y thank your owners for entering this case today derives out of the diversity of jurisdiction so you're hearing it's a michigan tort commercial law and and real estate law today i tried to learn how to raise this up so i hope i'll keep eye contact with you but it would be looking down at my notes a bit here i would like to reserve three minutes of time for a vote only honors the facts of this case is that eagle pond bought an apartment complex that hart had already installed plumbing years before and that plumbing a component of it was defective and certain one inch thick vertical pipes failed in those pipes or supply pipes there in the walls  here they run to the ground and it created a significant amount of damage the issue arises before this court because it was dismissed on an summary judgment based on the application of their last doctrin as well as the court found the statue of limitations had run under the products liability for the economic loss doctrine applies to commercial transactions and there are two lubrizol or the company to whom lubrizol sold its product the court did find that there was a commercial transaction in goods and that is another basis think we have to apply michigan ball though i  think that there's that you cannot like last doctrine is somewhat state dependent on its scope and the way i read that restaurant case it is an insurance that didn't require privity of contractor that they were two contracting with the party who was repairing it back i believe in the there is a component to that repair that was defective so they had both preview contract and a commercial transaction i'm not getting a pretty of contract to say there's no other way i'm just eliminating that product to put on the desk to the owner to the person who is the plaintiff in that case in our case there is no transaction in goods that eagle pine has participated in they have they have participated in a real estate transaction and that is the issue what the plaintive his participated in or is the issue what the defendant has participated in it's the isn't it the sale litigation were not engaged in a transaction the other thing for good the other thing i look at is that the cases talk about bystanders and strangers evil palms a stranger to that transaction that had had no opportunity to bargain no opportunity to negotiate for something that would protect it and that's what these cases are looking for they say commercial law if you have the chance to negotiate and chance to bargain for protection restaurant was like ok we're going to be stuck with the economic loss doctor and if we sue them let's sell to somebody else that other person can come in and then sue because there won't be any direct relationship so what is your view in some respects so our parties to manipulate things to avoid the economic loss dr well i i don't believe in the feeling circumstances but i think that if you're a seller goods that  have a long life span and you believe the sense of a plumbing material that should last decades the property may be sold you can protect yourself your contract while you can seek indemnification from the person who is involved in the commercial transaction what i don't think we should do is i don't believe the federal court should expand the reach of the economic loss doctrine to real estate transactions and that's my my primary concern with how the judge  and and i will point the court to a case i i found a case through lexis that i hadn't found before because it's listed under pleadings breeze and motions it's not listed under case and i don't know if it was filed improperly but it's a case from judge case to counsel i have found in the last couple days but in that case there was a lease revolves around a lease that was to obtain oil and gas from the farm and part of the issue as a thirty something page opinion but part of it had to do with the application of the economic economic loss doctrine what oil and gas are things that can be severed from the land and are intended to be taken from the land and so they do qualify as goods the plumbing components here were never intended to be separate from the land they become came part of the real estate so in that case you truly have the sale of real estate or the lease of real estate a real estate transaction with an an underlying good and the court judgment on you found in that case that michigan has not extended the economic loss doctrine beyond the sale of goods to the sale of real estate and i and i think that's important i do agree with you that the michigan supreme court has not said one thing or the other but isn't it our job  predict what the michigan supreme court would do so why do you think the michigan supreme court would not extend it i could see arguments for why it would because whether it's a set of goods or a so of real estate i don't think matters with the underlying idea that in the contractual context both of a contract parties should just protect themselves by putting in terms of a contract why when it that general rule extended real estate what's what what's about real which is the michigan well it's michigan court of appeals then it is the court of appeals but there are published cases that are standing for the proposition that the the u c c and the uniform commercial code in the defense arising out of don't apply to real estate transactions and i would also you know go back to the hornbook law about how commercial law a rose and rose from maritime merchant law they didn't want to be bound by you know they came to a certain order they came to england they didn't want to be bound by the the common law of the land because it didn't allow them to engage in transactions in various places and and so a different set of laws rose up for merchants and it was in competition with the law of the land that you know the common law that dealt with property in real estate so that really did arise in different ways and the u c c came out of that so i think real estate has its own you know it's it's unique  that apply in the context of these commercial site eales of real estate because isn't there the capacity when when this when the apartment complex was purchased isn't there generally the on for tina to be in that contract to protect one's as purchaser to protect yourself or guarding all the component parts of what you're purchasing well i would respond to that in two ways one is that you're not purchasing goods so again i'd just like to circle back to the point that i prefer that the court the federal court not expand michigan law because there is a recourse there's recourse to products liability defenses and just to go that route but the other