- Stephen N. Cole

SubroFlash #1   Fire Sprinkler System
SubroFlash #2   Contractual Liability
SubroFlash #3   Early Mediation
SubroFlash #4   Water Supply Lines
SubroFlash #5   Tree Roots & Limbs
SubroFlash #6   Cause vs. Legal Liability
SubroFlash #7   Three Types of Questions
SubroFlash #8   Historical Weather
SubroFlash #9   Appliance Failures-Easy Experts
SubroFlash #10 NFPA 921 - Scene/Evidence Exam
SubroFlash #11  Who Manages the Property?
SubroFlash #12 Changed Design
SubroFlash #13  Subro When Missing Evidence
SubroFlash #14  Powerline Facts
SubroFlash #15  Toilet Failures
SubroFlash #16  Changed Design
SubroFlash #17  Product Too Old ?
SubroFlash #18  The Building Passed Inspection
SubroFlash #19  Independent Contractor or Employee
SubroFlash #20  Stress Corrosion Cracking
SubroFlash #21  Mold Subrogation
SubroFlash #22 Subro vs. Vehicle Manufacturers
SubroFlash #23 Where Did The Water Come From?
SubroFlash #24 Failure Of Under Water Sink Supply Lines
SubroFlash #25 Accrual Of Cause Of Action
SubroFlash #26 Multiple Defendants But Who Caused The Damage?
SubroFlash #27 Fire Hydrant / Water Pipe Failure What Records to Obtain
SubroFlash #28 Measurements
SubroFlash #29 Tolling The Statute of Repose


SubroFlash #1          Fire Sprinkler System

An assured contracted for a remodel at his home. The architect noted the fire sprinkler system as NIC (not in contract) and the general contractor engaged a fire sprinkler company to design/build a system. Central manufactures Omega sprinkler heads. Omega heads rated at 160 degrees F were installed throughout the home. A similar head was installed in a sauna. Saunas attain temperatures of 170-190 degrees F. You see the problem!

The sauna sprinkler head discharged while the assured waited for the sauna to heat, and water ran out of the sauna, into the dressing and master bedroom suite on a second floor, down the walls into the first floor, and did over $240,000 damage.

Fault: installing the lower temperature head, contrary to NFPA 13, the national standard as well as the standard incorporated into the codes enacted by the town in which the home was built. Another fault was that the Central Omega sprinkler heads were on national recall, and the design/build firm failed to notify the homeowner of such recall. If it had, perhaps someone at the design/build firm would have noticed the 160 head in a sauna, and installed a 250 head, thus preventing the damage. (20753).

A single family home in the Central Valley of California was damaged by a fire. The fire was caused by power lines hitting each other, causing molten metal to fall on dry grass. The fire spread across many acres until ultimately damaging our assured's home.

Interestingly, the lines were not owned by a major utility but by a large landowner--an energy company which owned vast acreage. I contacted the energy company, which advised it did not own the power lines at the time of the loss in Sept. I requested and the energy company provided the purchase contract detailing the assumption of liabilities between the selling entity and the energy company, and the energy company, for tax reasons, entirely legally "backdated" the purchase to a month before the fire. Thus, the energy company was not on title at the time of the fire. However, due to contract language, it accepted liability and settled the claim. (20246).

Early Mediation

A fire occurred in a row of closely located single family, multistory homes. The "cause" home was owned by T, and was being remodeled by C Contractor. T rented an apartment on the first floor of the home to L. While L was on an extended trip, T boxed up his contents to allow C to continue on the remodel. T told C to move the boxes to L's apartment. C did so. T surveyed L's apartment after C moved the boxes to L's apartment. T had no right to enter L's apartment. 

The cardboard boxes were stacked on a heater vent. When the heater
came on, it ignited the boxes, destroying T's home as well as 3-4 others
down the row of homes. 

T and C have $1M coverage each. If the plaintiff's attorneys worked 2-3
years on the file, there would still be only $2M in total coverage, so I set in motion a mediation, pre-suit, and all parties will mediate the case and "split up" the settlement pie. This points up the creative possibilities of mediation, even pre-suit. (21239) 

Water Supply Lines

Toilet water supply lines (WSL) can leak for a number of reasons. A typical reason is over-tightening of the locknut. The locknut is included in the package when a user purchases a fill valve (a common one is Fluidmaster). Many toilets, when originally installed in a home, are delivered to the general or plumbing contractor with the fill valve already installed in the water supply tank. This means the that the locknut was already installed and over-tightened at the factory by Kohler, American Standard, and most other manufacturers. There are usually numbers and letters in the water supply tank of significance to the manufacturer. It allows them to track the manufacturing date and delivery to the job site. When you have a water supply line failure, it is a good idea to have your insured, adjuster, or restoration contractor note the information in the water supply tank, as well as retain the evidence, including the supply line, locknut, and the entire fill valve.

