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St. Paul Mercury Insurance Co. v. Viking Corp.

August 21, 2008

ST. PAUL MERCURY INSURANCE COMPANY, PLAINTIFF-APPELLANT,
v.
THE VIKING CORPORATION, DEFENDANT-APPELLEE.



Appeal from the United States District Court for the Eastern District of Wisconsin. No. 04 C 1124-William E. Callahan, Jr., Magistrate Judge.

The opinion of the court was delivered by: Williams, Circuit Judge

ARGUED NOVEMBER 9, 2007

Before BAUER, MANION, and WILLIAMS, Circuit Judges.

St. Paul Mercury Insurance Company sued The Viking Corporation, a fire sprinkler manufacturer, for breach of warranty over an allegedly defective sprinkler that damaged a building owned by St. Paul's insured, Johnson Bank. Because there was no agreement between Johnson Bank and Viking when the sprinkler was purchased, privity of contract did not exist, so we conclude that the magistrate judge properly granted summary judgment in favor of Viking.

I. BACKGROUND

On October 25, 2002, a fire sprinkler manufactured by Viking became activated at the Johnson Bank Building in Racine, Wisconsin. This was not supposed to happen, since there was no fire. The water did not stop gushing until the fire department arrived to shut down the system, and by then, the water had seriously damaged the bank.

At the time of the incident, Johnson Bank had occupied the newly-built building for only about six months. It had contracted with M.A. Mortenson Co. to build the bank; this contract had a one-year warranty effective until May 2003. Mortenson in turn subcontracted with Wenninger Company to install a fire suppression system, including fire sprinklers, which was also under a one-year warranty effective until May 2003.

As a subcontractor, Wenninger bought the sprinklers for the fire suppression system from Viking. This sprinkler contract included a one-year warranty for replacement of defective sprinkler heads, though this warranty was explicitly limited to the original purchaser, Wenninger. There is no evidence that Johnson Bank ever received any warranty information, advertising, or other literature from Viking regarding the sprinklers prior to the accident.

After the accident, Johnson Bank's insurer, St. Paul Mercury Insurance Company, reimbursed Johnson Bank fully for the water damage. St. Paul then asked an engi- neer, John Mertens, to examine the sprinkler head. After eliminating many potential causes, Mertens and St. Paul concluded that a defective glass bulb in the sprinkler most likely caused the sprinkler to activate.*fn1 Mertens could not eliminate improper installation or handling as possible causes.

Viking's Manager of Technical Services, George Wirsch, also inspected the sprinkler. According to Wirsch (who had inspected hundreds of activated sprinklers in his twenty-five years of experience), a sprinkler head will activate for only one of four reasons: (1) heat, (2) mechanical trauma, (3) ice in the line, or (4) defects in the workmanship or materials for the sprinkler head. Although Wirsch could not determine what had caused the sprinkler to activate, he claimed not to see any evidence of improper installation or mechanical trauma, and could not eliminate defects in workmanship or materials as possible causes.

Viking also asked another individual, Professor John Gland, to inspect the sprinkler. Dr. Gland has a Ph.D. in physical chemistry and twelve years of experience conducting microscopic analysis of materials in the private sector. Although he did not have a background in fire protection systems, he had worked on three other sprinkler activation cases. As part of his analysis, Dr. Gland exam- ined the sprinkler under a microscope and compared it to an exemplar sprinkler. Based on this comparison, Dr. Gland concluded there was no evidence that the subject sprinkler was defective. Dr. Gland also saw foreign fibers and "witness marks" near where the glass bulb had been, which suggested to him that someone had applied force or removed the sprinkler after it had been installed. He could not eliminate the glass bulb as the cause of activation, given that the bulb had shattered and was missing.

On September 30, 2004, St. Paul stepped into Johnson Bank's shoes via subrogation and filed a four-count complaint, including a claim for breach of warranty, against Viking in Wisconsin state court. Viking removed the case to federal court on diversity grounds and the parties agreed to proceed before a magistrate judge. Viking then moved for summary judgment, which the magistrate judge granted, concluding that a lack of privity between Viking and Johnson Bank barred St. Paul's breach of warranty claim. The parties also filed cross-motions to exclude their adversaries' expert witnesses, but in light of the summary judgment grant, these motions were denied as moot.

St. Paul now appeals the grant of summary judgment on its breach of warranty claim.*fn2 It also appeals the magistrate judge's denial of its motion to exclude the ...


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