Flaherty v. CNH Indus. Am., LLC
| Decision Date | 28 June 2019 |
| Docket Number | No. 119,704,119,704 |
| Citation | 56 Kan.App.2d 1317,446 P.3d 1078 |
| Parties | Duane Edward FLAHERTY, Appellant, v. CNH INDUSTRIAL AMERICA, LLC, Appellee, and Straub International, Inc., Defendant. |
| Court | Kansas Court of Appeals |
Cynthia J. Sheppeard and N. Larry Bork, of Goodell, Stratton, Edmonds & Palmer LLP, of Topeka, for appellant.
Patrick A. Edwards, of Stinson Leonard Street LLP, of Wichita, and D. Christopher Robinson, pro hac vice, of Frost Brown Todd LLC, of Louisville, Kentucky, for appellee.
Before Arnold-Burger, C.J., Hill, J., and Stutzman, S.J.
Duane Edward Flaherty brought claims for breach of express and implied warranty against CNH Industrial America, LLC (CNH) after his 2014 Case IH Patriot 2240 Sprayer (Sprayer), manufactured by CNH, caught fire. The district court granted summary judgment to CNH, finding that Flaherty failed to prove that the Sprayer had a defect which caused the fire. Flaherty appealed.
Flaherty makes two arguments on appeal.
First, Flaherty argues that the district court erred in refusing to allow him to depose CNH's in-house expert and employee, Robert Hawken. A party ordinarily may not "discover facts known or opinions held by an expert who has been retained or specially employed by another party in anticipation of litigation or to prepare for trial and who is not expected to be called as a witness at trial." K.S.A. 2018 Supp. 60-226(b)(5)(D). Whether an in-house expert like Hawken is "retained or specially employed" is an issue of first impression in Kansas. Because Hawken only inspected the Sprayer at the request of CNH's legal department in anticipation of litigation, we find that CNH specially employed him for the purposes of the privilege. And we find that Flaherty has failed to prove that CNH waived the privilege at any time.
Second, Flaherty argues that he did not have to show specific evidence of a defect in the Sprayer to survive a summary judgment motion and, even if he did, there was enough circumstantial evidence to prove the existence of a defect. We disagree. To prevail on his claims, Flaherty had to show that the Sprayer had a defect. Moreover, while a party may use circumstantial evidence to show a defect, Flaherty does not have enough circumstantial evidence here to prove a defect.
Accordingly, the district court's grant of summary judgment to CNH is affirmed.
Flaherty bought the Sprayer from Straub International, Inc. (Straub) in February 2014. CNH manufactured the Sprayer. Straub is an authorized dealer of CNH products. Prior to making the purchase, Flaherty reviewed materials about the Sprayer on CNH's website. He also discussed the Sprayer with Straub sales representative Eric Everhart who told Flaherty "that the Sprayer was a good product that would do what [Flaherty] needed it to do and that Straub would stand behind its product." The Sprayer came with a Warranty and Limitation of Liability Agreement (Warranty Agreement) which provided: "If a defect in material or workmanship is found in a unit and reported during the Warranty Period, [CNH] will pay parts and labor costs to repair the defect if the services are performed by an authorized [CNH] dealer at the dealer's location." A limitations and exclusions provision in the Warranty Agreement stated that the Warranty Agreement contained the entire warranty, and that CNH made no other express or implied warranties.
On September 11, 2014, Flaherty brought the Sprayer to Straub for scheduled maintenance and a spray hose adjustment intended to reinforce the Sprayer's boom supports. Several months earlier, Straub had received a general Product Improvement Program (PIP) bulletin to inspect the routing of 2014 Case IH Patriot 2240 Sprayers, particularly the right-hand side hydrostatic drive hoses at the engine starter to make sure they do not come in contact with the battery terminal on the engine starter. Flaherty left the Sprayer at Straub with the door unlocked and the keys in the ignition. A Straub mechanic was present and aware that the keys were in the Sprayer when Flaherty left. The Sprayer had a full tank of diesel fuel and a full tank of diesel exhaust fluid. The mechanic told Flaherty that he would move the Sprayer into the shop when he was ready to work on it.
Three days later, at 2 a.m. on September 14, 2014, a passerby saw the Sprayer engulfed in flames and reported the fire to the Saline County Sheriff's Office. No one from Straub had interacted with the Sprayer from the time Flaherty dropped it off.
