Safeco Insurance Company of America v. Olstedt Construction

Full title: SAFECO INSURANCE COMPANY OF AMERICA, a Washington corporation, Plaintiff…

Court: United States District Court, D. Oregon

Date published: May 7, 2004

CV-02-1680-ST (D. Or. May. 7, 2004)

Opinion

CV-02-1680-ST.

May 7, 2004

FINDINGS AND RECOMMENDATIONS

JANICE STEWART, Magistrate Judge

INTRODUCTION

Plaintiff, Safeco Insurance Company of America ("Safeco"), filed an Amended Complaint on September 30, 2003 seeking subrogation for insurance proceeds paid for fire damage allegedly caused by the use of a construction heater and the storage of a propane tank inside a house under construction. The Amended Complaint alleges two causes of action for negligence and breach of contract. The First Cause of Action for negligence alleges that: (1) defendant United Rentals Northwest ("URN") was negligent for providing overfilled propane cylinders to defendant Olstedt Construction, Inc. ("Olstedt"), which was building the house where the heater and propane were used; (2) defendant United Rentals, Inc. ("URI"), the parent company of URN, was negligent for failing to warn URN and/or its customers of the dangers involved in storing spare propane tanks inside a structure; and (3) Olstedt was negligent for storing a spare propane tank inside the house under construction. The Second Cause of Action alleges that Olstedt breached its safety obligations in its construction contract with the owners of the home under construction.

Safeco is incorporated in Washington and has its principle place of business in Seattle, Washington. Olstedt is an Oregon corporation with its principal place of business in Oregon. URN is an Oregon corporation with its principal place of business in Oregon. URI is a foreign corporation. The matter in controversy exceeds $75,000.00 exclusive of interests and costs. Therefore, this court has diversity jurisdiction under 28 U.S.C. § 1332(a).

URI's and URN's Motion for Summary Judgment against Safeco (docket #79) and Safeco's Motion for Partial Summary Judgment against Olstedt (docket #84) are now before this court (docket #129). For the reasons stated above, URI should be granted summary judgment against Safeco on the negligent failure to warn claim and the other motions should be denied.

LEGAL STANDARDS

FRCP 56(c) authorizes summary judgment if "no genuine issue" exists regarding any material fact and "the moving party is entitled to judgment as a matter of law." The moving party must show an absence of an issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the moving party does so, the nonmoving party must "go beyond the pleadings" and designate specific facts showing a "genuine issue for trial." Id at 324, citing FRCP 56(e). The court must "not weigh the evidence or determine the truth of the matter, but only determines whether there is a genuine issue for trial." Balint v. Carson City, 180 F.3d 1047, 1054 (9^th Cir 1999) (citation omitted). A "` scintilla of evidence,' or evidence that is `merely colorable' or `not significantly probative,'" does not present a genuine issue of material fact. United Steelworkers of Am. v. Phelps Dodge Corp., 865 F.2d 1539, 1542 (9^th Cir), cert denied, 493 U.S. 809 (1989) (emphasis in original) (citation omitted).

The substantive law governing a claim or defense determines whether a fact is material. T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 631 (9^th Cir 1987). The court must view the inferences drawn from the facts "in the light most favorable to the nonmoving party." Id (citation omitted). Thus, reasonable doubts about the existence of a factual issue should be resolved against the moving party. Id at 631.

FACTS

A review of the parties' facts, as well as the other materials submitted by the parties, including affidavits, declarations, and deposition excerpts,¹ reveals the following facts.

1 All parties have submitted documents with various attachments. Citations to affidavits, declarations, and depositions are identified by the last name of the affiant, declarant, or deponent, and citations are to the paragraph(s) of the affidavit, declaration or page(s) of the deposition transcript. All other citations are to the exhibit number of the parties' submissions.

On June 6, 2000, James and Gwendolyne Peterson ("the Petersons") entered into a contract with Olstedt for the construction of their home in Cannon Beach, Oregon. The contract contained the following language:

ARTICLE IV: In performing said work, contractor shall obtain and pay for all necessary permits and comply with all applicable laws, ordinances, building codes and regulations of any public authority and be responsible for any infraction or violation thereof and any expense or damages resulting from any such infraction or violation.

Plaintiff's Ex 1, p. 1.²

2 The numbering of Safeco's exhibits is unclear. However, since Safeco only submitted five exhibits, this court will consider them as followed: The copy of the Peterson-Olstedt contract (Plaintiff's Ex 1); Oregon Uniform Fire Code (Plaintiff's Ex 2); Space Heater Safety Handout (Plaintiff's Ex 3); URI webpage printout entitled "Our Company Safety Risk Management" (Plaintiff's Ex 4); and URI webpage printout entitled "Our Company About United Rentals" (Plaintiff's Ex 5). Additionally, in a supplemental filing (docket #123), plaintiff attached five photographs to the deposition of Michael Graham, marked exhibits 5A-5E. This court will refer to those exhibits as "Graham Deposition Exhibits" followed by the exhibit number given them during the deposition.

The Petersons subsequently obtained a homeowner's insurance policy from Safeco. On December 18, 2000, during construction of the Petersons' home, a fire occurred which caused extensive damage to the home and two other homes nearby. Safeco paid the Peterson's insurance policy and is now seeking subrogation from defendants.

During construction of the Petersons' home, Olstedt was using a construction heater it borrowed from a subcontractor, Wadsworth Electric ("Wadsworth"), to dry various materials inside. Thornton Depo, pp. 41, 55. Olstedt did not obtain a copy of the owner's manual or any instructions on the safe operation and handling of the heater. Craig Depo, pp. 17-18; Olstedt Depo, p. 49. In order to fuel the heater, Olstedt rented propane tanks and purchased propane refills from URN. Olstedt Depo, p. 30. During construction of the Peterson house, Olstedt routinely operated the construction heater, with the attached propane tank, inside the house, even when construction was nearly completed and the interior of the house was enclosed by windows, doors, and siding on the walls. Thornton Depo, pp. 10, 36.

