Appellate Court Affirms Dismissal of Subrogation Suit Where Truck Had Been "Modified" Prior to Fire

Many subrogation matters involve the failure of a product which causes a fire.  In order to hold a manufacturer or distributor liable in products liability, the subrogating carrier must show, among other things, that the product was defective at the time it was in the hands of the defendant and that the product was not altered or modified in any significant way prior to the fire’s occurrence.

A fire occurred in a garage owned and operated by the County of Schoharie.  Schoharie’s insurer, New York Municipal Insurance Reciprocal (“NYMIR”), adjusted the loss and hired an investigator to ascertain the origin and cause of the fire. NYNMIR’s expert discovered the fire started at a truck the county had purchased from International Truck & Engine Corp. (“ITEC”) five years prior. More specifically, he concluded the fire was due to hydraulic hoses being improperly bundled together with the truck’s battery cables. Over time, the battery cables frayed due to normal wear and tear, an electrical arc occurred which ignited the hydraulic fluid and the fire was caused.

Defendant Viking-Cives had been hired by the county to upfit the truck with a snow plow and dump body at the time the county purchased the truck from ITEC (i.e., approximately five years before the fire). Viking-Cives’ work involved re-routing the battery box and cables and installing the hydraulic system and hoses. Someone (the court doesn’t say who) subsequently moved the battery box after Viking-Cives’ work. Viking-Cives’ expert submitted an affidavit stating that the moving of the battery box created slack in the battery cables. Whoever moved the box also removed this slack in the cables by re-routing the battery cables through hangers that were holding the hydraulic hoses.

Viking-Cives moved for summary judgment on the grounds that whoever moved the battery box and re-routed the battery cables had significantly altered the “product” and that it was this significant alteration that caused the fraying of the cables that lead to the fire. The trial judge agreed and dismissed the case. NYMIR appealed, but the appellate court affirmed the dismissal. [1]  Plaintiff NYMIR submitted an affidavit from their expert stating that the subsequent movement of the battery box would not have created the need to re-route the battery cables. However, the court found this statement was “unsupported by any evidentiary foundation” and rejected this expert’s opinion. The court agreed with the trial judge that Viking-Cives successful proved that “the subsequent medication of the truck, made after it left defendant’s control, resulted in the condition that ultimately caused the fire.”

Bottom Line:  To succeed on a failed product theory, the subrogating carrier must show that: (a) the product was “defective,” at the time it left the hands of the defendant; and (b) the defect in the product was the cause of the fire. Thus, it is critical to establish, through interrogatories and depositions, the “chain of custody” for the product in order to show how the product traveled from the manufacturer to the insured, and to establish that no significant changes or alterations occurred to the product from the time it was last touched by the defendant until the fire occurred. If the product was manufactured overseas, the subrogating carrier will need to show the judge and jury that the product traveled in a sealed box and was not altered as it traveled to your insured’s home. When a fire occurs several years after the product was made and had been in use, it may be harder to show that the product had not in any way been changed and that the defect existed at the time it left defendant’s hands.

[1] NYMIR a/s/o County of Schoharie v. International Truck and Viking-Cives USA, Third Department 517360 (October 23, 2014)