1997 -NMCA- 25, Spectron Development Laboratory, a Div. of Titan Corp. v. American Hollow Boring Co.

• Decision Date: 02 January 1997
• Docket Number: No. 16,769,16,769
• Citation: 123 N.M. 170,1997 NMCA 25,936 P.2d 852
• Court: Court of Appeals of New Mexico
• Parties: , 1997 -NMCA- 25, Prod.Liab.Rep. (CCH) P 14,920 SPECTRON DEVELOPMENT LABORATORY, A DIVISION OF The TITAN CORPORATION, Defendant/Third-Party Plaintiff-Appellant, and Allendale Mutual Insurance Co., and Hartford Insurance Company, Third-Party Plaintiffs-in-Intervention-Appellants, v. AMERICAN HOLLOW BORING COMPANY and Bay City Forge Company, Third-Party Defendants-Appellees.

Page 852

936 P.2d 852

123 N.M. 170, 1997 -NMCA- 25,

Prod.Liab.Rep. (CCH) P 14,920

SPECTRON DEVELOPMENT LABORATORY, A DIVISION OF The TITAN CORPORATION, Defendant/Third-Party Plaintiff-Appellant and Allendale Mutual Insurance Co., and Hartford Insurance Company, Third-Party Plaintiffs-in-Intervention-Appellants, v.AMERICAN HOLLOW BORING COMPANY and Bay City Forge CompanyThird-Party Defendants-Appellees.

No. 16,769.

Court of Appeals of New Mexico.

Jan. 2, 1997.

R. Galen Reimer, Patrick D. Allen, Butkus & Reimer, P.C., Albuquerque, for Appellants.

Larry D. Beall, T. Scott Hyde, Beall & Biehler, P.A., Albuquerque, for Appellee Bay City Forge Company.

Mark J. Riley, Padilla, Riley & Shane, P.A., Albuquerque, for Appellee American Hollow Boring Company.

OPINION

HARTZ, Judge.

¶1 On September 26, 1991 a two-stage light-gas gun exploded at the Albuquerque facility of Spectron Development Laboratory (Spectron).No one was injured, but there was substantial property damage.This appeal arises out of litigation to determine who should ultimately bear the loss.

BACKGROUND

¶2 Engineers use light-gas guns to study the impact characteristics of materials that may be selected for such purposes as military armor or meteorite shielding for space vehicles.The Spectron gun operated as follows: The first stage began when smokeless gunpowder was ignited, propelling a piston down the bore of a steel pump tube filled with compressed hydrogen gas.The pump tube was approximately fifteen feet long and ten and a half inches in diameter.The piston compressed the gas in the tube until the pressure ruptured a diaphragm at the end of the tube, thereby initiating the second stage.In the second stage the compressed hydrogen gas entered the launch tube and propelled a projectile at high speed to a target.This process is illustrated in a schematic diagram that appears in the record:

NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE

¶3 The explosion resulted from a failure of the pump tube on shot number 346 for the gun.DefendantBay City Forge Company(Bay City) had forged the steel for the tube and Defendant American Hollow Boring (American) had bored and finished the tube.

¶4The Plaintiffs seek to recover under several different theories: strict products liability, negligence, breach of express warranty, and breach of implied warranty.Because the availability of a particular theory of recovery may depend on the type of damages sought, it is important to distinguish what damages are sought by each of the Plaintiffs.

¶5 Spectron, a division of The Titan Corporation(Titan), suffered damage to the light-gas gun itself, damage to other contents of the building in which the gun was housed, and economic losses from interruption of its business.Allendale Mutual Insurance Company(Allendale), the premises insurer for Titan, compensated Titan for those losses, less a $25,000 deductible.Allendale seeks to recover from American and Bay City its payments to Titan, and Titan seeks recovery of the $25,000 in damages for which it was not compensated.

¶6 The building also suffered damage.Broadway Development (Broadway) owned the building and leased it to Titan.Broadway's losses were compensated by its property insurer, Northwestern National Insurance Company(Northwestern).Northwestern sued Titan to recover the payments it made to Broadway.Titan's liability carrier, the Hartford Insurance Company(Hartford), ultimately paid Northwestern $165,000 to settle that claim.Hartford now seeks to recover its $165,000 from American and Bay City.

¶7The district court granted summary judgment in favor of American and Bay City.The Plaintiffs--Titan, Allendale, and Hartford--appeal.We affirm the district court's decision dismissing (1) the claims by Titan and Allendale for strict products liability and negligence, (2) the claims by Hartford against American for negligence, and (3) the claims by Titan and Allendale for breach of an implied warranty of fitness for a particular purpose.With respect to the other claims, we hold that the present record establishes genuine issues of material fact and therefore remand for further proceedings.