Another mode of failure is inadvertent over-tightening. Some water supply lines fail to have proper installation instructions, and they merely advise the installer, who could be your homeowner, "do not over tighten". What does that mean? Does that mean hand tighten only, does it mean it not to use a pipe wrench but that you can use crescent wrench? Thus, even though your insured is the one who over-tightens the lock nut, you may be able to affect a recovery due to faulty installation instructions or design. Many of the locknuts are plastic and do not perform well when over-tightened.

Tree Roots and Limbs

How many times has the neighbor's tree roots caused concrete and water supply line damage to the insured’s property? The rule in California and many jurisdictions used to be that our insured could simply cut the tree roots on his property. However, the current rule in California and developing rule in other states is that our insured must use reasonable care in removing the tree roots. For example, has the insured requested the neighbor to trim the tree or remove the roots prior to the loss? If not, that may be a bar to subrogation. 

On the other hand, if the insured has requested such, even though it is not in writing, then the neighbor, as owner of the tree, has to exercise reasonable care in remedying the problem or the neighbor/tree owner is liable for the damage to the insured’s property.

In addition, refer to ANSI A300-2000, for American National Standard for Tree Care Operations--Tree, Shrub and Other Woody Plant Maintenance-Standard Practices. Contact ANSI at 11 West 42d Street, NY, NY 10036 or http://www.ansi.org/

There is a difference between the cause of the loss and the legal liability for that loss. there may be a statement as to subrogation/cause of loss in reports by your independent adjusters and origin and cause consultants. However, each may be referring to cause of loss and not legal liability for the loss.

One example would be a vandalism loss at an abandoned, run-down
property. The cause of the loss may be kids or vandals discarding a
cigarette. However, the property owner itself may be legally liable for that loss. 

Another example would be the cause of the loss is a water supply line
failing, but the manufacturer of the fill valve or the plumber who installed it is legally liable for that cause. 

There are many sources of discerning who is legally liable for a loss, such as legal treatises, cases, hornbooks, all of which are available at law libraries and in many insurance carriers offices. Your subrogation counsel is another good source.

English is a delicate language. By this I mean that it depends on the interplay between two actors (for example, an investigator and subject). The investigator is seeking information. The subject has information, some of which he’ll give, and some of which he doesn’t want to give.

There are three types of questions, each having their own use depending on the investigator’s goal. 

Essay – Example: “What happened?” The subject may ramble and may not give all the information in the same order that the investigator wishes, but this question will disclose or provide the most information.

Multiple Choice – Example: Was it a, b, or c? If the investigator truly knows and wants to narrow down the answer to a or b or c, this question can be very helpful. Example: Was the light yellow, or red or green? However, the drawback is that it may have been a flashing red light. The investigator, with his red or yellow or green question, would not
know that or give the subject the opportunity to reply that it was a flashing red light, or that the light was out of order.

True/False. Example: Did you see the red light? This is the most restrictive type of question. It forces the subject to answer yes or no or
either/or.  A blending of the three types of questions is the best way to get the most information, starting with essay, moving to multiple choice and finally to true/false.

SubroFlash #8     Historical Weather

A claims person or subrogation attorney can make excellent use of
historical weather to analyze a subrogation case. For example, if
historical rain data or stream flow data is needed for analysis of the
subrogation case, it is readily available. One such business that provides such data is SE Research:

The data is useful in analyzing a structure and whether it was designed
and/or built properly, taking into account historical rain and floodwater. 

For example, assume a “100 year flood” will produce water at 216’ above sea level. The water in a particular storm event only reached 215’ above sea level and the project flooded. Your analysis will be that this is probably a good subrogation case. 

Likewise, if the designer/engineer used 216’ as a 100-year floodwater
height, and it was actually 215’ “as built”, then that data will be helpful in
sustaining the burden of proof against the designer/engineer if the project floods. In addition to water, freeze and heat temperatures, hail, and other weather records are also available and extremely helpful. 

Another use is obtaining isotherm data on temperature, as some building codes refer to minimum temperature data (NFPA 13, for example).

