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Vigilant Insurance Co. v. Energy Saving Products, Ltd.

United States District Court, D. Massachusetts

May 1, 2017

VIGILANT INSURANCE COMPANY, Plaintiff,
v.
ENERGY SAVINGS PRODUCTS, LTD., Defendant. ENERGY SAVINGS PRODUCTS, LTD., Third-Party Plaintiff,
v.
CUSTOM COILS, INC., Third-Party Defendant.

          ORDER

          Denise J. Casper United States District Judge

         I. Introduction

         Plaintiff Vigilant Insurance Company (“Vigilant”) has filed this lawsuit against Defendant Energy Savings Products, Ltd. (“Energy Savings”) alleging negligence and breach of the implied warranty of merchantability in the sale and installation of a heating, ventilation, and air conditioning (“HVAC”) unit that was placed into the residence of Vigilant's insured. D. 1. In turn, Energy Savings has filed a third-party complaint against Custom Coils, Inc. (“Custom Coils”), the manufacturer of a component of the HVAC unit, alleging contribution (Count I), breach of contract (Count II), indemnification (Count III), breach of the implied warranty of merchantability and fitness for usage of trade (Count IV) and breach of the implied warranty of merchantability for a particular purpose (Count V). D. 10. Custom Coils has now moved for summary judgment. D. 36. Vigilant has also moved for leave to file an amended complaint to assert claims directly against Custom Coils. D. 35. For the reasons stated below, the Court DENIES Custom Coils's motion for summary judgment and GRANTS Vigilant's motion for leave to file an amended complaint.

         II. Standard of Review

         Summary judgment is proper if the movant shows that “there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law.” Ahmed v. Johnson, 752 F.3d 490, 495 (1st Cir. 2014). “A dispute is genuine if “the evidence about the fact is such that a reasonable jury could resolve the point in favor of the non-moving party.'” Johnson v. Univ. of P.R., 714 F.3d 48, 52 (1st Cir. 2013) (quoting Thompson v. Coca-Cola Co., 522 F.3d 168, 175 (1st Cir. 2008)). “A fact is material if it has potential to determine the outcome of the litigation.” Id. (quoting Maymi v. P.R. Ports Auth., 515 F.3d 20, 25 (1st Cir. 2008)).

         In determining whether a movant has met its burden, the court must view the record in the light most favorable to the nonmoving party and give that party the benefit of all reasonable inferences in its favor. Johnson, 714 F.3d at 52. Once the moving party has made a preliminary showing that no genuine issue of material fact exists, the nonmovant must produce “specific facts, in suitable evidentiary form, to establish the presence of a trialworthy issue.” Fed.R.Civ.P. 56(c); Brooks v. AIG SunAmerica Life Assur. Co., 480 F.3d 579, 586 (1st Cir. 2007) (quoting Clifford v. Barnhart, 449 F.3d 276, 280 (1st Cir. 2006)). “As to any essential factual element of its claim on which the nonmovant would bear the burden of proof at trial, its failure to come forward with sufficient evidence to generate a trialworthy issue warrants summary judgment to the moving party.” In re Spigel, 260 F.3d 27, 31 (1st Cir. 2001) (citation and internal punctuation omitted).

         III. Factual Background

         The following facts are drawn from Custom Coils's Rule 56.1 statement of material facts (included in its motion for summary judgment), D. 36-1, Energy Savings's response to Custom Coils's statement of material facts, D. 40, and supporting documents, all of which are undisputed unless otherwise noted.

         On November 1, 2013, a property owner insured by Vigilant sustained property damage as a result of water discharge from an Energy Savings HVAC unit, Model Number HE-70H (the “unit”). D. 36-1 at 1; D. 40 ¶ 1. The unit was installed at the insured's vacation home located at 45 Point Road, North Falmouth, Massachusetts (the “Property”), at some point in 2010. D. 36-1 at 1; D. 40 ¶ 2. Following the water leak, the unit was inspected and a substantial dent and crack was found in the header pipe of the unit's hot water coil. D. 36-1 at 1-2; D. 40 ¶ 3.

         The damaged coil was originally manufactured by Custom Coils in 2008 and had been ordered by Energy Savings for installation in the unit pursuant to a purchase order and invoice for ninety-six model #20-5303 coils. D. 36-1 at 2-3; D. 40 ¶¶ 6, 7, 23. The coil was made by assembling copper tubes and manifolds according to particular specifications provided to Custom Coils by Energy Savings. D. 36-1 at 2; D. 40 ¶ 11. That is, Custom Coils produced this coil specifically for Energy Savings. Id.

         Prior to shipment to Energy Savings, Custom Coils inspected and tested each coil. D. 36-1 at 2; D. 40 ¶ 9. Per standard operating procedure, coil shipments arriving at Energy Savings's facility-including the one that contained the coil at issue here-are inspected by Energy Savings employees. D. 36-1 at 3; D. 40 ¶¶ 16, 17. The coils were removed from their containers and then visually inspected for any abnormalities such as “dings, dents, or misformations.” D. 36-1 at 3; D. 40 ¶ 16. If a coil passes inspection, Energy Savings then installs it into an HVAC unit. D. 36-1 at 3; D. 40 ¶ 20. Energy Savings has stated that, had it received a coil in the condition found in the incident HVAC unit, it would not have installed the coil and would have instead returned it to Custom Coils. D. 36-1 at 3; D. 40 ¶ 21. Thus, both parties agree that the mechanical damage that was observed on the coil at issue here occurred at some point after manufacturing, leak testing, assembly and inspection. D. 36-1 at 4; D. 40 ¶ 26. Following the initiation of this lawsuit, the incident coil and exemplar coils were subject to various tests to determine the cause of the leak. D. 36-9; D. 40-2; D. 40-3; D. 40-4. These tests included nondestructive and destructive examination of the subject coil and an exemplar coil, as well as metallurgical testing. D. 36-9; D. 40-2; D. 40-3; D. 40-4. The various experts retained by the parties have come to conflicting theories of liability pertaining to the leak's origin. See D. 36-9; D. 40-2; D. 40-3; D. 40-4.

         IV. Procedural History

         Vigilant instituted this action on April 1, 2015. D. 1. Energy Savings filed its third-party complaint against Custom Coils on June 26, 2015. D. 10. Vigilant has now moved for leave to file an amended complaint and Custom Coils has moved for summary judgment as to the third-party claims against it. D. 35; D. 36. The Court heard the parties on the pending motions on March 16, 2017 and took these matters under advisement. D. 45.

         V. Discussion

         A. Breach of Warranty

         Custom Coils argues that there is insufficient proof that any actions on its part caused the coil failure that led to the unit's leak and, therefore, summary judgment in its favor is warranted as to Energy Savings's breach of warranty claims. D. 36-1 at 7. Custom Coils maintains that, after leaving its possession, an impact of unknown origin dented and cracked the joint. Id. According to this theory, damage ...


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