                                                                                                                           Opinions of the United
2006 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


3-1-2006

Natl Fuel Gas Co v. Equimeter Inc
Precedential or Non-Precedential: Non-Precedential

Docket No. 05-1901




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Recommended Citation
"Natl Fuel Gas Co v. Equimeter Inc" (2006). 2006 Decisions. Paper 1493.
http://digitalcommons.law.villanova.edu/thirdcircuit_2006/1493


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                                                            NOT PRECEDENTIAL


  UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT



                                No. 05-1901



                   NATIONAL FUEL GAS COMPANY,
                                        Appellant
                                 v.

                            EQUIMETER, INC.




               On Appeal from the United States District Court
                   for the Western District of Pennsylvania
                           (D.C. No. 03-cv-00188J)
                District Judge: Honorable Sean J. McLaughlin



                 Submitted Under Third Circuit LAR 34.1(a)
                            February 28, 2006

Before: SLOVITER, FUENTES, Circuit Judges, and BRODY,* District Judge

                           (Filed March 1, 2006)

                                 OPINION




           *
               Hon. Anita B. Brody, United States District Court for the
               Eastern District of Pennsylvania, sitting by designation.
SLOVITER, Circuit Judge.

       Plaintiff National Fuel Gas Company appeals from the District Court’s Order

granting Defendant Equimeter, Inc.’s Motion for Summary Judgment.

                                               I.

       On August 19, 2003, National Fuel Gas Company (“National Fuel”) filed this suit

against Equimeter, alleging that Equimeter “violated the warranty of merchantability and

the implied warranty of fitness for a particular purpose” in the design and manufacture of

its 257S safety valve. National Fuel had purchased and installed 219 safety valves

manufactured by Equimeter.

       One of the safety valves that National Fuel had purchased from Equimeter failed

on January 26, 1994, causing a natural gas explosion that resulted in substantial property

damage and personal injuries. Theresa Foster, who was injured in that explosion, sued

numerous defendants, including National Fuel and Equimeter. National Fuel filed a third-

party complaint against Equimeter, and the issue of whether the safety valve was

defective was ultimately submitted to a jury by special interrogatory. The jury found that

the “safety relief valve was defective at the time it left control of Defendant Equimeter,

Inc.” This finding was subsequently affirmed by a district court and this court in Foster v.

Nat’l Fuel Gas Co., 316 F.3d 424 (3d Cir. 2002).

       National Fuel alleges that as a result of the jury’s finding in the Foster case, it felt

compelled both “by law and conscience” to replace all 219 safety valves located in its

system. It thereafter instituted this suit against Equimeter to recover its cost of replacing

                                               2
the safety valves.

       Equimeter filed a motion for summary judgment, asserting that National Fuel’s

claims are for breach of warranty and are barred by the four-year statute of limitations

applicable to such claims. National Fuel responded that the four-year statute of

limitations is inapplicable because its claims are based on indemnification and strict

liability. The District Court granted Equimeter’s motion for summary judgment because

of the four-year statute of limitations for breach of warranty. The District Court noted

that 13 Pa. Cons. Stat. § 2725 provides that:

       A cause of action accrues when the breach occurs, regardless of the
       aggrieved party's lack of knowledge of the breach. A breach of warranty
       occurs when tender of delivery is made, except that where a warranty
       explicitly extends to future performance of the goods and discovery of the
       breach must await the time of such performance the cause of action accrues
       when the breach is or should have been discovered.

13 Pa. Cons. Stat. § 2725(b).

       The District Court also granted Equimeter’s motion for summary judgment with

regard to National Fuel’s claims for indemnity and strict liability, notwithstanding

National Fuel’s failure to allege these claims in the complaint. The District Court noted

that “[u]nder Pennsylvania law, the right to indemnity ‘enures to a person who, without

fault on his own part, has been compelled, by reason of some legal obligation to pay

damages occasioned by the negligence of another.’” (App. at 87 (citing Burbage v. Boiler

Eng’g & Supply Co., 249 A.2d 563, 567 (Pa. 1969)). The court continued, “In this case,

[National Fuel] has not paid damages to any third party as a result of any defect in the 219


                                             3
Safety Valves it replaced in its system after the jury’s finding in the Foster case.” App. at

87.