component of that is that and i in europe last night i had the other component of it and it escaped when i was just trying to say that if the question is whether you can who is responsible to protect themselves by contract even if you're not in privity view even if we can exclude that yet then isn't the protection by contract for a real estate entity the the purchase in the contractual purchase of the realist the other difficulty there is for instance in this case the the failure of the defect was not apparent it did not arise until after the p has taken place so certainly if there is something i think you're posing counsel argues that there were indications that there had been plumbing problems and that the seller said there have been plumbing problems and that they thought that they were typical plumbing problems that that they could buy without any additional contractual protection right in that may get into the issue for the statue of limitations whether there were these fan or return pipes that they're broke that were normal run of the mill  issues that come up in an apartment complexes versus this defect in the supply line so in this case the defect in the supply lines which are the thicker pipes didn't occur until later and so even so didn't your client testify that there was for there were four instances all of which were the problem and the st ones are the are the power lines that would cause the statute to run for you might my client didn't testify that they were all the same problem they there were the normal standard problems of these return lines that break one because you're exposed they're thin and they deteriorate without fact as a matter of course and you dealt with fifty different apartment complexes over thirty years there only two of those apartment complexes had these defects in the in the supply lines the theater supply and so when i think when when you're looking at the issue of what these return lines how they compare to the supply lines it's really apples and oranges and the other issue is there's no evidence in this case that noob results component components were in there so you just don't have the expert test the other lines to i you know i'm not aware of under what circumstances they made those tests but i do their work and i find is the what i would what i've mentioned out of the product from the products liability statue limitations is that it is also a question of fact for the jury whether those two harms are the same harm and really i believe the judge below looked at the issue and decided that question for the jury is not purely a legal question whether those before a jury and say was its component in there is there evidence that this component was in there and are they the same and i would submit they aren't and i would ask the court to really before extending michigan argument to the contrary eagle pond has to ignore a host of michigan supreme court appellate court decisions and simply pretend that they don't exist even part also just ignore the facts of this case in britain that their owner adam blais nat didn't testify the way that he testified there's no genuine issue material fact here summary judgment was appropriately issued below and judge would got this right i want to start if i may by explaining or at least reminding the court who my clients are my clients  raw material manufacturers are chemical companies they make compounds chemical compounds that come either in pellet or powder form it doesn't make pipes they don't make fittings they don't install pipes they don't sell real their compounds when that when their customer the company that made the pipes when their product failed apparently but you say that there's a strain of contract correct connecting you all the way through so you would  sold contract with a distributor would probably contract with another distributor ultimately there'd be a fabricator general contractor an installer and ultimately the the building purchaser the builder so there are a series numerous contracts and everybody has a contract and everybody is a commercial entity who has the power to protect themselves upstream and that's exactly what we're dealing with here but you know the claim against us here essentially is claiming by way of tort that we must have there's plenty of case law on it and there's not a lot of room for for argument here you cannot sue an upstream raw material supplier in tort for property damage this is the law actually not only in michigan but this is virtually the law in every state in the country  is there a distinction between merchants and consumers for purposes of this rule not in michigan in a lot of states there are big mishmash i just bought a can of soup from kroger in the soup to up my house  i would be able to sue campbell's soup or you just talk about property damage or you injured property damage if i could only get back to michigan you cannot sue campbell soup in some states you can't but if you are a business and that happens or if you are  a distributor of soup and it's a commercial transaction a bought that soup is part of your business or a kitchen or something what case in michigan says that there is no distinction between merchants and ordinary consumers you know i mean that's not the case we don't we don't have a consumer in this case i believe that need burger itself has some language related to that there are definitely some of the courts of appeals decisions that have followed up on the bar that make that point but i'm not prepared to answer that question since that is in our case here but the but i know that there are cases that have said that the consumer distinction does not apply in michigan but to be clear we're talking about commercial entities here that's what we have here eagle pond as is a commercial seller of commercial manager of apartment buildings and other types of buildings so there is no doubt that they are a commercial entity but such claims in a michigan are soley the province of contract law and or the uniform commercial code of the u c c and what happened here s imply is that the plaintiff dropped the ball mr blair's knack of the legal ponds owner testified that there was an investigation period there was a negotiation period he talked at length about leaks with the party from whom they bought the  building and ultimately at the end of the day they said this is typical stuff they even talked about leaks he asked about leaks and he said yeah we've had leaks he didn't investigate i asked him a deposition did you hire a plumber no i didn't hire a plumber we you know we do this all the time this is what we do we know what we're doing and we know how to do it