Sylvan R. Shemitz Designs v. Newark Corp., No. 17998.

• Decision Date: 21 April 2009
• Docket Number: No. 17998.
• Citation: 967 A.2d 1188,291 Conn. 224
• Court: Connecticut Supreme Court
• Parties: SYLVAN R. SHEMITZ DESIGNS, INC. v. NEWARK CORPORATION, et al.

967 A.2d 1188

291 Conn. 224

SYLVAN R. SHEMITZ DESIGNS, INC. v. NEWARK CORPORATION, et al.

No. 17998.

Supreme Court of Connecticut.

Argued January 7, 2008.

Decided April 21, 2009.

David R. Schaefer, with whom was Sean M. Fisher, New Haven, for the appellant (plaintiff).

Melissa Sullivan, with whom, on the brief, was John H. Kane, Stamford, for the appellees (defendant General Electric Company et al.).

KATZ, PALMER, SULLIVAN, THOMPSON and GORDON, Js.

PALMER, J.

Under General Statutes §§ 52-572m(d)¹ and 52-572n(c)² of the Connecticut Product Liability Act (act); see General Statutes § 52-572m et seq.; commercial losses, in contrast to damage to property, are not recoverable in a product liability action as between commercial parties. In this case, Elliptipar, Inc. (Elliptipar), a division of the plaintiff company, Sylvan R Shemitz Designs, Inc. (plaintiff), sold to its customers a product containing a defective part that had been manufactured by the defendant General Electric Company (General Electric) and the defendant Regal-Beloit Corporation (Regal).³ Thereafter, the plaintiff incurred costs for replacing the part and otherwise repairing damage to its product that had been caused by the defective part. The issue presented by this appeal is whether, under the act, those costs constitute damage to property and, therefore, are recoverable by the plaintiff against the defendants, or whether the costs represent unrecoverable commercial losses. We conclude, contrary to the determination of the trial court, that the costs constitute damage to property that the plaintiff may recover.

The record reveals the following relevant facts and procedural history. The plaintiff is a manufacturer of commercial and residential lighting fixtures. For many years, one of its divisions, Elliptipar, purchased capacitor boots (boots), an insulation product that is used in lighting fixtures, from Newark Corporation, a distributor of such products. The boots were manufactured by General Electric until 2004, when Regal acquired the manufacturing operation of General Electric. Since that time, Regal has manufactured the boots. Elliptipar used those boots in the manufacture of the lighting fixtures that it sold to its customers.

In approximately July, 2004, Elliptipar began receiving reports from its customers that lighting fixtures containing the boots were failing, often within two weeks of the time that the fixtures had been placed in operation. Elliptipar conducted an investigation and determined that the failure of the lighting fixtures was caused by a defect in the boots that resulted in arcing and ignition. In response to the problem, Elliptipar repaired and, when necessary, replaced the lighting fixtures that had been damaged by the boots. Elliptipar also replaced the boots in those fixtures that had been sold but not yet damaged. In September, 2005, the plaintiff commenced the present action against the defendants, among others, to recover the costs that it had incurred in repairing and replacing the fixtures that Elliptipar had sold to its customers. The plaintiff alleged strict liability under the act,⁴ and a breach of the implied warranty of merchantability under the Uniform Commercial Code (UCC). See General Statutes § 42a-2-314.

The defendants filed a motion to strike the plaintiff's strict liability claim on the ground that the claim sought damages for commercial loss between commercial parties, and that such damages are not recoverable under the act. The defendants also moved to strike the plaintiff's claim of breach of the implied warranty of merchantability, alleging, first, that the plaintiff's claim is barred by the exclusivity provision of the act; see General Statutes § 52-572n(a);⁵ and, second, that the claim is legally insufficient under the UCC because it did not allege privity of contract between the parties.

The trial court granted the defendants' motion to strike the plaintiff's strict liability claim. In support of its conclusion, the court explained that, under § 52-572n(a), a product liability claim may be asserted only "for harm caused by a product...." (Internal quotation marks omitted.) The court further explained that, under the definitional section of the act; see General Statutes § 52-572m(d);⁶ "`[h]arm' includes damage to property, including the product itself, and personal injuries including wrongful death" but "does not include commercial loss." (Internal quotation marks omitted.) The court concluded that, although "the alleged damage to the light fixtures and boots was undoubtedly `damage to property' with respect to the owners of the property at the time the property damage occurred, [the plaintiff] was not such an owner. [The plaintiff] admits in its complaint that the property in question had been sold to other customers. [The plaintiff's] damages came about because it had to repair [or] replace ... [the light fixtures containing the defective boots] or otherwise pay for the property damage suffered by its customers. This was monetary damage. The damage to [the plaintiff], unlike the damage to its customers, was thus `commercial loss.'"

