Strict liability is a legal concept where a manufacturer puts a product on the market which has a defect and is unreasonably dangerous. In a recent case decided by the United States District Court for the District of Connecticut, a fire destroyed a residential building insured by the plaintiff insurance company. The plaintiff paid its insured’s claim and filed a subrogation action against the defendant who manufactured the product, a device called “electric meter pan with circuit breakers,” which will be referred to as “the electric meter.” The plaintiff’s case was based on the theory of strict liability, alleging that the meter pan was defective and unreasonably dangerous and the fire was the direct result of the defect.

The plaintiff’s insured constructed a series of homes in which none sold and stood vacant for a number of years. The property owner retained a security monitoring company to monitor the electric power, which was left on in the vacant homes. On the night in question, it was very cold and snow covered the ground. About two hours after being alerted to the loss of power, one of the homes was severely damaged by fire. The insurance company paid the owner for the loss and filed the action for strict liability.

The meter pan was enclosed within a metal container, affixed against the exterior wood siding. The plaintiff retained an expert to investigate the cause of the fire, who indicated that it was due to a short circuit within the main circuit of the internal line side components. The report stated that the meter enclosure was designed and manufactured for outdoor applications yet moisture compromised the circuit breaker’s internal system.

The defendant who manufactured the product made motions before the court: an order striking the opinion of the plaintiff’s expert and precluding his opinion testimony at trial, and a motion for summary judgment dismissing plaintiff’s complaint.

The court relied on a previous Supreme Court case in the State of Connecticut which recognized the “malfunction theory” of products liability. In that case, the court indicated that all product liability actions required the plaintiff to prove that “the product was in a defective condition unreasonably dangerous to the consumer or user.” In this case, the court indicated that a plaintiff relying upon the “malfunction theory” in a products liability action must satisfy a two-pronged burden of proof: a product failure attributable to the defendant and, a causal connection between that failure and the loss.

The court pointed out that the failure was due to a short circuit within the main circuit breaker mounted within the meter enclosure and there was sufficient evidence to justify the expert’s conclusion. However, the court further pointed out that these circumstances were not sufficient to cast the defendant liable for a product defect because “proof of an accident alone is insufficient to establish a manufacturer’s liability. The fact of a product accident does not necessarily establish either the existence of a defect or that the manufacturer is responsible, both of which must be proven in products liability cases.”

When a new product malfunctions, the inference that the malfunction resulted from a defect attributable to the manufacturer is likely to be stronger than when the product is older because of the diminished possibility of other causes. In the case at hand, the house did not sell, but electricity was maintained, making use of the meter enclosures. The fire occurred six years later. There was no evidence in the record that the meter enclosure failed to keep continually dry during five or six winters of considerable severity. If an external meter enclosure left the manufacturer’s control in so defective a condition that foreseeable amounts of natural outdoor water could penetrate the product, causing it to short circuit, one would expect this to happen sooner rather than later.

The court indicated that the plaintiff’s proof did not suffice in practice; therefore the court granted the defendant’s motion to preclude the expert opinion testimony and granted the defendant’s motion for summary judgment.


Q: I have been negotiating with a major company to install a security system. It is a large job that I really want to finalize. The company just returned the contract and the potential subscriber has crossed out the limitation of liability provision and the third party indemnification provisions from the contract. The subscriber has initialed the deletion. Shall I allow these deletions from the contract?

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A: The limitation of liability and the third party indemnification provisions are your security and your protection in dealing with your customer or subscriber. Claims are not often made against an alarm company; however, if a claim is made against you because your subscriber sustained a loss, the two provisions they have eliminated are the provisions that protect you from the claim. Your subscriber has or should have liability insurance protecting them against any loss. You are not an insurer. If these provisions are removed, you become vulnerable. I assume you have insurance and I assume that your insurance carrier has required you to include these provisions in your contract. If you remove them without the consent of your insurance carrier it is probable that your insurance carrier will deny coverage. There may be some flexibility in negotiating the contract, but I would not remove the two provisions.