Material Failure--Focus on Cellulose Insulation

This recurring series will discuss various materials, including engineered plastics, woods, metals, polymers, bio-polymers, and other composites, and evaluate real world failure modes and provide practice tips for the recovery professional. The first material discussed is cellulose insulation.

Cellulose is an organic material derived from wood, and commonly used in the building industry to insulate.  Cellulose is commonly seen as blown in insulation in homes and businesses. Blown cellulose insulation is made mostly from shredded newspaper and chemicals to reduce flammability. The composition can vary significantly as to the cellulosic material, and the type and percentage of fire retardant chemicals utilized. Many cellulose companies use a blend of ammonium sulfate and borate. While cellulose manufacturers contend this material is fire safe, even treated cellulose can support combustion and smoldering ignition. 

In the last decade, exactly how cellulose insulation can be ignited has become a growing debate. An older theory claimed that when cellulose was subjected to heat, its ignition temperature was lowered and eventually ignited by that heat source. The current explanation is that through pyrophoric carbonization, where the cellulose first chars and carbonizes, it will self-heat until it ignites. This theory is supported by a 1999 National Institute of Standards and Technology ("NIST") study. Wood chips and whole wood pieces were tested, resulting in a finding that self-heating occurs because of a physical change in the wood which raises its surface temperature and leads to ignition.    

Regardless of the processes, blown in insulation is a competent ignition source. In any fire claim where cellulose insulation may be in the area of origin, steps should be taken to identify the manufacturer, brand/type, and the installer. These parties should be placed on notice if it is suspected the cellulose could have played a role in ignition or fire spread.  If packaging can be obtained, it will typically identify the material type, composition, standards to which the material has been certified, and any warnings.  Samples of cellulose from areas of the home or business that were unaffected by fire should also be taken for future testing.

Decisions should be made whether a chemist or fire spread engineer will be needed. While certain jurisdictions have allowed submission to a jury based merely on cellulose insulation being the most probable fuel for the fire, expert testimony regarding he ignition sequence may be advisable. In circumstances where the fire occurred months or years after installation, having an expert explain the delay in ignition may help the jury to connect the dots.

LG Dehumidifiers Recalled after Reports of Thirteen Fires

Thirteen fires and more than one million dollars in property damage have been caused by LG Dehumidifiers, prompting a recall. The Goldstar GHD30Y7, Goldstar DH305Y7 and Comfort-Aire BHD-301-C dehumidifiers are all included in the recall. The recalled units are distributed through The Home Depot, Walmart, Ace Hardware, Do It Best, Orgill and other nationwide retailers from January 2007 through June 2008.

The failure mode is identified by the CPSC as a short in the power connector for the dehumidifier's compressor. Consumers are warned to immediately stop using the dehumidifiers and unplug them. Goldstar and Comfort-Aire deny any responsibility.

If you learn of dehumidifiers in the area of origin, it's recommended to hire an electrical engineer to perform a site inspection so as to rule the unit in or out, along with any other electrical sources, including the structural electrical system. The dehumidifier should be preserved if there is any possibility it may have been involved in the fire, along with the receptacle to which it is connected, and any associated cords, including extension cords.
 

Refocusing the Duty Inquiry in Michigan

In March, we discussed the importance of pleading common law duties separate and distinct from a builder’s contractual duties in order to preserve tort-based construction defect actions under Michigan law. In its opinion released June 6, 2011, the Michigan Supreme Court recently reinforced but fine-tuned this advice in Loweke v. Ann Arbor Ceiling & Partition Co., L.L.C., 2011 WL 2184294 (Mich. 2011).

The court recognized that under Fultz v. Union Commerce & Assocs., 470 Mich. 460 (2004), Michigan courts had mistakenly created a form of tort immunity against claims raised by noncontracting third parties. This immunity has grossly limited recoveries in both residential and commercial claims, because the policyholder typically contracts with only one entity, either the builder or general contractor, but the subcontracting tortfeasor has been previously ruled by trial courts to be immune due to lack of privity with the homeowner. The Supreme Court commented that Michigan courts had been allowing contract terms to obscure the inquiry as to whether a contracting defendant owed a noncontracting third party any legal duty. Rather, the court explained, any duty owed should be discerned “without regard to the obligations contained within the contract.” The focus of the inquiry is not whether a defendant’s conduct was separate and distinct from the defendant’s contractual obligations but whether a defendant owes any duty at all to a particular plaintiff.

