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HAMMERMILL PAPER CO. v. C. T. MAIN CONSTR.

June 12, 1987

Hammermill Paper Company, Plaintiff
v.
C. T. Main Construction, Inc., The C. T. Main Corporation, Riley Stoker Corp., and Ashland Technology Company, Defendants



The opinion of the court was delivered by: WEBER

 C. T. Main Construction, Inc. subcontracted the upgrading of the boiler to the original manufacturer of the boilers, Riley Stoker, Inc. This work included, as pertinent to this case, the alteration of the superheater elements of the boilers. These are steel tubes located inside the boiler which are exposed to the gas and fire of the boiler and served to superheat the steam passing through them. The specifications called for a design to allow a temperature of 770 degrees at a pressure of 650 p.s.i.g. According to the Complaint, the project was completed and went into production in October 1984.

 In May of 1985, Hammermill began to experience difficulties from ruptures of the superheater tubes in Boiler No. 2. Seven of the tubes in Boiler No. 2 ruptured in the next seven months, and had to be repaired. Boiler No. 1 also required repairs. Plaintiff claims damages, both direct for replacement, and consequential including production losses, additional production costs, loss of revenue, and legal and engineering costs.

 Plaintiff has sued on causes of action of strict tort liability, negligence and breach of implied warranties.

 Plaintiff sued C. T. Main Construction, Inc., the contractor; The C. T. Main Corporation, its parent company; Riley Stoker Corp. and its parent company, Ashland Technology, Inc., now called ATEC, Inc.

 Defendants Riley Stoker Corp. and C. T. Main Construction, Inc. have moved for Judgment on the Pleadings, or in the alternative, for Partial Summary judgment. Because evidentiary materials have been filed in support of the motion, the court will determine the matter under F.R.Civ.P. 56.

 Movants allege that this case is concerned solely with economic loss for which no cause of action exists under theories of negligence or strict liability because no injuries to persons or property resulted from the failure of the boiler. Defendants also move for partial summary on the limitation of warranties and recoverable damages for breach of warranty if a breach is established.

 We will consider each part of the motion separately. The matter has been fully briefed and supported by evidentiary material. There appears to be no genuine issue of material fact and the matter is ripe for summary judgment.

 The Tort Claims

 This is a diversity action and Pennsylvania law applies to the tort claims.

 Since the adoption of the rule of strict liability imposed on manufacturers and sellers by Sec. 402A Restatement (2nd) of Torts by the Pennsylvania Supreme Court in Webb v. Zern, 422 Pa. 424, 220 A.2d 853 (1966), the rule has undergone judicial construction to define the nature of the harm caused by the defective product. A distinction was drawn between those cases resulting in physical injury to persons and damage to other property as distinguished from economic loss from the deterioration of the product itself. The states have divided in their interpretation of the Restatement Rule as applied to the property itself.

 In New Jersey, it was held that the unexpected deterioration of carpeting gave rise to strict liability, Santor v. A & M Karagheusian, Inc., 44 N.J. 52, 207 A.2d 305(1935).

 In California, a landmark case established a rule that has been followed in a majority of states, that economic loss alone caused by the deterioration or malfunction of the product itself, without injury to persons or damage to other property would not support a cause of action for strict liability. ...


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