Union Mut. Fire Ins. Co. v. Ace Caribbean Mkt. ( 2023 )

21-2653
Union Mut. Fire Ins. Co. v. Ace Caribbean Mkt.
1 IN THE
2 United States Court of Appeals
3 For the Second Circuit
4 ________
5 AUGUST TERM, 2022
6
7 ARGUED: JANUARY 12, 2023
8 DECIDED: APRIL 6, 2023
9
10 No. 21-2653
11
12 UNION MUTUAL FIRE INSURANCE COMPANY,
13 Plaintiff-Appellant,
14
15 v.
16
17 ACE CARIBBEAN MARKET, NEERA RAMDIN,
18 Defendants-Appellees.
19
20 ________
21
22 Appeal from the United States District Court
23 for the Eastern District of New York.
24 1:18-cv-01570 – Komitee, District Judge.
25
26 ________
27
28 Before: CALABRESI, CHIN, and BIANCO, Circuit Judges.
29 ________
30 Plaintiff-appellant Union Mutual Fire Insurance Company (“Union
31 Mutual”) appeals from a judgment of the United States District Court for the
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Union Mut. Fire Ins. Co. v. Ace Caribbean Mkt.
1 Eastern District of New York (Komitee, J.). This insurance subrogation suit arose
2 from a fire which started at 110-14 Liberty Avenue in Queens, New York, and
3 which damaged the neighboring buildings insured by Union Mutual. On appeal,
4 Union Mutual argues that sufficient circumstantial evidence shows that the
5 negligence of defendants-appellees Ace Caribbean Market and Neera Ramdin,
6 proprietor and owner of 110-14 Liberty Avenue, respectively, caused the fire. We
7 disagree. We therefore AFFIRM the district court’s grant of summary judgment
8 for the defendants.
9
10
11 ERIC T. BORON, Hurwitz & Fine, P.C., Buffalo, NY (Agnieszka Wilewicz,
12 Hurwitz & Fine, P.C., Buffalo, NY, on the brief), for Plaintiff-Appellant
13 Union Mutual Fire Insurance Company.
14 DENNIS M. ROTHMAN, Lester Schwab Katz & Dwyer, LLP, New York,
15 NY, for Defendants-Appellees Ace Caribbean Market, Neera Ramdin.
16
17
18 CALABRESI, Circuit Judge:
19 Plaintiff-appellant Union Mutual Fire Insurance Company (“Union
20 Mutual”) appeals from a judgment of the United States District Court for the
21 Eastern District of New York (Komitee, J.). On March 4, 2017, a fire started at 110-
22 14 Liberty Avenue in Queens, New York, spreading to and damaging four
23 neighboring buildings insured by Union Mutual. After an investigation, the fire
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1 marshals concluded, but could not determine with certainty, that the fire
2 originated in the extension cords used by Ace Caribbean Market. Union Mutual
3 paid proceeds to the damaged neighboring buildings, and subrogated into their
4 owners’ tort claims. Union Mutual then sued Ace Caribbean Market and Neera
5 Ramdin (collectively, “defendants”), alleging that their negligent use of the
6 extension cords caused the fire. The district court granted summary judgment for
7 the defendants.
8 This case requires us to determine whether in an insurance subrogation case,
9 evidence that a fire may have originated in the extension cords is sufficient to show
10 that (a) the owners and proprietors were negligent in their use of the extension
11 cords and (b) if they were negligent, that negligence was the cause of the fire. We
12 hold that such evidence is not sufficient. We therefore affirm the district court’s
13 grant of summary judgment for the defendants.
14 BACKGROUND
15 The facts, viewed in the light most favorable to Union Mutual as the
16 nonmoving party in the district court, are as follows. Located on the first floor of
17 110-14 Liberty Avenue, Ace Caribbean Market used four refrigerators and freezers
18 to display vegetables and beverages. The refrigerators and freezers could not be
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1 plugged directly into electric outlets, because there were none on the floor of the
2 store. Instead, the store used power strips and surge protectors to power its
3 appliances. 1
4 On March 4, 2017, a fire started in Ace Caribbean Market at around 10:52
5 PM. No one was inside of the store at the time. The fire destroyed or damaged
6 four buildings around Ace Caribbean Market insured by Union Mutual. Union
7 Mutual paid around $1.5 million in insurance proceeds for physical loss, loss of
8 business income, and removal of debris resulting from the fire damage of the four
9 buildings, and subrogated into their owners’ tort claims.
