Ariz. high court to review product liability case

July 2, 2007

The Arizona Supreme Court announced it will be reviewing a product liability case in which a lower court decided that all parties in a distribution chain could not be sued equally.

At issue in State Farm Insurance v. Premier Manufactured Systems, is whether the Arizona Legislature’s principles of comparative fault are applicable to participants in the distribution chain of an allegedly defective product.

Previously, the Arizona Court of Appeals ruled that they are.

In the case, the plaintiff, who was insured by State Farm Insurance, discovered that an under-sink water filtration system had leaked, damaging his home and property. The insured had properly installed and maintained the system in the two years prior to the leak.

The system was packaged and sold by Premier Manufactured Systems Inc. Worldwide Distributing Ltd. manufactured the canisters holding a series of filters and sold them to Premier.

State Farm paid its insured approximately $19,000 for the losses, then filed a strict products liability case against Premier and Worldwide to recover the amount it had paid.

The court entered a default judgment against Worldwide because the company was defunct. Premier denied liability. Thus, State Farm moved for summary judgment on issue of comparative fault, asserting all entities in a distribution chain are joint and severally liable.

The state superior court held that the entities involved in the manufacture, production and sale of a defective product to consumers are severally at fault. Worldwide was determined 75 percent at fault, and Premier 25 percent at fault.

State Farm appealed.

The Supreme Court is expected to make a ruling in mid-summer.

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Insurance Journal West July 2, 2007
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