By Nicholas Kaster, J.D.
The court found it notable that the manufacturer exerted control over the installation and maintenance of the product in a manner characteristic of "equipment."
A wrongful death suit against the maker of the Buell Classifier, a product used for the production of manufactured sand from crushed stone, was not time-barred by Virginia’s statute of repose, according to the Virginia Supreme Court. The court reversed and remanded a decision of a state circuit court, finding that the lower court incorrectly determined that the Buell Classifier was not equipment or machinery and, as such, was subject to the five-year limitation imposed by the statute (Potter v. BFK, Inc., July 22, 2021, Powell, C.).
Background. The case arose out of a fatal accident suffered by a truck driver employed by the Luck Stone Corporation. Luck Stone operates a surface-mining and processing operation for the production of stone products. A part of this operation is a system for the production of manufactured sand from crushed stone. The system is comprised of a feed conveyor that carries the raw product to the sand system, which falls into a "Buell Classifier" that uses an air flow system to separate the fine and coarse materials. The "super fines" go into a silo; the sand goes onto another conveyor.
In 2007, Luck Stone replaced earlier equipment with two Buell Classifiers and other components of the sand manufacturing system with products manufactured by BFK, Inc. and installed by a contractor employed by Luck Stone.
The worker was instructed to remove material from the sand plant and dump it at an onsite storage area. He parked his truck under the conveyor belt and entered the silo to operate the air flow system. Soon after he entered the silo, a hopper containing stone material ruptured, setting off a chain of events that buried him in falling material and caused his death.
In July 2017, the personal representative of the decedent’s estate brought an action against BFK under the Virginia Wrongful Death Act. In response, BFK asserted that the action was time-barred under Virginia’s statute of repose because the Buell Classifier did not qualify as equipment or machinery and, therefore, was subject to the five-year limitation imposed by the statute.
After holding an evidentiary hearing, the circuit court determined that the Buell Classifier manufactured by BFK "was ordinary building material" and, therefore, the action was time-barred. Accordingly, the circuit court dismissed the action against BFK with prejudice.
The representative of the decedent’s estate appealed, arguing that the circuit court erred because it incorrectly determined that the Buell Classifier was not equipment or machinery.
Statute of repose. Virginia’s statute of repose (Code § 8.01-250) provides that no action for wrongful death "arising out of the defective and unsafe condition of an improvement to real property, nor any action for contribution or indemnity for damages sustained as a result of such injury, shall be brought against any person performing or furnishing the design, planning, surveying, supervision of construction, or construction of such improvement to real property more than five years after the performance or furnishing of such services and construction." However, this limitation "shall not apply to the manufacturer or supplier of any equipment or machinery or other articles installed in a structure upon real property."
The state high court noted that this statute demonstrates the legislature’s intent to perpetuate a distinction between, on one hand, those who furnish ordinary building materials-which are incorporated into construction work outside the control of their manufacturers or suppliers, at the direction of architects, designers, and contractors-and, on the other hand, those who furnish machinery or equipment.
The court acknowledged that the phrase "ordinary building materials" is not actually used in the statute. However, the court said, this phrase is useful shorthand to refer to objects that are neither machinery nor equipment. In other words, the phrase describes objects that have become so attached to a building or land that they are more akin to the structure itself. Such objects are essentially improvements to real property and, therefore, fall within the statute of repose and are subject to the five-year limitation that it imposes.
Classification as equipment. In prior case law, the court noted, the determination of whether an object was or was not "ordinary building materials" has always been juxtaposed with a determination of whether an object is machinery or equipment.
Recognizing the multitude of forms that equipment in its ordinary sense can take, the determination of whether an object is properly classified as "equipment" is of necessity a multi-faceted issue for which the court has not found it prudent to provide a single definition that would apply in every circumstance. Rather than prescribe a single definition, the court has identified several factors for the lower courts to consider and apply based on the circumstances of each case.
Consequently, when the issue turns on whether the object is "equipment or machinery," it is appropriate to first analyze the characteristics of the object and determine whether it may be classified as such. If, after the various factors are considered, the object does not fit within the classification of "equipment or machinery," then by process of exclusion, the object may fall within the non-statutory rubric of "ordinary building materials."
