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Subrogation Alert

The U.S. District Court for Maryland recently published a decision that will undoubtedly have an impact on subrogation cases in this region. The case, Fireman's Fund Ins. Co. v. Tecumseh Prods. Co., 2011 U.S. Dist. LEXIS 21010 (D. Md. Mar. 2, 2011), concerned the admissibility of expert testimony where critical evidence was consumed in the fire. Although this case does not constitute new law in the area of expert witness testimony, it will now force expert witnesses to “tighten up” their investigations in cases where the important evidence was destroyed in the mishap; the “indeterminate defect" theory of liability case.

In Fireman's Fund Ins. Co. v. Tecumseh Prods. Co., a fire occurred at a hotel, and after investigation, the cause was narrowed to a heat pump, one of which was located in the maintenance closet for each room. The hotel’s maintenance staff reported experiencing heat pump failures in the past. Plaintiff’s counsel hired an engineer who conducted an investigation on three pumps:  the one in the fire’s area of origin (“actual pump”), one that had failed (“failed exemplar”) and a brand new one (the exemplar). In reviewing these three pumps, the engineer centered his attention on the thermal overload protector (“TOM”); he found that while the actual pump’s TOM was destroyed in the fire, the failed exemplar’s TOM showed signs of pitting, which was evidence of high resistance heating, and that this pitting was not present on the exemplar’s TOM. The engineer then opined that the cause of the fire was high resistance heating caused by a defective TOM; a manufacturing defect.

Defendant's challenged the engineer’s methodology in arriving at his opinion and the District Court agreed. The Court reviewed the engineer’s method of investigation based upon the National Fire Protection Association 921 (“NFPA 921”), which is a guide to fire investigators. In doing so, the Court found that the engineer was required to develop a hypothesis based solely on the data collected, to test the hypothesis by comparing it to all known facts, and to repeat the process until all feasible hypotheses have been tested.  Until all these steps are completed, NFPA 921 unambiguously requires an investigator to list the cause of the fire as undetermined. The Court then found that contrary to the requirement of NFPA 921, the engineer developed a hypothesis too early, not based solely upon the date collected and it did not rule out other possible causes of the fire. As such, the methodology of the engineer was based upon any accepted methodology accepted in the fire investigation community.

The impact of Fireman's Fund Ins. Co. v. Tecumseh Prods. Co. to those parties wishing to recover their losses in subrogation is that they must now be very careful with an “indeterminate defect" theory of liability case. While it is doubtful that the ultimate conclusion drawn by this engineer was wrong, it highlights the danger of straying from the requirement of NFPA 921, or any other methodology accepted by the investigator’s community. Careful documenting of what phase of the investigation the initial hypothesis was reached, how that hypothesis was tested and how other possible causes were ruled out would have resulted in recovery for this Plaintiff. Going forward, defense counsel will be on the look out for such investigative gaps, and subrogating parties will likely see more of these types of challenges to their expert opinions.

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