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St. Paul Mercury Insurance Co. v. Pepsi-Cola Bottling Co. of New York

August 2, 2007

ST. PAUL MERCURY INSURANCE COMPANY, ON ITS OWN BEHALF AND AS SUBROGEE OF MARS 2112 WOODFIELD CORP., PLAINTIFFS,
v.
PEPSI-COLA BOTTLING COMPANY OF NEW YORK, INC., AND DUANE READE, INC., DEFENDANTS.
ST. PAUL FIRE AND MARINE INSURANCE COMPANY A/S/O DUANE READE INC. AND OTHER INTERESTED INSUREDS UNDER POLICY NUMBER 0144SP1206, PLAINTIFFS,
v.
PEPSI-COLA BOTTLING COMPANY OF NEW YORK, INC., DEFENDANT.



The opinion of the court was delivered by: Trager, J.

MEMORANDUM AND ORDER

St. Paul Mercury Insurance Company ("St. Paul Mercury" or "plaintiff") and its insured, Mars 2112 Woodfield Corp ("Mars 2112"), seek to recover damages caused by a fire originating in a refrigeration unit owned by Pepsi-Cola Bottling Company of New York, Inc. ("Pepsi") and located inside the Duane Reade Inc. ("Duane Reade") store located at 1633 Broadway, New York, New York 10019. Duane Reade moves for summary judgment, arguing that it is not liable for damages suffered by plaintiff and its insured. For the following reasons, Duane Reade's motion for summary judgment is granted.

Background

(1) Factual Background

a. Agreement between Pepsi and Duane Reade

On November 5, 1998, Pepsi and Duane Reade entered into an equipment customer agreement, whereby Pepsi provided Duane Reade with a triple-door visi-cooler,*fn1 model number GDM69, serial number 2161150 ("Pepsi cooler" or "Pepsi machine"). See May 10, 2006 Affidavit of Michael F. Palmeri in Support ("Palmeri Aff. in Support") ¶ 4, Ex. F; Deposition of Michael Merritt ("Merrit Dep.") at 8:12-9:5. According to Michael Merritt, the Marketing Equipment Manager for Pepsi, this equipment customer agreement dated November 5, 1998 states the entire agreement between Pepsi and Duane Reade. See Merrit Dep. at 35:16-22. Under the customer agreement, Pepsi was the owner the cooler, see Merrit Dep. at 35:12-36, and Duane Reade was to "use the equipment properly and as necessary, service the equipment in a timely manner." Pepsi/Duane Reade Customer Agreement, dated November 5, 1998.

Despite the language of the agreement, it appears all service to and maintenance of the coolers was provided exclusively by Pepsi; neither Duane Reade, nor the distributor*fn2 of Pepsi product would service the machines. See Khan Dep. at 29:7-21, 41:16-23. In fact, Duane Reade was never provided with a manual or written instructions nor given any written or oral safety warnings regarding the maintenance or service of the cooler. See Merritt Dep. at 37:21-38:6, 136:8-13, 143:9-18.

Pepsi, however, did not perform routine or annual maintenance. See Merritt Dep. at 91:23-25, 100:21-101:2. Instead, the coolers would only be serviced after Duane Reade or the Pepsi distributor placed a call, alerting Pepsi that maintenance needed to be performed on a cooler.*fn3 See Deposition of Shahab Khan ("Khan Dep.") at 18:16-24, 20:21-21:4, 25:13-26:15, 27:11-28; Merritt Dep. at 32:12-33:10, 91:23-25, 100:9-20; Rivera Dep. at 32:21-25.

b. Installation of the Pepsi Cooler

Pepsi delivered the Pepsi cooler to Duane Reade's 1633 Broadway store location on November 5, 1998,*fn4 the same day the contract was entered into, replacing an existing Pepsi cooler in the store. See Merritt Dep. at 69:3-72:14; Palmeri Aff. in Support, Ex. F. It is unknown who actually placed, installed or plugged in the Pepsi cooler when it was delivered on November 5, 1998. See Khan Dep. at 20:7-10 (stating he has no knowledge of who originally positioned the coolers); Merritt Dep. at 16:4-7, 17:17-24 (admitting he was not present on the day of installation, but speculating that the manager of Duane Reade may have been the one to decide where the Pepsi cooler would be placed); Merritt Dep. at 19:11-14, 61:3-6 (stating he did not know whether the Pepsi cooler was plugged in on the day of installation, but, in general, Pepsi employees could plug in a cooler when they install it "if there's an outlet available"). Neither party has provided deposition testimony from the Pepsi employees who installed the Pepsi cooler at 1633 Broadway store location on November 5, 1998.

c. Maintenance services provided by Pepsi

Pepsi serviced the Pepsi and Evian coolers*fn5 four times between June 27, 2002 and September 1, 2002, the day of the fire.

The first service record indicating Pepsi came to the 1633 Broadway Duane Reade store is on June 27, 2002. See Merritt Dep. at 46:22-47:4. On this date, Pepsi mechanic, Joey Atkins ("Atkins"), responded to a complaint that the "door string" on the Evian cooler was not working properly. See Merritt Dep. at 99:4-19. Although the work order report indicates that service was performed on the Evian GDM23 unit, see Merritt Dep., Pl.'s Ex. 7, all deposition testimony is consistent that only the Pepsi cooler had a door string, and that service was actually performed on the Pepsi cooler. See Merritt Dep. at 29:8-32:10, 106:19-107:2 (testifying that the cooler fixed by Pepsi technicians on June 27, 2002 was the Pepsi cooler, not the Evian cooler, and that the work order "was keyed in under GDM23 instead of the GDM69"); Rivera Dep. at 41:11-42:19 (stating the GDM69 Pepsi unit has a door string while the GDM23 Evian unit does not); Atkins Dep. at 22:24-23:25 ("Q: Based on your knowledge of GDM23 [Evian] units, would there be any reason to ever reattach a door string? A: No, not to my knowledge. Q: What about in regard to a GDM69 [Pepsi] unit? Would there ever be cause to attach or reattach a door string on that kind of unit? A: Yes, there would.").