Lieutenant Jeremiah Hays investigated the scene of the fire that night and prepared an incident report. He reported:
Captain Jim Hughes went to the scene of the fire the following morning to try to determine the cause of the fire. He reviewed surveillance video from Straub. While there were several cameras, none were directed at the scene of the fire. Hughes observed no foot or vehicle traffic in the two hours preceding the fire. Troy Long, a fire investigator with the Salina Fire Department, accompanied Hughes because Hughes had no fire expertise. But Long was not there in an official capacity and conducted no formal investigation. After inspecting the Sprayer, Long told Hughes that the battery box on the rear left side of the Sprayer was the origin of the fire and he "suspected some type of electrical issue was more than likely the cause."
Flaherty had two experts inspect the Sprayer. David Higday, a certified fire investigator, examined the Sprayer on September 17, 2014. In his report, he opined that the fire originated in the cab of the Sprayer. He could not determine the cause of the fire. He stated: He noted that because the cameras were not facing the Sprayer, "[a] person on foot could have gained access to the sprayer without being detected by the security cameras." He discovered that Straub installed the cameras because there had been several incidents of theft on the property. Because of a disability, Higday was unable to continue working on the case. Kent Grier, President and Chief Investigator at Kent Grier Fire Investigations, Inc., reviewed and adopted Higday's opinions. During a deposition, Grier was clear that he was not offering an opinion that a defect in the design or manufacture of the Sprayer caused the fire. He had no evidence to suggest that a defect caused or contributed to the fire.
Ghattas Bitar investigated the scene of the fire on September 22, 2014, on behalf of Flaherty's insurance company. Bitar is a senior technical consultant with Independent Forensic Investigations Corporation. After examining the Sprayer, Bitar concluded that the cause of the fire in the cab was undetermined. He believed it would not be possible to conclusively determine the cause of the fire because of the extent of the damages.
Robert Hawken, a product safety specialist for CNH, investigated the Sprayer over a month later. In an affidavit, Hawken stated that he inspected the Sprayer at the request of CNH's legal department and in anticipation of litigation against CNH.
Flaherty sued CNH and Straub. The suit listed several causes of action, including negligence, strict liability, breach of express warranty, breach of implied warranty of merchantability, failure to warn, violations of the Kansas Consumer Protection Act (KCPA), and negligent misrepresentation. Flaherty designated Grier and Bitar as his expert witnesses. During discovery, Flaherty filed a notice of deposition duces tecum informing the other parties of his intention to depose Hawken. CNH replied with a motion to quash and asked the court for a protective order prohibiting Flaherty's discovery of documents and information related to Hawken's inspection of the Sprayer based on two statutory privileges. The district court granted CNH's motion and did not allow Flaherty to depose Hawken. This will be addressed in more detail later.
CNH subsequently moved for summary judgment, mainly arguing that Flaherty failed to prove that a defect in the Sprayer caused the fire. Flaherty settled with Straub while the motion for summary judgment was pending.
The district court granted CNH's motion for summary judgment. The court first held that Flaherty's product liability and implied warranty claims failed because Flaherty could not show that a defect in the Sprayer caused the fire. In doing so, the court noted that the Kansas Product Liability Act (KPLA) governed the claims. The purpose of the KPLA, the court held, was "to consolidate all product liability actions into one theory of legal liability." This included Flaherty's claims for negligence, strict liability, implied warranty, and failure to warn. In order for Flaherty to succeed on his defective product claims, he had to prove that the Sprayer was defective. The existence of a defect could not be inferred from the mere fact that the Sprayer was involved in a fire. The court held that Flaherty failed to prove that there was a defect in the Sprayer because Flaherty's experts "were unable to reach a conclusion as to the origin or the cause of the Fire, and neither expert could offer testimony that the Sprayer was defective in any way."
The district court also relied on the economic loss doctrine to reject Flaherty's tort claims. The court explained that this "doctrine precludes buyers of allegedly defective goods from suing under negligence or strict liability theories where the only injury consists of damage to the goods themselves." When a claim is purely for economic loss, the damages are the same as they would be in a contract action. Thus, the court found that "when the actual damages that could be recovered under a tort...
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