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From Products Liability Law Daily, May 29, 2014

Claims against the manufacturers, seller of a propane heater that exploded and fatally injured its user were properly dismissed

By John W. Scanlan, J.D.

Products liability claims brought against the manufacturers of a propane space heater by the widow of a man who died of his injuries after a heater exploded were properly dismissed due to lack of sufficient evidence, the U.S. Court of Appeals for the Fifth Circuit held. The court also affirmed the dismissal of claims against the seller of the heater; however, it reversed the district court’s imposition of sanctions against the widow’s counsel (Ayala v. Enerco Group, Inc., May 28, 2014, Per Curiam).

Background. Patricia Ayala, a Louisiana resident, purchased a Mr. Heater portable propane heater from Gabriel Building Supply. The heater was manufactured by Mr. Propane, Inc., and Enerco Group, Inc. While Louis Ayala, her husband, was using it in their shed, it exploded, causing him severe burns and significant damage to the shed. He underwent multiple surgeries, but died of his injuries six months after the accident.

Patricia Ayala filed suit in Louisiana state court against Gabriel, Enerco, Mr. Heater, and their insurance companies. Enerco and Mr. Heater removed the case, contending that Gabriel was improperly joined to defeat diversity, and that Gabriel could only be held liable if it knew or should have known the heater was defective and failed to notify Ayala but that Ayala did not allege this. Ayala then filed an amended complaint adding a claim for “handling and merchandising” against Gabriel and moved for remand. The district court dismissed the claims against Gabriel, and then dismissed her claims for negligence, strict liability, and manufacture of an ultra-hazardous product against the other defendants, stating that her theories of recovery were limited to the Louisiana Products Liability Act (LPLA). The court subsequently granted summary judgment to the defendants and dismissed her claims under the LPLA.

Once Gabriel was dismissed from the suit, Ayala filed a second suit in state court against Gabriel alone; after Gabriel filed a third-party demand against Mr. Heater, she filed an amended complaint asserting claims against Mr. Heater that were “virtually identical” to those in her first case, which at that time was still ongoing. The district court enjoined the state court action and awarded costs and attorneys’ fees to Mr. Heater as sanctions, which were later determined by a magistrate judge to amount to $5,045. Ayala appealed both the decision against her and the order on fees and costs.

Improper joinder. Considering Ayala’s original complaint without the “handling and merchandising” claim later added against Gabriel, the Fifth Circuit agreed that Gabriel had been improperly joined because there was no basis for liability against it. The LPLA, which provides the exclusive theories of liability in Louisiana for manufacturers for damages caused by their products, has no cause of action against sellers of products that do not qualify as manufacturers under the LPLA. Therefore, Ayala had no viable cause of action against Gabriel under the LPLA. Furthermore, she failed to allege that Gabriel had actual or constructive knowledge of a defect in the heater and that it failed to declare this defect, which is required under Louisiana tort law to establish liability for a non-manufacturing seller.

LPLA/defect in construction or composition. The testimony of Ayala and her expert witness, an engineer, was not sufficient to create an issue of material fact regarding whether the heater was defective, the Fifth Circuit ruled. The engineer’s deposition testimony was too speculative; it was, by his own admission, based upon conjecture involving the Mr. Heater product generally. Because all non-ferrous components of the heater at issue were destroyed in the fire, the engineer examined an identical Mr. Heater model; however, he did not perform an analysis or engage in destructive testing of the example heater, and he conceded that he could not rule out other potential sources of a propane leak. Ayala’s testimony that her husband was familiar with the Mr. Heater and was careful in following instructions and maintaining equipment was speculative lay opinion not based on her first-hand perceptions because she was not present on the day the fire occurred, as was her testimony that she had taken the propane bottle for refills and was confident that it had functioned properly because she did not observe how it functioned on that day.

Res ipsa loquitur. Ayala could not establish indirectly that the heater was defective; her evidence was insufficient to exclude the inference that others besides the defendants could have been responsible. Her expert, who asserted that a propane leak caused the fire, testified that he could not exclude a failure by Louis Ayala to properly tighten a valve or a fault in the propane bottle as potential sources for the leak. In addition, Patricia Ayala’s testimony on her husband’s general care and her belief that the propane bottle functioned properly were not probative. Therefore, the court found that reasonable hypotheses about potential causes other than a defect in the heater had not been ruled out.

Sanctions. The award of sanctions against Ayala’s counsel were reversed because the Fifth Circuit determined that there was no evidence of bad faith, improper motive, or reckless disregard of the duty owed the court. The district court had imposed the sanctions under 28 U.S.C. §1927 after finding that her counsel had subverted its jurisdiction by filing virtually identical claims in state court to the claims that were already before the district court. The Fifth Circuit said that counsel had not advanced legally sound arguments for his state court filing, but also had not persistently brought a meritless claim despite warnings from the court; instead, counsel was mistaken in believing that the client would lose certain claims if the second action was not filed. Therefore, the district court abused its discretion in imposing sanctions.

The case numbers are 13-30532 and 13-31246.

Attorneys: Fred E. Salley (Salley & Associates) for Patricia Hamaker Ayala. Paul Darren Palermo (Blue Williams, LLP) for Enerco Group, Inc. and Mr. Heater, Inc.

Companies: Enerco Group, Inc.; Mr. Heater, Inc.

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