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U.S. Specialty Insurance Co. v. Daimler Trucks North America, LLC

United States District Court, S.D. Indiana, Indianapolis Division

September 28, 2018




         The present case revolves around an accidental fire that significantly damaged three garbage trucks that were parked in a city parking lot. Fortunately, for all involved, nobody was injured. However, the fire did cause over $300, 000 in damage prompting the present products liability lawsuit between the owner of the truck, the City of Columbus, Indiana (“City”); its insurer, Tokio Marine Holdings, Inc.[1] (collectively referred to as “Plaintiffs”); and the manufacturer of the truck, Daimler Trucks North America, LLC (“Daimler” or “Defendant”).

         Before the court are Defendant's motion to exclude the expert testimony of David Zedonis, Plaintiffs' motion to exclude the expert testimony of John Maurus, and Defendant's motion for summary judgment. For the reasons stated below, Plaintiffs' Daubert motion is DENIED, Defendant's Daubert motion is GRANTED IN PART and DENIED IN PART, and Defendant's motion for summary judgment is GRANTED IN PART and DENIED IN PART.

         I. Background

         In early 2008, the City issued an invitation to the public seeking bids for a new garbage truck. (Filing No. 76-1, Deposition of Bryan Burton (“Burton Dep.”) at 19:20 - 25; 20:1 - 6)[2]; see generally Ind. Code § 5-22-7-1 et seq. (describing Indiana's bidding process for public purchasing). Bryan Burton, the Director of the Department of Public Works for the City, was in charge of the bidding process and responsible for purchasing the truck. (Filing No. 76-1, Burton Dep. at 14:9 - 19; 20:4 - 6; 30:6 - 8). After getting approval from the Board of Public Works and Safety, Burton placed an order with Best Equipment Co. Inc.-the winning bidder. (Id. at 21:13 - 25; 30:21 - 24). On May 28, 2008, the City officially purchased the 2007 M2 106V Freightliner garbage truck-the “subject truck” of this litigation. (Filing No. 71-12, Certificate of Title for the subject truck).

         Along with the purchase of the subject truck, the City also purchased an Extended Warranty (the “Warranty” or “Warranty Agreement”) from Daimler.[3] (See Filing 71-4, Extended Warranty Agreement). When purchasing trucks, the City's standard practice is to always purchase an extended warranty because it is cheaper to purchase an extended warranty than it is to pay for the repairs over time. (Filing No. 71-3, Burton Dep. at 36:7 - 19). The Warranty covers the subject truck's suspension, engine, transmission, and both the front and rear axles. (Id. at 57:16 - 23). The Warranty also contains certain limitations:

Purchaser's Exclusive Remedy
The foregoing limited warranty shall be the Purchaser's sole and exclusive remedy against Freightliner, whether in contract, under statute (including statutory provisions as to conditions as to quality or fitness for any particular purpose of goods supplied pursuant to the contract of sales), warranty, tort, strict liability, or any other legal theory.
Freightliner Limitation of Liability
Freightliner's liability to a Purchaser on any claim, for loss or damage arising out of, connected with, or resulting from the contract or sale, or the performance or breach thereof, or from the design, manufacture, sale, delivery, service, repair or use of any vehicle manufactured by Freightliner, shall not exceed the price to the Purchaser allocable to the part of such vehicle which gives rise to the claim and in no event shall it exceed the sales price of the vehicle. In no event shall Freightliner be liable for special or consequential damages, including, but not limited to, injuries to persons or damage to property, loss of profits or anticipated profits, or loss of vehicle use.

         (Extended Warranty Agreement at 3 - 4). The Warranty Agreement is a standard form agreement, and Burton explained that he understands the terms of the agreement and that the terms are a condition to Freightliner extending the agreement. (Filing No. 71-3, Burton Dep. at 57:3 - 15). The Warranty is signed “Brian Burton, ” but Burton explained that the signature was not his (since it was misspelled) and he did not know who signed the document. (Id. at 56:2 - 13).

         On May 11, 2015, the subject truck ignited resulting in a fire that damaged the subject truck and two other garbage trucks parked nearby. (Filing No. 57, Answer at 5 ¶ 16; Filing No. 71-3, Burton Dep. at 94:25, 95:1 - 4).

         The origin and cause of the fire is disputed. John Maurus-a fire investigator and Defendant's expert-examined the trucks less than two weeks after the fire. (See Filing No. 71-13, May 22, 2015 Inspection Sheet). He concluded the fire originated in the engine compartment of the subject truck near a battery cable. (See Filing 71-14, Deposition of John Maurus (“Maurus Dep.”) at 35:9 - 17). David Zedonis-a fire investigator and Plaintiffs' expert-examined the trucks in August of 2017, more than two years after the fire. (Filing No. 94-2, Expert Report of David Zedonis (“Zedonis Report”) at 1). He concluded that the fire originated in the taillight power distribution module (“PDM”). (Id. at 2).