Water losses may result from failures of appliances such as dishwashers and washing machines. The result may be damages of as little as $1,000 or as great as $40-50,000 or greater. One easy way to analyze the cause of the loss is to have the insured call the manufacturer’s authorized repair facility. For example, GE has service reps in most cities. If the insured calls a service rep to repair the washing machine, the GE repairman will travel to the scene and for a modest charge, analyze the cause of the loss (or what repairs are necessary) and give the assured an estimate. If it is a failed switch on the fill cycle, for example, the repairman will remove and replace the switch, and give the damaged switch to the insured. The insured can then send the part to your subrogation unit or field adjuster and you have saved the cost of hiring an expert to analyze the problem. 

A similar result will occur with dishwashers, refrigerator icemakers, and
the like. 

This procedure will allow the subro unit representatives to settle many of
these smaller amount cases themselves. 

Also, on these smaller losses, you have saved the cost of hiring an expert, which is probably not economic in view of the size of the loss. 

Be sure the insured knows that you will cover the cost of the service visit
and replacement of the part, which is generally not more than $200.00. 
You would pay at least that much to an expert witness to perform exactly
the same function, and generally pay much more in fees. Some carriers
have coded this as a witness fee or an expert witness fee, notwithstanding that the insured has performed the function. The insured ends up with a repaired appliance, you end up with an analysis of the cause of the loss as well as the damaged part, and perhaps are able to settle the case. It is a win-win! (21327)

SubroFlash #10       NFPA 921 - Scene/Evidence Exam

The newest edition of NFPA 921 contains a definition of evidence, to
include the fire scene. Section 9.33.6.2 defines the responsibility of the fire investigator to preserve evidence. Evidence is defined broadly, and
includes the scene itself. 921 requires the investigator to preserve the
evidence/scene until all “interested parties” can be put on notice to inspect the scene. Sections thereafter deal with other aspects of evidence handling. 

This duty is to be adjusted, depending on circumstances. Those
circumstances include the weather, protection from theft/vandalism, and
other destructive forces.

This means that the property adjuster, subro/recovery unit, and
subrogation attorney must work together to identify “interested parties”,
and to thereafter immediately place them on notice to inspect the scene
before further destruction/demo activities occur.

In the context of a property fire, interested parties may include the
construction team of general contractor, subcontractors, manufacturers of products included in the property, such as water system (toilet, water
heater, etc.), electrical system, and the like.

In the context of a water loss, it will include the same type of interested
party definition.

In a construction defect loss, it would also include the design and
engineering team.

NOTE: In hiring experts to examine fire, water and other losses, be sure
to use experts familiar with NFPA 921. NFPA 921 will be viewed as a
guide to investigation of losses other than fire.

With rental property, your assured may have a written contract with a management company. The contract will spell out the management company’s responsibility. The contract could very well have a clause in which the management company obligates itself to screen the tenants, rent to only insured tenants, regularly inspect the property, and otherwise take on most of the obligations of an owner. 

The property management firm may have been added as an additional assured under the landlord’s policy, so be sure to examine the landlord’s contract with the property management company. 

In addition, the assured may have had discussions with the management firm, and there may be correspondence between them. 

Thus, when a tenant causes damage, either by negligence or by vandalizing the property, the management company may be a target for your subrogation efforts.  (21284). 

Finally, the management will have records on what repairs were made, and what new products were installed, and who installed them, on the assured's property. There may be subro targets among them!

Consumer products change often. Sometimes its related to the manufacturers concept of an improved design, and sometimes its related to safety issues. Just because there is a change in design does not mean the manufacturer changed the design to make the product safer.

Example: a water filtration unit has a cap and filter housing. The filter is located inside the housing. The housing screws into the cap. The old design was involved in two separate losses. Each subject cap exhibited the same depth of threads in the plastic male end of the housing. We purchased two new units, and noticed the threads were deeper in the exemplar units.

Hint: if the cost of an exemplar unit is not disproportionate to the loss, purchase several. Try purchasing them from the same source from which the assured purchased the unit. The benefit is that you/your expert can look at an undamaged unit, perhaps even disassembling one, to assist in analyzing the cause of the loss.

If the claim goes into litigation, the attorney will be able to discover all the product changes, the manufacturers reason for the change, and claimed damaged from the product from other claimants.

