Underwriters v. Group

• Decision Date: 23 September 2015
• Docket Number: Member Case: 1:13-CV-385 (GTS/FRT),Lead Case: 1:12-CV-0707 (GTS/FRT)
• Parties: THOSE CERTAIN INTERESTED UNDERWRITERS, AT LLOYD'S, LONDON, subscribing to Policy No. Z101663/003, as subrogee of M&C Ventures, LLC, and Adirondack Sports Complex, LLC, Plaintiff, v. THE FARLEY GROUP, Defendant. THE FARLEY GROUP, Third-Party Plaintiff, v. TADJER-COHEN-EDELSON ASSOCIATES, INC., Third-Party Defendant. M&C VENTURES LLC; and ADIRONDACK SPORTS COMPLEX, LLC, Plaintiffs, v. THE FARLEY GROUP, Defendant.
• Court: U.S. District Court — Northern District of New York

THOSE CERTAIN INTERESTED UNDERWRITERS, AT LLOYD'S, LONDON,subscribing to Policy No. Z101663/003, as subrogee of M&C Ventures, LLC,and Adirondack Sports Complex, LLC, Plaintiff, v. THE FARLEY GROUP, Defendant.

THE FARLEY GROUP, Third-Party Plaintiff, v. TADJER-COHEN-EDELSON ASSOCIATES, INC., Third-Party Defendant.

M&C VENTURES LLC; and ADIRONDACK SPORTS COMPLEX, LLC, Plaintiffs, v. THE FARLEY GROUP, Defendant.

Lead Case: 1:12-CV-0707 (GTS/FRT)

Member Case: 1:13-CV-385 (GTS/FRT)

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF NEW YORK

September 23, 2015

APPEARANCES:

FURMAN KORNFELD & BRENNAN, LLP

Counsel for Plaintiff Those Certain

Interested Underwriters at Lloyd's, London

61 Broadway, 26^th Floor

New York, New York 10006

BAXTER, SMITH & SHAPIRO, P.C.

Counsel for Defendant

99 North Broadway

Hicksville, New York 11801

FITZGERALD MORRIS BAKER FIRTH, P.C.

Counsel for Plaintiffs Adirondack

Sports Complex and M&C Ventures, LLC

16 Pearl Street

P.O. Box 2017

Glens Falls, New York 12801

OF COUNSEL:

ANDREW R. JONES, ESQ.

ARTHUR J. SMITH, ESQ.

STEVEN M. BUNDSCHUH, ESQ.

JOHN D. ASPLAND, JR., ESQ.

JOSHUA D. LINDY, ESQ.

GLENN T. SUDDABY, Chief United States District Judge

TABLE OF CONTENTS

Page

I. RELEVANT BACKGROUND .............................................. 1

A. The Underwriters' Complaint ......................................... 1

B. The Complaint Filed by M&C and ADSC ................................ 3

C. Procedural History .................................................. 4

D. Statement of Undisputed Material Facts ................................. 4

1. Plaintiffs' Claims and Relevant Background ........................... 4

2. Mr. Miller's Decision to Purchase a Farley Dome ...................... 5

3. Farley Contract and Warranties ..................................... 9

4. Design of the ADSC Dome ........................................ 9

5. TCE ......................................................... 11

6. Farley's Design of the ADSC Dome ................................ 12

7. Erection of the ADSC Dome ...................................... 18

8. Operation and Maintenance of the ADSC Dome ....................... 20

9. Air Pressure Fluctuation of the Dome to Remove Snow ................. 24

10. Temperatures Inside the ADSC Dome ............................... 26

11. Events Preceding the Dome's Partial Collapse ........................ 27

12. Events Post-Collapse of the ADSC Dome ............................ 33

13. Damage Caused by the Dome's Collapse ............................ 35

E. Parties' Briefing on Defendant's Motion for Summary Judgment ............ 38

1. Defendant's Memorandum of Law-in-Chief ....................... 38

2. Underwriters' Opposition to Defendant's Motion for Summary Judgment .................................................. 41

3. ADSC's Opposition to Defendant's Motion for Summary Judgment .... 43

4. Defendant's Reply to Plaintiffs' Respective Oppositions to the Motion for Summary Judgment .......................................... 45

5. Underwriters' Sur-Reply ...................................... 49

6. ADSC's Sur-Reply ........................................... 50

7. Defendant's Sur-Sur-Reply to Plaintiffs' Sur-Replies ................ 51

II. APPLICABLE LEGAL STANDARDS ....................................... 52

III. ANALYSIS .......................................................... 54

A. Whether the Economic Loss Rule Bars Plaintiffs' Tort Claims .............. 54

1. "Abrupt Cataclysmic Occurrence" ............................... 55

2. "Other Property" ............................................ 56

3. Negligent Misrepresentation ................................... 58

4. Independent Duty of Care ..................................... 63

5. Failure to Warn ............................................. 67

B. Whether the Limitation-of-Liability Provision Precludes Consequential Economic Damages ................................................ 68

1. Whether the Subject Contract Is Unconscionable ................... 69

2. Whether Public Policy Prohibits Enforcement of the Limitation-of-Liability Provision ........................................... 72

C. Whether Underwriters' Claims for Breach of Implied and Express Warranties and Breach of Contract Are Barred by the Statute of Limitations .. . . 74