The court has held that the level of quality control exerted by the manufacturer, the existence of a voidable manufacturer’s warranty, and the existence of use and/or installation instructions directly from the manufacturer are some of the factors that indicate whether an item may be exempt from Virginia’s statute of repose. Moreover, if the action at bar arises from a non-fungible part of the land or building, this weighs in favor of finding that an object is equipment. Finally, the court has held that fully assembled, independent mechanical devices that are not essential structural components of a structure or building are generally equipment under the statute.
Buell Classifier. Applying these factors to the Buell Classifier demonstrated that it was equipment under the statute of repose, the court held. The court found it notable that BFK exerted control over the installation and maintenance of the Buell Classifier in a manner characteristic of equipment.
The court acknowledged that the Buell Classifier was not fully assembled when it left BFK, but this was because it was very large and, therefore, it was necessary to assemble it on site after shipment from the factory. Further, the court noted that BFK conducted a visual inspection of the Buell Classifier’s welds to ensure they were suitable for its intended purpose before it left the factory.
While there was uncertainty as to whether BFK was involved in the installation of this specific Buell Classifier at Luck Stone, the court found that there was evidence that, in approximately half of the installations of these types of classifiers, a representative from BFK comes on site to adjust the device and make sure it is working properly after installation.
There also was evidence presented demonstrating that BFK provided recommended inspections and maintenance for a Buell Classifier throughout its use by the purchaser.
The court noted that the Buell Classifier was not actually part of the silo; it was added several years after the silo’s construction and, therefore, it was clearly not an essential component of the silo. In addition, the classifier was somewhat mechanical in nature in that it had louvers that "control the direction and amount of air that comes into the device." If the louvers are not correctly installed and positioned, the Buell Classifier will not function properly. Further, the Buell Classifier "serves an adjunct function in the building" in that it was only necessary as a means of separating sand particles.
Additionally, the Buell Classifier was neither fungible nor generic. BFK’s former CEO and president explained that the Buell Classifier was "not readily available" for purchase. While the Buell Classifier at issue here was not specially designed for Luck Stone, the former CEO said there were only two or three other manufacturers of similar classifiers.
While not dispositive, the fact that BFK routinely referred to the Buell Classifier as "equipment" further supported the notion that it was, in fact, a piece of equipment, the court said. The court also found it telling that the chief concept engineer at Luck Stone described the Buell Classifier as "a piece of equipment that separates materials." The former president and CEO of BFK also admitted that he refers to the Buell Classifier as "equipment" and that BFK holds it out as equipment that companies like Luck Stone can use in their business functions. Indeed, on the first page of the proposal that BFK sent to Luck Stone regarding the Buell Classifier, it was described under a section labeled "Equipment Recommended." The proposal also stated, "Equipment will be delivered in approximately 12 weeks after receipt of approval drawings." Finally, the invoice for the freight of the classifier referred to the classifier as equipment.
Thus, considering all of the relevant factors, the court concluded that it was apparent that the Buell Classifier was equipment within the meaning of Virginia’s statute of repose. The Buell Classifier was a device used for a specific purpose unrelated to the structural integrity of the building itself, the court noted. It had several qualities that were characteristic of equipment: the manufacturer exerted some degree of control over its installation and maintenance; it was not required for the operation of the building; and it was neither fungible nor generic.
Therefore, the court found that the circuit court erred in concluding that the Buell Classifier qualified as ordinary building materials and was thus subject to the five-year statute of repose. Accordingly, the judgment of the circuit court was reversed, and the case was remanded.
The case is No. 191716.
Attorneys: Jon Dennis Pels (Pels Law Firm, LLC) for Brian C. Potter. Dawn Elizabeth Boyce (Bancroft, McGavin, Horvath and Judkins, P.C.) for BFK, Inc.
Companies: BFK, Inc.
MainStory: TopStory SofLReposeNews IndustrialCommercialEquipNews VirginiaNews
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