensic collection program must be able to “support” the phone or tablet it is analyzing in order to copy data from it. The data collection process can be hampered or slowed until a software manufacturer issues an update to their programs when data from newer smartphones or tablets is being collected. Most of the forensic collection programs also do not support older mobile devices since the software manufacturers determined it was not feasible or profitable to invest the time and expense to write software for what they considered to be outdated or obsolete devices. One other issue with the forensic collection programs is being able to copy some, but not all of the available data. The most significant example of this is the iPhone. The Apple iOS has a built-in file system encryption that limits what data types can be copied. Most notably, the inaccessible data on the iPhone includes e-mail and deleted photos. However, we can expect that as the mobile device technology advances, so will the forensic collection programs.

One of the unique challenges of mobile device discovery is the risk of inadvertent spoliation. Older model mobile phones have small storage capacity and as a result, data is routinely overwritten with normal usage. For example, moderate text messaging can fill up all the available SMS space in just a few weeks. Even less storage space is allocated to other types of data like call history. Once the storage space is filled, the device will automatically overwrite the space with new data. The risk of spoliation is lower with smartphones, but even the latest model smartphone has far less storage capacity than a computer.

Another challenge of mobile device discovery is the issue of ownership and control in a “bring your own device” to work world. Many companies allow employees to use their personal devices for business communications without addressing the ramifications for e-discovery in a “bring your own device” policy issued by the company. In fact, there are many companies that do not even have a “bring your own device” policy in place. Co-mingling personal and business communications obviously raises privacy issues that should be addressed in a “bring your own device” policy at work.

Data collected from smartphones and tablets is already critical in many cases, and it is only going to continue to grow in importance as more and more people use their mobile devices for both business and personal applications. Understanding the legal and technical underpinnings of mobile device discovery is vital in an e-discovery world.

 

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Obtaining Weather Data in the Internet Age

Sweather.1o far the Winter of 2014-15 has spared much of the country from the misery of last winter, but we still have a way to go. As we have just passed the halfway point of the four month season, it’s a good time to look at collecting weather data for subrogation claims where weather may be a contributing factor. Whether looking for temperature data, rainfall, snow totals, or hail, the subrogation professional will at some point have to find and interpret data. Subrogation counsel will have the added responsibility to make sure the evidence is admissible at trial if the case is pursued. Before the internet, the task took more time and there were fewer options. While John’s Weather Forecasting Stone would not have been the best option, it does have a certain elemental simplicity to it.

Fortunately, when a loss comes in today where weather data is necessary, there are many options to get basic data. As a general rule, you should obtain data from a source that was as close to your site as possible. When necessary, a meteorologist can be retained and relied upon to gather the data. Most cases, however will likely only require the records to examine. Below are some helpful websites that provide weather information:

1. For detailed historic weather information, go to:

www.wunderground.com

Put in the ZIP Code or location you want to inquire about in the space provided and click “search”. When you get to the page for that location, scroll down to the “Almanac” section and click on the link for “Almanac for (current date)”. When you get to the almanac page, you can select any date going back to 1942. For any given date, you can get precipitation, wind speed (both sustained and gust), temperatures, humidity, averages and record for the date. You can get this data presented in weekly or monthly form as well as by date. The site will generally give you the call sign for the airport from which the weather data is obtained, making it easier to determine just how far from a particular loss site the weather data was obtained.

2. This site provides free temperature data for 7 day periods:

http://weathersource.com/past-weather/weather-history-reports/free?gclid=CN6Jrp_xtMMCFUwV7AodES8A2w

3. If you ever need to track the amount of hail at a given location, this paid service has a minimal cost but can be very helpful.

https://www.weatherfusion.com

There are other sites that provide information that can be helpful for investigating a loss. The trial lawyer must be aware, however, that if the case goes to trial, the data is only helpful if admitted as evidence. There are several ways to ensure admissibility. Federal Rule of Evidence 902 (4) for Certified Copies of Public Records can be used for “self-authenticating” in conjunction with records obtained from the National Oceanic and Atmospheric Administration or other recorded or official records. The NOAA has a website with information on how to obtain certified weather data and the costs. If using an expert, and the records are not official or public records, he can testify how he obtained the records and lay the proper foundation. Technically, the records themselves are hearsay and must satisfy a level of trustworthiness to be admitted at trial. If the records themselves aren’t admissible, he may still be able to give an opinion under Federal Rule of Evidence 703 if an expert in his field would reasonably rely on this type of data in forming an opinion. The safest course is self-authentication as the records are admissible without any testimony to lay the foundation.

As with many things in life, the internet has made gathering information easier but making sure it is reliable and can be used at trial is still an issue.