In the above example, the two subject caps, as well as the two exemplar caps, exhibited the same defect. Particularly, when the plastic cap was molded, the cap was not round, as designed, but oval. This meant that even with deeper threads, there was not enough force from the filter threads into the cap to hold it securely, and it failed spontaneously, letting water flow throughout the kitchen. (21278)

As a general rule, there is not likely to be subrogation without evidence.  However, in some cases subrogation will exist.  

Example:  if a major department store sells and installs a product, such as a dishwasher or refrigerator, and the product fails, causing water damage, the store service unit may respond to the insured’s home and replace a part, and keeping the part. You will have good subrogation for either products liability or negligent installation. 

Example: where a contractor or subcontractor is working on the insured’s home, and causes a loss, whether fire or more likely, water. If the contractor repairs the part, but not the damage, and takes the faulty part, there will be subrogation.

The lesson to be learned is to go the extra step and identify what happened to the part after the loss, and determine who last had possession of it, who removed it, and what happened to the part thereafter.

Power line fires are common. Subrogation depends are fact intensive. Your case  probably involves fire damage. Basic information you should obtain, some on your own, and some by request from the power company.

Site inspection: physical configuration of power lines, poles, vegetation, including primary and secondary conductors and service lines.

Evidence: any removed by the power company?

Repairs: what did the configuration look like before the loss and what does it look like now?

Documents (I've used names that may be different among power companies, but the description should give you the gist of what you're seeking):

T-man (Trouble Man): reports, observations at site. He's generally the first sent to the scene by the power company.

Crew: what did they see, repair, and why. They're sometimes called in by the DO or T-Man to repair the site.

D.O.: Distribution Operator: daily reports. He is responsible for day-to-day operations and is generally who the Fire Department calls in the event of electrically-involved losses. He generally dispatches the T-Man and/or crew.

I.R.: Inspections records of periodic inspections of lines and equipment, recommendations for repairs, repairs actually made.

Governing regulations/statutes/standards: usually a public regulation or law. (In California, it is General Order 95 (GO 95) of the Public Utilities Commission. Also, the power company has its own standards for operations, inspections and repair. (21440)

Obtain as much of the above as you can, but be prepared for a fight with most power companies, perhaps in litigation.

As an adjuster, you respond to  

• a water damage claim by dispatching one of your restoration vendors to the loss site. Two months later, you receive a call from the assured about a mold problem due to improper repair (the vendor has no experience or training relating to mold, or
• a roof leak claim. A month later, the assured complains of additional damage which should have been discovered during the additional inspection and repair, or
• a water damage claim in an upstairs bath. During repairs, your restoration contractor rips out the ceiling without realizing it contains asbestos, and the company doesnt have an asbestos certificate.

The above examples illustrate what can happen to carriers having to reopen claims and pay substantial sums on claims they thought were closed. In most of these cases we advised our clients to subrogate against the vendors.

Could these situations have been prevented? Yes.

In the process of subrogating these claims, I asked my investigative vendor, SE Research to check the credentials of the vendors, to discover the background relating to licensing and permits which would have indicated they were properly trained and certified for the restoration they were contracted to perform. In 90% of the reopened cases, we found derogatory information which, had the carrier known earlier, would have resulted in the carrier or assured hiring qualified vendor.

Due diligence would include a review of all licensing, certifications, training, permits, disciplinary actions, history and prior litigation.

As an attorney, I have found due diligence is the key to prevent these additional losses. Just as a life insurance carrier performs due diligence on the proposed insured as a form of proactive loss prevention, I feel Property and Casualty carriers need to perform due diligence on their vendors to prevent additional losses on claims.

SubroFlash No.16 Toilet Failures

Toilets can fail, causing a little or a lot of damage.

The two main areas of failure are the fill valve, and the water supply line (WSL).

Fill valve: in the old days, this was the device attached to the big copper ball that floated on top of the water in the water supply tank, and traveled down as the toilet was flushed.

Other types of fill valves, of which the Fluidmaster is the most noted, have generally replaced the ball. It is held in place by a lock nut screwed into the fill valve stem, which passes through the bottom left-hand side of the water supply tank. The coupling nut is generally plastic, and secures the WSL to the fill valve. The WSL is connected at the wall below the toilet by an angle stop.

The WSL can be plastic or braided metal.

Many times an adjuster or Origin & Cause consultant will put in a report words to the effect of the product (hose, wire, etc.) was too old and wore outno subro.

This is an incorrect analysis.

The manufacturers duty is to properly design, test, manufacture and instruct the user as to installation and use of their products.

