New York Law Review

Tag: Asbestos

  • Matter of New York City Asbestos Litigation, 27 N.Y.3d 411 (2016): Manufacturer’s Duty to Warn Regarding Combined Use of Products

    Matter of New York City Asbestos Litigation, 27 N.Y.3d 411 (2016)

    A manufacturer has a duty to warn of dangers arising from the known and reasonably foreseeable use of its product in combination with a third-party product which, as a matter of design, mechanics or economic necessity, is necessary to enable the manufacturer’s product to function as intended.

    Summary

    The New York Court of Appeals addressed the scope of a manufacturer’s duty to warn about the hazards of using its product with another company’s product. The court held that a manufacturer of a product has a duty to warn of dangers arising from the foreseeable combined use of its product with a third-party product when the third-party product is essential for the manufacturer’s product to function as intended. The court considered the manufacturer’s superior knowledge of the risks, its ability to warn, and the economic realities of product usage. The court affirmed the lower court’s decision that the manufacturer, Crane Co., had a duty to warn about the dangers of asbestos exposure when its valves were used with asbestos-containing components.

    Facts

    Crane Co. manufactured valves used in high-pressure, high-temperature steam systems. These valves required asbestos-based gaskets, packing, and insulation to function, and Crane Co. knew this. Crane Co. supplied these asbestos-containing components with its valves and marketed asbestos-based replacement parts. Ronald Dummitt, a Navy boiler technician, was exposed to asbestos dust while working with Crane Co.’s valves. He developed mesothelioma and sued Crane Co. for failure to warn.

    Procedural History

    Dummitt commenced a negligence and strict products liability action in Supreme Court. The case was consolidated with another asbestos litigation case. The trial court granted an accelerated trial preference under CPLR 3403. The jury found Crane Co. 99% liable and awarded damages. The trial court granted Crane Co.’s motion to set aside the verdict only to the extent of remitting for a new trial on damages or a stipulated reduction in damages. The Appellate Division affirmed the judgment, and Crane appealed as of right to the Court of Appeals.

    Issue(s)

    1. Whether Crane Co., as a manufacturer, had a duty to warn about the dangers of asbestos exposure resulting from the use of its valves in conjunction with third-party asbestos-containing products.

    Holding

    1. Yes, because Crane Co. had a duty to warn about the dangers of asbestos exposure resulting from the use of its valves in conjunction with third-party asbestos-containing products.

    Court’s Reasoning

    The court cited New York’s longstanding approach to products liability, emphasizing that a manufacturer is liable for injuries caused by a defective product. It differentiated between manufacturing defects, design defects, and inadequate warnings. The Court of Appeals referenced its prior ruling in *Rastelli v. Goodyear Tire & Rubber Co.* to outline considerations for determining a manufacturer’s duty when its product is used with another company’s product. The court stated that a manufacturer has a duty to warn of dangers resulting from foreseeable uses of its product of which it knew or should have known. The court considered several factors, including the manufacturer’s superior knowledge of the risks, its ability to warn, and economic considerations. The court found that Crane Co. had a duty to warn, noting its knowledge of the asbestos hazards, its supply of asbestos-containing components, and the economic necessity of using those components with the valves. The court also rejected Crane Co.’s arguments against this duty, pointing out the close connection between Crane Co.’s product and the use of asbestos-containing products.

    Practical Implications

    This case clarifies the scope of a manufacturer’s duty to warn about risks associated with using its product with other products. It emphasizes that manufacturers must warn of known dangers, including those arising from the combined use of their product and a third-party product if that third-party product is essential for the primary product to function. This ruling affects how lawyers analyze failure-to-warn claims, especially in cases involving complex products requiring the use of other products. Companies must assess whether their products require other products to function and, if so, evaluate potential risks associated with those products and issue warnings as necessary. This decision underscores the importance of comprehensive product safety assessments and effective warning systems.

  • American Standard, Inc. v. Oakfabco, Inc., 14 N.Y.3d 402 (2010): Determining Assumption of Liability in Business Acquisitions

    14 N.Y.3d 402 (2010)

    When a business is sold “subject to all debts, liabilities, and obligations connected with or attributable to such business and operations,” the buyer assumes tort liabilities arising from the business’s pre-sale activities, even if the injury occurs post-sale, unless the agreement explicitly limits such assumption.

    Summary

    American Standard sold its Kewanee Boiler division to OakFabco. The purchase agreement stated OakFabco would acquire the assets subject to all liabilities connected to the boiler business. Years later, tort claims arose from asbestos in boilers manufactured before the sale, with injuries occurring after the sale. American Standard sought a declaratory judgment that OakFabco assumed these liabilities. The New York Court of Appeals held that OakFabco did assume these liabilities, based on the agreement’s broad language indicating a complete transfer of the business and its associated obligations.