The Petersons, who visited the house during the course of construction, saw the propane construction heater being used inside and became greatly alarmed at the nearly three-foot flame shooting out of it. Gwendolyne Peterson Depo, p. 12. On one visit to the site, Mrs. Peterson told Don Thornton ("Thornton"), an Olstedt employee and the foreman on the Peterson project, that the heater and its flame "looked irresponsible." Id at 11-12. Thornton assured Mrs. Peterson that it had long been common practice to use construction heaters to dry timbers inside a house and that there was always someone present in the house when the heater was in use. Id at 12.

On the morning of the fire, an Olstedt employee, Jacob Burke ("Burke"), went to URN in Seaside, Oregon to pick up a propane tank as fuel for the construction heater. Burke Depo, pp. 14-15. Burke purchased a tank on Olstedt's account at approximately 7:15 am and drove to the Peterson job site. Id at 17-18.

At the site, Burke met fellow Olstedt employee, Brian Embury ("Embury"). Id at 18; Embury Depo, p. 14. It was still early morning and just starting to become daylight. Embury Depo, pp. 13-14, 42. Burke and Embury carried the tank into the partially constructed residence, intending to hook it up to the propane construction heater. Burke Depo, pp. 13-14. Burke and Embury then noticed that there was already a propane tank hooked up to the heater.³ Id at 22; Embury Depo, pp. 15-16. There is some confusion about what occurred next. According to Embury, Burke attempted to disconnect the tank from the hose and heater, but decided to stop because the tank still had propane inside it and he did not have the appropriate tool. Embury Depo, pp. 29-31, 42-43. Burke does not remember attempting to disconnect the tank from the hose and heater. Burke Depo, pp. 20, 31-32. Both men agree they left the extant tank connected to the heater, turned on the heater, and left the construction site. Id at 32; Embury Depo, pp. 29-30, 37. Before leaving, they stored the new tank in a room inside the house.⁴ Embury Depo, pp. 17-18.

3 In a written statement, an employee of URN, Nancy Earls, states that an Olstedt employee returned an empty propane tank to URN on the morning of the fire and told her that there were no other propane tanks at the construction site. On the other hand, Burke testified that there was a partially-filled tank attached to the construction heater at the job site, and that they also delivered a second filled URN tank to the Peterson job site on the morning of the fire. Burke Depo, pp. 15-16. For the purposes of these motions only, URN and URI concede that there were two URN propane tanks at the Peterson job site on the morning of the fire.

4 There is conflict in the testimony about whether the tank was stored in the same room as the heater or was moved to a different room. Embury testified that they put the spare tank in bedroom number two, while the heater was in bedroom number four. Embury Depo, pp. 15-18. Burke could not remember where the tank was placed. Burke Depo, pp. 19-20. Michael Graham ("Graham"), the Fire Marshall who investigated the fire and took photographs of the scene, testified that one propane tank was found just outside the foundation of bedroom number four (Graham Depo, pp. 11-12) and another was found in bedroom number four. Id at 14. However, the record is devoid of evidence as to how one tank ended up outside bedroom number four after the explosion.

At least one subcontractor who was working outside the Peterson house on the day of the fire heard a hissing sound shortly before he saw flames inside the house. Peppin Depo, pp. 29-30. No one ever smelled propane gas before the fire, even though employees of one subcontractor were in the house near the propane heater minutes before the fire. Id at 42. There were no eyewitnesses to the ignition of the fire.

Safeco's expert, Larry Thatcher ("Thatcher"), concludes that the fire was probably caused by an overfilled propane cylinder being exposed to excessive heat in the Peterson home, which resulted in the propane's expulsion through the relief valve and ignition by any available source, such as the heater itself. Thatcher Dec, ¶¶ 6, 8-10. Olstedt's expert, Mark MacDonald, Ph.D, P.E., opines that the fire is consistent with the ignition of a substantial quantity of flammable gas, such as could be released by the activation of a pressure relief valve on a propane cylinder due to overfilling. MacDonald Aff, ¶ 6. However, Dr. MacDonald does not share Thatcher's opinion that the actual release of the propane through the pressure relief valve occurred as a result of exposure to excessive heat. Id at ¶¶ 7-8. Instead, Dr. MacDonald believes that the pressure relief valve was activated when the tank was overfilled in cool outdoor temperatures and then subsequently warmed up due to moderate temperatures inside the house. Id at ¶¶ 9-11. Therefore, Dr. MacDonald concludes that the overfilled tank presented a significant hazard regardless of where it was stored inside the house. Id at ¶ 12.⁵

5 In opposition to both Thatcher and Dr. MacDonald, URI and URN state that their expert opines that the fire was most likely caused by a catastrophic failure of the hose that connected the construction heater to the propane tank. Because Burke did not have the proper tool to detach the propane tank from the heater, URI and URN contend that it is likely Burke damaged the hose. However, no evidence supporting this alternative theory as to the cause the fire was submitted.

URI's Vice President of Risk Management, Grace Crickette ("Crickette"), contends that every one of the propane tanks it rents has a warning label attached. Crickette Depo, pp. 23-31. However, Frank Orrell ("Orrell"), the former manager of URN's Seaside office, testified in his deposition that while "all" of URN's tanks had a label on them, he did not think the label told a user not to take a spare tank inside a structure. Orrell Depo, pp. 33-34. Orrell subsequently clarified in his Declaration that while he knows there are decals on each URI/URN propane tank, he cannot recall what they state and would "certainly" defer to Crickette on this issue.⁶ Orrell Dec, ¶ 3.