While Loweke will be greeted with sighs of relief by those seeking to advance construction defect claims, the “separate and distinct” analysis is not dead letter. The failure to plead a duty independent of a contractor’s obligations will limit recovery to contractual avenues, to which third parties cannot generally avail themselves. Evaluation of what duties may exist relative the damage suffered, and careful crafting of the Complaint, is critical.

This facet of Michigan law has been dynamic and Cozen O’Connor will keep a watchful eye open for the latest changes.

 

Stumbling Over Michigan's Distinction Between Contractual and Common Law Duties

Tort claims arising from construction defects often falter in the looming presence of a contract. The existence of a contract is particularly challenging for the plaintiff who is not in contractual privity with the defendant. Under Michigan law, the distinction between duties owed by a contractor arising from a contract and those arising in the common law plays a critical role in properly pleading a tort claim. The distinction is acutely unclear with respect to claims arising from defective construction.

The “plaintiff not in privity” situation was addressed by the Michigan Supreme Court in Fultz v. Union Commerce & Associates, 470 Mich. 460 (2004). In Fultz, the Court declared that the plaintiff must show the defendant owed a duty to the plaintiff that was “separate and distinct from the defendant’s contractual obligations” in order to recover in negligence. The Fultz court further explained that a separate and distinct duty could be breached through a defendant’s creation of a “new hazard.” Since Fultz, the concepts of “separate and distinct duties” and “new hazard” under Michigan case law have remained unclear, thus an element of uncertainty exists with respect to pleading those elements.

On September 7, 2010, the Michigan Court of Appeals further explained the contract-common law duty dichotomy and the “new hazard” theory of breach. See Boylan v. Fifty-Eight Ltd. Liab. Co., 2010 WL 3488995 (Mich. Ct. App. 2010). In Boylan, the defendant was hired to install a water line that traversed an easement on the plaintiff’s land. The defendant contractor did not restore the terrain to its preexisting condition, thus predisposing the land to flooding and eventually causing the plaintiff’s septic system to fail. The court determined that the defendant had a duty that was grounded in “common-law duties to avoid permanently damaging” the landowner’s real property which was separate and distinct from its contractual duties. The court held that the defendant breached its duty when it created a “new hazard” that interfered with the plaintiff’s drainage system and caused the home’s septic system to back up.
 

While Boylan is instructive in defining both “separate and distinct” duties and “new hazard” breaches, the court did not pass on the pleading requirements for either element. The recent personal injury case of Tucker v. Pipitone, unpublished opinion per curiam of the Court of Appeals, issued Feb. 15, 2011 (No. 294754), helps explain the pleading requirements for alleging a “separate and distinct” duty.

In Tucker, the defendant was hired by a general contractor to perform siding work on the group home in which the legally-blind plaintiff resided. The plaintiff was not a party to the subcontract and therefore unable to recover under a breach of contract theory. The court concluded that the plaintiff alleged a duty that was “separate and distinct” from those imposed under the defendant’s contract with the general contractor by alleging that the defendant placed building materials in a location where it was foreseeable that it could cause group home residents to fall. The court reasoned that the plaintiff’s allegations implicated the defendant’s “common law duty to act in a manner that does not place others in unreasonable danger.” The court explained “[H]arms caused by the failure to perform the duty imposed under the contract” arise “solely under the contract” and “the failure to refrain from taking actions that unreasonably place others in danger” arise under the common law and apply to every action that a person takes. The court noted that had the plaintiff alleged that the defendant acted negligently by failing to properly install the siding (which later fell and injured the plaintiff), such a claim would have implicated a contractual duty, and thus the negligence claim would have failed.

In light of Tucker’s guidance, a plaintiff seeking to recover damages arising from a construction defect must tread carefully when the plaintiff is not a party to the applicable construction contract. Based on Tucker’s hypothetical, the duty to perform a task or properly perform a task derived from a contract cannot be the basis of such a claim; however, the failure to perform such tasks in a safe manner may satisfy the pleading requirements. Accordingly, plaintiffs not in privity with a defendant must allege duties that arise from the common law. Careful pleading may be the key to recovery.