Krull v. Thermogas Co. of Northwood, Iowa, Div. of Mapco Gas Products, Inc.

• Decision Date: 19 October 1994
• Docket Number: No. 93-42,93-42
• Citation: 522 N.W.2d 607
• Parties: Prod.Liab.Rep. (CCH) P 14,069 James KRULL and Deanna Krull, Plaintiffs, v. THERMOGAS COMPANY OF NORTHWOOD, IOWA, DIVISION OF MAPCO GAS PRODUCTS, INC., Defendant. THERMOGAS COMPANY OF NORTHWOOD, IOWA, DIVISION OF MAPCO GAS PRODUCTS, INC., Third-Party Appellant, v. HONEYWELL, INC., Third-Party Appellee.
• Court: Iowa Supreme Court

Page 607

522 N.W.2d 607

Prod.Liab.Rep. (CCH) P 14,069

James KRULL and Deanna Krull, Plaintiffs, v. THERMOGAS COMPANY OF NORTHWOOD, IOWA, DIVISION OF MAPCO GAS PRODUCTS, INC., Defendant.

THERMOGAS COMPANY OF NORTHWOOD, IOWA, DIVISION OF MAPCO GAS PRODUCTS, INC., Third-Party Appellant, v. HONEYWELL, INC., Third-Party Appellee.

No. 93-42.

Supreme Court of Iowa.

Oct. 19, 1994.

Rehearing Denied Nov. 21, 1994.

Robert Kohorst of Kohorst Law Firm, Harlan, for appellant.

Jeannine L. Lee and Sarah L. Brew of Cosgrove, Flynn, Gaskins & O'Connor, Minneapolis, MN, and Frank A. Comito of Comito, Capps & Critelli, Des Moines, for appellee Honeywell, Inc.

Considered by McGIVERIN, C.J., and LAVORATO, NEUMAN, ANDREASEN, and TERNUS, JJ.

LAVORATO, Justice.

An L.P. gas explosion and resulting fire destroyed James and Deanna Krull's home and possessions. Allegedly a gas control valve in their furnace was a cause of the explosion and fire. Honeywell, Inc. (Honeywell) manufactured the valve. The Krulls sued Thermogas Company of Northwood, Iowa, a division of Mapco Gas Products, Inc. (Mapco). The suit alleges Mapco was negligent because it failed to properly identify the valve in a recall program initiated by Honeywell.

Mapco brought a third-party action against Honeywell. This action asserts claims for, among other things, contribution and indemnity. The district court sustained Honeywell's motion for summary judgment over Mapco's resistance. See Iowa R.Civ.P. 237.

In its appeal from that ruling, Mapco raises several issues, all of which the district court decided against Mapco. Those issues concern Iowa code section 614.1(11) (1989), Iowa's statute of repose regarding defective improvements to real property. The issues are (1) whether a manufacturer can create an improvement to real property, (2) whether the time limitations of section 614.1(11) cover manufacturers of such improvements, (3) whether a claim based on negligent recall is barred by section 614.1(11), and (4) whether section 614.1(11) violates the equal protection provisions of the federal and Iowa Constitutions. We affirm.

In 1987 the Krulls and their two children moved into a farmhouse outside of Northwood. The house was heated by an L.P. gas furnace equipped with a Honeywell V8139 control valve. The furnace had been purchased in 1969. After the Krulls moved in, Mapco began supplying them with L.P. gas for cooking and heating.

Honeywell voluntarily recalled the V8139 control valve in 1980 through a media campaign and mailings to L.P. gas retailers. Honeywell asked retailers to provide it with customer lists so it could send recall notices directly to consumers. The retailers could, if they preferred, send the notices themselves. In addition, Honeywell (1) requested that retailers require their service personnel to check for recalled valves during any service call, (2) provided a toll-free number for consumers and service personnel to call and verify whether a particular valve was under recall, and (3) provided and installed new controls without charge.

In the fall of 1989, a Mapco serviceperson stopped by the Krull home specifically to examine the valve to find out whether it was under recall. He was familiar with the V8139 valve and had identified and replaced several of them. However, the serviceperson failed to properly identify the valve in the Krull's furnace. In his deposition, the serviceperson testified that he must have misidentified the valve because he had difficulty reading the control number. He incorrectly recorded the valve as V8152 or V8159. Honeywell has never manufactured control valves with either of these numbers. No one at Mapco could positively state which employee called Honeywell to determine whether either of these numbers were on the recall list.

The day before the explosion in November 1990, the serviceperson was again at the Krull's home to install a gas line to a chicken coop. He turned off the gas before installing the line, but he did not go into the house and turn off the furnace. When he was done with the line, the serviceperson told James that he would relight the pilot. James told him he would light the pilot himself.