6 Olstedt contended during oral argument that Orrell's Declaration is an improper attempt to contradict, rather than clarify his deposition testimony. In support, Olstedt pointed to Orrell's deposition testimony when he was presented with Exhibit 6 and asked whether there was a label on the tank that "roughly replicated what appears in Exhibit 6," to which he replied "No, I don't believe so." Orrell Depo, p. 44. Counsel for URI/URN indicated during oral argument that Exhibit 6 to Orrell's deposition was the "Space Heater Safety" Handout, which is now labeled Plaintiff's Ex 3. After considering the many differences between this Space Heater Safety handout and the propane tank warning label (URI/URN Ex A), it is not surprising that Orrell said that no label on the tanks roughly replicated the Space Heater Safety handout, or at least that he did not believe there was. Therefore, Orrell's Declaration does not improperly contradict, but is admissible to clarify his earlier deposition testimony.

The warning label on an existing URN tank is six inches by eight inches in size. URI/URN Ex A. The label has some words in bold and others in all capitals, and the top of it reads as follows:

DANGER — FLAMMABLE GAS UNDER PRESSURE • LEAKING LP-GAS MAY CAUSE A FIRE OR EXPLOSION IF IGNITED • CONTACT LP-GAS SUPPLIER FOR REPAIRS OR DISPOSAL OF THIS CYLINDER OR UNUSED LP-GAS • FOR OUTDOOR USE ONLY*⁷ • DO NOT USE OR STORE CYLINDER IN A BUILDING, GARAGE OR ENCLOSED AREA.

Id.

7 This asterisk references a notation at the bottom of the label, which is written in all bold capital letters and reads " EXCEPT AS AUTHORIZED BY ANSI/NFPA 58 OR CAN/CGA-B 149.2".

Below the top of the label, in smaller font, are customer warnings and instructions for connecting for use. Id. One of the customer warnings states: "Do not use, store or transport cylinder where it would be exposed to high temperatures. Relief valve may open allowing a large amount of flammable gas to escape." Id. Another states "Be certain not to overfill the container." Id. Finally, the bottom of the label states, in the same size font as the customer warnings and connection instructions, "NEVER fill an LP cylinder beyond 80% full: a fire causing death or serious injury may occur." Id.

The instruction manual for the type of construction heater that Olstedt borrowed from Wadsworth indicates that use of the heater is prohibited in a space where flammable liquid or vapors are stored or used. URI/URN Ex B, p. 1. Additionally, the manual states that the heater is "[f]or use only with ductwork specified by manufacturer." Id at 2. As previously discussed, Olstedt did not obtain this manual when it borrowed the heater.

DISCUSSION

URI and URN move for summary judgment against Safeco's negligence claims against each of them. Safeco moves for summary judgment only with respect to its negligence claim against Olstedt.

I. URI's Warning Label Defense

URI assumes for the purposes of these motions that it had a duty to warn URN and/or its customers of the dangers of storing propane tanks indoors. However, URI argues that it met this obligation as a matter of law because of the warning label which appears on every propane tank rented by URI and its subsidiaries, including URN.

Safeco replies by first arguing that even if URI puts warning labels on all its tanks, there is no evidence that the warning label was on any tank rented to Olstedt. Safeco notes that the labels could have worn off over time and relies on Orrell's deposition testimony that the labels do not warn against storing spare propane tanks inside a structure. Second, Safeco argues that URI actually provides URN with a safety handout that directly contradicts the warning label on tanks. This handout, entitled "Space Heater Safety," is given to URI/URN customers, including Olstedt, who rent space heaters and instructs users to "[l]ocate additional cylinders at least 7 feet from the heater sides and rear. Never direct the heater towards other cylinders." Plaintiff's Ex 3. Users are also instructed that the heater is "[f]or indoor use only." Id. Finally, Safeco argues this case is comparable to a number of precedents involving a failure to warn.

A. Presence of Warning Labels on Tanks in Question

The actual tanks that were involved in the fire were severely damaged, making it impossible to determine the presence of any label. See Graham Depo Exs 5A-5E. Although URI did not present any evidence specifically indicating that the two propane tanks involved in the Peterson fire had the warning label on them, Crickette testified that all the propane tanks rented by URI and its subsidiaries, including URN, have the label submitted as URI/URN Ex A. Crickette Depo, pp. 29-31. Absent any contrary evidence, it is reasonable to conclude that since all URN tanks had the warning label, the actual tanks involved in the fire also had labels.

Safeco has not submitted any evidence indicating that, despite URI's policy, the actual tanks rented to Olstedt did not have labels. Contrary to Safeco's interpretation of Orrell's deposition testimony, Orrell did not say that URN's propane tanks have no labels on them or that he remembers the content of the labels. Instead, he testified that although he could not remember the specific content of the label or labels on the tanks, all the tanks had a triangular "MSD label" that indicates "what to do in case of fire and whatnot[.]" Orrell Depo, pp. 33, 44. It is not clear that Orrell was ever presented at his deposition with a copy of the propane tank label (URI/URN Ex A).

At best, Safeco speculates that the labels could have been obliterated over time and not replaced. Such speculation is insufficient to create a genuine issue of material fact. Accordingly, URI has adequately demonstrated for purposes of summary judgment that the actual tanks in question had the warning label on them.

B. URN's Space Heater Safety Handout

URN's "Space Heater Safety" handout also fails to create a genuine issue of material fact. Olstedt borrowed the heater used on the Peterson job site from Wadsworth, not from URN. Therefore, URN would not have provided a copy of the safety handout to Olstedt for the Peterson job.

Furthermore, no evidence was submitted to indicate that the Wadsworth heater was the same type of heater the handout accompanies, or even that the handout refers to propane-powered heaters like the one used at the Peterson job site. For example, the handout warns consumers not to use any ductwork (Plaintiff' Ex 3), while the instruction manual for the actual Wadsworth heater indicates the heater is "[f]or use only with ductwork specified by manufacturer." URI/URN Ex B, p. 2.

