Royal Indem. Co. v. Tyco Fire Products

• Decision Date: 13 January 2011
• Docket Number: 092567.,Record Nos. 091993
• Citation: 281 Va. 157,73 UCC Rep.Serv.2d 386,704 S.E.2d 91
• Parties: ROYAL INDEMNITY COMPANY, as Subrogee of First Centrum, LLC and Centrum Prince William, LP, et al.v.TYCO FIRE PRODUCTS, LP.Royal Indemnity Company, as Subrogee of First Centrum, LLC and Centrum Prince William, LP, et al.v.SimplexGrinnell, LP.
• Court: Virginia Supreme Court

281 Va. 157

704 S.E.2d 91

73 UCC Rep.Serv.2d 386

ROYAL INDEMNITY COMPANY, as Subrogee of First Centrum, LLC and Centrum Prince William, LP, et al.

v.TYCO FIRE PRODUCTS, LP.Royal Indemnity Company, as Subrogee of First Centrum, LLC and Centrum Prince William, LP, et al.

v.SimplexGrinnell, LP.

Record Nos. 091993

092567.

Supreme Court of Virginia.

Jan. 13, 2011.

From the Circuit Court of Prince William County, Craig D. Johnston, Judge.¹Michael J. Izzo, Jr.; Paul R. Bartolacci, Philadelphia, PA (Lawrence F. Walker; C. Jay Robbins, IV; Robert Tayloe Ross; Kevin T. Streit, Richmond; Cozen O'Connor Midkiff, Myncie & Ross, on briefs), for appellants.Charles C. Eblen, Kansas City, MO; J. Michael Robert (Paul A. Williams; Dawn E. Boyce; Shook, Hardy & Bacon; Trichilo, Bancroft, Horvath & Judkins, Fairfax, on briefs), for appellees.Virginia Association of Defense Attorneys (Mark D. Loftis; Frank K. Friedman; Woods Rogers, on brief), in support of appellees SimplexGrinnell, L.P., for amicus curiae.Present: KOONTZ, KINSER, LEMONS, GOODWYN, MILLETTE, and MIMS, JJ., and RUSSELL, S.J.OPINION BY Justice LEROY F. MILLETTE, JR.

In this product liability case, we address issues concerning the statute of repose and breach of warranty. We conclude that exterior sidewall sprinkler heads are “equipment” under Code § 8.01–250 and reverse the judgment of the circuit court that the sprinkler heads are ordinary building materials. We also hold that a manufacturer's description of how a sprinkler head functions does not constitute an express warranty of future performance.

BACKGROUND

This case arose out of a fire that started on the exterior balcony of an apartment building on February 8, 2003. Two exterior sidewall sprinkler heads installed on two separate balconies where the fire originated failed to activate, which allowed the fire to spread to other parts of the building and adjoining buildings causing substantial damage.

Royal Indemnity Company and American Empire Surplus Lines Insurance Company (together, Royal) filed an amended motion for judgment in the amount of $10,317,083.78 against Tyco Fire Products (Tyco) and SimplexGrinnell, LP (Simplex) alleging that the sprinkler heads, which were manufactured by Tyco and installed by Simplex prior to June 1997, failed to properly activate causing substantial damage to the apartment complex.² Royal asserted various negligence-based causes of action against both Tyco and Simplex, including negligent design and manufacture of the sprinkler heads, and post-sale duty to warn. Royal also asserted warranty claims against both defendants, claiming that the defendants breached an alleged warranty of future performance.

The parties' stipulated facts described the sprinkler heads as follows:

The model F960/Q46 sprinkler head is an automatic dry sprinkler of the frangible bulb type. This model contains a sprinkler secured to an extension nipple that has a seal at the inlet end to prevent water from entering the nipple until the sprinkler operates. The seal mechanism at the inlet end is comprised of a brass plug and O-ring. The O-ring is fitted into a machined groove on the brass plug. The plug is attached to a yoke assembly. The yoke assembly sits upon a watertube. A guide tube assembly is fitted into the opposite end of the watertube. The bulb seat sits upon the guide tube assembly and the bulb sits upon the bulb seat and is secured in place by the compression screw. The compression screw is threaded into the frame. The frame is secured into one end of the outer pipe and the inlet is secured into the opposite end of the outer pipe. The inlet is machined with 1? NPT threads for mating the sprinkler head into a fire sprinkler system fitting.

....

Under normal service conditions, the F960/Q46 sprinkler head is intended to operate as follows. When the sprinkler is in service, water is prevented from entering the assembly by the Plug and O-ring seal in the inlet of the sprinkler. The glass bulb contains a fluid that expands when exposed to heat. When the rated temperature is reached, the fluid expands sufficiently to shatter the glass bulb, and the bulb seat is released. The compressed spring is then able to expand and push the water tube as well as the guide tube outward. This action simultaneously pulls outward on the yoke, withdrawing the plug and O-ring seal from the inlet allowing the sprinkler to activate and flow water.

