Opinion
No. CV03-0101983
December 15, 2004
MEMORANDUM OF DECISION RE MOTION TO STRIKE
The plaintiff Douglas Cartelli filed a one-count complaint against Laurick Enterprises LLC (Laurick), owner and operator of a gas station located in Middletown, Connecticut. Cartelli claims that he sustained property damage to his motor vehicle on June 26, 2002, when a diesel hose he was using at Laurick's gas station burst, causing diesel fuel to spray into his motor vehicle. He seeks compensation for the damages to his motor vehicle that resulted from Laurick's negligent maintenance of the fuel hose.
West American Insurance Company (West American), insurer of the motor vehicle owned by Douglas Cartelli, is a co-plaintiff in this case. For the purposes of this motion, the term "plaintiff" is used to refer to Douglas Cartelli only.
The court recently granted Laurick's motion to implead Dayco Products, Inc. (Dayco) as a third-party defendant for indemnification, and Laurick filed a third-party complaint. In the revised third-party complaint filed September 28, 2004, Laurick seeks indemnification from Dayco on the ground that any property damage suffered by the plaintiff is the result of Dayco's defective design of the fuel hose. Laurick alleges that Dayco, as the manufacturer of the "Series 7280 Flex-Ever 2000 Gasoline Hose" that Laurick purchased from Dayco for use at its gasoline station, is responsible for the resulting harm to the plaintiff. Dayco has filed a motion to strike the revised third-party complaint on the ground that the Connecticut's Products Liability Act (the Act) precludes recovery for commercial loss between commercial parties and that the Act does not establish an independent indemnification cause of action.
As used in this memorandum, "third-party complaint" refers to the Revised Third-Party Complaint filed on September 28, 2004.
"The purpose of a motion to strike is to contest . . . the legal sufficiency of the allegations of any complaint . . . to state a claim upon which relief can be granted." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. Alves, 262 Conn. 480, 498, 815 A.2d 1188 (2003). "A motion to strike challenges the legal sufficiency of a pleading, and, consequently, requires no factual findings by the trial court." (Internal quotation marks omitted.) Broadnax v. New Haven, 270 Conn. 133, 173, 851 A.2d 1113 (2004). The court must "take the facts to be those alleged in the complaint that has been stricken and . . . construe the complaint in the manner most favorable to sustaining its legal sufficiency." (Internal quotation marks omitted.) Commissioner of Labor v. C.J.M. Services, Inc., 268 Conn. 283, 292, 842 A.2d 1124 (2004). "[I]f facts provable in the complaint would support a cause of action, the motion to strike must be denied." (Internal quotation marks omitted.) Bhinder v. Sun Co., 263 Conn. 358, 366, 819 A.2d 822 (2003).
Dayco argues that Laurick's indemnification claim as set forth in the revised third-party complaint is not supported by the plain language of the Connecticut Products Liability Act, General Statutes § 52-572m et seq. Additionally, it contends that Laurick seeks damages that are not compensable under the Act inasmuch as "Laurick and Dayco are commercial parties and Laurick's claim for payment of any judgment against it constitutes a claim for economic loss that is barred by the commercial loss prohibition of the product liability statute."
The Products Liability Act provides in relevant part: "`Product liability claim' includes all claims or actions brought for personal injury, death or property damage caused by the manufacture, construction, design, formula, preparation, assembly, installation, testing, warnings, instructions, marketing, packaging or labeling of any product. `Product liability claim' shall include, but is not limited to, all actions based on the following theories: Strict liability in tort; negligence; breach of warranty, express or implied; breach of or failure to discharge a duty to warn or instruct, whether negligent or innocent; misrepresentation or nondisclosure, whether negligent or innocent." General Statutes § 52-572m(b).
Laurick counters that the third-party complaint does not allege a commercial loss but rather a derivative claim of property damage, which is protected by the Act. Further, Laurick alleges that an indemnification right is granted not only by the Products Liability Act § 52-577a, but also under the common law, as the Supreme Court recognized in Malerba v. Cessna Aircraft Co., 210 Conn. 189, 554 A.2d 287 (1989).