 

 

 

 

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A Deal Is Not A Deal, Until It’s A Deal

CSignature.1alifornia Code of Civil Procedure section 664.6 was enacted in 1981 to provide a summary procedure to enforce settlements. That statute provides that a settlement may be enforced by motion either when an agreement is signed by all parties outside the presence of the court or when the settlement terms are placed on the record in open court. Notwithstanding its simplistic language, that code section continues to spawn a litany of appellate decisions.

The latest case interpreting that code section, J.B.B. Investment Partners, LTD. V. R. Thomas Fair 2014 DJAR 16071, held that an automatically generated e-mail signature was insufficient to comply with the terms of that statute. The Fair case arose in the context of an alleged Ponzi scheme involving Arizona real estate. Plaintiffs contended that defendants had made fraudulent representations and omissions to induce their investment in apartments.

Prior to instituting litigation, numerous e-mail negotiations were exchanged in an attempt to resolve those disputes. Based on Fair’s electronic signature at the end of one of those e-mails, plaintiffs asserted that a settlement had been reached. The trial court enforced the purported settlement under California’s Uniform Electronic Transactions Act (UETA) contained in California Civil Code section 1633.1 et seq. and under the “common law of contract.” The appellate court reversed, holding that Fair’s printed name on an e-mail was ineffective to constitute an enforceable settlement under 664.6.

While acknowledging that under UETA an electronic signature can suffice under certain circumstances, the Court of Appeals noted there was no meeting of minds at the time Fair printed his name on the subject e-mail. Further, the Fair court emphasized there was no evidence that the parties consented to conduct the transaction by electronic means as required by UETA . To the contrary, the appellate court found at the time of the subject e-mail there were still a number of settlement terms yet to be finalized. The Court of Appeals also concluded that the e-mail signature was insufficient under contract law to bind Fair, as the record was devoid of evidence demonstrating that Fair intended to execute a settlement agreement by electronic means.

The moral of the Fair case-All is Fair in Love, War and Contracts! To quote movie mogul Samuel Goldwyn, an oral contract is not worth the paper it is written on!

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Oregon’s Revised and Expanded Product Liability Statute of Repose

hourglass.1Oregon, like many states, has a statute of repose (“SOR”) that sets a time frame in which product liability lawsuits must be filed. Prior to 2009, ORS 30.905(2), the statute governing Oregon’s SOR, set an 8 year limitation period that started to run when the product was first purchased for use or consumption. The rule was clear: if a lawsuit was not filed 8 years from that date, it was time barred. Simply stated, case closed.

In 2009, the Oregon legislature revisited its SOR. First, the legislature extended the SOR from 8 years to 10 years. Second, and more importantly, the legislature added a “look away” provision which allows a claimant to extend the SOR further if the state where the product was made or imported into has a SOR longer than 10 years.

ORS 30.905(2), as amended in 2010, now reads as follows:

A product liability civil action for personal injury or property damage must be commenced before the later of:

(a) Ten years after the date on which the product was first purchased for use or consumption; or
(b) The expiration of any statute of repose for an equivalent civil action in the state in which the product was manufactured, or, if the product was manufactured in a foreign country, the expiration of any statute of repose for an equivalent civil action in the state into which the product was imported.

Accordingly, if a product in Oregon is more than 10 years old, the “look away” language in subsection (b) above requires that a determination of the SOR for the State in which the product was manufactured or imported into be made in any product liability claim. If the manufacturing/importing state has a SOR longer than 10 years or no SOR at all, the claim in Oregon may not be barred. Interestingly, 5 states have SORs longer than Oregon’s and 32 states do not have product liability SORs at all. A question therefore exists regarding what SOR time period to apply if the state where the product was manufactured does not have a SOR. In this situation, manufacturers argue that if the state where the product was made has no SOR, Oregon’s 10 year SOR applies. Claimants whose product is beyond the 10 year statute argue that if the state where the product was made has no SOR, the time period is indefinite.

In revising ORS 30.905, the Oregon legislature debated the pros and cons of the proposed changes to the SOR extensively. An examination of the debates suggests support for the argument that the legislature did, in fact, contemplate that claimants would benefit from an expanded and/or indefinite SOR if the look away state does not have a product liability SOR. The Legislative News Release that was issued once the bill was passed is telling:

This Senate passed legislation this morning that keeps courtroom doors open for consumers harmed by dangerous products that are greater than 8 years old. SB 284 increases the statute of ultimate repose – age of a defective product – for product liability actions from its current limit of 8 years to 10 years. The bill also includes a “look away” provision to the state of manufacture, giving the injured party the length of time allowed in the state where the product was originated.

Oregon Legislative News Release, 5/26/2009 (underlining added).

As you can see, determining exactly when Oregon’s product liability SOR runs is not as straightforward as it might seem.  This blog will be updated should any further developments occur that provide clarity to exactly how to interpret the “look away” provision.

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