10 Supervised by James Kelly, fire marshal Matthew Lewis of the New York
11 Fire Department (“FDNY”) led the fire investigation. Lewis found a V-shaped
12 burn pattern, as well as heavily damaged power strips and extension cords, in the
13 rear of Ace Caribbean Market. On the Fire Incident Report, Lewis input the
14 numerical code for “Extension Cord” as the cause of the fire. A 85. But Lewis
1Two employees and the owner of Ace Caribbean Market stated that no extension cords were
used in the store. But viewing the evidence in the light most favorable to Union Mutual as the
nonmoving party in the district court, we assume that Ace Caribbean Market did use extension
cords to power some of its appliances. There was no electric outlet into which the refrigerators
could directly be plugged, and fire marshal Lewis recovered damaged extension cords in the store
after the fire.
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1 explained that the cause was “not fully ascertained due to structural collapse,” as
2 the collapsed roof and the second floor of the building damaged the area of the
3 fire’s origin. Id. (capitalization omitted). While extension cords that are plugged
4 into each other could overheat and start a fire, neither Lewis nor Kelly found any
5 evidence of misuse or overload. FDNY did not send any of the damaged electrical
6 components for testing, and Lewis acknowledged that the extension cords and the
7 power strip could have had manufacturing defects. Kelly confirmed Lewis’s
8 findings, testifying that while he believed that the extension cords were the
9 probable cause of the fire, he could not make the determination with certainty.
10 Kelly was confident that the fire originated in the rear of Ace Caribbean Market
11 where the extension cords were found, but was not sure as to its cause.
12 On March 14, 2018, Union Mutual sued Ace Caribbean Market and Ramdin
13 in the United States District Court for the Eastern District of New York. Union
14 Mutual alleged inter alia that defendants’ misuse of the extension cords caused the
15 fire. In the district court, defendants called two expert witnesses. The first, a
16 former FDNY fire marshal, found no evidence that defendants’ actions contributed
17 to the cause of the fire, and noted that due to the extensive damage caused by the
18 fire, the origin of the fire within Ace Caribbean Market could not be determined
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1 to the exclusion of other fire-origin hypotheses. The second defense expert, an
2 electrical engineer, found no evidence that the extension cords caused the fire, or
3 that the defendants misused or overloaded them. Union Mutual had engaged an
4 expert of its own, but did not identify him as a witness or produce any report from
5 him in the district court.
6 On September 10, 2020, defendants moved for summary judgment.
7 Defendants argued that Union Mutual produced no evidence showing that their
8 negligence caused the fire. Union Mutual opposed summary judgment,
9 contending inter alia that the parties had genuine disputes of material fact over
10 whether Ace Caribbean Market’s use and overload of the extension cords caused
11 the fire.
12 On September 30, 2021, the district court granted defendants’ motion for
13 summary judgment. The district court noted that to succeed on a negligence claim,
14 plaintiffs must show duty, breach, causation, and damages. With respect to
15 breach, the district court noted Union Mutual’s argument that defendants
16 breached the applicable standard of care by plugging the refrigerators into light-
17 gauge extension cords, which can overheat if overloaded. The district court found
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1 no record evidence about the actual amount of electricity used by the refrigerators,
2 and did not focus further on issues of breach.
3 The district court held that Union Mutual failed to produce sufficient
4 evidence to establish causation. The district court concluded that Lewis’s report
5 and testimony did not establish a reasonable probability that defendants’
6 negligence caused the fire, because Lewis could not determine the cause of the fire
7 with certainty. Because Union Mutual produced no other evidence of causation,
8 the district court granted summary judgment for defendants.