The Products Liability Act acknowledges a right of indemnification in Section 52-577a(b): "[A] product seller may implead any third party who is or may be liable for all or part of the claimant's claim . . ." The Act, however, limits the types of harm recoverable in products liability actions involving commercial parties. Specifically, the Act defines "harm" to include "damage to property, including the product itself and personal injuries including wrongful death." General Statutes § 52-572m(d). The statute continues, "[a]s between commercial parties, `harm' does not include commercial loss." General Statutes § 52-572m(d). Section 52-572n(c) provides clarity and states: "As between commercial parties, commercial loss caused by a product is not harm and may not be recovered by a commercial claimant in a products liability claim. An action for commercial loss caused by a product may be brought only under, and shall be governed by, title 42a, the Uniform Commercial Code." General Statutes § 52-572n(c).
In determining the issue of "commercial loss," the court must first establish whether the parties are considered commercial parties for the purposes of the Products Liability Act. The Act does not define "commercial party," but judicially-created definitions have emerged within the context of products liability cases. These definitions provide that a commercial party is one "regularly engaged in business activities consisting of providing goods or services for compensation . . . [or] participat[ing] in enterprises involved in work intended for the mass markets and . . . hav[ing] profit or success as [its] chief aim." (Citations omitted; internal quotation marks omitted.) Zurich Ins. v. Let There Be Neon City, Superior Court, judicial district of New Haven, Docket No. 02 0463606, 33 Conn. L. Rptr. 603 (November 20, 2002, Booth, J.). Laurick and Dayco both fall within the definition as Dayco is the manufacturer of the fuel hose at issue and Laurick is engaged in business that utilizes such fuel hoses in connection with its operations as a gasoline service station. See Smith v. Yankee Motor Inn, Superior Court, judicial district of New London, Docket No. 523560 (July 22, 1994, Leuba, J.) ( 9 C.S.C.R. 880); Producto Machine Co. v. Ajax Magnethermic Corp., Superior Court, judicial district of Fairfield at Bridgeport, Docket No. CV 236005 (November 10, 1987, Burns, J.) ( 3 C.S.C.R. 66).
The main issue, then, is what constitutes a "commercial loss" under the Act. The meaning of "commercial loss" as it applies to a products liability claim, has been neither defined by the legislature nor given full interpretation by the appellate courts. As a result, two different definitions of "commercial loss" have emerged among the Superior Courts, revolving primarily around the question of whether the term includes property damage suffered by a commercial party as a result of a defective product. The broader definition, set forth in Producto Machine Co. v. Ajax Magnethermic Corp., supra, 3 C.S.C.R. 66-67, equates commercial loss with "economic injury, whether direct, incidental, or consequential, including property damage and damage to the product itself." Id. This analysis was followed in the seminal case of Smith v. Yankee Motor Inn, supra, 9 C.S.C.R. 880.
The court in Yankee Motor granted a motion to strike based on facts similar to those in the present case. There, it was reasoned that "`commercial loss' within the meaning of the Products Liability Act has reference to loss of profits or consequential economic losses as opposed to property damage and personal injuries." Id. The court construed the third-party complaint in that case, which sought reimbursement for products liability damages, as effectively a claim for commercial loss unrecoverable under the Act.
Other courts have applied a less inclusive definition of "commercial loss," allowing for indemnification against third-party manufacturers. Rejecting the more expansive view, the court in American Manufacturers Mutual Ins. Co. v. Harrington Hoists, Inc., Superior Court, judicial district of New Haven, Docket No. 0262369 (June 13, 1989, Berdon, J.) ( 4 C.S.C.R. 564), explained that commercial loss "merely has reference to consequential economic losses, and . . . does not include property damage or personal injury as between the commercial parties." Id., 565. A similar approach was taken by the court in Silent Stalker, Inc. v. Vickers Engineering, Superior Court, judicial district of Ansonia-Milford at Milford, Docket No. CV 02 0078923 (July 25, 2003, Alander, J.) ( 35 Conn. L. Rptr. 286), which found that the fundamental flaw with the Producto Machine/Yankee Motor line of cases is that those courts' interpretation of commercial loss "sweeps too broadly and whisks away . . . indemnity claims that are clearly authorized by the provisions of the product liability statute." Id. The broader analysis also belies the Supreme Court holding of Malerba v. Cessna Aircraft Co., supra, 210 Conn. 196, which took a more restrictive approach when it interpreted § 52-577a(b) to allow third-party contribution and indemnification claims arising under the products liability statute.
