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From Products Liability Law Daily, April 30, 2014

Punitive damages available in property damage only action; however award against concrete maker improperly calculated

By Pamela C. Maloney, J.D.

The Connecticut Products Liability Act (act) permits punitive damage awards in claims seeking recovery of property damage only; therefore, a construction company was entitled to punitive damages against the manufacturer of a concrete product because the evidence was sufficient to establish that the manufacturer had acted in reckless disregard for safety, the Connecticut Appellate Court ruled. Despite this finding, the appellate court overturned the award because the amount had been calculated improperly. The appellate court also overturned the compensatory award, finding that it had been calculated improperly as well. Finally, the court determined that the construction company’s structural engineering expert was permitted to testify (R.I. Pools, Inc. v. Paramount Concrete, Inc., Officially released May 6, 2014, Keller, C.).

Background. R.I. Pools, Inc. had purchased a concrete product known as Shotcrete from Paramount Concrete Inc., for use in the construction of pools and spas. At least 17 of the pools in which R.I. Pools had used Shotcrete cracked, causing property damage. R.I. Pools alleged that the concrete was defective in a number of ways including: (1) the use of masonry sand alone or in combination with concrete sand in formulating the product; (2) improper mixing of the concrete product; (3) improper maintenance of machines and equipment used to manufacture the product; and (4) use of improper amounts and/or grade of ingredients in the manufacturing of the products. R.I. Pools also alleged that the concrete manufacturer had failed to warn of the potential for danger and damage posed to pools and spas being constructed, as well as the potential for damages and losses to both real and personal property in the vicinity of these pools. The jury found in favor of R.I. Pools and awarded it damages in the amount of $2,760,207.90. The jury also found that R.I. Pools was entitled to punitive damages.

Expert testimony. Before turning to the concrete manufacturer’s challenges to the compensatory and punitive damages awards, the court addressed the challenge to testimony offered by R.I. Pool’s structural engineering expert. The cement company argued that because the expert did not conduct any firsthand evaluation of four of the pools and did not rely on evidence of a type reasonably relied on by experts in his field, his opinion that defective Shotcrete caused cracking in these pools did not support the verdict with respect to these four pools. According to the court, an expert witness was not required to personally study or observe conditions, but could apply his or her specialized knowledge to facts perceived or made known to him at or before the proceeding. In addition, an expert witness was allowed to render an opinion on the basis of hypothetical facts that fairly are supported by the evidence. Without objection, the structural engineer had provided an expert opinion that was based on hypothetical questions and the concrete manufacturer failed to show that these questions were not fairly based on facts in evidence.

Compensatory damages. Turning to the concrete manufacturer’s challenge to the compensatory damages, the court found that the jury verdict, which was ten cents less than the gross damages figure relied on by R.I. Pool’s attorney during closing argument, had been improperly calculated and included an award for lost profits in contravention of the court’s instructions. It was clear from the verdict form that the jury had treated each of the 19 pools at issue identically, awarding the full amount of replacement costs for all the pools, despite evidence that only a handful of the pools needed to be replaced. The court rejected R.I. Pool’s argument that the jury’s use of a mathematical shortcut of determining the gross damages figure and then as nearly as practicable, dividing that figure by 19 to arrive at its findings of damages for each pool was harmless error. The jury’s verdict demonstrated its disregard for the court’s instructions that the jury determine damages separately for each pool and its instruction that lost profits were not a proper component of the damages. It also included amounts for miscellaneous expenses suggested by R.I. Pool’s attorney for which the jury had made a finding of zero dollars in response to the interrogatories. Finally, a review of the evidence did not explain or support the jury’s identical findings of damages for all the pools, particularly where the plaintiff had carefully detailed in the course of argument what it believed to be the full extent of its claimed and proven damages with regard to each pool.

Availability of punitive damages. On the issue of punitive damages, the court found as an initial matter that the harm for which punitive damages could be awarded included, by definition, damage to property, including the product itself. The court further explained that it need not determine whether, as the manufacturer suggested, that the act required a showing of a risk of bodily injury to justify an award of punitive damages because there was no evidence that this factor affected the verdict.

Evidence of reckless disregard. The court went on to find that the evidence supported the jury’s findings of fact that the manufacturer acted with reckless disregard for the safety of product users, consumers, and others who were injured by the product. Specifically, there was ample evidence concerning the manufacturer’s principals, employees, plant operations, procedures, equipment and methods of delivery from which the jury reasonably could have concluded that (1) the manufacturer lacked trained employees and quality control procedures to produce and deliver quality Shotcrete consistently; and (2) persons in positions of control for the manufacturer even lacked a basic understanding of how Shotcrete was manufactured and were seemingly "unconcerned" either with producing a product that was manufactured and delivered according to industry standards or with how their pattern of conduct would negatively affect the interests of the consumers who purchased this critical building material from their company. This evidence permitted a finding that through its officers and employees, the manufacturer had not merely been "negligent or inadvertent in its manufacturing process, but that its business operations reflected a wholesale lack of concern for the interests of the purchasers of its product, which was a critical building material in pools."

Calculation of punitive damages award. Having determined that punitive damages were recognized by the act and that R.I. Pools had satisfied the reckless disregard standard of proof required by law, the court found that the amount had been calculated improperly. Under common law, punitive damages are limited to the plaintiff’s litigation expenses minus taxable costs. In this case, the trial court had based its award on a lodestar calculation and considerations related thereto, rather than on the fees R.I. Pool had incurred pursuant to its agreement with its attorneys. As a result, R.I. Pool’s attorneys’ fees were calculated at $325 an hour rather than the agreed upon fee of $150 an hour. Because the award was contrary to the evidence, the appellate court reversed and remanded the order for further consideration.

The case number is AC 34363.

Attorneys: Raymond J. Plouffe, Jr. (Bai, Pollock, Blueweiss & Mulcahey, PC) for R.I. Pools, Inc. Michael S. Taylor (Gordon & Rees LLP) for Paramount Concrete, Inc.

Companies: R.I. Pools, Inc.; Paramount Concrete Inc.

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