The manufacturer knows or should know the useful life of its products. A $15 hair dryer, coffee maker, and other consumer products may not last forever. On the other hand, if they wear out they should just stop working. They should not cause a fire or water damage.

The manufacturer must instruct the user to inspect the product and notice particular things indicating imminent failure, such as cracked hoses, cracked wires, and the like. Otherwise, how is the user to know the product will fail and cause damage?

Some states, like California, have no statute of repose for product defects, and we have made subrogation recoveries on products as old as 35 years. Other states, like Oregon, have a statute of repose after which suit may not be filed, generally commencing from the date of purchase. Be sure to check the statute in each state!

If a product wears out, what caused it to wear out?

Ask your expert to identify the manner of wearing out (cracking, splitting, chemically embrittled, etc.) What compound caused the corrosion? What caused the cracking?

These may be signs of an improperly designed product.

If the product wore out due to coming in contact with a compound, such as chlorine or cleaner, did the manufacturer warn the user not to use such compounds? If not, there may be a good case of product liability for failure to test and failure to warn.

SubroFlash No. 18 The Building Passed Inspection

The Claimant contend the structure was approved/passed inspection and therefore there are no defects. 

Your Response could be: The fact that a product passed a building/fire inspection is not determinative of lack of defects. The Uniform Building Code (UBC), adopted by the public entity (City, County), provides the contractor is responsible for constructing a building properly, notwithstanding the public entitys issuing an inspection. This includes the various sub inspections, such as for electrical and plumbing, as well as the final inspection. In fact, the great majority of damage cases deal with homes and other structures that have passed inspection.

 The law generally allows broad immunity to the building department for improper inspections or even a failure to inspect. Each contractor is responsible for his work, and the general contractor is responsible for the entire structure.

 In addition, there may be a design team, such as architect, building designer, construction manager. If so, they are additional possible defendants.

 To do: 

1. Obtain a copy of the building department file, which includes permits, plans, record of inspections, and the like. It also may identify who applied for the building permit, which is in all likelihood the general contractor. (In some cases, the owner can apply for the building permit.) Additional records may be available at the fire department.
2. Through a title company, trace back the history of ownership from the assured backwards to the developer.
3. If the fire or water damage emanated from the neighbors property, the neighbor may be liable for the loss, in addition to the construction entities.

SubroFlash No. 19 Independent Contractor or Employee?

Many claims involve multiple actors. The person hiring the actor is referred to as the hirer. The person performing the task is the actor.

Example: A seller hires contractor to install product seller has sold. Is the contractor (actor) an independent contractor or employee of the seller (hirer)? Example: Owner of business hires drivers to deliver goods. Is the driver (actor) an independent contractor or employee of the business owner (hirer)?

The reason this is in establishing liability on the hirer of the culpable actor. If the actor is an employee, the hirer will be liable under various theories. Even if the actor is an independent contractor, the hirer may still be liable, but it is more problematic, and I suggest you gather facts with which to establish/argue the actor is an employee.

Several checklists exist to assist you in your arguments. One is grounded in the IRS regulations (used to assist the IRS in defining the hirer as an employee, so it can collect more taxes!). Another arises from various court cases.

To do:

1. Download and print items from hyperlinks at left, save in your forms file.  

2. Read through the materials to increase your understanding of the checklist items.

SubroFlash No. 20 Stress Corrosion Cracking

Stress corrosion cracking (SCC) is a well-known corrosion phenomenon affecting many metal alloys, especially brasses.  In SCC, tiny cracks form in the surface of the metal due to the combined action of tensile stress and corrosion.  The tensile stress can be either applied, such as from normal tightening of a threaded fitting, or residual, such as from a machining operation during manufacturing.  Ammonia and ammonia compounds (i.e., urine) are the corrosive most commonly associated with SCC of brass, but corrosion of brass can also occur in potable water, or in industrial environments containing SO2 (i.e., acid rain).  Because SCC does not require applied tensile stress, brass fittings with sufficient residual stresses can crack even during storage, before installation.

Certain brass alloys, namely those containing more than 15 weight percent zinc, are inherently susceptible to SCC even in water service. Therefore, choice of alloy is an important factor in preventing SCC. There are many brass alloys available which are resistant to SCC.  In theory, if a brass alloy with resistance to SCC is chosen, then failure due to SCC should not occur. Typical failures of brass alloys due to SCC include cracking of brass plumbing fixtures, such as in residential bathroom lavatory faucets and commercial fire protection sprinkler systems, to name only a few.  Other alloys like stainless steel are also susceptible to SCC in certain corrosive environments, namely, those containing chlorides.  Chlorides are found in many cleaners, such as bleach.  Some common failures of stainless steel due to SCC are braided flexible water supply lines to the toilet or lavatory.   Needless to say, these failures often cause extensive water damage.

