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Great Northern Insurance Co. v. Honeywell International Inc.

Court of Appeals of Minnesota

April 10, 2017

Great Northern Insurance Company, as subrogee of Scott and Leah Rued, Appellant,
v.
Honeywell International, Inc., et al., Defendants, McMillan Electric Company, Respondent, and Honeywell International, Inc., Cross Claim Plaintiff,
v.
McMillan Electric Company, Cross Claim Defendant.

         Hennepin County District Court File No. 27-CV-14-4020 Kirk, Judge

          Thomas P. Kane, Cozen O'Connor, Minneapolis, Minnesota; and Anthony J. Morrone (pro hac vice), Cozen O'Connor, Chicago, Illinois (for appellant)

          Cortney G. Sylvester, Nilan Johnson Lewis PA, Minneapolis, Minnesota; and Webster A. Hart, Herrick & Hart, S.C., Eau Claire, Wisconsin (for respondent)

          Considered and decided by Schellhas, Presiding Judge; Kirk, Judge; and Bratvold, Judge.

         SYLLABUS

         The plain meaning of "equipment or machinery" includes a heat-recovery ventilator under Minn. Stat. § 541.051, subd. 1(e) (2016).

          OPINION

          KIRK, Judge

         Appellant-insurer challenges the summary-judgment dismissal of its product-liability, breach-of-warranty, and post-sale duty-to-warn claims against respondent-manufacturer, arguing that the district court erred by concluding that its claims were barred by the ten-year statute of repose because the heat-recovery ventilator (HRV) is not "equipment or machinery" installed upon real property under Minn. Stat. § 541.051, subd. 1(e) (2016), the exception to the statute of repose. Because the HRV satisfies the plain and ordinary meaning of "equipment or machinery" under subdivision 1(e), and McMillan had a post-sale duty to warn, we reverse and remand.

         FACTS

         In 1996, Scott and Leah Rued constructed a new home in Eden Prairie. The Rueds' architect included two HRVs in the design of the home's ventilation system. Two Honeywell HR200 Model 2355 HRVs were installed in the Rueds' home. While the HRVs were not mandated by state code, they provided additional energy efficiency by recovering heat and removing humidity through the air-exchange process.

         The HRV is an air exchanger containing two fans and two air filters, a heat-exchange core, a motor, and two ventilation openings. Two metal mechanical ducts connect the HRV with fresh air from outside the home, as one duct removes stale air from the home and the other duct draws in fresh air from outside the home. The metal ducts are attached to the HRV with screws. Each HRV is powered by an alternating current delivered via a standard three-prong electrical plug that is connected to a standard electrical outlet. The electrical outlet for the HRV receives power on its own electrical breaker. The HRV is controlled through a humidity-control dial on a thermostat that is located in the bathroom. The humidity-control dial is hard-wired through the walls to the HRV through low-voltage wiring. Drains attach to the HRV, removing any condensation that builds up inside the air exchanger.

         After completion of the first stage of construction, the HRVs were hung from the overhead ceiling joists in the basement by metal straps and brackets and connected to the duct branches running throughout the Rueds' home. An HVAC technician installed the HRVs. A city inspector checked the installation of the HRVs prior to issuing a certificate of occupancy to the Rueds.

         Defendant Nutech R. Holdings Inc. designed and manufactured the HRVs that were installed in the Rueds' home. Nutech manufactured the HRVs for defendant Honeywell International Inc., and the HRVs were labeled with the Honeywell name. In 1992, Nutech began using electric motors that were manufactured by respondent McMillan Electric Company. Nutech installed McMillan's model 2355 electric motor only in the Honeywell HRVs. McMillan sold the model 2355 motor exclusively to Nutech, and the motor was only installed in HRVs. In 1998, McMillan stopped producing the model 2355 motor. Between 2006 and 2010, approximately 60, 000 Honeywell HRVs with McMillan motors were sold to customers in Canada and the United States. When the lawsuit was filed in 2014, the model 2355 motor had been linked to 11 fires, but no deaths.

         In 2010, one of the two HRVs installed in the Rueds' home was replaced with an air exchanger made by a different manufacturer. On May 9, 2012, an HVAC technician from defendant Treated Air Company serviced the Rueds' air conditioner and furnace. Ten days later, a fire occurred in the remaining Honeywell HRV, causing substantial property damage to the Rueds' home. The parties contest the cause of the Rueds' fire, but one theory is that the wires within the motor were vulnerable to electrical failure because they were not designed to withstand the thermal limit of the motor. The Rueds had a homeowner's policy with appellant Great Northern Insurance Company, and Great Northern paid the Rueds' insurance claim.

         Great Northern, as subrogee, alleged 13 counts of tort liability. Great Northern alleged claims of post-sale duty to warn, product liability, and breach of warranty against Honeywell, Nutech, and McMillan and breach of contract and negligence against defendant Heating and Cooling, Two, and Treated Air. Honeywell and Nutech crossclaimed against McMillan, Treated Air, and Heating and Cooling, Two, ...


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