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Great Northern Insurance v. Martin Schwartz

June 1, 2011

GREAT NORTHERN INSURANCE COMPANY, AS SUBROGOR OF NANCY BENZEL, HELEN DIAMOND, HERBERT & CAROLE GREENBERG, C/O GRAMERCY BROKERS, AS SUBROGOR; FEDERAL INSURANCE COMPANY, AS SUBROGOR OF MARION & SYLVIA CUTLER; CHUBB INSURANCE COMPANY OF NEW JERSEY, AS SUBROGOR OF SOL FELDMAN AND ERNEST P. WERLIN; AND VIGILANT INSURANCE COMPANY, AS SUBROGOR OF SANI & SYLVIA ROTHBERG, PLAINTIFFS-RESPONDENTS,
v.
MARTIN SCHWARTZ, DEFENDANT, AND INVACARE CORPORATION, DEFENDANT-APPELLANT.
CHUBB INSURANCE COMPANY OF NEW JERSEY, AS SUBROGOR OF MARTIN SCHWARTZ, PLAINTIFF-RESPONDENT,
v.
INVACARE CORPORATION, DEFENDANT-APPELLANT, AND AT HOME MEDICAL, DEFENDANT.
ATLANTIC MUTUAL INSURANCE COMPANY, A/S/O MYRON AND RUTH ALTSCHULER AND GARY STARR, PLAINTIFF-RESPONDENT,
v.
INVACARE CORPORATION, DEFENDANT-APPELLANT, AND AT HOME MEDICAL, DEFENDANT.
AMY HERDE, PLAINTIFF-RESPONDENT,
v.
INVACARE CORPORATION, DEFENDANT-APPELLANT, AND AT HOME MEDICAL, DEFENDANT.
TRAVELERS INDEMNITY COMPANY, AS SUBROGEE OF SOUTHBRIDGE PARK, INC., PLAINTIFF-RESPONDENT,
v.
INVACARE CORPORATION, DEFENDANT-APPELLANT, AND AT HOME MEDICAL, DEFENDANT.



On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-5819-06, L-8006-06, L-116-07, L-3676-07, and L-8499-07.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted February 1, 2011

Before Judges Graves, Messano and Waugh.

Judgment was entered against defendant Invacare Corporation (Invacare) following the jury's determination that it had manufactured a defective hospital bed that proximately caused a fire resulting in death, personal injuries and property damage at an apartment building in Fort Lee. The total judgment reflected the aggregate of insurance claims paid by plaintiffs Great Northern Insurance Company (Great Northern), Federal Insurance Company (Federal), Vigilant Insurance Company (Vigilant), Atlantic Mutual Insurance Company (Atlantic Mutual), Chubb Insurance Company of New Jersey (Chubb), and Travelers Indemnity Company (Travelers) as a result of the fire, as well as damages for personal injuries suffered by plaintiff Amy Herde.

The tragic fire at issue took place on May 18, 2005 in apartment 26A, 1500 Palisades Avenue, Fort Lee, where Martin Schwartz and his daughter, Meryl, resided. In 2002 and again in 2005, Schwartz rented Invacare hospital beds from At Home Medical (At Home and, collectively, defendants), for his daughter's use. Meryl suffered from Pick's disease,*fn1 and Herde, a home health aide, cared for her. Meryl perished in the fire, Herde suffered serious personal injuries, and other apartments in the building were extensively damaged.

In 2006 and 2007, various plaintiff insurers filed complaints against defendants seeking subrogation for claims paid to their insureds in connection with the fire. Herde also filed a complaint for damages resulting from her injuries. Defendants answered the complaints generally denying liability, and the cases were consolidated. *fn2

Pre-trial, defendants moved for summary judgment, or alternatively to exclude certain evidence at trial, including evidence: 1) that Invacare had recalled the electrical junction box (J-box) used on some of its hospital beds manufactured between August 1998 and October 2000; and 2) that "adverse event reports" had been filed with the United States Food and Drug Administration (the FDA) regarding fires involving Invacare hospital beds.*fn3 The pre-trial judge, who was not the trial judge, denied defendants' summary judgment motion and reserved decision on the evidentiary issues for the trial judge.

Defendants renewed their motion in limine regarding the evidentiary issues immediately before trial. The judge denied the motion. At trial, defendants moved unsuccessfully for a directed verdict on two occasions, once, after plaintiffs' liability experts had testified, and again at the close of plaintiffs' case. The judge denied those motions.

On multiple occasions during the trial, defendants renewed their objection to the admission of evidence of the recall and adverse event reports. The judge overruled the objections. Defendants' motion for a mistrial made at the end of plaintiffs' case based upon the admission of this evidence was denied, but the judge decided to provide a limiting instruction to the jury.

The jury returned a verdict for plaintiffs against Invacare, but found no cause of action against At Home. On August 3, 2009, the judge entered an order for final judgment in the amount of $1,284,395.46 as follows: to Great Northern, Federal, Chubb, and Vigilant, $321,786.67; to Atlantic Mutual, $147,907.52; to Travelers, $411,391.49; to Chubb, $228,309.78; and to Herde, $175,000.*fn4 This appeal followed.*fn5

Invacare contends that the trial judge erred in not granting its motions for dismissal or judgment. Alternatively, it seeks reversal and remand for a new trial based upon the evidentiary rulings made by the judge, and an allegedly misleading and incomplete verdict sheet given to the jury.

We have considered the arguments raised in light of the record and applicable legal standards. We reverse and remand the matter for a new trial.

I.