Many failures of threaded brass fittings are wrongly attributed to over tightening by the installer. 

Stephen Cole's suggestions:

 To Do:

1. is the crack brittle in appearance? 
2. Is the crack surface discolored due exposure to the environment?

 If the answer to either of these questions is yes, then the cause for the failure is likely SCC. On smaller cases, document the evidence and send to the manufacturer and if it agrees its product failed, it will pay you. Otherwise, I suggest you engage an expert to examine the evidence and prepare for litigation.

Discussion courtesy of Lisa K. Thomas, P.E.,

Berkeley Engineering and Research, Inc

SubroFlash No. 21 Mold Subrogation

The insured suffers a modest water loss.  However, as a result of improper work, the property is substantially damaged by mold.  

Who is the defendant?  

The set of defendants responsible for the initial leak include the developer, general contractor, plumber, and manufacturer of the offending water system.  

In addition, the repair contractor will be liable if improper methods of cleaning and/or remediating the mold were used. 

Many companies have contracts with preferred vendors.  The contract should provide insurance information as well as a standard of care with which the repair contractor will pursue his work.  In fact, one company guarantees the work of its authorized contractors, which results in the company paying for damage resulting from improper work, even though the insured hired the authorized contractor.  

A good source of information is the IICIA. Their publications, especially IICRC S500 (about $11) are good guides for water cleanup standards, and their website also includes a search for certified restoration contractors by geographic area. (Tel: 360-693-5675). 

SubroFlash No. 22 Subro vs. Vehicle Manufacturers

Vehicle fires are common. Unfortunately, many involve less than $50,000. There has to be a way to economically pursue subro, without incurring many thousands of dollars of experts fees.

Way 1:

You can pursue the case through litigation or, if the manufacturer agrees, to binding arbitration. You may not need an expert or if so, your basic origin and cause expert. He will eliminate driver error, and if in the vicinity of a structure, the structures wiring, careless use of smoking materials, and arson. Then simply go to the jury with the assured and O&C expert. The jury will either give you a win or a loss, but the costs are minimal. One downside is that in the event of a loss, you will have to pay the defendant manufacturers costs.

Way 2:

Daimler Chrysler is a member of Arb. Forums. You can arbitrate cases involving their whole line of products, from Jeep, to Dodge, to Chrysler, to Plymouth, etc.

You can request the other manufacturers to submit to binding arbitration, either through Arb Forums or some other arbitration proceeding.

To Do:

1. Have your expert run the lists of recall notices and service bulletins, to locate service problems with the make and model involved in your loss.

SubroFlash No. 23 Where did the water come from?

 Many reports of water losses are inadequate. Reading adjusters notes on a loss may include some of the following:

• Toilet leak
• Dishwasher leak
• Washing machine leak
• Water supply line leak
• Water line broke
• Water line failed

 You get the idea. None of the above are precise enough for analysis. It is important to know, for example, in a toilet leak, if the toilet overflowed, the water supply tank overflowed, the water supply line broke at the coupling nut, the water supply line broke mid-line, etc.  Or, if it is an appliance, can you see where and how the water escaped from the appliance, or, was it from the inside?

 To Do: 

1. Request information from the property adjuster or assured precise information on the manner of the leak and where the water came from.
2. Obtain information on the installation of the appliance associated with the leak, such as age, who installed, if any repair work had been done and if so, by whom, who discovered the leak and what they saw, and the present location of the appliance and if it is changed from the time the leak was discovered. Also request any photographs of the appliance and water line, as well as any documentation from the seller, the installation and any repairs.
3. Identify possible defendants, such as the manufacturer of the appliance, the manufacturer of the water line, and perhaps the installer of the appliance.