Given the split of authority at the trial court level in this state, it is worth noting that the United States Supreme Court has touched on the issue and concluded that broadening the scope of "commercial loss" goes against public policy behind the creation of products liability law. In East River S.S. Corp. v. Transamerica Delaval, Inc., 476 U.S. 858, 106 S.Ct. 2295, 90 L.Ed.2d 865 (1986), the high court stated that "[p]roducts liability grew out of a public policy judgment that people need more protection from dangerous products than is afforded by the law of warranty." Id., 866. The court explained that, in a products liability action, "[t]he manufacturer is liable whether or not it is negligent because public policy demands that responsibility be fixed wherever it will most effectively reduce the hazards to life and health inherent in defective products that reach the market." (Internal quotation marks omitted.) Id. "For similar reasons of safety, the manufacturer's duty of care was broadened to include protection against property damage . . . Such damage is considered so akin to personal injury that the two are treated alike." (Citations omitted.) Id., 867.
In light of such policy considerations and given the dearth of authoritative precedent on "commercial loss" in this state, this court concludes that the more persuasive interpretation distinguishes between damages suffered from true commercial loss . . . a loss related to commerce . . . and those arising from economic loss as a result of property damage such as incurred by Laurick in the present case. Under the broader "commercial loss" approach, indemnification actions could never be brought by a party who paid damages to satisfy a prior product liability judgment in which another product seller was involved in the design, assembly or manufacture of the defective product. This court believes that Laurick's claim for indemnification as asserted in the revised third-party complaint does not implicate "commercial loss" and that Laurick should have the opportunity to show that Dayco should be held liable for any economic damages for which Laurick becomes obligated to the plaintiff.
Laurick also argues that its right to indemnification is supported by the principles of common law. To maintain an action for common-law indemnification, a third-party complaint must allege facts sufficient to establish four separate elements: "(1) that the other tortfeasor was negligent; (2) that his negligence, rather than the plaintiff's, was the direct, immediate cause of the accident and injuries; (3) that he was in control of the situation to the exclusion of the plaintiff; and (4) that the plaintiff did not know of such negligence, had no reason to anticipate it, and could reasonably rely on the other tortfeasor not to be negligent." (Internal quotation marks omitted.) Id." Thomas v. Seaport Motors Inn, Superior Court, judicial district of New London at Norwich, Docket No. 122625 (August 23, 2002, Hurley, J.).
"Indemnity involves a claim for reimbursement in full from one who is claimed to be primarily liable." Atkinson v. Berloni, 23 Conn.App. 325, 326, 580 A.2d 84 (1990). Our Supreme Court has also noted that "a party is entitled to indemnification, in the absence of a contract to indemnify, only upon proving that the party against whom indemnification is sought either dishonored a contractual provision or engaged in some tortious conduct." Burkert v. Petrol Plus of Naugatuck, Inc., 216 Conn. 65, 74, 579 A.2d 26 (1990).
Laurick alleges sufficient facts in the revised third-party complaint to satisfy the test for common-law indemnification. It alleges that the fuel hose breakage was caused by negligence on the part of Dayco; that such negligence was the direct cause of the injuries to the plaintiff; and that Dayco was in control of the situation that resulted in the hose breakage. While the complaint does not state whether Laurick had knowledge or reasonable anticipation of any negligence, it can be inferred that Laurick reasonably relied on Dayco, as the manufacturer, not to sell it a faulty product.
The revised third-party complaint thus sets forth sufficient facts to maintain legally cognizable claims for both common-law indemnification and statutory indemnification under the Products Liability Act. Dayco's motion to strike the third-party complaint is therefore denied.
Jonathan E. Silbert, Judge