Nemirovsky v. Daikin N. Am., LLC

Decision Date16 December 2021
Docket NumberSJC-13108
Citation177 N.E.3d 901
Parties Ofer NEMIROVSKY v. DAIKIN NORTH AMERICA, LLC, & others.
CourtUnited States State Supreme Judicial Court of Massachusetts Supreme Court

The following submitted briefs for amici curiae:

Mark C. Fleming (Felicia H. Ellsworth also present) Boston, for the defendants.

James L. Messenger (John W. Moran also present) Boston, for the plaintiff.

Jennifer B. Dickey, of the District of Columbia, & Patrick Strawbridge for Chamber of Commerce of the United States of America.

James M. Campbell & Christopher Howe, Boston, for Product Liability Advisory Council, Inc.

Phil Goldberg & Cary Silverman, of the District of Columbia, & Brandon L. Arber, Boston, for National Association of Manufacturers.

Present: Budd, C.J., Gaziano, Lowy, Cypher, Kafker, Wendlandt, & Georges, JJ.

WENDLANDT, J.

We have long held that the manufacturer of a nondefective component placed in an integrated product generally is not liable for damage caused by a defect in the integrated product.2 This so-called "component parts doctrine" is grounded in the unremarkable proposition that the component manufacturer, unlike the integrated product manufacturer, usually is not well positioned to oversee the design or manufacture of the integrated product and thus should not be liable for damage caused by defects in the integrated product.

In the present case, a Superior Court judge declined to apply the doctrine to the nondefective component distributed by defendant Daikin North America, LLC (Daikin NA), because the component was not itself a "standalone" product and because the component was designed specifically for use in the integrated product, a heating, ventilation, and air conditioning (HVAC) system, manufactured and sold by entities other than Daikin NA. Neither reason supplies an exception to the doctrine in view of the rationale that undergirds it.

Because the additional contention of the plaintiff, Ofer Nemirovsky, that the doctrine applies only to tort claims (as opposed to the warranty claims at issue here) is also unsupportable, we vacate the judgment entered against Daikin NA and remand for reconsideration of damages, if any, that stem from Nemirovsky's reasonable reliance on Daikin NA's intentional misrepresentations to him in connection with efforts to determine the causes of the HVAC system's failures. Further concluding that evidence at trial showed only economic injury to the HVAC system itself, we affirm the judge's directed verdict for the defendants on Nemirovsky's claims for breach of the implied warranty of merchantability against the original sellers of the HVAC system as time barred under G. L. c. 106, § 2-725.3

1. Background. We recite the evidence presented at trial in the light most favorable to the jury verdict, reserving some facts for discussion later in the opinion. O'Brien v. Pearson, 449 Mass. 377, 383, 868 N.E.2d 118 (2007).

In 2008, as part of a remodel of his 22,000 square foot single family home in Boston, Nemirovsky purchased an HVAC system designed and manufactured by Daikin Industries, Ltd. (Daikin Industries), a Japanese corporation. The system included "fan coil units," which comprised a fan, an evaporator coil, and a Styrofoam drain pan. In operation, the coil is filled with a refrigerant and the fan blows air across the coil, cooling the air, before the air is blown into a room. The Styrofoam drain pan sits below the coil, collecting and removing water that condenses and drips from the coil.

Nemirovsky's HVAC contractor, Climate Engineering, LLC, purchased the HVAC system from defendant Stebbins Duffy, Inc. (Stebbins Duffy), a manufacturer's representative of Daikin Industries’ products. Stebbins Duffy in turn acquired the system from its North American distributor at the time, Daikin AC (Americas), Inc.; the successor-in-interest to this entity is defendant DACA Delaware Dissolution Trust (DACA Trust).

In 2012, an evaporator coil within Nemirovsky's HVAC system began to leak, resulting in the loss of air conditioning. Properly installed, cleaned, and inspected evaporator coils were expected to last from ten to fifteen years before needing to be replaced. Nemirovsky had the first coil replaced, believing the failure to be a "hiccup."

In 2013, four additional coils in Nemirovsky's system failed. Nemirovsky began to believe that there was a systemic problem; he communicated his concerns to defendant Daikin Applied Americas Inc. (Daikin Applied), which serviced his system from 2013 to 2015. Meanwhile in 2013, the defendant Daikin NA was established, becoming the North American distributor for the evaporator coils used in the type of HVAC system Nemirovsky had purchased. In late 2014, Daikin Applied replaced Nemirovsky's four leaking coils with coils acquired from Daikin NA.