9 Union Mutual timely appealed.
10 DISCUSSION
11 On appeal, Union Mutual argues that the district court erred in granting
12 summary judgment for defendants, because it produced sufficient evidence that
13 defendants’ negligence, in particular their use of the extension cords, caused the
14 fire. We review de novo a district court’s grant of summary judgment. Estate of
15 Gustafson ex rel. Reginella v. Target Corp., 819 F.3d 673, 675 (2d Cir. 2016). “Summary
16 judgment is appropriate only where ‘there is no genuine dispute as to any material
17 fact and the movant is entitled to judgment as a matter of law.’” Id. (quoting Fed.
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1 R. Civ. P. 56(a)). “In determining whether there are genuine disputes of material
2 fact, we are ‘required to resolve all ambiguities and draw all permissible factual
3 inferences in favor of the party against whom summary judgment is sought.’” Id.
4 (quoting Stern v. Trs. of Columbia Univ., 131 F.3d 305, 312 (2d Cir. 1997)). “We will
5 affirm summary judgment ‘[w]here the record taken as a whole could not lead a
6 rational trier of fact to find for the non-moving party.’” Id. (alteration in original)
7 (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)).
8 “Under New York law, a tort plaintiff seeking to prove a defendant’s
9 negligence must show: ‘(1) the existence of a duty on defendant’s part as to
10 plaintiff; (2) a breach of this duty; and (3) injury to the plaintiff as a result thereof.’”
11 Borley v. United States, 22 F.4th 75, 78 (2d Cir. 2021) (quoting Akins v. Glens Falls
12 City Sch. Dist., 424 N.E.2d 531, 535 (N.Y. 1981)). In the absence of “direct” evidence
13 of causation, New York courts consider three factors in deciding whether a
14 factfinder can conclude that a defendant’s negligence caused the accident.
15 Reginella, 819 F.3d at 675; accord Williams v. Utica Coll. of Syracuse Univ., 453 F.3d
16 112, 121 (2d Cir. 2006); cf. Williams v. KFC Nat’l Mgmt. Co., 391 F.3d 411, 424–25 (2d
17 Cir. 2004) (Calabresi, J., concurring). “First, was there evidence of negligence or a
18 defect on defendant’s part, and, if there was, did that negligence or defect increase
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1 the chances of plaintiff’s injury occurring, and by how much? That is, how strong
2 was the circumstantial evidence of causation?” Reginella, 819 F.3d at 675. “Second,
3 which party is better placed to tell us whether the negligence or defect was in fact
4 likely to be a cause of the injury or whether the injury would have happened
5 regardless of the negligence or defect?” Id. at 676. “And third, has the relevant
6 jurisdiction . . . indicated a preference in favor of or against liability in the given
7 context?” Id.8 The second and the third factors are not significant in the case before us.
9 Defendants may have misrepresented their use of extension cords in the building.
10 But no one was in Ace Caribbean Market when the fire started, and defendants are
11 not better positioned to explain the cause of the fire. Further, New York has not
12 indicated a preference in favor of or against liability in this context. New York
13 courts have upheld insurers’ equitable subrogation claims against third-party
14 tortfeasors, but have also articulated anti-subrogation rules to spread costs
15 through insurance companies rather than concentrate them. Compare, e.g., Fed. Ins.
16 Co. v. Arthur Andersen & Co., 552 N.E.2d 870, 875–76 (N.Y. 1990) (“While arguably
17 a compensated insurer or surety should in fairness bear the loss where the third
18 party’s liability is solely contractual and not based on fault, such a result seems
9
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1 neither fair nor judicious when the loss has been caused by the third party’s
2 tortious conduct.” (citations omitted)), with Pa. Gen. Ins. Co. v. Austin Powder Co.,
3 502 N.E.2d 982, 985 (N.Y. 1986) (prohibiting an insurer’s subrogation claims
4 against its insured, in part because subrogation would permit the insurer to “pass
5 the incidence of the loss . . . from itself to its own insured” (alteration in original)
6 (internal quotation marks omitted)). See generally Guido Calabresi, The Cost of