FACTUAL BASIS OF THE CLAIMS

¶8 To defeat a motion for summary judgment, the opposing party need only establish a genuine issue of material fact.Rule 1-056(C) NMRA 1996.Consequently, even if Defendants produced extensive, persuasive evidence to establish the absence of liability, summary judgment is improper if Plaintiffs produced contrary evidence upon which a reasonable person could infer liability.In other words, on a motion for summary judgmentthe court does not weigh the evidence.Hutcherson v. Dawn Trucking Co., 107 N.M. 358, 361, 758 P.2d 308, 311(Ct.App.1988).To review the summary judgment in this case it is therefore unnecessary for us to dwell on the evidence presented by Defendants.Our focus is on the sufficiency of what Plaintiffs presented.

¶9Plaintiffs rely on the testimony of their expert witness, James M. O'Brien.Defendants do not challenge O'Brien's qualifications on this appeal.In O'Brien's opinion the failure of the pump tube resulted from the presence of proeutectoid ferrite in the steel; firing the gun created stress on the inner surface of the barrel, which caused cracks in the ferrite that propagated through the barrel until it was too weak to withstand the stress of firing.He testified that the only possible explanation for the presence of the proeutectoid ferrite was a delay in quenching the metal after it was removed from the furnace.In particular, he testified that when Bay City forged the steel, the steel must not have been quenched within 20 minutes of its removal from the furnace.

¶10Defendants contend that the steel was produced in accordance with the specifications in the purchase order for the tube.The purchase order to American was from Physics Applications, Inc.(PAI), a division of California Research and Technology, which itself is a division of Titan.The purchase order provided the following description and requirements for the item that was to become the pump tube:

10 1/2"' dia.X 181"' long bar forged from SAE 4150 steel @ RC 28-32.Bore and hone 4.500"' +/- .002"' dia. through entire length.

....

MATERIAL NOTE: All material to be thoroughly stress relieved and ultrasonically inspected.

All bore surfaces must have 16 microinch finish and be free of checks, flaws and voids.

The order from American to Bay City sought the following product:

SAE 4150 Alloy Steel Forgings, heat treated for a Rockwell "C" Hardness of 28-32, stress relieved after rough turning, rough turned 10 1/2"' diameter X 181 1/2"' long.Ends to be machine sawed square to length.

¶11 O'Brien testified that Bay City did not comply with this purchase order from American.He stated that "based on standard practice in the heat-treat industry," the purchase order implied "[p]roper heat treatment."He explained:

With a 4150 material, or with any steel that's to be heat-treated by austenitizing and oil quenching, one thing that's implied is that the part will be fully austenitized.Another thing that's implied is that the part will be immersed in the oil quench tank while the part is still a hundred percent austenite.And those are basic heat-treat practices.And if your question is from whom would I have derived that, I would say anyone in the heat-treat business knows those principles intimately.

With proper heat treatment, in O'Brien's view, there would be no proeutectoid ferrite, except perhaps at the very center of the steel bar.

¶12 With this factual background Plaintiffs' claims can be stated as follows:

1.The presence of proeutectoid ferrite in the pump tube made the tube a defective product.Both American and Bay City are subject to strict products liability for their manufacture and distribution of the tube.

2.The failure to properly heat-treat the tube constituted negligence by Bay City.American was also negligent in failing to assure that Bay City properly heat-treated the tube and in failing to test the tube in a manner that would have detected the defect.

3.American is liable for breach of express provisions in its written warranty.

4.American and Bay City are also liable for breach of implied warranties of merchantability and fitness for a particular purpose.

We now discuss the claims in turn.

STRICT PRODUCTS LIABILITY

¶13 The basic rule of strict products liability is summarized in Section 1 of Restatement (Third) of Torts: Products Liability (Tentative DraftNo. 2, 1995)[hereinafter Tentative DraftNo. 2]:

Liability of Commercial Seller or Distributor for Harm Caused by Defective Products

(a) One engaged in the business of selling or otherwise distributing products who sells or distributes a defective product is subject to liability for harm to persons or property caused by the product defect.

(b) A product is defective if, at the time of sale or distribution, it contains a manufacturing defect, is defective in design, or is defective because of inadequate instructions or warnings.

¶14Plaintiffs allege that the pump tube was defective because it contained a manufacturing defect.We adopt the definition of "manufacturing defect" contained in Tentative DraftNo. 2, Section 2(a): "[A] product contains a manufacturing defect when the product departs from its intended design even though all possible care was exercised in the preparation and marketing of the product[.]"Because Plaintiffs' expert testified that the steel of the pump tube contained proeutectoid ferrite and that the purchase order implicitly specified steel that contained no proeutectoid ferrite, there is sufficient evidence to support the finding that the pump tube contained a manufacturing defect.Moreover, Plaintiffs produced evidence that the damage was caused by this defect.

¶15 Nevertheless, Defendants present three arguments why they are not subject to strict products...