From a real file, the analysis was:

It  ruptured due to pitting corrosion of the stainless steel wires. Besides the rupture, there were 9 discreet areas on the hose that exhibited brown
discoloration and pitting corrosion. Based on the evaluation of other similar ruptured hoses, the hoses somehow get contaminated with acid mist or droplets. The two most probable causes for this is 1) exposure to soldering flux fumes during sweating of nearby joints, or 2) exposure to other chemicals in the
plumber's toolbox. The plumbers buy these hoses in bulk, and carry them around in their truck until they install them in someone's home. The hoses are not protectively wrapped, and can come into contact with chemicals that are corrosive to stainless. Another possible cause for this is contamination by household cleaners. However, in this case it is unlikely because the hose outside of the spots of corrosion was free of deposits (from cleaners), and the hose was located under the bathroom sink. Cleaners as a cause for pitting corrosion is more likely when the flex line is the toilet water supply line, because it would more easily contact mops and toilet bowl cleaners.(21460)

1. Determine who installed the line, and when it was installed.

2. Determine where other similar lines were installed in the home, and whether they were installed at the same time by the same person, i.e., in the original construction of the home.

3. Purchase several exemplar lines, if possible. They will be helpful in having your expert analyze the loss. In addition, the manufacturer's instructions, warnings, and installation guidelines will assist you in analyzing the case and in convincing the manufacturer the product was poorly designed or manufactured, or was accompanied by inadequate warnings.

What is the “start date” for the statute of limitations? In legal terms, the start date is called the “accrual date”.

In an auto case where a vehicle rear-ends your assured and causes property damage to the assured vehicle, the accrual of the cause of action is the date of the accident. In California, the statute is 3 years for property damage, so you would have 3 years from the date of the accident within which to file suit.

What happens in an underground water leak with an unknown source or cause? What happens with a construction defect whose cause is unknown?

California and other states use the “date of discovery” rule for the accrual of those causes of action.

In layman’s terms, when did the assured know of appreciable harm and the cause of the harm?

Typically in an underground leak, the assured suffers water damage to the home, reports the loss to the carrier, and the carrier hires an expert to investigate the cause of the leak. It is the date of the expert’s report that would be the accrual of the cause of action against a building trade person or a public entity.

In a construction defect setting, it is again the date of your expert’s report identifying the cause of the damage.

To do:

1. identify when the assured reported the damage to you.

2. identify when your expert identified the source of the damage and the cause.

3. discuss with your attorney what the statute is in the state of loss.

It is always better to file suit as quickly as possible, to avoid defense arguments that the statute has already run. However, sometimes that is not possible. The discovery rule may save a case that comes to the recovery department later, rather than earlier.

How do you proceed if there are:

Two negligent parties but only one of which caused the damage?

Two or more parties but some combination of them caused the damage, and 1 or more could be blame free?

Situation 1 involves two parties, both of whom acted negligently, say, by firing a rifle within the city limits, but only one bullet struck the injured party. The court in California and many states allows the injured party to file suit against both parties and let the two parties prove who did or didn’t cause the injury. This situation could arise in a property loss from a construction defect, two speeding vehicles colliding and only one of which struck our assured’s building, or product that is improperly installed from improper instructions from a manufacturer. The plaintiff may not be able to prove which negligent party caused his loss.In California, the case dealing with this situation and authorizes such an approach is Summers v. Tice (1948) 33 C.2d 80, 199 P.2d 1.

Situation 2 involves multiple parties, but some combination of whom caused the loss, but also some of whom may be blame-free. In California, this scenario is discussed in Ybarra v. Spangard (1944) 25 C.2 486, 154 P.2d 687. That case involved a patient having an operation. He was injured by some combination of medical care personnel in the operating room, but he, being under anesthesia, couldn’t identify who was there or who did what. The court nevertheless allowed the plaintiff to proceed, and let the defendants prove who were liable parties and who were blame-free. To do: 

identify all the players in a scenario involving the property loss.

identify the conduct of each (such as seller, neighbor, installer, manufacturer, etc.).

identify our assured’s activities with regard to each player.identify who was negligent.

identify whose negligent had a causal relation to the assured’s loss.demand payment from all negligent parties or their liability carrier.

SubroFlash No. 27 Fire Hydrant / Water Pipe Failure What Records to Obtain?