       The District Court also rejected National Fuel’s strict liability claims for the cost

of replacement of the other purportedly defective safety valves and the repair of other

adjacent property. The District Court found this damage theory unavailing because

National Fuel had failed to show that this property was damaged.

                                              II.

       The District Court had jurisdiction of this action pursuant to 28 U.S.C. § 1332. We

have jurisdiction pursuant to 28 U.S.C. § 1291. “We exercise plenary review over a

district court's grant of summary judgment and apply the same standard as the district

court; i.e., whether there are any genuine issues of material fact such that a reasonable

jury could return a verdict for the plaintiffs. . . . We are required to review the record and

draw inferences in a light most favorable to the non-moving party, . . . yet the non-

moving party must provide admissible evidence containing specific facts showing that

there is a genuine issue for trial.” Pa. Prot. & Advocacy, Inc. v. Pa. Dep't of Pub. Welfare,

402 F.3d 374, 379 (3d Cir. 2005) (internal quotations and citations omitted).

Breach of Warranty

       National Fuel’s complaint alleges that “Equimeter’s design, manufacture and sale

of the defective 257S safety relief valves violated the warranty of merchantability and the

implied warranty of fitness for particular purpose.” App. at 8. Insofar as this is a claim

for breach of warranty of merchantability and implied warranty of fitness for a particular

                                               4
fitness, the District Court correctly applied the four-year statute of limitations to grant

Equimeter’s motion for summary judgment. See Ranker v. Skyline Corp., 493 A.2d 706,

708 (Pa. Super. Ct. 1985).

Indemnification and Strict Liability

       Equimeter contends that because National Fuel failed to mention indemnification

in its initial complaint, the District Court had no need to address National Fuel’s claims

based on indemnity and strict liability. However, Equimeter has not argued that it would

be prejudiced by consideration of the indemnity or strict liability claims, which are based

on the same facts as the claims for breach of warranty. See Titanium Metals Corp. v.

Elkem Mgmt., 87 F. Supp. 2d 429, 431 n.6 (W.D. Pa. 1998) (considering indemnity claim

raised for the first time after close of discovery where defendant was “on full notice of the

claims asserted against it and this amendment would not change the character of the case

against it” ). Therefore, we will address these claims.

       The Pennsylvania Supreme Court has stated that the right to indemnity “enures to

a person who, without active fault on his own part, has been compelled by reason of some

legal obligation to pay damages occasioned by the negligence of another.” Burbage, 249

A.2d at 567. The District Court stated that though National Fuel “had a duty to

investigate the safety of its pipelines to ensure that the other Safety Valves in its system

were not defective” because of the jury’s verdict in Foster, “no legal liability to

automatically replace the Safety Valves arose as a result of the Foster jury’s finding.”

App. at 90-91.

                                               5
       National Fuel contends that it did have a legal obligation to replace all of the

valves, but it cites to no order or precedent imposing such an obligation. Because the

duty to indemnify arises from a “legal obligation to pay damages,” National Fuel must

prove a legal duty to replace all of its valves and liability for failure to do so in order to

claim indemnity. In Phila. Elec. Co. v. Hercules, Inc., 762 F.2d 303 (3d Cir.1985), the

plaintiff, “[u]nder a threat of legal action . . . pursuant to the Pennsylvania Clear Streams

Law, . . . negotiated and carried out a plan to clean up the Chester site.” Id. at 316-17.

This court, quoting Tugboat Indian Co. v. A/S Ivarans Rederi, 5 A.2d 153, 156 (Pa.

1939), stated that “To recover indemnity where there has been . . . a voluntary payment, .

. . it must appear that the party paying was himself legally liable and could have been

compelled to satisfy the claim.” 762 F.2d at 317. Because Philadelphia Electric Co. had

failed to prove any such legal liability, we refused to award damages based on

Philadelphia Electric Co.’s indemnification theory. This case is no different.

       As for the strict products liability claim, we agree with the District Court that

National Fuel cannot recover under a products liability theory for self-inflicted damages

that it caused to its own property in the course of replacing an allegedly defective product.




                                                6
      For the above reasons, we will affirm the District Court’s grant of summary

judgment to Equimeter.




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