Testimony at trial revealed that the movements of the bed used in Meryl Schwartz's bedroom were controlled by three motors mounted at the foot of the bed. The motors were in turn controlled by circuitry contained in the J-box, also mounted at the foot of the bed; a pendant control, also connected to the junction box, allowed for operation of the bed's movements. A power cord ran under the bed from the J-box to a wall outlet.

Herde testified that on the day of the fire, while she was making oatmeal in the apartment's kitchen, she smelled something burning and went to the bedroom to check on Meryl. She observed smoke and sparks coming from under the foot of the bed. Herde attempted to drag Meryl out of the apartment, but succumbed to smoke and fumes near the apartment door. In speaking to an investigating detective after the fire from her hospital bed at the St. Barnabas Medical Center burn unit, Herde reported seeing sparks coming from the wall outlets. However, Herde, who had been administered significant pain medication at the time, had no recollection of that conversation at trial.

Richard Sylvia investigated the fire on behalf of the Bergen County Prosecutor's Office. Based upon the burn patterns found at the scene, he determined that the fire originated underneath the hospital bed. Although the bed had been plugged into a wall outlet, Sylvia found no evidence that the fire originated in any of the light switches or wall outlets. Nor was anything under the bed that could have served as a source of ignition.

Silvia wrote in his official report that the fire "was ignited by an unknown source" and its cause was "undetermined." Because his function was to determine whether a crime had occurred, Silvia did not conduct an investigation into the cause of the fire. After finding no evidence of arson, and determining the fire was accidental, Silvia "back[ed] off" and left any further investigation to others employed by plaintiffs.

Kevin Dallos, Travelers' fire investigator, also concluded the cause of the fire was "undetermined." He agreed with Silvia that the fire originated in the bedroom, but he could not determine where specifically, due to the condition of the room when he performed his investigation, i.e., walls had been taken down and furniture removed.

Harry Hansen, plaintiffs' expert in fire science and cause and origin investigations, however, testified that "[c]learly the fire originated in the vicinity of the Invacare hospital bed." He "believe[d] the origin was within the bed." Hansen could not determine the precise cause of the fire, explaining that relevant investigative guidelines "set[] a very high standard on origin and cause, and basically if you cannot prove to a scientific degree what the cause of the fire is, you have to call it 'undetermined.'" He found no evidence of "any adverse electrical activity," such as arcing or shorting, which would indicate the fire originated in an electrical wire or outlet. Therefore, he eliminated those items as a cause of the fire.

Christoff Flaherty, plaintiffs' expert in electrical engineering with training in determining fire cause and origin, testified that the fire originated underneath the Invacare bed and "was caused by an electric fault in the control circuitry, the motors and/or the associated wiring" located underneath the bed. Based upon the location of the origin of the fire, the electrical components of the bed were the only possible cause. Flaherty, however, could not identify a specific malfunction or the mode of failure in the electrical components because of the damage caused by the fire and firefighting efforts.

Although there was some damage to the electrical outlet near the bed, Flaherty believed this was consistent with the outlet having been engulfed by the fire, rather than having caused it. He ruled out everything other than the Invacare bed as the cause of the fire.

John Mertens, defendants' expert in electrical systems evaluation and fire cause and origin, took issue with the quality of the investigations performed by plaintiffs' witnesses, particularly Silvia and Flaherty. He disagreed with their analyses, finding no evidence of an electrical fault in the bed. Mertens concluded there were other possible causes of the fire, including other electrical devices in the room, damaged electrical cords, and, most likely, a pinched electrical wire. Mertens opined that the cause of the fire was "undetermined." He identified the area of the fire's origin as being:

[B]etween the wall outlet . . . all the way to the . . . front of the bed where the wall sconces are in the wall above it because you can have material drop down below it. . . . I had to include the dresser because of the device on top of it plus the cord going from this outlet to that device can also be pinched under the dresser.

And then I included underneath the bed all the way to the controller and the motors.

In Mertens' opinion, it was impossible to more specifically identify the area of origin.

In addition to the expert testimony, plaintiffs called David Ferguson, the director of operations for A.H.S. Investment Corporation, the parent of At Home, as a witness. In August 2001, Invacare advised At Home by letter that some of its electric beds "manufactured from August 1998 through October 2000" contained "[a] component inside the [J-box] . . . [that] could fail and . . . cause the . . . box to overheat." The recall notice contained the serial numbers of the affected beds and J-boxes. Invacare advised At Home of the number of "foot spring[s]," i.e., foot boards, and J-boxes in At Home's inventory, and noted "on hand inventory should be inspected immediately and replacements made where applicable."

Ferguson testified that the company took steps to comply with Invacare's recall. He ordered a total of 239 replacement units, which was the number of affected beds identified by Invacare, and he advised staff to "verify each bed that is on [sic] our on hand inventory and implement the upgrade if appropriate." However, since the company did not "track [its] bed inventory by serial numbers," Ferguson concluded that "the most efficient way to comply with th[e] recall [wa]s to verify the serial number[s] and implement the upgrade . . . when the bed[s] [were] returned from a patient, but before the unit[s] [were] returned to inventory." At Home also directly advised patients with Invacare beds of the recall.

Ferguson further testified that "all 239 [replacements] were utilized." Moreover, since the bed in question was delivered to Schwartz in 2002, a full year after the recall, Ferguson testified that it "would [have] been inspected prior to being delivered." However, Ferguson acknowledged that At Home did not keep specific records of its actions regarding the recall, and that, in its everyday operations, At Home ...


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