Evaporator coils in Nemirovsky's system continued to fail over the next few years; all told, seventeen of the twenty-eight coils in the house failed. Of the seventeen failed coils, three were supplied by Daikin NA as replacement parts; the remaining coils supplied by Daikin NA did not fail.

Nemirovsky commenced an action in 2016 against DACA Trust, Stebbins Duffy, Daikin Applied, and Daikin NA. As against each, he alleged breach of express warranty, breach of the implied warranty of merchantability, breach of the implied warranty of fitness for a particular purpose, intentional and negligent misrepresentation, and violations of G. L. c. 93A. The judge allowed summary judgment in favor of all defendants on the claims of breach of express warranty and breach of the implied warranty of fitness for a particular purpose, as well as summary judgment in favor of Stebbins Duffy and Daikin Applied on the G. L. c. 93A claims.4

A jury trial was held on the remaining claims -- namely, breach of the implied warranty of merchantability and intentional and negligent misrepresentation as against all defendants, as well as the G. L. c. 93A claims against DACA Trust and Daikin NA. Following the close of the evidence, the judge directed a verdict in favor of DACA Trust and Stebbins Duffy, the sellers of the original system, on the implied warranty of merchantability claim, because the four-year statute of limitations had run on claims related to the 2008 sale of the original HVAC system to Nemirovsky. As to the various misrepresentation claims, the judge determined that only the negligent misrepresentation claims against DACA Trust and Stebbins Duffy could proceed to the jury based on those defendants’ conduct leading to the sale of the original HVAC system, and that only the intentional misrepresentation claims could proceed against Daikin NA and Daikin Applied based on their conduct after the sale of the original system. The judge denied Daikin NA and Daikin Applied's motions for a directed verdict, allowing the jury to decide Nemirovsky's claims against those two defendants for breach of the implied warranty of merchantability and intentional misrepresentations. The judge also allowed the jury to provide an advisory opinion on whether Daikin NA and DACA Trust violated G. L. c. 93A.

The jury found Daikin Applied liable for a breach of the implied warranty of merchantability and awarded $8,934 in damages for the cost of the replacement coils, but they found that defendant not liable for intentional misrepresentation.5 The jury found Daikin NA, which sold the replacement coils to Daikin Applied, liable for intentional misrepresentation and breach of the implied warranty of merchantability, awarding $3,387,473.73 in damages, along with an advisory verdict that Daikin NA had violated G. L. c. 93A, warranting doubled damages. The jury returned an advisory verdict that DACA Trust was not liable for any violation of G. L. c. 93A and found DACA Trust and Stebbins Duffy not liable for negligent misrepresentation with respect to the original sale.6 The judge adopted the jury's G. L. c. 93A advisory verdict against Daikin NA, added prejudgment interest and attorney's fees, and awarded a total of $10,644,720.25 in damages.

Daikin NA filed a motion for judgment notwithstanding the verdict, contending that the component parts doctrine precluded liability because there was no evidence that the coils themselves were defective, and that there was no evidence of reasonable reliance on Daikin NA's alleged misrepresentations. Daikin NA also filed a motion for a new trial or remittitur, arguing, among other things, that the verdict was against the weight of the evidence, that the award of damages was contrary to law, and that the verdict form's failure to ask specifically about reasonable reliance required a new trial on the intentional misrepresentation claim. Both motions were denied. Daikin NA timely appealed. Nemirovsky filed a cross appeal, contending that the judge improperly allowed the directed verdict motion of DACA Trust and Stebbins Duffy on Nemirovsky's breach of implied warranty of merchantability claims. We granted Daikin NA's application for direct appellate review.

2. Discussion. When reviewing the denial of a motion for judgment notwithstanding the verdict, we "construe the evidence in the light most favorable to the nonmoving party" to determine "whether the evidence, construed against the moving party, justif[ies] a verdict against him" (quotation and citations omitted). O'Brien, 449 Mass. at 383, 868 N.E.2d 118. The verdict will stand if "anywhere in the evidence ... any combination of circumstances could be found from which a reasonable inference could be made in favor of the [nonmovant]" (citation omitted). Id.

a. Component parts doctrine.7 It is a well-settled principle of products liability law that, as a general matter, a commercial manufacturer of a defective product is liable for harm to persons or property caused by the defect.8 Restatement (Third) of Torts: Products Liability § 1 (1998). See Evans v. Lorillard Tobacco Co., 465 Mass. 411, 424, 990 N.E.2d 997 (2013) ; Back v. Wickes Corp., 375 Mass. 633, 640-641, 378 N.E.2d...

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