If a fire hydrant or adjacent water pipes fail and cause water damage, it may be due to improper design, construction, inspection or maintenance by the public entity. Set forth are some of the documents you or your attorneys may want to obtain and review:

Design:

1. City design specs used for the purchase of residential fire hydrants and adjacent (lay-in sheets)water pipes.

2. Industry Standards to which the City sought to comply in the above.

3. City documents setting forth:

a. expected life of fire hydrants and adjacent water pipes.

b. use of breakaway bolts and design standards thereof.

c. manufacturer's recommendations as to design, installation, inspection and maintenance of the fire hydrant used in front of the Wilson residence.

d. soil testing procedures and results for soil in which the Doe fire hydrant and adjacent water pipe was placed.

e. City's consideration/discussion of the use of lined water pipes, breakaway bolts, concrete slab, thrust block in the Doe fire hydrant.

f. City inspection of the installation of the Doe fire hydrant.

g. City inspection and maintenance schedule for fire hydrants in the subdivision in which Doe's home is located.

h. specifications for the fire hydrant and adjacent water pipes.

i. base material specification for water pipes adjacent to the Doe fire hydrant

j. corrosion-control considerations, from 1965 to 2001, in relation to the possible corrosion of city water system.

k. purchase records of the hydrant and adjacent water pipes

l. Fire Department report for the incident.

m. City report of the investigation of the incident.

Construction:

1. records as to construction and installation of the Doe fire hydrant and adjacent water pipes.

2. photos thereof.

Inspection and maintenance:

1. inspection and maintenance records of water pipes and hydrants in the Doe subdivision.

2. records of failures and claimed failures of fire hydrants and adjacent water pipes in the City from 1990 to the present, and photos thereof.

3. repair records of the failure of the Doe fire hydrant and adjacent water pipes, and photos thereof.

Water records:

1. water pressure records from 1990 to 2001 for the water delivery system supplying water to the Doe fire hydrant.

SubroFlash 28 Measurements

In the case of fire, water or construction defect damage, it is critical to obtain measurements.

There are two types of measurements of interest; namely, as-built and design.

As-built measurements are the most critical for subrogation. Regardless of the type of damage, it is critical that measurements be taken before demolition and reconstruction.

Examples:

-fire damage involving a fireplace allegedly defectively designed or constructed. Measurements are needed of the entire area, since the subrogation investigation will be analyzing the origin and cause of the fire. Once the fireplace is demolished and rebuilt, those measurements are no longer possible.

 -water damage involving a water filtration system. Tale measurements of the under-sink cabinet, location of all parts of the system, and lines under the sink. It is also a good idea to test the water pressure to the property with the filter system still in place.

 -construction defect involving leaking windows. Take measurements of the wall in which the window is located, as well as measurements of exemplar windows.

 Design drawings and measurements are available from the manufacturer and/or builder. Since these are not under your control, they can be obtained later.

 Should you take “as built” measurements on all cases? There is a cost associated with the “as-built” measurements. However, if you take measurements on those cases in which you anticipate subrogation, the increase in subro recoveries should more than offset the costs. This will be true even if some of the cases in which you take measurements end up in no subro recovery.

 The reason for both sets of measurements is that the product/building may have been built differently than it was designed. This may be the key to your subrogation recovery.

 To Do: 

1. Hire the appropriate expert/contractor to take measurements of the scene as early as possible, and prior to demolition,
2. Instruct the expert to discuss with you and/or your subrogation counsel what “interested parties” to give notice to, for inspection of the scene before evidence is removed, and
3. Instruct the expert to retain evidence.

SubroFlash 29 – Tolling of Statute of Repose

 Many states have statutes of repose for defects in real property. California’s statute is found in CCP section 337.15, for latent defects. Suit is barred for all causes of action but for personal injury, willful misconduct, and fraudulent concealment unless suit is filed within 10 years of substantial completion, regardless of when the damage is discovered.

 Some states may also have tolling provisions in the statute.

 A case decided in April 2002, in California (Jackson Plaza Homeowners Assoc. v. Alcal Roofing & Insulation (2002 DJDAR 4777) in the First Appellate District dealt with CA’s approach to tolling the 10 year statute. The entire case is not certified for publication, but relevant portions are.

 The plaintiff contended the 10-year time period should be extended for the time period in which the contractor attempted to remedy the defect. The court agreed. Other states may have similar cases or attorneys may argue by analogy that the same ruling should result in their particular state.

 To do: 

1. Determine the relevant statutes and court cases in the jurisdiction in which you’re dealing.
2. Determine when the building was substantially complete. This may be done by inquiring at the building department for a notice of final inspection or notice of completion.
3. Ask the assured if the builder attempted repairs, or was contacted at all.

© 2005 Copyright The Cole Law Firm.   All Rights Reserved

Legal Statement

Contact Webmaster for submissions and suggestions

Last updated: Wednesday, April 27, 2005 03:10 PM