Finally, during oral argument, Safeco noted that Olstedt rented heaters from URN on prior occasions and may have been given a copy of the safety handout. Even if Olstedt had previously rented URN's heaters, there is no evidence in the record that it rented the particular heater which this safety handout accompanies. And even if Olstedt had rented that particular heater, there is no evidence that the handout was provided to any of the employees involved in handling the heater and propane tanks involved in this case. Thus, URN's "Space Safety Heater" handout has no connection with the tanks or the heater involved in this case.

C. Adequacy of the Warning Label 1. Legal Standards

The supplier of a chattel for another to use is liable for harm caused by the use of the chattel in the manner for which it is supplied if the supplier "fails to exercise reasonable care to inform them of its dangerous condition or of the facts which make it likely to be dangerous." RESTATEMENT (SECOND) OF TORTS § 388(c) (1965). Thus, the supplier is negligent "if it fails to warn of those dangerous propensities of which it knows or reasonably should know." Wood v. Ford Motor Co., 71 Or. App. 87, 90, 691 P.2d 495, 497 (1984), review denied, 298 Or. 773, 97 P.2d 556 (1985).

For the purposes of this motion, URI concedes that it has a duty to warn customers of the dangers of storing propane tanks indoors. The issue is whether the warnings contained in the labels that appear on every URI tank are sufficient to discharge this duty. The Oregon Supreme Court has held that a warning is adequate when it is:

in such a form that it could reasonably be expected to catch the attention of the reasonably prudent [person] in the circumstances of its use and the content of the warning is of such a nature as to be comprehensible to the average user and to convey a fair indication of the nature and extent of the danger to the mind of a reasonably prudent person.

Anderson v. Klix Chem. Co., 256 Or. 199, 207, 472 P.2d 806, 810 (1970), quoting Spruill v. Boyle-Midway, Inc., 308 F.2d 79, 85 (4^th Cir 1962).

In short, a warning should give fair and adequate notice of the possible consequences of or dangers involved in the product's use or misuse. Schmeiser v. Trus Joist, 273 Or. 120, 131-32, 540 P.2d 998, 1004 (1975). Additionally, warnings can be adequate even when ignored:

Where a proper warning is given, as by instructions on the product's container, the manufacturer or seller is normally not liable on the ground of negligence for product-caused injury when the warning or instructions are disregarded, and where it appears that the injury would not have occurred had they been observed.

Id at 132 (emphasis added).

2. Analysis

Here the warning label on the propane tanks satisfies the Anderson standard. First, the warning was in a form designed to catch the attention of a reasonably prudent person. The label is fairly large and its text begins with " DANGER" written in all capitals and in bold, followed by several warnings in all capitals and other warnings that are smaller but still legible. The label is bright white with black type, in contrast to the color of the tank, is located on the tank itself, and is several inches in size.

Second, the content of the label is "of such a nature as to be comprehensible to the average user and to convey a fair indication of the nature and extent of the danger to the mind of a reasonably prudent person." Anderson, 256 Or at 207. The warning explicitly and conspicuously informs the user the tank is "FOR OUTDOOR USE ONLY."⁸ The label goes on to warn against using or storing the tank "IN A BUILDING, GARAGE, OR ENCLOSED AREA." Immediately above this warning, in large, bolded capital letters, appears the word " DANGER" followed by, also in large capital letters, "FLAMMABLE GAS UNDER PRESSURE • LEAKING LP-GAS MAY CAUSE A FIRE OR EXPLOSION IF IGNITED." A separate section, headed with bold capital letters is:

8 The exceptions referenced by an asterisk would not confuse a reasonable person. The label's emphasis is clearly on warning against outdoor use. If a person was nonetheless intending to use the tank indoors, the label would make him aware that is only permitted according to the regulations referenced. Furthermore, just above the regulations is a telephone number to call for questions or comments.

CUSTOMER WARNING: . . . • Do not use, store or transport cylinder where it would be exposed to high temperatures. Relief valve may open allowing a large amount of flammable gas to escape.

The warnings are more than sufficient to attract the attention of a reasonably prudent person and to warn of the consequences of the improper storage of a propane tank. A reasonably prudent person would surely conclude from reading these warnings that storing or using a propane tank inside a structure creates a serious risk of fire or explosion. A reasonably prudent person also would conclude from reading these warnings that storing or using a propane tank inside a structure and exposing the tank to high temperatures would cause the tank's release valve to open and a large amount of flammable gas to escape, again creating a serious risk of fire or explosion.

Safeco appears to also argue that the reasonableness of URI's warnings is somehow affected by the fact that Burke and Embury handled the propane tanks early in the morning of the fire when it was still dark, and presumably would have had difficulty reading the label. This argument has no merit. First, Embury held a flashlight while Burke handled the propane tanks, and therefore presumably could have seen the label. Embury Depo, p. 19. He simply chose to ignore its warnings. Second, the Anderson standards do not require a warning be prepared in a form that prepares for every possible contingency, such as ensuring that all warning labels glow in the dark in case the product is used early in the morning. For some products such a label might be necessary, but a propane tank does not fit in that category.

Safeco also points to the testimony of several of the employees working on the Peterson job site that it was common sense not to store a propane tank inside near a heat source. However, this testimony undermines Safeco's arguments. If it was common sense not to store a propane tank in such a way, then the adequacy of the warning label would be less, not more important.

Despite the apparent clarity of the warning label, Safeco argues that the circumstances in this case are comparable to several cases where Oregon courts allowed a failure to warn claim. First, Safeco contends that the present case is nearly identical to Harris v. Northwest Natural Gas Co., 284 Or. 571, 588 P.2d 18 (1978). It is not. In Harris, a homeowner sued a gas company under both strict liability and negligence theories for injuries he suffered when gasoline vapors in his garage were ignited by the pilot lights of the gas water heater and furnace located in the garage. The gas company controlled only the gas and did not control the design or manufacture of the water heater or the furnace, their location in the garage, or the activities which might take place in the garage. Because the relationship between the gas company's product and the situation in which its use might have been "unreasonably dangerous" was too attenuated and remote, the Supreme Court of Oregon rejected the plaintiff's strict liability claim for failure to warn. However, the court held that plaintiff stated a claim for negligent failure to warn because the gas company failed to provide any warning that the pilot lights could ignite volatile substances in the garage, when it knew or should have known that such an unreasonable risk of explosion or injury existed. Here, in contrast, URI provided an explicit, conspicuous, and adequate warning.

