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State Farm Insurance Companies v. Premier Manufactured Systems, Inc. - 8/29/2006

Arizona Court of Appeals Division One Holds That the Principles of Comparative Fault Established In A.R.S. § 12-2506 Are Applicable To the Participants In the Chain of Distribution of a Defective Product In a Strict Products Liability Case.


State Farm filed a strict products liability case against the manufacturer and distributor (and others not relevant to the appeal) of a defective water filtration system that had leaked and flooded the home of an insured. State Farm received a default judgment against the manufacturer, but the distributor answered and alleged that the trier of fact would be required to determine the comparative fault of all parties and other persons. State Farm moved for summary judgment on this issue, asserting that all entities in the chain of distribution in a strict products liability action are jointly and severally liable. The Superior Court denied State Farm’s motion, holding that the comparative fault principles set forth in A.R.S. § 12-2506 applied to strict products liability cases and that entities in the chain of distribution were severally at fault. State Farm timely appealed.

The Court of Appeals affirmed the trial court’s ruling. The Court acknowledged the difficulty of grafting a “faultless” strict products liability system onto a fault allocation system; however, the Court held that “the plain language of A.R.S. § 12-2506 requires the fault of all members of the distribution chain to be compared and allocated.” In so holding, the Court of Appeals rejected State Farm’s argument that the legislature had only intended to eliminate joint liability in those situations in which the negligence of multiple tortfeasors “coalesced to form a single injury.” See Wiggs v. City of Phoenix, 198 Ariz. 367, 371 10 P.3d 625, 629 (2000). In Wiggs, the Supreme Court declined to apply comparative fault to an employer vicarious liability case. Although the Court of Appeals recognized that the justifications for imposing vicarious liability and for imposing strict liability on the members of the chain of distribution of a defective product were similar, the Court declined to extend the Wiggs analysis to strict products liability cases.

Judge Norris authored the unanimous opinion joined by Judge Sult and Judge Orozco.

Posted On: 9/6/2006