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Liberty Northwest Ins. Co. v. Spudnik Equipment Co., LLC

Supreme Court of Idaho, Boise

November 26, 2013

LIBERTY NORTHWEST INSURANCE CO., individually and as Subrogee of Duane R. Grant and Douglas E. Grant, d/b/a Grant 4-D Farms, Plaintiff-Appellant-Cross Respondent,
v.
SPUDNIK EQUIPMENT COMPANY, LLC, an Idaho limited liability corporation, Defendant-Respondent-Cross Appellant, and John Does I-IV and John Doe Corporations I-IV, Defendants.

Rehearing Denied Jan. 29, 2014.

Page 647

Anderson, Julian & Hull, LLP, Boise, for appellant. Mark D. Sebastian argued.

Stewart Taylor & Morris, PLLC, Boise, for respondent. Daniel W. Bower argued.

Page 648

J. JONES, Justice.

Liberty Northwest Insurance initiated this product liability action against Spudnik Equipment Company, seeking to recover worker's compensation benefits it paid to an employee of its insured, Grant 4-D Farms, who was injured while working on a potato conveyor. The district court dismissed the case on summary judgment, finding that Liberty had failed to adequately identify the equipment involved in the accident. Liberty appealed to this Court and we affirm.

I.

FACTS AND PROCEDURAL HISTORY

On October 9, 2008, Armando Olmos, an employee of Grant 4-D Farms (Grant), was injured when his hand was pulled into the junction or " nip point" between two potato conveyor tables (hereinafter, conveyors or tables). Olmos was a " clod picker," and his duties included standing next to the conveyor system to remove debris, rocks, or other unwanted materials from the conveyor tables. On the day of the accident, Grant was using five or six conveyors, attached end-to-end, to move potatoes into its potato cellar. The conveyors are supposed to run in the same direction but, because they are operated by three-phase electric motors, they can run equally well in both directions. The direction the conveyor runs depends on which power wire is hooked up to the terminal on the motor. Rearranging the conveyors or pulling one out of the line could result in a conveyor reversing direction. Olmos' hand was pulled in between two conveyors that were incorrectly running in opposite directions.

Since the 1980's, Grant has used conveyors manufactured by three separate companies: Spudnik, Double L, and STI. Grant owns at least two different models of Spudnik conveyors. Grant purchased its conveyors used and many have been modified by previous owners. Any conveyors that are not interchangeable with its system are modified by Grant so as to be interchangeable with the other components of its conveyor system. These modifications include changing bolt connection patterns between the two Spudnik models, altering the Double L conveyor ends to match up with the Spudnik conveyor ends, changing the electrical connections so that they are uniform, and adding phase reversers. Typically, it is Grant and not Spudnik, that performs the modification and maintenance work on the conveyors.

After Olmos' accident, Liberty's investigator, Tom Groat, identified only one of the conveyors by its serial number. It is unclear how the identified conveyor fit into the conveyor system. It may either have formed half of the nip point that caused the injury to Olmos' hand or it may have merely formed part of the line of conveyors.

Liberty ultimately paid out $214,221 in worker's compensation benefits and initiated the present subrogation action against Spudnik on February 1, 2010. Spudnik filed a motion to dismiss for Liberty's failure to preserve evidence of the conveyors involved in the injury, which the district court denied. Spudnik then filed a motion for summary judgment, which the district judge granted, based on Liberty's failure to identify the conveyors that caused Olmos' injuries. Liberty timely appealed to this Court.

II.

ISSUES ON APPEAL

I. Did the district court err in granting summary judgment to Spudnik? [1]
II. Should Idaho law be modified to permit district courts the discretion to fashion an appropriate sanction where an experienced ...

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