Products Liability Law Daily Wrap Up, SUPPLY CHAIN LIABILITY ISSUES—ASBESTOS—Md. App.: Summary judgment in favor of turbine seller upheld in asbestos exposure case, (Feb 13, 2024)

By Pankhuri Bhatnagar, B.A. LL.B.

A strict liability design defect claim could not be maintained against the seller because the turbine and its asbestos-containing parts never left the seller’s control.

In an action brought against a turbine maker and seller by the estate of a woman who died from mesothelioma due to her alleged exposure to asbestos dust present on her husband’s work clothes, the Appellate Court of Maryland affirmed a lower court’s grant of summary judgment to the seller. The appeals court observed that the seller could not be held liable for injuries that arose during the product’s installation because the seller was in charge of both the sale and installation of the turbine and the product was not “delivered” until it was fully assembled (Basil-Flippen v. General Electric Co., February 8, 2024, Battaglia, L.).

Background. In 1966, Paramount Global (hereinafter, Westinghouse or seller) and Potomac Electric Power Company (PEPCO or buyer) started negotiating the purchase by PEPCO of a turbine generator for use at PEPCO’s Morgantown Generating Station (station). The parties’ sales contract required Westinghouse to manufacture and deliver one steam turbine generator unit consisting of specified components (including insulating materials), while a separate installation contract required the seller to construct and install the turbine at the station. Westinghouse subcontracted with the Walter E. Campbell Company (WECCO) to supply and install heat insulation. A WECCO employee was involved in cutting, mixing, and applying the asbestos insulation on the turbine, which produced dust that collected on his clothing. His wife laundered these clothes on a weekly basis and was allegedly exposed to the asbestos dust. She was diagnosed with mesothelioma in 2020.

Prior proceedings. The worker’s wife filed a complaint against seven companies, including the seller, for strict products liability, breach of warranty, and negligence. After her death, her estate and her children added a wrongful death claim. Westinghouse successfully moved for summary judgment on the grounds that the decedent’s exposure arose from the handling of asbestos materials by another producer before they were attached to the turbine, that the seller could not be held liable for the negligent work practices of a subcontractor, and that the turbine was not a product for purposes of strict products liability. The children appealed, questioning the trial court’s grant of summary judgment on their strict liability design defect claim despite evidence demonstrating that Westinghouse manufactured, designed, and sold a defective and unreasonably dangerous product—the turbine, inclusive of third-party manufactured asbestos insulation components—which was a substantial and contributing cause of the decedent’s disease and death.

Legal standard. Maryland has adopted Section 402A of the Restatement (Second) of Torts, which imposes strict liability on sellers of defective or unreasonably dangerous products for physical harm caused to users or consumers. In order for strict products liability for a design defect to apply, the product must be in a defective condition at the time it left the possession or control of the seller, meaning that the manufacturer or seller must no longer have possession or dominion over the “product” when the injury occurs, Phipps v. General Motors Corp., 278 Md. 344 (1976).

Parties’ contentions. The estate asserted that Westinghouse had placed an unreasonably dangerous product (including its asbestos-containing component parts) on the market by selling it to PEPCO and that it could not ignore the sales contract to claim that it acted only as an installer and not as a seller because there were two contracts involving the turbine. The sales contract required the seller to deliver an unassembled turbine, with PEPCO bearing the responsibility of assembly, a responsibility that it separately allocated to Westinghouse. Had PEPCO contracted with any other entity to install the turbine, there would be no dispute that Westinghouse did not have possession of or control over the turbine and its asbestos-containing parts when the alleged asbestos exposure occurred, the estate maintained. Conversely, Westinghouse argued that because it was contractually obligated to both supply and install the turbine, and because the exposure arose from WECCO’s handling of its own asbestos materials, not Westinghouse’s, the asbestos components had not left Westinghouse’s control as required for strict products liability. Both parties cited cases supporting their stances.

Precedents. In Vaughn v. Daniels Co. (West Virginia), Inc., 841 N.E.2d 1133 (Ind. 2006), a subcontractor’s injured employee was found not to be a “consumer” because the contract provided for the delivery of a completed coal plant. If a contract provides for an assembled product but is delivered unassembled, the seller remains obligated to install the product to meet the contract. Thus, the seller is not liable for injuries arising during installation because the product is not considered complete and “delivered” to the buyer until it is installed. Conversely, if the contract provides for the delivery of an unassembled product, delivery occurs when the component parts are delivered, and the seller can be held liable for injuries arising from installation because the purchaser, not the seller, is obligated to install it, Lantis v. Astec Indus., Inc., 648 F.2d 1118 (7th Cir. 1981).

Analysis. In the instant suit, Westinghouse “wore two hats” as the seller and the installer. Although the turbine’s component parts had left their manufacturing plant and were being assembled at the station, they had not left the seller’s possession, as the seller retained an obligation to provide a fully assembled system, Ettinger v. Triangle-Pacific Corp., 799 A.2d 95 (Pa. Super. Ct. 2002). As such, the turbine and its components had not left the seller’s control for the seller to be held liable for a design defect. The estate emphasized the existence of separate sales and installation contracts and added that even if the contracts were viewed as one transaction, the precedents regarding hybrid transactions would clarify that the predominate purpose was the product’s sale rather than the installation service. The court observed that the overlapping contract dates, simultaneous negotiations of both contracts, and cross-references showed that there was functionally one agreement between Westinghouse and PEPCO for the supply and installation of the turbine, split into two contracts. The children claimed that under the sales contract, the legal and equitable title of the turbine parts passed to PEPCO upon delivery. The court held that even if the agreement constituted a hybrid transaction or PEPCO legally owned the components, Westinghouse and its representatives were the only parties expected to interact with the turbine and its parts, such that the seller had sole control over them until the installation was complete. Accordingly, the asbestos the decedent was exposed to never left the seller’s control, and the lower court’s order was affirmed.

The case is No. 1427.

Attorneys: Daniel A. Brown (Brown Kiely LLP) for Theresa R. Basil-Flippen. Christopher G. Conley (Evert, Weathersby, Houff, LLC) for Paramount Global f/k/a Westinghouse Electric Corp.

Companies: Paramount Global f/k/a Westinghouse Electric Corp.

MainStory: TopStory SCLIssuesNews AsbestosNews DesignManufacturingNews GCNNews MarylandNews