Safeco also relies on Boyl v. California Chem. Co., 221 F. Supp. 669 (D Or 1963). In Boyl, the plaintiff applied a weed killer to her driveway, rinsed the tank she used to apply the weed killer with water, and poured the rinse water onto a grass area in her back yard. A few days later, the plaintiff laid on the grass area to sun herself and shortly thereafter broke out in a rash and hives. Her condition continued to worsen and she was hospitalized in critical condition for three days. The court upheld the plaintiff's negligence claim against the manufacturer of the weed killer because the manufacturer should have known of the stable quality and long-lasting contamination propensities of one of the ingredients of the weed killer and was negligent in failing to warn users of the risk of danger from contact with soil that was previously contaminated with the weed killer.

Boyd also is distinguishable from the present case. Because the manufacturer failed to warn of the danger that caused the injury, the plaintiff could not be said to have disregarded a clear warning that would have prevented her injury. Here, in contrast, URI gave an explicit warning of the dangers of storing propane tanks indoors. Olstedt's employees disregarded those warnings, and damage resulted.

The third case Safeco cites, Jones v. Bender Welding Machine Works, Inc., 581 F.2d 1331 (9^th Cir 1978), is distinguishable for the same reasons. In Jones, the owner of a fishing vessel sued the manufacturer of the vessel's diesel engine for negligence in failing to advise its dealers of a design change which added a bracket to the engine to support the oil cooler supply line and in failing to inform them it was possible to retrofit the changes to older engines, such as the plaintiff's. The damage to the plaintiff's vessel was caused by the absence of the bracket. Had the manufacturer advised dealers of the design change and the possibility of retrofitting older engines, the plaintiff's vessel would not have been damaged. That situation is very different from URI giving a specific warning of the dangers involved in storing spare propane tanks inside or near to heat.

Accordingly, based on Oregon law, the warnings contained on the label are adequate to discharge any obligation URI may have had to warn. As a result, URI is entitled to summary judgment on Safeco's negligence claim alleging a failure to warn.

II. URN's Negligence as a Substantial Factor

URN accepts for the purposes of these motions that it overfilled the propane tank Olstedt rented, but argues that it should not be liable to Safeco because this negligence was not a substantial factor in causing the fire. For the reasons discussed below, this argument should be rejected. A. Legal Standard

Under Oregon law, a party is liable in negligence only if its conduct was "at least" a "substantial factor" in causing the plaintiff's injury. Brennan v. City of Eugene, 258 Or. 401, 413, 591 P.2d 719, 726 (1979). This determination cannot be made in isolation, but rather must be made with reference to the totality of potentially causative circumstances. See Furrer v. Talent Irrigation Dist., 258 Or. 494, 511, 466 P.2d 605, 614 (1971) (noting that the term "substantial factor" "expresses a concept of relativity which is difficult to reduce to further definiteness").

Use of a "but for" analysis alone is not proper. A determination that "but for" the actor's conduct, the loss would not have occurred is not sufficient by itself to subject the actor to liability for negligence under the "substantial factor" test.⁹ Knepper v. Brown, 182 Or. App. 597, 618, 50 P.3d 1209, 1221 (2002), citing Simpson v. Sisters of Charity of Providence, 284 Or. 547, 588 P.2d 4, 27 (1978) (approving the substantial factor test in a negligence case). Indeed, the Ninth Circuit has stated that "uniformly accepted principles of tort law . . . require a plaintiff to prove more than that the defendant's action triggered a series of other events that led to the alleged injury." Benefiel v. Exxon Corp., 959 F.2d 805, 807 (9^th Cir 1992), citing RESTATEMENT (SECOND) OF TORTS §§ 431, 433, 440-453 (1965).

9 Safeco maintains that URN is effectively arguing that Olstedt's negligence is an intervening or superseding event that relieves URN of any liability for overfilling the propane tanks. It is true that Oregon courts reject the formulation of liability in terms of physical causation, such as intervening and superseding cause analysis, in favor of a proportionate fault-based system. See Ingram v. Acands, Inc., 977 F.2d 1332, 1340-41 (9^th Cir 1992) (discussing Oregon's allocation of liability through fault rather than physical causation); Becker v. Barbur Blvd. Equipment Rentals Inc., 81 Or. App. 648, 653, 726 P.2d 967, 970 (1986) ("The formulation of liability in terms of intervening and superseding causes has been abandoned in favor of the foreseeability test"), citing Stewart v. Jefferson Plywood Co., 255 Or. 603, 609, 469 P.2d 783, 786 (1970). However, URN does not argue that Olstedt's negligence was an intervening or superseding cause of the fire. Instead, URN argues that Olstedt is so at fault for causing the fire that URN should not be held liable for its own negligence which did not contribute to the fire in a substantial way.

Oregon courts use the factors set out in the RESTATEMENT (SECOND) OF TORTS to determine whether the actor's conduct is a substantial factor in bringing about harm to another. See Lyons v. Walsh Sons Trucking Co., Ltd., 183 Or. App. 76, 83, 51 P.3d 625, 629 (2002); Davis v. Pacific Diesel, 41 Or. App. 597, 604, 598 P.2d 1228, 1232 (1979). These factors, by themselves or in combination with one another, are:

(a) the number of other factors which contribute in producing the harm and the extent of the effect which they have in producing it;

(b) whether the actor's conduct has created a force or series of forces which are in continuous and active operation up to the time of the harm, or has created a situation harmless unless acted upon by other forces for which the actor is not responsible;

(c) lapse of time.

