By Robert P. Mader Of Contractor’s staff
CLEVELAND— Heatway Systems failed to persuade a federal district court jury here in February that Goodyear Tire & Rubber manufactured defective hydronic radiant tubing. Goodyear argued that the nearly 700 failures of the tubing were the result of improper installation and maintenance of the systems.
‘These are not contractors doing this for the first time,’ Holohan said.
Heatway found itself forced into the legal position of arguing that all 25 million ft. of hose produced by Goodyear were defective, said Heatway Vice President Dan Chiles. Chiles also said it was difficult to argue the case in Goodyear’s “backyard.”
“Goodyear, obviously, is very gratified by the verdict,” said spokesman Fred Haymond. “We always have believed that the Entran II hose was appropriate for use in radiant home heating systems when it was sold and that if the Entran II hose is used in a system that is properly installed, operated and maintained, it will continue to provide many years of service.”
Goodyear devotes a portion of its Web site to the Heatway issue, including operation and maintenance advice to homeowners at www.goodyear.com/us/corporate/heatway/index.html.
Goodyear will probably now sue Heatway for the $2.5 million it owes for tubing, Haymond said.
Can Heatway pay? “Well, no,” Chiles said. He said he doesn’t know if the company will file for Chapter 11 bankruptcy protection.
Chiles said that Heatway and its insurance companies have paid $3.6 million to homeowners and contractors to remediate problem systems.
Homeowners still have the right to sue Goodyear and Heatway to recover for damage to their homes.
“Our relations with contractors and homeowners is excellent because we stood up in a federal court and swore an oath and presented compelling evidence that contractors, equipment suppliers and homeowners did not cause this host of failures,” Chiles said.
“Furthermore, the day before this trial began Goodyear made us an offer. They said, we’ll do away with this litigation, we’ll give you cash, we’ll indemnify you against lawsuits from homeowners and all you have to do is sign this paper and agree that the fault is with homeowners and contractors, and we said, no.
“So we proceeded to fight this terrible three-week fight in Goodyear’s backyard and we lost,” Chiles continued.“We interviewed the jury afterward and they said that 658 projects is not enough to condemn this hose. If you came to us and said 2,500 or 3,500, you might have had a different result, but they did not find unarguable proof of 658 failures to be compelling.”
Heatway hoped to win money from Goodyear to create a fund to fix failed systems.
Chiles predicted that Goodyear will ultimately end up paying “to fix this mess” and that Heatway will survive because of the support of its customers and homeowners.
“I think it should have gone the other way,” said hydronic consultant Dan Holohan. “I’ve seen these jobs and I’m pretty convinced that there’s something wrong with that hose.” Holohan noted that Goodyear has blamed contractors.
“These contractors are professionals,” he said. “They put them in the same way they’ve used other people’s products”
Holohan said he doesn’t believe that the recommendations on Goodyear’s Web site for actions such as air elimination and water treatment would have made any difference in the failed jobs that he’s seen.
“The door is open for a major manufacturer to point at product problems and say it’s the contractor,” Holohan said. “They [Goodyear] are flat out saying they would put Entran II in a house. That calls contractors who have put in 10,000 jobs incompetent. These are not contractors doing this for the first time. These are guys doing radiant heat every day.”
Holohan fears that if Heatway is forced to liquidate, that homeowners will hold contractors liable.
Rachel Yates, a partner in Holland & Hart, Denver, said her firm is working with Black, Allely, Ryon and Maus, also in Denver. The two law firms represent about 15 homeowners, Yates said.
She said the two firms have filed suit in both state and federal courts. A class-action lawsuit has been filed in state court in Eagle County, Colorado, and a second class-action suit is being considered in the Rocky Mountain area and Alaska.
“The court system in the Rocky Mountain region is not that overloaded, so we expect trial in a year or year-and-a-half, unless there’s an earlier ruling on the case,” Yates said. “The class action in Colorado court will have a hearing to determine if the class should be certified and that will be heard in July.”
Yates said that Goodyear’s victory against Heatway would not relieve it from its obligation to homeowners.
“They [Heatway] were having to establish that the entire product was unmerchantable and that’s just something they apparently were unable to prove,” Yates said. “In any given home with several thousand feet of this hose, perhaps not every inch of it is subject to failure, but that’s not the test for damages.”
Yates said that an implied warranty of merchantability or fitness for a particular purpose could be argued, in addition to the Colorado Consumer Protection Act, which permits treble damages.