In reaching its determination, the trial court acknowledged that the act does not expressly "address the issue of whether an item of damages may be `damage to property' as to one downstream purchaser and `commercial loss' with respect to another." The court reasoned, however, that its conclusion in the present case was consistent with the common-law principle that a claimant "`may not recover in negligence for economic loss resulting from bodily harm to another or from physical damage to property in which the plaintiff has no proprietary interest.' [4 F. Harper, F. James & O. Gray, Torts (2d Ed.1986) § 25.18A, p. 619]."

The trial court also granted the defendants' motion to strike the plaintiff's claim of a breach of the implied warranty of merchantability. Specifically, the court agreed with the defendants that the plaintiff could not establish privity between the parties, and that the lack of privity was fatal to the plaintiff's claim.

On appeal,⁷ the plaintiff contends that the trial court improperly concluded that, because the plaintiff did not own the property that had been damaged, the expenses that it incurred in remedying the damage caused by the defective boots constituted a nonrecoverable commercial loss. Although the plaintiff acknowledges that the act provides the exclusive remedy against a seller of a defective product; see, e.g., Hurley v. Heart Physicians, P.C., 278 Conn. 305, 325, 898 A.2d 777 (2006) (product liability act "was intended to serve as the exclusive remedy for a party who seeks recompense for ... injuries caused by a product defect" [internal quotation marks omitted]); the plaintiff also contends that, if we conclude that the trial court properly determined that the plaintiff does not have a remedy under the act, then we should reverse the trial court with respect to its ruling on the defendants' motion to strike the plaintiff's claim of a breach of the implied warranty of merchantability.⁸ For the reasons that follow, we conclude that the trial court improperly granted the defendants' motion to strike the plaintiff's claim of strict liability under the act. In light of that determination, we also conclude that the exclusivity provision of the act bars the plaintiff's claim of a breach of the implied warranty of merchantability under the UCC.⁹

Before addressing the merits of the plaintiff's claim, we set forth the applicable standard of review. "A motion to strike challenges the legal sufficiency of a pleading ... and, consequently, requires no factual findings by the trial court. As a result, our review of the court's ruling is plenary.... We take the facts to be those alleged in the complaint that has been stricken and we construe the complaint in the manner most favorable to sustaining its legal sufficiency.... [I]f facts provable in the complaint would support a cause of action, the motion to strike must be denied .... Thus, we assume the truth of both the specific factual allegations and any facts fairly provable thereunder. In doing so, moreover, we read the allegations broadly ... rather than narrowly....

"Furthermore ... the [plaintiff's claim] raises an issue of statutory construction. It is well settled that in construing statutes, [o]ur fundamental objective is to ascertain and give effect to the apparent intent of the legislature.... [W]e seek to determine, in a reasoned manner, the meaning of the statutory language as applied to the facts of [the] case, including the question of whether the language actually does apply.¹⁰ ... Finally, we review de novo the trial court's construction of the relevant statutory provisions." (Citations omitted; internal quotation marks omitted.) Greco v. United Technologies Corp., 277 Conn. 337, 347-48, 890 A.2d 1269 (2006).

We also note, preliminarily, that the defendants do not dispute that the damages that the plaintiff seeks to recover in connection with its product liability claim represent the costs that the plaintiff actually incurred in remedying the damage to the lighting fixtures that had been caused by the defective boots. In other words, the defendants do not contend that the damages that the plaintiff seeks are for consequential economic loss such as lost profits, loss of commercial opportunities or damage to business reputation. The defendants' sole contention is that the term "damage to property" in § 52-572m(d) pertains only to property that is owned by the party seeking to recover under the act. Thus, the defendants maintain that the trial court properly concluded that, when a commercial party sells a product containing a defective part to a commercial buyer and then incurs costs to repair or replace that product, those costs are not recoverable against the manufacturer of the defective part because, under § 52-572m(d), the costs constitute a...