RESTATEMENT (SECOND) OF TORTS § 433.

Comment d to this section is instructive and relevant to the present case:

There are frequently a number of events each of which is not only a necessary antecedent to the other's harm, but it is also recognizable as having an appreciable effect in bringing it about. Of these the actor's conduct is only one. Some other event which is a contributing factor in producing the harm may have such a predominant effect in bringing it about as to make the effect of the actor's negligence insignificant and, therefore, to prevent it from being a substantial factor. So too, although no one of the contributing factors may have such a predominant effect, their combined effect may, as it were, so dilute the effects of the actor's negligence as to prevent it from being a substantial factor.

Id, comment d (emphasis added).

B. Analysis

URN argues that the many acts and omissions by Olstedt's employees had such a predominant effect on causing the fire that any negligence by URN was diluted to the point of insignificance as a substantial factor in causing the loss. URN points to:

(1) Olstedt's use of the borrowed propane construction heater inside a structure even though the operating instructions for the heater directed that it be used outdoors;

(2) Olstedt's breach of its contractual obligation to the Petersons to comply with all applicable safety codes relating to the use of construction heaters and storage of propane tanks;

(3) Olstedt's ignorance of the warning on the label on the outside of the tanks, which explicitly stated not to store or use propane tanks indoors; not to use or store propane tanks inside a building, garage, or other enclosed area; and not to use or store propane tanks where they would be exposed to high temperatures;

(4) Olstedt's assurance to Mrs. Peterson that whenever the construction heater was in use, someone would be inside the house monitoring the heater. It is undisputed that, on the day of the fire, Olstedt employees ignited the heater and left the premises while the heater was running. There was no one inside the home when the fire occurred; and

(5) Burke's testimony that it was against common sense to store propane tanks next to a heater. Burke Depo, p. 31. Yet URN maintains that Burke and Embury stored a spare propane tank inside the house near a heat source.

URN compares this case to Pippin v. Potomac Elec. Power Co., 132 F. Supp.2d 379 (D Md 2001), aff'd, 64 Fed Appx 382, 2003 WL 21235464 (4^th Cir 2003), in which the plaintiffs' decedent drove his truck head-on into a utility pole. The pole fractured over 22 feet above the ground, at a point where there was a knot cluster in the wood. The split in the pole caused a 500-pound transformer attached to the top of the pole to collapse onto the cab of the truck, killing the plaintiffs' decedent. The plaintiffs, among others, sued the company in charge of inspecting the pole. The court granted the company's motion for summary judgment because even if the company had breached its duty to inspect the pole, its negligence was not a substantial factor in causing the loss. Applying the three factors set out in RESTATEMENT § 433, the court held that there were "just too many intervening factors" that occurred between the date the company inspected the pole and the accident for the company to be held negligent. Id at 393. One such factor was a power company employee's determination not to replace a guy wire that helped support the pole when the wire was struck by a tractor. Another was the decedent's truck hitting the pole and causing the pole to break and the transformer to fall. In sum, the court concluded: "There are just too many other parties that are equally, if not more culpable for the transformer falling for [the company's] alleged breach of duty to inspect to be the proximate cause of [the decedent's] untimely death." Id.

Even if Olstedt were negligent, this case is not comparable to Pippin. In Pippin, several different acts could and did cause the pole to fall. Similarly here, factors in addition to the overfilling of the tank were involved in causing the fire. However, the precise risk involved in overfilling a propane tank, as the warning label indicates, is fire, presumably due to ignition of a gas leak. In the words of RESTATEMENT § 433, overfilling of a propane tank is not "a situation harmless unless acted upon by other forces for which the actor is not responsible." Overfilling of a propane tank alone is a harmful act due to the ease of ignition from a resulting gas leak.

Moreover, Dr. MacDonald believes that the fire was caused by storing the overfilled tank inside the house where it was exposed to moderate temperature increases, causing it to leak. Once it leaked, the propane lacked the ventilation provided by outside storage and was near to an ignition source in the form of the heater. In that case, URN's negligence (the cause of the leaking propane) is not so diluted by Olstedt's negligence (the cause of the ignition) that the former was not a substantial factor in causing the fire.

III. Olstedt's Negligence Based on Possible Violation of Oregon Law

Safeco argues that Olstedt has committed negligence per se because it violated several Oregon regulations and statutes governing the storage and handling of propane tanks. Additionally, Safeco argues that Olstedt is liable for committing a statutory tort. However, Safeco did not specifically plead a claim for a statutory tort. The Amended Complaint only alleges Olstedt committed negligence and breach of contract. Amended Complaint, ¶¶ 14, 16. Thus, this court need only address whether Olstedt was negligent per se. A. Legal Standards for Negligence Per Se

Negligence per se is a common-law doctrine. Traditional negligence per se actions rest on the premise that a court has created, or should now be willing to create, a common law negligence action for persons like the plaintiff. To be liable for negligence per se in Oregon, the statute in question must be relevant. See Miller v. City of Portland, 288 Or. 271, 276, 604 P.2d 1261, 1264 (1980), overruled on other grounds by Fulmer v. Timber Inn Restaurant and Lounge, Inc., 330 Or. 413, 9 P.3d 710 (2000) . The relevance test entails: "(1) [w]hether the injured person is a member of the class intended to be protected, and (2) [w]hether the harm is of a kind which the statute was intended to prevent." Id.

A violation of a relevant statute does not make the defendant strictly liable as a matter of law. Instead, the violation is prima facie evidence of negligence, which can be rebutted by evidence that the defendant's conduct was nevertheless reasonable under the circumstances. Maquiel v. Adkins, 175 Or. App. 43, 50-51, 27 P.3d 1050, 1055 (2001), review denied, 333 Or. 73, 36 P.3d 974 (2001); Barnum v. Williams, 264 Or. 71, 78-79, 504 P.2d 122, 126 (1972).

