By Georgia D. Koutouzos, J.D.
The homeowners insurer for a couple whose dinner guest had been burned when their fondue pot burst into flames was entitled to assert products liability claims against the manufacturers of the pot and its denatured alcohol fuel component, a Florida federal magistrate determined in his report and recommendation, rejecting the manufacturers’ motion to dismiss the lawsuit. Standing in the shoes of the burn victim and her husband—to whom the insurer had paid the limits of its policy—the insurance company adequately pleaded its claim to equitable subrogation and could proceed with its suit as the compensated victims’ subrogee (Universal Property & Casualty Insurance Co. v. Lifetime Brands, Inc., March 8, 2016, Lynch, F.).
A couple whose dinner invitee was severely burned after flames erupted from the couple’s fondue pot filed a claim under their homeowners insurance policy, which paid the injured woman and her husband the full limit of the policy in return for their general release of all claims against the policyholders, the pot makers, and any others in the supply chain. One of the two insurance companies that had issued the policy then filed a lawsuit against the manufacturers of the fondue pot and its cooking fuel source (denatured alcohol, a component part) as subrogee of the burn victim and her spouse, seeking to recover the amount it had paid out in compensation for their injuries.
The insurance company alleged that the pot maker had negligently manufactured and designed the pot and had made use of the device’s fuel source in a way that caused the pot to produce high flames that went beyond the intended cooking surface and resulted in a fireball. As to the fuel source maker, the insurer alleged that the company had provided an inadequate warning of the flammable/explosive nature of that product. The two manufacturers moved to dismiss the suit, challenging the insurer’s standing as well as the adequacy of the claims stated in the complaint.
Contending that the insurer could not sue them for the tort of strict products liability, the manufacturers argued that only the tort victim, and not a third party assignee, may sue for personal injury. The insurer countered that it was entitled to proceed against the pot and fuel source manufacturers as a subrogee, and not an assignee, of the burn victim and her spouse.
Subrogation. The fondue pot owners’ homeowners insurer was entitled to bring the lawsuit against the pot and fuel component manufacturers as the subrogee of the injured parties. No legal bar prevented the insurance company, as subrogee rather than assignee, from asserting the two products liability causes of action for negligent design/manufacture and inadequate warning.
The doctrine of subrogation permits the involvement of a third-party insurer and enables the realignment of interests that insurance compensation effectuates. Acting in its role as issuer of the homeowners policy, the insurance company provided compensation for the injury victims’ damages. Subrogation provided the means by which the insurer could honor its obligations under the policy, compensate the victims, and substitute itself as the tort “plaintiff” in order to hold the manufacturers liable as tortfeasors.
Moreover, regardless of whether the insurance company had a contractual right to subrogation, it met the requirements of equitable subrogation inasmuch as it had a relationship to both the policyholders and their dinner guests by virtue of the insurance policy and had acted in a way that was deemed fit as the involved insurer.
Products liability causes of action. As for the manufacturers’ argument that the insurance company failed to state a cause of action for strict products liability because its complaint included nothing more than a formulaic recitation of the elements with insufficient facts to show a plausible claim for relief, the insurer adequately pleaded the minimum facts necessary to support its theories of product liability. In that regard, the manufacturers cited no legal authority that the insurer had to plead in any greater specificity how the combined fondue pot and fuel product were negligently designed, made, and labeled than what the complaint already had stated.
The case is No. 15-14333-CIV-ROSENBERG/LYNCH.
Attorneys: Ian Scott Ronderos (Walton Lantaff Schroeder & Carson, LLP) for Universal Property & Casualty Insurance Co. Brent David Hanks (Smith, Rolfes, Skavdahl Co. LPA) for Lifetime Brands, Inc. Jon James Hernan (Bowman And Brooke LLP) and Justin Douglas Niznik (Seipp, Flick & Hosley LLP) for Wm Barr Co.
Companies: Universal Property & Casualty Insurance Co.; Lifetime Brands, Inc.; Wm Barr Co.
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