James did not relight the pilot. At 4:15 a.m. the next morning, the Krull family was awakened by an explosion. Though they escaped uninjured, the house and its contents were destroyed by fire.

Our review of a summary judgment ruling is at law. Iowa R.App. 4. All the issues center on our interpretation of section 614.1(11). This is a legal question, properly resolvable by summary judgment. Ottumwa Hous. Auth. v. State Farm Fire & Casualty Co., 495 N.W.2d 723, 726 (Iowa 1993).

I. Background.

At common law, the liability of architects, engineers, and other members of the building industry was limited. Such persons were liable only to those who built a building or caused work to be done on a structure. So third parties injured because of an architect's or builder's negligent acts had no remedy against the architect or builder. Horton v. Goldminer's Daughter, 785 P.2d 1087, 1089 (Utah 1989).

MacPherson v. Buick Motor Co., 217 N.Y. 382, 111 N.E. 1050 (1916) struck down privity in products liability cases. Later, relying on MacPherson, courts began abandoning privity in actions against architects and builders. In response, the building industry convinced legislatures in many states to pass statutes limiting the duration of liability of construction professionals. The statutes differ in various ways. But they do have one thing in common: the time within which an action is filed begins from some date associated with the completion of construction, not from the time of injury. So these statutes are statutes of repose, not statutes of limitation. Horton, 785 P.2d at 1089-90.

The Iowa legislature responded by passing Iowa Code section 614.1(11). It became effective April 21, 1986. 1986 Iowa Acts ch. 1120, § 1. The statute provides:

In addition to limitations contained elsewhere in this section, an action arising out of the unsafe or defective condition of an improvement to real property based on tort and implied warranty and for contribution and indemnity, and founded on injury to property, real or personal, or injury to the person or wrongful death, shall not be brought more than fifteen years after the date on which occurred the act or omission of the defendant alleged in the action to have been the cause of the injury or death. However, this subsection does not bar an action against a person solely in the person's capacity as an owner, occupant, or operator of an improvement to real property.

We have characterized this as a statute of repose, which closes the door after fifteen years on certain claims arising from improvements to real property. McKiness Excavating & Grading, Inc. v. Morton Bldgs., Inc., 507 N.W.2d 405, 408 (Iowa 1993). The fifteen-year period begins to run from the date of the act or omission causing the injury or death. Id. at 409. Here the furnace was purchased in 1969. So the period began to run at least from that date and expired in 1984. If the statute applies, all of Mapco's claims are barred.

II. Whether a Manufacturer Can Create an Improvement to Real Property.

This issue concerns the language "arising out of the unsafe or defective condition of an improvement to real property." Iowa Code § 614.1(11). Mapco contends that the control valve cannot be an improvement to real property.

Mapco's argument in support of this contention is this. The control valve falls within the broad definition of "goods" under Iowa's uniform commercial code. See Iowa Code § 554.2105(1). As a good, the control valve is subject to implied warranties of merchantability and fitness for a particular purpose. Those warranties extend to persons who may reasonably be expected to use, consume, or be affected by the goods and are injured in person or property because of a breach of warranties. See Iowa Code § 554.2318. If those goods are considered improvements to real property, the warranties could be lost before any injury ever occurred because of the section 614.1(11) bar. This result would create a clash between the warranty statutes and the statute of repose. The legislature never intended such a result. The only way to resolve the conflict is to say that goods are not improvements to real property and improvements to real property are not goods.

The short answer to all of this is that as a practical matter a good can be an improvement to real property as we will shortly explain. The legislature recognized this fact. Nevertheless, it made a judgment call to impose the bar although the warranties could become worthless before an injury ever occurred. All of what we say is borne out in section 614.1(11) because there the legislature expressly bars an action based on implied warranty. This language is without limitation and is therefore broad enough to include warranties in the uniform commercial code.

That leads us to the question whether the control valve is an improvement for section 614.1(11) purposes. The statute does not define the word "improvement," so we look to its common, ordinary meaning. Noble v. Lamoni Prods., 512 N.W.2d 290, 294 (Iowa 1994) (citation omitted). An improvement means

a permanent addition to or betterment of real property that enhances its capital value and that involves the expenditure of labor or money and is designed to make the property more useful or valuable as distinguished from ordinary repairs.

Webster's Third New International Dictionary 1138 (P. Gove ed. 1993).

The furnace--including its component control valve--was an integral part of the house. Without the valve, the furnace could not work properly. Without a properly working furnace, the home could not be comfortably used during cold weather. So as a part of the furnace, the control valve was a betterment of the Krull home. This betterment (1) enhanced the home's value, (2) involved the expenditure of labor or...