Furthermore, even if a person violated a relevant statute in a manner that was not reasonable under the circumstances, this conduct may be negligent per se, but it will not result in liability unless it caused the harm. The Oregon Supreme Court has explained this analysis as follows:

[P]roof of negligence, by presumption or otherwise, should not be confused with proof of causation. The unexcused violation is negligence per se, or in itself. The effect of such a rule is to stamp the defendant's conduct as negligence, with all of the effects of common law negligence, but with no greater effect. There will still remain open such questions as the causal relation between the violation and the harm to the plaintiff.

Cutsforth v. Kinzua Corp., 267 Or. 423, 432, 517 P.2d 640, 644 (1973) (citations and internal quotations omitted).

B. Oregon Law Governing the Use and Storage of Propane

ORS 476.120 sets forth the general regulatory guidelines for protection of life and property in the case of a fire:

The State Fire Marshall, in making rules and regulations establishing minimum standards for the protection of life and property against fire, shall consider as evidence of generally accepted standards the applicable standards prescribed from time to time by the National Fire Protection Association ["NFPA"]. The State Fire Marshall may request consideration and recommendations from the Department of Public Safety and Standards and Training before adopting any such regulations.

ORS 480.410-420 sets forth the regulatory framework for handling propane:

484.410 Definition. As used in ORS 480.420 to 480.460, "LP gas" or "liquid petroleum gas" means any liquid composed predominantly of any of the following hydrocarbons or mixtures of the same: Propane, propylene, butanes (normal butane or isobutane) and butylenes.

480.420 Liquid Petroleum gas rules and regulations; conformity with standards of the National Fire Protection Association. (1) The State Fire Marshall shall make, promulgate and enforce regulations establishing minimum general standards for the design, construction, location, installation and operation of equipment for storage, handling, transporting by tank truck or tank trailer and utilizing liquid petroleum gases and specifying the degree of odorization of the gases, and shall establish standards and rules for the issuance, suspension and revocation of licenses and permits provided in ORS 480.410 to 480.460.

(2) The regulations required shall be such as are reasonably and necessary for the protection of the health, welfare and safety of the public and persons using or handling such materials, and shall be in substantial conformity with the generally accepted standards of safety relating to the same matter . . .

Pursuant to his regulatory powers under these statutes, the Oregon State Fire Marshall adopted the UFC 1997 edition. OAR 837-040-0010. The UFC was amended in part and appears as the Oregon Uniform Fire Code. Id.

Article 82 of the UFC governs the storage and use of liquid petroleum gas ("LPG"). UFC § 8201. LPG containers "shall not be filled or maintained with LP-gas in excess of the fixed outage gauge installed by the manufacturer or the weight stamped on the tank." UFC § 8206.2. When stored, LPG containers "shall be located in a manner which minimizes exposure to excessive temperature rise, physical damage or tampering." UFC § 8212.2. Portable containers are allowed to be used in buildings or areas of buildings undergoing construction or for temporary heating as set forth in UFC Standard 82-1, §§ 3-4.3, 3-4.4, 3-4.5 and 3-4.7. UFC § 8203.2.1.3.

The following standards deal with the use of LPG containers in a building during construction or undergoing major renovation:

3-4.3.1 Cylinders shall be permitted to be used and transported in buildings or structures under construction or undergoing major renovation where such buildings are not occupied by the public or, if partially occupied by the public, cylinders shall be permitted to be used and transported in the unoccupied portions with the prior approval of the authority having jurisdiction. Such use shall be in accordance with 3-4.3.1 through 3-4.3.8.

3-4.3.2 Cylinders, equipment, piping, and appliances shall comply with 3-4.2

3-4.3.3 For temporary heating, such as curing concrete, drying plaster, and similar applications, heaters, (other than integral heater-container units covered in 3-4.3.4) shall be located at least 6ft (1.8 m) from any cylinder.

UFC Standard 82-1, § 3.4.3.

UFC Standard 82-1, § 3-4.2.4 (referenced in § 3-4.3.2 above), states that: "Cylinders, regulating equipment, manifolds, tubing and hose shall be located as to minimize exposure to abnormally high temperatures (such as might result from exposure to convection and radiation from heating equipment or installation in confined spaces), physical damage or tampering by unauthorized persons."

In addition, UFC Standard 82.1 sets the following standards governing the location of LPG containers:

3-2.2.1 LP-Gas containers shall be located outside of buildings.

Exception No. 1: Cylinders as specifically provided for in Section 3-4;

* * *

Exception No. 7: Cylinders awaiting use or resale when stored in accordance with Chapter 5.

* * *

5-2.1.1 Cylinders in storage shall be so located as to minimize exposure to excessive temperature rise, physical damage or tampering.

C. Negligence Per Se for Alleged Violations of the Oregon UFC

Safeco has offered evidence, including a declaration from its expert, Thatcher, that Olstedt violated the NFPA (as codified in the UFC), §§ 3-2.2, 3-4.2.4, 3-4.3, 3-4.3.3 and UFC §§ 8206.2 and 8212.2. Thatcher Dec, ¶ 7. Nevertheless, this declaration is insufficient to avoid a genuine issue of material fact as to whether Olstedt violated any of these regulations.

1. UFC Standard 82-1, §§ 3-2.2 5-3.4

As set forth above, UFC Standard 82-1, § 3-2.2.1, requires LPG containers to be located outside except as set forth in UFC Standard 82-1, § 3-4 and Chapter 5. Section 5-2.1.1 states that containers "shall be so located as to minimize exposure to excessive temperature rise."

