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Corvias Military Living, LLC v. Ventamatic, Ltd.

Supreme Court of Kansas

October 25, 2019

Corvias Military Living, LLC, and Corvias Military Construction, LLC, Appellants,
v.
Ventamatic, Ltd., and Jakel, Inc., Appellees.

         SYLLABUS BY THE COURT

         1. The Kansas Product Liability Act (KPLA), K.S.A. 60-3301 et seq., codifies a modified version of the common-law economic loss doctrine. In a product liability cause of action, the KPLA excludes recovery of damages for any "direct or consequential economic loss" but permits a plaintiff to recover damages for any damage to property. K.S.A. 60-3302(d). This includes damage to the product itself.

         2. Because the KPLA excludes from the scope of a product liability cause of action any claim to recover direct or consequential economic loss, the KPLA does not subsume or extinguish any legally viable alternative cause of action seeking recovery for direct or consequential economic loss.

         Review of the judgment of the Court of Appeals in 54 Kan.App.2d 169, 397 P.3d 441 (2017).

          Appeal from Geary District Court; Benjamin J. Sexton, judge. Judgment of the Court of Appeals reversing the district court is affirmed in part and reversed in part. Judgment of the district court is affirmed in part, reversed in part, and remanded with directions.

          Charles L. Philbrick, pro hac vice, of Rathje & Woodward, LLC, of Wheaton, Illinois, argued the cause, and William J. Bahr, of Arthur-Green, LLP, of Manhattan, was with him on the briefs for appellants.

          Seth A. Lowry, of Fisher, Patterson, Sayler & Smith, L.L.P., of Topeka, argued the cause, and James P. Nordstrom, of the same firm, was with him on the briefs for appellee Ventamatic, Ltd.

          David E. Rogers, of Foulston Siefkin LLP, of Wichita, argued the cause, and Daniel J. Buller, of the same firm, was with him on the briefs for appellee Jakel Motors, Inc.

          OPINION

          Stegall, J.

         The plaintiffs in this lawsuit-Corvias Military Living, LLC, and Corvias Military Construction, LLC-collectively form a construction firm specializing in building military housing. Corvias built thousands of homes near Fort Riley in Geary County. In these homes, Corvias installed bathroom ceiling fans constructed by the defendants-Ventamatic, Ltd., and Jakel Motors, Inc. After installation, several of the ceiling fans caught fire and damaged several homes. Corvias then sought to mitigate further damage by removing and replacing the remaining fans. This lawsuit followed.

         The district court entered summary judgment against Corvias, holding that the economic loss doctrine barred Corvias from recovery. Corvias appealed, and the Court of Appeals reversed. The panel reasoned that the economic loss doctrine did not bar Corvias from asserting a product liability claim because the property damage to the homes was not economic loss. We granted review.

         Factual and Procedural Background

         Corvias is a military housing developer that built and now manages privatized family housing at Fort Riley, Kansas. During the construction phase, Corvias, through its subcontractors, purchased and installed approximately 3, 785 "NuVent" bathroom ceiling fans into the Fort Riley homes. Ventamatic manufactures the NuVent model bathroom exhaust fans, and some of these fans were built with electric motors manufactured by Jakel.

         On June 12, 2012, a fire occurred in one of the homes. A defective electrical motor in a NuVent bathroom exhaust fan allegedly caused the fire. Corvias claims the fire caused $656.26 in damage. Then, another fire occurred in a different housing unit constructed by Corvias. Again, a defective electrical motor in a NuVent bathroom exhaust fan allegedly caused the fire. This fire caused extensive damage to the home including walls, ceiling, rafters, artwork, and personal property of the tenants. Additionally, the fire caused damage to the adjoining townhome. In total, this fire caused $88, 994 in damages.

         But the fires were not the only problem Corvias had with the NuVent fans. Before the fires, Corvias allegedly experienced over 100 failed NuVent fans. So, following the second fire, Corvias removed the remaining 3, 783 NuVent fans from its housing units and replaced them with a new brand of bathroom fans. This removal and replacement of the fans cost an estimated $459, 027.

         Corvias filed suit in Geary County District Court against Ventamatic, Jakel, and four other defendants. In Corvias' amended petition, Corvias asserted: (1) a product liability claim under the Kansas Product Liability Act; (2) claims for breaches of express and implied warranties of merchantability; (3) an unjust enrichment claim; (4) a claim under the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301 et seq.; and (5) breach of contract. Corvias sought $459, 027.26 in damages for the removal and replacement of the 3, 783 NuVent fans and $50, 000 for property damage associated with the two fires-the amount of its insurance deductible.

         Corvias voluntarily dismissed its claims against the four other defendants- including all its breach of contract claims-with prejudice. Ventamatic and Jakel filed motions for summary judgment arguing the economic loss doctrine barred Corvias' product liability claims because the damages incurred were purely economic. Ventamatic also argued Corvias' ...


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