    Facts

    In 1970, American Standard, Inc. sold its Kewanee Boiler division to Kewanee Boiler Corp., now OakFabco, Inc. The asset purchase agreement stated OakFabco would acquire substantially all assets of the Kewanee Boiler business. The agreement specified that the purchase was “subject to all debts, liabilities, and obligations connected with or attributable to such business and operations.” The agreement defined “Kewanee Liabilities” as “all the debts, liabilities, obligations and commitments (fixed or contingent) connected with or attributable to Kewanee existing and outstanding at the Closing Date.” Subsequently, numerous tort claims arose due to asbestos in Kewanee boilers, with some injuries occurring after the sale but attributable to boilers manufactured and sold before the sale.

    Procedural History

    American Standard initiated a declaratory judgment action against OakFabco to determine liability for the asbestos-related tort claims. The Supreme Court held that OakFabco assumed these liabilities. The Appellate Division affirmed the Supreme Court’s declaration and enjoined OakFabco from relitigating the issue. OakFabco appealed, and the Court of Appeals granted leave to appeal.

    Issue(s)

    Whether the language in the asset purchase agreement, specifically the phrase “liabilities…existing and outstanding at the Closing Date,” includes tort claims arising from pre-sale activities where the injury occurred post-sale.

    Holding

    Yes, because the agreement’s intent was to transfer the entire Kewanee Boiler business and all related obligations to OakFabco, encompassing liabilities for injuries arising from boilers manufactured pre-sale, even if the injury manifested post-sale.

    Court’s Reasoning

    The court emphasized the agreement’s stated purpose: the sale of substantially all assets of the Kewanee Boiler business “subject to all debts, liabilities, and obligations connected with or attributable to such business and operations.” The court reasoned that this broad language indicated an intent to transfer all obligations related to the business. While OakFabco argued the phrase “liabilities . . . existing and outstanding at the Closing Date” limited their assumption, the court found this interpretation inconsistent with the overall intent of the agreement. The court distinguished this case from Grant-Howard Assoc. v General Housewares Corp., noting that the agreement in that case contained explicit limitations on the assumption of liabilities, unlike the broad transfer of obligations in this case. The court highlighted a specific clause in the agreement relating to warranty, service, repair, and return obligations, stating it would be “absurd” to interpret this clause to exclude claims arising after the closing date. This clause demonstrated the parties’ intent to cover future claims related to pre-sale products. The court concluded that OakFabco assumed liabilities for claims brought by tort claimants injured after the closing date by boilers installed before that date. However, the court vacated the Appellate Division’s injunction against OakFabco relitigating the issue, stating that parties should generally be allowed to take any position in litigation with a good-faith argument. While the court’s decision may preclude relitigation, an injunction was unnecessary.

  • Germantown Central School District v. Clark, Clark, Millis & Gilson, AIA, 290 A.D.2d 927 (2002): Statute of Limitations for Latent Effects of Toxic Exposure

    Germantown Central School District v. Clark, Clark, Millis & Gilson, AIA, 290 A.D.2d 927 (2002)

    CPLR 214-c, the discovery rule for toxic torts, applies only when the injury is caused by the latent effects of exposure to a toxic substance, meaning the harm attributable to the substance does not manifest until years after the exposure.

    Summary

    Germantown Central School District sued Clark, Clark, Millis & Gilson, AIA, alleging professional malpractice for incorrectly certifying that an asbestos abatement project was complete when asbestos remained. The school district discovered the remaining asbestos 13 years later and filed suit. The key issue was whether the discovery rule of CPLR 214-c applied, extending the statute of limitations. The court held that CPLR 214-c was inapplicable because the mere presence of undetected asbestos, without any additional damage or change in condition over time, did not constitute an injury caused by the latent effects of exposure to a toxic substance. Therefore, the standard three-year statute of limitations for malpractice applied, barring the claim.

    Facts

    The Germantown Central School District contracted with Clark in 1985 for architectural services related to asbestos abatement. Clark subcontracted with Robson & Woese, Inc. as the engineering firm for the project. In December 1986, both Clark and Robson certified that no asbestos remained in the designated removal areas. All work concluded in 1987. In 2000, during a renovation, the school district discovered asbestos in areas previously certified as asbestos-free.

    Procedural History

    In October 2000, the school district sued Clark, its partners, and Robson, alleging malpractice. The defendants moved for summary judgment, arguing the three-year statute of limitations for malpractice (CPLR 214(6)) had expired. The Supreme Court denied the motion and allowed the school district to amend its complaint, finding the action timely based on the discovery of the asbestos. The Appellate Division reversed, granting summary judgment to the defendants, holding that CPLR 214-c did not apply to property damage claims and the malpractice action was untimely.

    Issue(s)

    Whether CPLR 214-c, the three-year discovery-based statute of limitations for toxic torts, applies to a property damage claim where asbestos remained undetected after certification of its removal, but without any allegation of additional damage or change in condition due to its presence over time.