On July 26, 2002, Pepsi mechanic Orlando Rivera ("Rivera") visited the Duane Reade store to address Duane Reade's concerns that the Evian cooler was not cooling properly. See Rivera Dep. at 33:11-34:11. Rivera examined the Evian cooler and determined that the motor was "no good" and that "the compressor was burnt." Rivera Dep. at 34:15-36:8. When he told the manager that the Evian cooler needed to be fixed or replaced as soon as possible, the manager directed him to replace the Evian cooler. See Rivera Dep. at 36:3-8; Merritt Dep., Pl.'s Ex. 8. During this same July 26 visit, although not requested by Duane Reade, Rivera testified that he also cleaned out the compressor of the Pepsi cooler as part of "preventative maintenance." See Rivera Dep. at 37:19-38:11; Merritt Dep. at 27:5-28:11, 90:7-91-22. Rivera found the Pepsi cooler to be cold and working properly. See Rivera Dep. 43:1-3, 44:24-45:3.

On July 31, 2002, Pepsi technicians returned to Duane Reade to pick up the old Evian cooler and replace it with either a new or refurbished Evian cooler. See Merritt Dep. at 55:7-15; Atkins Dep. at 54:13-55:3. There is no record of Pepsi servicing the Pepsi cooler on that day. See Merritt Dep. at 96:22-97:5.

On August 2, 2002, just three days after replacing the Evian machine, Atkins again returned to Duane Reade in response to a complaint that the Evian cooler was failing to properly cool. See Merritt Dep. at 117:22-121:16; Atkins Dep. at 35:5-37:19, 83:7-20. This was the third time within the approximate five-week period prior to the fire that Pepsi returned to Duane Reade for service.*fn6 Atkins found that the compressor in the Evian cooler needed to be replaced "asap." See Merritt Dep. at 117:22-121:16, Pl.'s Ex. 11; Atkins Dep. at 35:5-37:19, 84:2-15. He later testified that he did not know whether the request for a replacement compressor was ever filled. See Atkins Dep. at 67:20-68:3. Atkins further testified that he did not have any independent recollection of speaking to anyone from Duane Reade about any problems with the Pepsi cooler, nor working on the Pepsi cooler on that day. See Atkins Dep. at 46:15-48:6.

d. The Fire

On or about September 1, 2002, a fire began in Duane Reade. See Duane Reade's 56.1 Statement ¶ 5. All parties agree the power cord of the Pepsi cooler was the source of the fire. Id. See also Deposition of Larry Wharton ("Wharton Dep.") at 62:6-65:21; Deposition of Roger Boyle ("Boyle Dep.") at 59:17-60:20. However, Duane Reade's and Pepsi's experts disagree as to exactly how the power cord caused the fire to develop.

Duane Reade's expert, Larry Wharton ("Wharton"), first inspected the Pepsi cooler on the Duane Reade premises on September 3, 2002, two days after the fire. See Wharton Dep. at 21:20-22:1. Wharton's theory of causation is that the power cord of the Pepsi cooler was pinched between the cooler and a column to the left of the Pepsi cooler where the outlet that the Pepsi cooler was plugged into was located. See Wharton Dep. at 62:6- 65:21. Because there was insufficient cord available between the pinch point and the outlet, the plug could not be properly inserted into and aligned within the receptacle. See Wharton Dep. at 66:1-16; 74:23-75:3. Wharton opines that this improper placement caused side pressure on the cord, which caused a high-resistance connection to develop between the line blade of the plug and the receptacle. See Wharton Dep. at 75:10-19. Ultimately, this high resistance connection resulted in a "glowing connection," causing the copper to melt and arcing to occur, and, thus, served as the ignition source for the fire. See Wharton Dep. at 75:20-76:3.

Pepsi's expert, Roger Boyle ("Boyle), first inspected the Pepsi cooler in May 2003 at College Point, New York, New York, see Boyle Dep. at 43:7-45:11, and first inspected a section of electrical metallic tubing, including the power cord that had been cut from the Pepsi cooler, in June 2003 at Affiliated Engineering Laboratories in Edison, New Jersey, see Boyle Dep. at 46:7-48:18. Based on these examinations, Boyle opines that the power cord was crimped or pinched 12 centimeters from the plug. See Boyle Dep. at 59:17-60:20. At the pinch, the insulation deformed and allowed contact between the electrical conductors inside the power cord. See Boyle Dep. at 67:19-68:11. This contact caused a short circuit, which drained the current, and the electrical energy dissipated as heat, causing the fire. See Boyle Dep. at 67:17-68:21. Boyle testifies that he does not know what specifically caused the pinching. See Boyle Dep. at 66:16-18.

(2) Procedural History

On January 29, 2004, St. Paul Mercury on its own behalf and as subrogee of Mars 2112, brought this diversity action against defendants Duane Reade and Pepsi for damages suffered from the September 1, 2002 fire originating from the Pepsi cooler situated inside the premises leased by Duane Reade at 1633 Broadway, New York, New York 10019. See Compl. by St. Paul Mercury ¶¶ 6, 9. As a result of this fire, plaintiff alleges that Mars 2112, a restaurant located below Duane Reade, sustained damages caused by the water used in extinguishing the fire in excess of $292,359.07, including damage to personal property, loss of business income and extra expenses to St. Paul Mercury. See id. ¶¶ 7, 10. The ...


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