1. Whether the Parties' Contract Is One for the Sale of Goods ........... 74

2. Accrual and Application of Statute of Limitations to Underwriters' Breach-of-Warranty Claims .................................... 82

D. Whether Underwriters' Claim for Defective and/or Negligent Design of the Dome Is Barred by the Statute of Limitations ................................. 84

E. Whether a Genuine Dispute of Material Fact Exists Regarding Underwriters' Claim for Defective and/or Negligent Design of the Dome ................. 86

F. Whether a Genuine Dispute of Material Fact Exists Regarding Underwriters' Claim for Failure to Warn ........................................... 92

G. Defendant's Challenge to the Admissibility of Thomas Grafe's Expert Opinions ......................................................... 95

IV. CONCLUSION ......................................................... 95

DECISION and ORDER

Currently before the Court, in these consolidated property damage actions filed by M&C Ventures, LLC ("M&C"), Adirondack Sports Complex, LLC ("ADSC") (collectively "ADSC"), and Those Certain Interested Underwriters at Lloyd's, London, subscribing to Policy No. Z101663/003, as subrogee of M&C and ADSC (hereinafter "Underwriters"), against The Farley Group ("Farley" or "Defendant"), is Defendant's motion for summary judgment pursuant to Fed. R. Civ. P. 56. (Dkt. No. 56.) For the reasons set forth below, Defendant's motion is granted in part and denied in part.

I. RELEVANT BACKGROUND

A. The Underwriters' Complaint

The Underwriters filed their Complaint on April 30, 2012, in their capacity as subrogee of M&C. (Dkt. No. 1.) Generally, the Complaint alleges as follows. M&C is the owner of the Adirondack Sports Complex, located in Queensbury, New York, which is a multi-sport and event facility operated by ADSC. (Id. ¶ 1, 7.) The Underwriters provided insurance coverage to M&C against property damage to its buildings in connection with M&C's operation of the sports complex. (Id. ¶ 2.) The sports complex is enclosed by a dome that was manufactured by Defendant in August of 2005, installed by Defendant sometime in November of 2005, and has continued to be serviced and maintained by Defendant. (Id. at ¶ 8.)

During the winter of 2006, the dome began having technical and mechanical problems with its longitudinal cables (cables that run over the top of the dome lengthwise and provide support for its "end caps"). (Id. at ¶ 9.) Specifically, snow began to slide down to the outer most cable on each side, causing a back up of snow on the dome, which resulted in sagging in thedome's southeastern areas and required the dome's air pressure to be kept at a higher level to maintain its structure. (Id.) ADSC notified Defendant of the accumulation of ice and snow in these areas in an attempt to develop a better method for causing accumulated snow to slide over the cable and off the side of the dome. (Id. at ¶ 11.) Defendant advised ADSC to implement a "pressure control" method of decreasing the air pressure of the dome as a means of dislodging snow accumulation from the dome's roof. (Id. at ¶ 13.) This method initially worked with some success. (Id. at ¶ 16.) However, due to significant snowfall and exceptionally cold temperatures during the winter of 2010-2011, the dome did not experience a normal shedding of snow. (Id. at ¶ 17.)

In February 2011, approximately eight inches of snow fell in the area of Queensbury. (Id. at ¶ 19.) To remove the excess snow, Defendant advised ADSC to take a length of rope and run it along the dome to dislodge the accumulated snow. (Id. at ¶ 20.) On February 5, 2011, the dome's roof began to invert under the weight of the accumulated snow and ice. (Id. at ¶ 21.) ADSC successfully used a recirculation unit to round out the dome to expel snow and ice from the dome's roof. (Id. at ¶ 22.) The next day, on February 6, 2011, ADSC contacted Defendant and advised that some of the snow had been dislodged from the dome. (Id. at ¶ 24.) However, that same night, ADSC attempted to increase the pressure of the Dome, with no success. (Id. at ¶ 25.) ADSC spoke with Defendant's representatives, who advised that reducing the pressure in the dome may cause the snow/ice to dislodge. (Id.) ADSC followed this advice and lowered the pressure, which caused large portions of snow/ice to shift to one area. (Id. at ¶ 26-28.) Moments later, a large portion of the dome collapsed to the ground. (Id. at ¶ 29.) This incident required the dome to be completely deflated so that it could be repaired. (Id. at ¶ 30.) As a result, Underwriters paid $933,642.80 to M&C under its insurance policy for the damage sustained to the dome.

Based on these factual allegations, the Underwriters' Complaint asserts five claims against Defendant: (1) a claim that Defendant is strictly liable for the defective design of the dome; (2) a claim that Defendant negligently designed the dome; (3) a claim that Defendant failed to warn M&C and ADSC about the dangers from the foreseeable uses of its product; (4) a claim that Defendant breached its duty of reasonable care by advising ADSC to remove accumulated snow and ice by employing failed techniques and otherwise providing inadequate and/or improper instructions on how to effectively handle the situation and failing to timely respond to M&C's requests for assistance; and (5) a claim that Defendant breached its implied and express warranties to M&C. (Id. ¶¶ 34-60.)

B. The Complaint Filed by M&C and ADSC

M&C and ADSC filed their Complaint on April 4, 2013. (12-CV-0707, Dkt. No. 1.) On April 17, 2013, an Order was entered by United States Magistrate Judge Randolph F. Treece, which consolidated this matter with the action commenced by Underwriters. (Dkt. No. 7.)...