    Holding

    No, because CPLR 214-c (2) requires that the injury to property be “caused by the latent effects of exposure” to a toxic substance, and the mere presence of undetected asbestos, without any additional damage or change in condition over time, does not meet this requirement.

    Court’s Reasoning

    The court emphasized that CPLR 214-c was enacted to address inequities in toxic tort cases where injuries manifest long after exposure. The statute tolls the statute of limitations until the injury is discovered or should have been discovered. However, the court stressed that CPLR 214-c (2) specifically requires that the injury be “caused by the latent effects of exposure” to a toxic substance. The court reasoned that this requirement aligns with the legislature’s intent to provide recourse only where the harm becomes apparent years after the exposure. The court distinguished this case from situations involving ongoing contamination, such as hazardous waste seepage, where the property damage results from the gradual infiltration of a toxic substance. Here, the harm occurred when the asbestos was initially installed, and its continued presence, without any change in its condition or impact, did not constitute a latent effect. As the court stated, “Where, as here, plaintiffs property damage claim involves no additional damage to its building since the original implantation of the harmful substance…the injury cannot be said to have resulted from the latent effects of exposure to a toxic substance.” Because CPLR 214-c was inapplicable, the standard three-year statute of limitations for malpractice applied, barring the claim. The Court made clear that not every asbestos-related property damage claim qualified for the extended statute of limitations under CPLR 214-c.

  • MRI Broadway Rental, Inc. v. United States Mineral Products Co., 92 N.Y.2d 421 (1998): Accrual of Toxic Tort Claims for Property Damage

    92 N.Y.2d 421 (1998)

    In toxic tort cases involving property damage, the cause of action accrues upon initial exposure to the toxic substance, not when the contamination exceeds regulatory standards or when abatement is undertaken.

    Summary

    MRI Broadway Rental, Inc., owned a building constructed in 1971 with asbestos-containing materials. MRI sued the asbestos manufacturer in 1990, alleging continuous physical damage to the building from asbestos fibers and seeking damages for abatement costs and loss of value. The New York Court of Appeals held that the cause of action accrued when the asbestos was initially installed in the building, not when the building became “contaminated” or when MRI discovered the contamination. The court emphasized the need for a bright-line rule to provide certainty for potential defendants and avoid stale claims, and rejected basing accrual on fluctuating regulatory standards or an unascertainable date of contamination.

    Facts

    MRI owned a building constructed in 1971 using asbestos-containing fireproofing and insulation. MRI purchased the building in 1976 and retained Paramount Group, Inc. (PGI) as managing agent. By the early 1980s, MRI became aware of potential asbestos dangers, and tenants began expressing concerns. In 1983, MRI hired an environmental consultant to assess the asbestos. From 1986-1987, MRI conducted abatement work due to tenant complaints and to comply with local laws.

    Procedural History

    MRI sued the asbestos manufacturer on August 28, 1990. The Supreme Court initially denied the defendant’s motion for summary judgment. The Appellate Division reversed, granting summary judgment to the defendant, holding that the cause of action accrued before August 28, 1987. The Court of Appeals affirmed the Appellate Division’s decision.

    Issue(s)

    1. Whether the cause of action for property damage due to asbestos accrues upon the initial installation of the asbestos-containing materials or when the building becomes “contaminated” with friable asbestos.
    2. Whether CPLR 214-c, New York’s discovery rule for toxic torts, applies to revive MRI’s claim.

    Holding

    1. No, because the injury occurs when the asbestos is installed in the building.
    2. No, because the injury was discoverable before July 1, 1986, precluding application of the discovery rule under CPLR 214-c (6)(b).

    Court’s Reasoning

    The Court of Appeals relied on its precedent in Schmidt v. Merchants Desp. Transp. Co., which held that a cause of action arising from toxic exposure accrues upon initial exposure. The Court acknowledged that the “actual physical damage” rationale in Schmidt may be flawed, but reaffirmed its holding for practical and policy reasons. The court stated, “a bright line, readily verifiable rule was adopted in which, as a matter of law, the tortious injury is deemed to have occurred upon the introduction of the toxic substance into the body.” The Court found the Second Circuit’s reasoning in Maryland Cas. Co. v. Grace & Co. persuasive, noting that “the damage that building owners are seeking to `undo’ is not the fact that they discovered asbestos, but the fact of its incorporation in their buildings.” The Court rejected the “contamination” standard proposed by MRI, finding it difficult to define and subject to ever-changing regulatory standards. The Court also held that CPLR 214-c did not apply because MRI was or should have been aware of the presence of asbestos and its dangers before July 1, 1986. The court emphasized the need for predictability and certainty in assessing liability risks. “In keeping with the important purposes of avoiding stale claims and providing defendants with a degree of certainty and predictability in risk assessment, our precedents have rejected accrual dates which cannot be ascertained with any degree of certainty, in favor of a bright line approach.”