7 Accidents 39–67 (1970).
8 We therefore turn to the first factor, the strength of the circumstantial
9 evidence. Reginella, 819 F.3d at 675. Broadly speaking, proof of cause-in-fact is
10 almost always circumstantial. See Kenneth S. Abraham, Self-Proving Causation, 99
11 Va. L. Rev. 1811, 1812 (2013) (“All evidence of causation ultimately is
12 circumstantial evidence.”). The question is how dangerous or risky an activity is
13 with respect to causing a particular kind of harm. At one time, wary of the post
14 hoc ergo propter hoc fallacy, courts demanded “direct” evidence of causation, and
15 were reluctant to find, as sufficient evidence of causation, an activity’s strong
16 propensity to cause the kind of harm which ensued. See, e.g., Wolf v. Kaufmann,
17 237 N.Y.S. 550, 551 (App. Div. 1929) (dismissing a negligence suit where the
18 deceased victim was found unconscious at the bottom of the stairs which were
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1 unlighted in violation of housing regulations, because of “a total absence of proof
2 of any causal connection between the accident and the absence of light”).
3 That has changed after courts grasped the thrust of Martin v. Herzog, 126
4 N.E. 814 (N.Y. 1920). In that case, Judge Cardozo held that where a defendant’s
5 negligence increased the risk of an accident, more direct evidence is not required
6 for a jury to find that it was the negligence that caused the harm. Id. at 816. Thus,
7 where a buggy, traveling without lights in violation of a statute, collided with a
8 car at nighttime, “a case, prima facie sufficient, of negligence contributing to the
9 result” is established. Id.; see also Clark v. Gibbons, 426 P.2d 525, 542 (Cal. 1967)
10 (Traynor, C.J., concurring in part and dissenting in part); Reynolds v. Tex. & Pac.
11 Ry. Co., 37 La. Ann. 694, 698 (1885) (“We . . . recognize the distinction between post
12 hoc and propter hoc. But where the negligence of the defendant greatly multiplies
13 the chances of accident to the plaintiff, and is of a character naturally leading to its
14 occurrence, the mere possibility that it might have happened without the
15 negligence is not sufficient to break the chain of cause and effect between the
16 negligence and the injury.”).
17 As New York’s highest court said in Schneider v. Kings Highway Hospital
18 Center, Inc., 490 N.E.2d 1221 (N.Y. 1986), “[t]o establish a prima facie case of
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1 negligence based wholly on circumstantial evidence, ‘[i]t is enough that [plaintiff]
2 shows facts and conditions from which the negligence of the defendant and the
3 causation of the accident by that negligence may be reasonably inferred.’” Id. at
4 1221 (quoting Ingersoll v. Liberty Bank, 14 N.E.2d 828, 830 (N.Y. 1938)); see also
5 Liriano v. Hobart Corp., 170 F.3d 264, 271 (2d Cir. 1999) (concluding, under New
6 York law: “When a defendant’s negligent act is deemed wrongful precisely
7 because it has a strong propensity to cause the type of injury that ensued, that very
8 causal tendency is evidence enough to establish a prima facie case of cause-in-fact.
9 The burden then shifts to the defendant to come forward with evidence that its
10 negligence was not such a but-for cause.”); Zuchowicz v. United States, 140 F.3d 381,
11 390–91 (2d Cir. 1998) (applying federal law).
12 Circumstantial evidence is therefore enough if there is a strong link between
13 (1) an activity considered wrongful because it increases the risk that a particular
14 type of harm would occur and (2) the occurrence of that exact type of harm. See
15 Guido Calabresi, Concerning Cause and the Law of Torts: An Essay for Harry Kalven,
16 Jr., 43 U. Chi. L. Rev. 69, 71–72 (1975) (explaining the concept of “causal link”). For
17 this causal link to be made out, however, there must be sufficient evidence of
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1 negligence on the part of the defendant that increased the chances of the harm that
2 occurred. 2
3 To show such negligence, Union Mutual relies almost exclusively on the fire
4 marshals’ report and testimonies that the fire originated in the extension cords
5 located in the rear of Ace Caribbean Market, and that overloaded extension cords
6 can overheat and cause fires. But the fire marshals also stated that they could not
7 fully ascertain the cause of the fire due to structural collapse and were more
8 confident about the fire’s origin than its exact cause. And defendants’ experts both
9 concluded that defendants’ actions did not contribute to the fire.
