City of Wichita, Kan. v. US Gypsum Co.

• Citation: 828 F. Supp. 851
• Decision Date: 14 July 1993
• Docket Number: Civ. A. No. 89-1331-MLB.
• Parties: CITY OF WICHITA, KANSAS, A Municipal Corporation, Plaintiff, v. UNITED STATES GYPSUM COMPANY, et al., Defendants.
• Court: U.S. District Court — District of Kansas

828 F. Supp. 851

CITY OF WICHITA, KANSAS, A Municipal Corporation, Plaintiff, v. UNITED STATES GYPSUM COMPANY, et al., Defendants.

Civ. A. No. 89-1331-MLB.

United States District Court, D. Kansas.

July 14, 1993.

Charles P. Efflandt, Robert L. Howard, Foulston & Siefkin, Thomas R. Powell, Hinkle, Eberhart & Elkouri, Joe A. Lang, City of Wichita Law Dept., Wichita, KS, Edward B. Cottingham, Jr., Ness, Motley, Loadholt, Richardson & Poole, Charleston, SC, for City of Wichita.

Brett C. Coonrod, Spencer J. Brown, Keith A. Cary, Deacy & Deacy, Kansas City, MO, James D. Pagliaro, Morgan, Lewis & Bockius, Philadelphia, PA, for U.S. Gypsum Co. William Hergenreter, Shaw, Hergenreter, Quarnstrom & Kocher, Topeka, KS, Marc A. Powell, Kahrs, Nelson, Fanning, Hite & Kellogg, Wichita, KS, Stephen E. Merrill, John T. Broderick, Mark E. Howard, Merrill & Broderick, P.A., Manchester, NH, for U.S. Mineral Products Co.

Richard C. Hite, Marc A. Powell, Kahrs, Nelson, Fanning, Hite & Kellogg, Wichita, KS, Kristine K. Kraft, C. Brooks Wood, Hillix, Brewer, Hoffhaus, Whittaker & Wright, Kansas City, MO, Robert D. Brownson, Stitch, Angell, Kreikler & Muth, Minneapolis, MN, for Asbestospray.

MEMORANDUM AND ORDER

BELOT, District Judge.

This matter is before the court on the joint motion of defendants for partial summary judgment (Doc. 261); summary judgment (Doc. 157)¹; and the motion of plaintiff for partial summary judgment. (Doc. 233). The City of Wichita ("the City") brings this action to recover damages for the costs of removing asbestos from two City buildings — the Century II Civic Cultural Center ("Century II")², and the Wichita Public Library. Plaintiff seeks recovery against defendant U.S. Gypsum Company as the manufacturer of asbestos products used in the construction of both buildings. Plaintiff alleges that asbestos products manufactured by the remaining two defendants — U.S. Mineral Products Company and Asbestospray — were used in the construction of the Public Library. Plaintiff seeks recovery under theories of negligence, strict liability, implied warranty, and fraud for defendants' alleged misrepresentations as to the characteristics and health hazards associated with their products. Plaintiff also seeks punitive damages.

Rule 56(c) of the Federal Rules of Civil Procedure directs the entry of summary judgment in favor of the party who "shows that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." A principal purpose "of the summary judgment rule is to isolate and dispose of factually unsupported claims or defenses...." Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). The court's inquiry is to determine "whether there is the need for a trial — whether, in other words, there are any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986). Summary judgment is inappropriate if there is sufficient evidence on which a trier of fact could reasonably find for the nonmoving party. Prenalta Corp. v. Colorado Interstate Gas Co., 944 F.2d 677, 684 (10th Cir. 1991).

The burden of proof at the summary judgment stage is similar to that at trial. "Entry of summary judgment is mandated, after an adequate time for discovery and upon motion, against a party who `fails to make a showing to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.'" Aldrich Enters., Inc. v. United States, 938 F.2d 1134, 1138 (10th Cir.1991) (quoting Celotex, 477 U.S. at 322, 106 S.Ct. at 2552). The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact by informing the court of the basis for its motion. Celotex, 477 U.S. at 323, 106 S.Ct. at 2552. This burden, however, does not require the moving party to "support its motion with affidavits or other similar materials negating the opponent's claim." Id. (emphasis in original). Once the moving party properly supports its motion, the nonmoving party "may not rest upon mere allegation or denials of his pleading, but must set forth specific facts showing that there is a genuine issue for trial." Anderson, 477 U.S. at 256, 106 S.Ct. at 2514; Shapolia v. Los Alamos Nat'l Laboratory, 992 F.2d 1033, 1036, (10th Cir. 1993). The court reviews the evidence in a light most favorable to the non-moving party, e.g., Washington v. Board of Public Utilities, 939 F.2d 901, 903 (10th Cir.1991), under the substantive law and the evidentiary burden applicable to the particular claim. Anderson, 477 U.S. at 255, 106 S.Ct. at 2513.

