A New York Appellate Court recently dismissed claims of strict product liability and breach of implied and express warranty against a vehicle repair facility, finding that such claims must fail where the facility did not design, manufacture, distribute or sell the product. Reeps v BMW of N. Am., LLC., et. al, 2012 NY Slip Op 02584 (1st Dept 2012).
The case involved the Reeps family, who had their 1989 BMW serviced at Hassell Motors (a licensed BMW dealer) for an exhaust odor inside of the vehicle in 1991. Hassell did not identify the source of the leak until a subsequent visit, where the leak was determined to be a split fuel hose. In 1992, Sean Reeps was born with birth defects, which the Reeps family claim resulted from the inhalation of gas fumes in early pregnancy. In 1994, BMW recalled the model vehicle at issue due to a defect in the feed fuel hose which was causing a fuel odor to develop inside of the vehicle. The family filed the lawsuit in 2008.
While the case continues against Hassell under a negligence theory of liability, the Court’s decision is an important one as it demonstrates an available defense for service providers with limited contact with a product in escaping strict product and breach of warranty theories of liability, which may ordinarily be quite difficult to overcome.
The case also highlighted an important issue with respect to spoliation of evidence. BMW sought to dismiss the case as the Reepses were no longer in possession of the vehicle at the time of the lawsuit. The court found that, with other circumstantial evidence available, even though the car changed ownership and the fuel hose was gone entirely, the defendants “failed to demonstrate that the parents disposed of the vehicle with knowledge of its potential evidentiary value.” Thus, even missing evidence may not be deemed spoliated under certain circumstances, compounding the difficulty in defending a strict liability cause of action.
For more information, please contact any member of Goldberg Segalla’s Global Insurance Services Practice Group.