         On October 17, 2016, Plaintiffs filed a complaint in Indiana state court, and on November 23, 2016, Defendant removed the action to federal court. (See Filing No. 1-2, State Court Record at 3; Filing No. 1, Notice of Removal). An Amended Complaint was filed on December, 15, 2016. (Filing No. 13). The Magistrate Judge whittled down[4] the Amended Complaint leaving only one remaining claim: a product liability claim alleging the subject truck was defective and seeking damages for the loss of the other two garbage trucks. (Id. at 6). Defendant now seeks summary judgment on Plaintiffs' remaining claim.

         II. Discussion

         A. Motions to Exclude Expert Testimony

         1. Legal Standard

         The admissibility of expert testimony is governed by the Supreme Court's decision in Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993) and Federal Rule of Evidence 702. C.W. ex rel. Wood v. Textron, Inc., 807 F.3d 827, 834 (7th Cir. 2015). Generally speaking, an expert's opinion must be helpful to the jury, based on sufficient facts or data, and the product of reliable principles and methods. See Fed. R. Evid. 702(a) - (c); Wood, 807 F.3d at 834. In addition, the expert must reasonably apply the principles and the methods to the facts of the case. Fed.R.Evid. 702(d); see Lapsley v. Xtek, Inc., 689 F.3d 802, 810 (7th Cir. 2012).

         The district court serves as the gatekeeper for expert testimony. Lapsley, 689 F.3d at 809. This means that the court must make a determination at the outset of whether the proffered testimony is sufficiently relevant, reliable, and related to the facts of the case. Id. (citing Daubert, 509 U.S. at 592 - 93). The court's analysis encompasses only the bases for the expert's opinions-not the opinions themselves. See Schultz v. Akzo Nobel Paints, LLC, 721 F.3d 426, 431 - 32 (7th Cir. 2013).

         2. David Zedonis

         Zedonis, Plaintiffs' expert, opined that the fire originated at the taillight PDM. Defendant seeks to preclude several of Zedonis's opinions-(1) the taillight PDM in the subject truck was exposed to similar severe environmental conditions similar to those involved in Defendant's 2008 voluntary recall; (2) the exposure to the environmental conditions led to corrosion on the PDM and its connectors; (3) the corrosion led to increased resistance sufficient to start an electrical fire; (4) the wind spread the fire from the taillight PDM to the engine compartment, and (5) the taillight PDM suffered from a defect that made it unreasonably dangerous-all because Zedonis lacks a reliable methodology. See Lapsley, 689 F.3d at 810; Clark v. Takata Corp., 192 F.3d 750, 759 n. 5 (7th Cir. 1999). Plaintiffs respond that Zedonis's opinions are reliable and based on the facts and evidence in this case.

         Turning to Defendant's first three challenges, the court finds that these opinions (collectively the “environmental exposure” opinions) are sufficiently reliable. First, Zedonis conducted an on-site inspection, during which he observed an exceptional amount of heat damage near the taillight PDM as well as significant corrosion on the PDM mounting bracket. (Zedonis Report at 11). Based on these observations, and his heating pattern and arcing pattern analysis, he concluded that the fire originated at the taillight PDM-a conclusion which Defendant does not challenge as unreliable. Second, he considered different reports concerning PDMs and environmental exposure. For example, he considered Defendant's 2008 recall (Safety Recall 08V-154) and a 2012 letter written by Defendant in response to an Office of Defects Investigation concerning the recall. (Id. at 12 - 13); (Filing No. 76-7, ODI Report of Nasser Zamani (“Zamani Report”) at 2 - 3). Both documents state that certain PDM locations are highly susceptible to water intrusion. (Zedonis Report at 13); (Zamani Report at 1 - 2). He also considered several of Defendant's technical reports, one of which that notes the existing PDM design-the taillight PDM design-has resulted in electrical failures and equipment fires due to water intrusion. (Filing No. 85, Bussman Severe Service PDM Technical Report (“Bussman Report”)[5] at 2).[6]

         Thus, his environmental exposure opinions are based on those two analyses: his analysis of the fire origin and consideration of the reports concerning PDMs. Defendant does not challenge the sufficiency of his fire-origin analysis, and experts may rely on other scientific or similar reports to form their conclusions. See Walker v. Soo Line R. Co., 208 F.3d 581, 588 (7th Cir. 2000); see also NutraSweet Co. v. X-L Engineering Co., 227 F.3d 776, 789 - 790 (7th Cir. 2000). Based on his experience and training as a mechanical engineer, Zedonis is qualified to bridge the gap between the reports and his ...

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