I. Partial Summary Judgment (Doc. 261)

Defendants seek partial summary judgment on plaintiff's claims based upon negligence, strict liability, and implied warranty.³

A. Negligence and Strict Liability

Defendants contend that plaintiff has claimed damages only for economic loss, which are not recoverable under theories of either negligence or strict liability (tort claims).

Under Kansas law, a products liability plaintiff suing under a theory of negligence or strict liability may not recover damages for pure "economic loss." Winchester v. Lester's of Minnesota, Inc., 983 F.2d 992, 995 (10th Cir.1993). In this context, "economic loss" is a term of art, and the rule does not literally mean that no plaintiff may recover for an injury to his pecuniary, economic interests damaged by the negligence of another. See Ettus v. Orkin Exterminating Co., 233 Kan. 555, 665 P.2d 730 (1983) (negligent inspection for termite damage to house); Brueck v. Krings, 230 Kan. 466, 469-70, 638 P.2d 904, 907-08 (1982) (accountant negligence resulting in failed savings association); Pancake House, Inc. v. Redmond, 239 Kan. 83, 86, 716 P.2d 575 (1986) (attorney negligence for filing lawsuit); Bollinger v. Nuss, 202 Kan. 326, 449 P.2d 502 (1969) (negligent failure of insurance company to settle claim against insured); Dodd v. Boles, 137 Kan. 600, 606, 21 P.2d 364, 366-67 (1933) (negligent misrepresentation against seller of stock); Monarch Normandy Square Partners v. Normandy Square Assocs. Ltd. Partnership, 817 F.Supp. 908, 919 (D.Kan.1993); W. Keeton, et al., Prosser and Keeton on Law of Torts § 107, at 747 (5th ed. 1984) (economic loss for negligent misrepresentation available to persons for whose use representation was intended); but see Green Constr. Co. v. Kansas Power & Light Co., 732 F.Supp. 1550, 1552 n. 2 (D.Kan.1990).

Rather, the rule against recovery of damages for "economic loss" is generally seen as an attempt to demarcate a line between tangible physical property damage — which is not barred by the rule — as opposed to the intangible economic injuries of lost expectations or advantages normally associated with contract theories. See Winchester, 983 F.2d at 995-96; AgriStor Leasing v. Meuli, 634 F.Supp. 1208, 1217 (D.Kan.1986) (quoting AgriStor Leasing v. Markley, No. 81-4163, 1984 WL 2817 (D.Kan. June 8, 1984)). At times, the same result has also been reached by applying concepts of proximate cause or the remoteness of injury. See Union Oil Co. v. Oppen, 501 F.2d 558, 563 (9th Cir.1974); cf. East River Steamship Corp. v. Transamerica Delaval Inc., 476 U.S. 858, 874, 106 S.Ct. 2295, 2303, 90 L.Ed.2d 865 (1986) (adopting economic loss rule and rejecting foreseeability as the only limitation for tort actions based on admiralty law). The distinction has been explained as a recognition that certain types of "economic losses" result from risks that contracting parties should be able to allocate among themselves, while the risk for other types of losses should rest with the defendant as a matter of law. See 2000 Watermark Ass'n v. Celotex Corp., 784 F.2d 1183, 1186 (4th Cir.1986); East River, 476 U.S. at 871-73, 106 S.Ct. at 2302-03. "Though the rule has been expressed in different ways, the common underlying pragmatic consideration is that a contrary rule, which would allow compensation for losses of economic advantage caused by the defendant's negligence, would impose too heavy and unpredictable a burden on the defendant's conduct." Just's, Inc. v. Arrington Constr. Co., 99 Idaho 462, 470, 583 P.2d 997, 1005 (1978).

In Adams-Arapahoe Sch. Dist. v. GAF Corp., 959 F.2d 868, 872-73 (10th Cir.1992), the court applied this rule under Colorado law in the context of asbestos contamination of buildings. As in this case, the plaintiff in Adams-Arapahoe sought damages under negligence and strict liability theories for the cost of removing asbestos-containing materials from its buildings. The material in that case was a vinyl asbestos floor tile ("VAT"), which, when left undisturbed, is not considered a friable (easily crumbled) asbestos material. See infra, note 12. The plaintiff argued that the VAT material caused three types of injuries: (1) injury from the mere presence of VAT; (2) injury in the nature of the risk inherent in VAT; and (3) injury in the nature of contamination caused by past releases of asbestos fibers from VAT.

The court held that plaintiff's first two claimed injuries were not recoverable under theories of negligence or strict liability. Adams-Arapahoe, 959 F.2d at 872-73. As to injury from the mere presence of VAT, the court recognized that "the presence of asbestos in VAT may well impose increased renovation costs" when the plaintiff conducts building renovations that cause the VAT to become friable. Id. at 872. Nonetheless, the court held that "any additional expense is best characterized as economic loss — consequential damages resulting from the failure of VAT to meet the plaintiff's economic expectations in terms of performance." Id. As to plaintiff's claim for damages from the injury inherent in the risk of harm from VAT, the court held that a risk of potential...