COURT OF APPEALS OF INDIANA, FOURTH DISTRICT
647 N.E.2d 355; 1995 Ind. App. LEXIS 165; CCH Prod. Liab. Rep. P14,171; 27 U.C.C. Rep. Serv. 2d (Callaghan) 326
February 28, 1995, Filed
Appellant’s Petition for Transfer Granted July 3, 1995.
The trial court correctly denied McGraw-Edison’s motion for partial summary judgment. Based on the foregoing, the trial court is affirmed.
PROCEDURAL POSTURE: Plaintiff electric corporation brought an action against defendant supplier for liability under the Indiana Strict Product Liability Act, Ind. Code § § 33-1-1.5-1 through 33-1-1.5-8 (1993). The Huntington Circuit Court (Indiana) denied the supplier’s motion for partial summary judgment. The court granted the supplier’s petition for leave to take a permissible interlocutory appeal.
OVERVIEW: The electric corporation purchased a recloser from the supplier through one of its distributors. The terms and conditions of the purchase limited the supplier’s liability to the purchase price of the recloser. When lightning struck the area surrounding the substation where the recloser was installed, a fire was caused by an electrical surge. The electric corporation argued that a design defect in the recloser prevented it from acting as a breaker and allowed the power surge to reach the transformer in the substation. The court held that parties generally were free to contract as they saw fit. However, because the Act was in derogation of the common law, it had to be strictly construed. Because the common law prohibited a seller or manufacturer from disclaiming or limiting its liability by contract and the Act was silent on any means of contractually allocating liability, the Act could not be construed to allow contractual limitations on liability. The court would not enforce the limitation of liability provisions.
OUTCOME: The affirmed the denial of the supplier’s motion for partial summary judgment.