In its complaint, Royal alleged that the sprinkler heads failed to operate properly. Specifically, Royal asserted that “[s]cientific inspection of the pressure tested sprinkler heads ... determined that corrosion existed at the interface between the brass plug and O-ring assembly and inlet which ... prevented the inlet plugs from disengaging and operating as intended upon the breaking of the frangible bulbs.”

Tyco and Simplex filed pleas in bar asserting that the negligence-based causes of action were barred by the statute of repose, Code § 8.01–250. After an ore tenus hearing and receipt of stipulated evidence, the circuit court granted the defendants' pleas in bar ruling that the sprinkler heads were ordinary building materials under the statute of repose.

The defendants also filed pleas in bar arguing that Royal's warranty claims were barred by the statute of limitations. After a hearing, the circuit court sustained the pleas in bar ruling the warranty claims were barred by the applicable statutes of limitations. We awarded Royal this appeal.

DISCUSSION

Royal assigns error to the circuit court's judgment sustaining the defendants' pleas in bar as to the negligence-based causes of action under the statute of repose, and as to the warranty claims under the applicable statutes of limitations.

A. Statute of Repose

Royal argues that the circuit court erred in granting the defendants' pleas in bar because it ruled that Royal's negligence-based actions were barred by the five-year statute of repose, Code § 8.01–250. The statute provides, in pertinent part:

No action to recover for any injury to property ... arising out of the defective and unsafe condition of an improvement to real property ... shall be brought against any person performing or furnishing the design, planning, surveying, supervision of construction, or construction of such improvement to real property more than five years after the performance or furnishing of such services and construction.

The limitation prescribed in this section shall not apply to the manufacturer or supplier of any equipment or machinery or other articles installed in a structure upon real property....

(Emphasis added).

Royal argues that the circuit court erred in concluding that the sprinkler heads are “ordinary building materials,” and therefore covered by the statute of repose. According to Royal, the sprinkler heads are “equipment” under the terms of the statute. To support this position, Royal cites various characteristics of the sprinkler heads that this Court has previously stated were indicative of “equipment” under Code § 8.01–250. Specifically, Royal asserts that the sprinkler heads are finished products, fully assembled by the manufacturer, and individually packaged. Royal also contends that the sprinkler heads are not essential to the building, but are “an adjunct service to the building to protect it from fire.” Continuing, Royal argues that the sprinkler heads “perform[ ] a function other than being a part of the construction[,]” which distinguishes them from ordinary building materials.

Focusing on our past decisions outlining the “ordinary building materials doctrine,” Royal concludes that our jurisprudence “make[s] it clear that ordinary building materials are generic in nature and are not separate and distinct mechanical operating products.” Royal asserts that the sprinkler heads are independent mechanical devices that have a specific function, and thus are clearly distinguishable from the items this Court has held to be ordinary building materials. Finally, Royal contends that the statute of repose was not intended to protect manufacturers, such as Tyco, who have the means to protect themselves by testing, engineering, quality control, and issuing warranties on their products.

We agree with Royal that our prior case law supports the conclusion that the sprinkler heads are equipment under the statute of repose. In addressing whether certain items fall within the protection of the statute of repose, we have

identified various characteristics of the items in question, which, in a specific case, led to the determination that the items were or were not ordinary building materials. Nevertheless, we have not held any single characteristic or set of characteristics as determinative of the issue. Each case has been and must be decided based on its own circumstances.

Jamerson v. Coleman–Adams Construction, Inc., 280 Va. 490, 496, 699 S.E.2d 197, 199 (2010). In considering this issue, we view the facts in the light most favorable to the party prevailing below, but review de novo the question whether the sprinkler heads are equipment under Code § 8.01–250. Id. at 496, 699 S.E.2d at 200; Caplan v. Bogard, 264 Va. 219, 225, 563 S.E.2d 719, 722 (2002).

We first addressed Code § 8.01–250 in Cape Henry Towers, Inc. v. National Gypsum Co., 229 Va. 596, 331 S.E.2d 476 (1985). In interpreting the statute, we stated:

We conclude that the General Assembly intended to perpetuate a distinction between, on one hand, those who furnish ordinary building materials, which are incorporated into construction work outside the control of their manufacturers or suppliers, at the direction of architects, designers, and contractors, and, on the other hand, those who furnish machinery or equipment. Unlike ordinary building materials, machinery and equipment are subject to close quality control at the factory and may be made subject to independent manufacturer's warranties, voidable if the equipment is not installed and used in strict...