10 At most, Union Mutual therefore produced weak circumstantial evidence
11 that something wrong with the extension cords caused the fire. But, even
12 assuming a reasonable jury could so conclude, Union Mutual showed no evidence
13 of negligence whatsoever on defendants’ part, and evidence of causation by itself
14 is not evidence of negligence. See Martin v. Herzog, 126 N.E. at 816 (“We must be
15 on our guard, however, against confusing the question of negligence with that of
2We speak of negligence, as that is the asserted basis of liability in the case before us. Where the
basis of liability is other, e.g., strict products liability or extra-hazardous liability, that basis must
be established by sufficient evidence.
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1 the causal connection between the negligence and the injury.”). The fire marshals’
2 testimonies that the fire originated in the extension cords do not, on their own,
3 show that the defendants were negligent in their use of the extension cords.
4 Still, though Union Mutual has not directly argued it, we must consider
5 whether the situation before us is one in which the plaintiff can rely on the doctrine
6 of res ipsa loquitur (a) to create a jury question as to the existence of defendant’s
7 negligence and (b) given such a possible finding of negligence, to create an
8 inference of causation. Cf. Morejon v. Rais Constr. Co., 851 N.E.2d 1143, 1144, 1149
9 (N.Y. 2006) (noting that res ipsa loquitur “is nothing more than a brand of
10 circumstantial evidence” that “allows a jury to . . . infer that the defendant was
11 negligent in some unspecified way”).
12 Like causation, res ipsa loquitur involves three factors: (1) strength of the
13 circumstantial evidence; (2) relative knowledge; and (3) preference in favor of or
14 against liability. See KFC Nat’l Mgmt. Co., 391 F.3d at 424–25 (Calabresi, J.,
15 concurring). And, as with causation, in the current case the second and the third
16 factors are not significant, so we look to the strength of the circumstantial
17 evidence, i.e., the likelihood that the accident would not have occurred without
18 defendant’s negligence.
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1 Traditionally, to succeed on a res ipsa loquitur theory, New York courts have
2 required three elements: “(1) the event must be of a kind which ordinarily does
3 not occur in the absence of someone’s negligence; (2) it must be caused by an
4 agency or instrumentality within the exclusive control of the defendant; (3) it must
5 not have been due to any voluntary action or contribution on the part of the
6 plaintiff.” Morejon, 851 N.E.2d at 1147 (quoting Corcoran v. Banner Super Mkt., Inc.,
7 227 N.E.2d 304, 305 (N.Y. 1967)). More recently, however, New York courts have
8 in practice eliminated exclusive control as an absolute requirement, and permitted
9 plaintiffs to show, sufficiently, that other possible controllers were not the
10 negligent cause. See Ebanks v. N.Y.C. Transit Auth., 512 N.E.2d 297, 298 (N.Y. 1987)
11 (requiring plaintiffs who rely on the doctrine of res ipsa loquitur to “establish that
12 the likelihood of [negligent causes not within the defendant’s control] was so
13 reduced ‘that the greater probability lies’” in defendant’s instrumentality (quoting
14 Dermatossian v. N.Y.C. Transit Auth., 492 N.E.2d 1200, 1205 (N.Y. 1986))).
15 Crucially, in the case before us, fire marshal Lewis expressly testified that
16 the extension cords and the power strip “[v]ery well could have” had
17 manufacturing defects in them. A 305. And Union Mutual failed to introduce any
18 evidence that such possible manufacturing defects were not the negligent cause.
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1 As a result, Union Mutual did not adduce evidence that the fire was caused by an
2 instrumentality within the requisite control of the defendants, who are the owner
3 and proprietor of the burned building rather than the manufacturer of the
4 extension cords. The res ipsa loquitur argument therefore cannot be made here.
5 There may have been negligence, and that negligence may have been the cause of
6 the fire. But no inference that it was the defendants’ negligence is permissible on
7 the facts before us.
8 We therefore conclude that under New York law, in the insurance
9 subrogation case before us, evidence that a fire may have originated in the
10 extension cords used by defendants was not enough to show that (a) the
11 defendants were negligent in their use of the extension cords or (b) their
12 negligence caused the fire.
13 CONCLUSION
14 We have considered Union Mutual’s remaining arguments and find them
15 to be without merit. Accordingly, we AFFIRM the judgment of the district court.
16