Insurer Not Entitled to Recover Amount From Manufacturers That Was Paid to Insured for Tractor Fire Where Insurer Failed to Show Manufacturing Defect.

An insurer filed an action against two manufacturers, seeking to recover the $252,075.56 it paid to its insured after a fire destroyed the insured's 2010 Case IH STX485 tractor. The insurer alleged that the manufacturers defectively designed and manufactured the tractor and its turbocharger. The insurer asserted common law claims for negligence, strict liability, and breach of express and implied warranties. The manufacturers sought summary dismissal of the insurer’s claims, and the court granted the motion. The court found that the insurer had not provided direct evidence of a defect in the tractor that caused the fire at issue. The insurer’s experts had opined that the precise cause of the fire could not be determined. The court stated that while it is well settled that the existence of a manufacturing defect may be established by circumstantial evidence alone, the insurer  failed to provide sufficient circumstantial evidence to demonstrate that the fire that destroyed the tractor "was caused by a defect and not other possibilities." The court also ruled that once after-market items were installed in the cab of the tractor, they became "integrated components" of the tractor. As such, the insurer’s negligence and strict liability claims were dismissed under Ohio’s economic loss rule. Finally, the court found that the insured performed an "unauthorized modification or field fix," rendering the express warranty inapplicable. Nationwide Agribusiness Ins. Co. v. CNH Am. LLC, No. 1:12-cv-01430, 2014 U.S. Dist. LEXIS 75997 (N.D. Ohio Jun. 4, 2014).

CALT does not provide legal advice. Any information provided on this website is not intended to be a substitute for legal services from a competent professional. CALT's work is supported by fee-based seminars and generous private gifts. Any opinions, findings, conclusions or recommendations expressed in the material contained on this website do not necessarily reflect the views of Iowa State University.

RSS​ Facebook Twitter