Thatcher states that Olstedt violated these provisions by placing the spare propane tank inside the Peterson's house in a location which subjected it to excessive heat. Thatcher Dec, ¶ 7. However, Olstedt's expert, Dr. MacDonald, concluded that the placement of the overfilled tank was irrelevant because even the moderate temperature inside the house was sufficient to activate the pressure relief valve. MacDonald Aff, ¶ 7. Accordingly, a genuine issue of material fact exists as to whether the spare propane tank was placed as to "minimize exposure to excessive temperature rise." If it was not so placed, then Olstedt's conduct may not have violated UFC Standard 82-1, § 3-2.2.1, because it falls within the exception of Chapter 5.

To the extent that Safeco also argues Olstedt violated UFC Standard 82-1, § 5-3.4, its argument is rejected. Section 5-3.4.1 states that "Storage of containers within a residential building . . . shall be limited to 2 containers each with a maximum water capacity of 2 1/2 lb . . ." The term "residential building" is not defined in UFC Art. 82 or UFC Standard 82-1. However, the ordinary meaning of "residential" refers to a building used, served or designed as a place which is occupied by people. Webster's Third New Int'l Dictionary, 1931 (unabridged ed 1993). In this case, the building was an unoccupied, partially completed residence under construction. Therefore, the Peterson job site was not a "residential building" subject to § 5-3.4.

2. UFC Standard 82-1, §§ 3-4.2.4 3-4.3.2

As set forth above, UFC Standard 82-1, § 3-4.2.4, requires containers to be located so as to minimize exposure to abnormally high temperatures. Among other things, UFC Standard 82-1, § 3-4.3.2, regulates the storage of tanks at a construction site in ways that can expose them to abnormally high temperatures. For the reasons discussed above, the dispute between the experts creates a genuine issue of fact as to whether the spare tank was located in a manner so as to expose it to excessive temperatures. Therefore, Safeco has failed to demonstrate that Olstedt violated these regulations.

3. UFC Standard 82-1, § 3-4.3.3

Pursuant to UFC Standard 82-1, § 3-4.3.3, an LPG heater on a construction site used for temporary heating or drying of materials must be located at least six feet from an LPG container, with certain exceptions. However, a material issue of fact exists with regard to whether Burke and Embury placed the spare propane tank within six feet of the heater. Embury testified the heater was placed in a different room than the heater. Fire Marshall Graham testified that one propane tank was found just outside of the foundation of the bedroom in which the other tank was found. If anything, this evidence points toward the conclusion that the tanks were placed in different rooms, perhaps six feet or more apart. Therefore, Safeco has failed to demonstrate a violation of this regulation. 4. UFC §§ 8206.2 8212.2

Because Safeco concedes that it overfilled the tank for the purposes of these motions, it did violate UFC § 8206.2, which prohibits overfilling. However, due to the dispute over to whether the overfilling alone without excessive heat caused the fire, the violation of this regulation does not make Olstedt negligent per se.

UFC § 8212.2 requires LPG tanks in storage be located in a manner that minimizes exposure to excessive temperature increases, physical damage, or tampering. As noted with similar regulations, the dispute over whether the tank was placed in a manner that exposed it to excessive heat prevents Safeco from demonstrating that Olstedt violated UFC § 8212.2 as a matter of law.

D. Negligence Per Se for Alleged Violations of OSHA Regulations

Safeco also alleges that Olstedt is negligent per se because it violated other regulations, promulgated by the Oregon Department of Consumer and Business Services, that govern storage and handling of LPG containers. Specifically, Safeco alleges violations of OAR 437-003-0001, which prohibits the use of propane tanks inside, except under certain circumstances; regulates how close tanks can be stored to heat sources; and requires storage of containers in an area that is suitably ventilated. See 20 C.F.R. § 1926.153(h) (j) (adopted by reference in OAR 437-003-0001). Although Olstedt may have violated these safety regulations, it is not negligent per se because the Petersons (and thus Safeco), were not among the class of persons the regulation was designed to protect.

In Shahtout By and Through Shahtout v. Emco Garbage Co., Inc. 298 Or. 599, 600-601, 695 P.2d 897, 898-99 (1985), the plaintiff was struck by the defendant's truck as the truck backed up. The plaintiff claimed that the defendant's violation of OAR 437-56-095(2), a safety rule requiring trucks be equipped with an alarm device that signals when the truck is backing up, was negligence per se. This rule was promulgated under the Oregon Safe Employer Act, ORS 654.001 to 654.295, and was intended to assure safe and healthful working conditions for employees. The court rejected the plaintiff's negligence per se claim because the plaintiff was not the defendant's employee, and therefore was not within the class of persons the regulation sought to protect.

The OSHA regulations in this case, as the rule in Shahtout, were promulgated under ORS 654.025, part of the Oregon Safe Employer Act, and were intended to protect employees from the risks in the workplace. Because the Petersons were not Olstedt's employees, they are not within the class of persons the regulations seek to protect (and neither is Safeco, who is suing in place of the Petersons). Furthermore, Safeco conceded this issue during oral argument, indicating it only included the OSHA regulations in its arguments in order to demonstrate there is a parallel set of regulations to the fire codes. Accordingly, Olstedt cannot be negligent per se for its alleged violations of these regulations.

RECOMMENDATIONS

For the reasons stated above, URI's and URN's Motion for Summary Judgment against Safeco (docket #79) should be GRANTED as to the claim against URI for negligent failure to warn and otherwise DENIED, and Safeco's Motion for Partial Summary Judgment (docket #84) should be DENIED. As a result, URI should be dismissed as a party and trial should proceed on the remaining claims.

SCHEDULING ORDER

Objections to these Findings and Recommendation(s), if any, are due May 28, 2004. If no objections are filed, then the Findings and Recommendation(s) will be referred to a district court judge and go under advisement on that date.

If objections are filed, then the response is due within 10 days after being served with a copy of the objections. When the response is due or filed, whichever date is earlier, the Findings and Recommendation(s) will be referred to a district court judge and go under advisement.