so it goes on didn't protect itself in the contracts that it made with the people from whom it bought the building it which was a you know previous commercial manager of real estate the same as they are and that's its own fault it could have protected itself by contract it could have written a lot of things and that could have retained liabilities into the contract it's very easy to do and it's very standard because said look you told us that there's leaks in the plumbing system we're not taking the liability for the if some turns out to be bigger than what we think it is or something that we can't handle so especially since we're not going to go out of our way to do anything investigative right now we're not going to hire a plumber we're not going to anything else those are going to be our new seller and then you know they passed a lie bill in a cell and that's how they protect themselves they don't go after upstream manufacturers i'm sorry but would you agree that  the michigan supreme court had leased has not reached a conclusion on whether the economic loss doctrine should extend to real estate doesn't matter in this case i would agree with you on that but it doesn't matter because my client doesn't sell real estate ok my client sold a chemical compound the product the defendant sold not on the plot product the plaintiff bought we don't sell real estate we do know that this building existed we sold a compound as part of a commercial transaction that was governed by the u c c to our customer back in  and ninety and so you know the idea of whether or not the economic law school would apply if the eagle pond were trying to sue the actual party that sold it the building for a detective building that's not my issue and i would agree with you that the michigan supreme court hasn't hasn't touched on that issue you know whether or not real estate is but a best case that suggests when you're a manufacturer of a product there's a case called freeman there's a case called sullivan all that are cited in our briefs all of which i think most of the cases i looked at at least it seems like it was only one or two levels and this seems like it's several levels removed do you think that there's any distinction to be drawn there can't imagine what that would matter you know i think it i think you know distribution networks are set up differently in different industries and you know whether it's one hundred and twenty three steps in the chain or seven i can't see why that would matter and here to be honest we don't even know how many steps are in the chain because we sold our product back in one thousand nine hundred and nine we know who we were selling product to back then and here on this point we don't even know their product is actually in this building that's a different that's a different issue but assuming it is we would have sold our product to to our customer and that how they distributed downstream and how it actually got this building we have no idea we just know that this is a building that has plumbing pipes and it made out to see p v c whether it's r c p v c or not we don't know so you move for summary judgment on the fact that they don't have a bought defective components in a building and had remedies against the company that sold it the building you know and it's and setting aside those those policy type arguments it's it's pretty clear under michigan law that it doesn't matter what the plaintiff bought it only matters what we sold you know and nd the along the same lines the real estate here is not what the defective product was that's not what the allegation is the allegation is that the c p b c chlorinated polyvinyl chloride compounds that we sold probably that went into the pipes is the defective product and so you have to look at what the defective product is when you when you're determining whether or not the economic loss rule applies and here again the defective product is a good it is not a building it is not a defective building that's falling down it is a good that specific good that plane of claims is is  the problem and that's why we're the only party they sued they didn't sue anybody else in this chain because they're trying to claim that this product seventeen years after the fact is the is the issue  and so plaintiffs attempt to focus on real estate here is really a red herring the michigan law is clear that the focus always remains on the product that the defendants old otherwise as your honor pointed out you can create liability simply by selling some of these product along with a piece of real estate somewhere down the line and that's just not the way that the law is set up and it doesn't allow you to manipulate the facts in that way if if the plaintiffs theory were to be believed then when there is an economic loss real problem all you could do is to fix it to a building and there are many michigan cases in which mission courts have found that the economic loss will controls even though the defendants products were incorporated into some kind of real estate transaction that's the metal looks case i may espy say the defendants defend its product in that case was a light fixture the plaintiff bought the building citizens insurance the defendants product there was chemicals just like ours chemicals for the treatment of wood the plaintiff in that case the contracted for construction services and bought trusses and decking they didn't buy the chemicals directly they bought you know the it was a real estate transaction this is the motor city stamping case of the f m it's also called again that's another light fixture case plaintiffs there bought the building and there are in fact the court went deep into the analysis provided one single case where any michigan court has has bought their theory and said that the economic loss will does not apply when the defendant's product is incorporated into a piece of real estate you think we have to disagree with the trial court case that house you don't have to disagree with it because river river house river house was wrong because it confused the michigan law regarding the consumer versus commercial distinction in river house they had a there was a consumer end users consumers and found that that's why the economic law school didn't apply but that's not our case if we did have a consumer case i'd probably be up here arguing that river house was wrong because it is but you don't have to disagree with it because it's so i see i am i'm almost out of time just real quickly on the statute of limitations issue the mr blair's neck testified that there were four major failures and he conflated them all together we didn't we didn't make that up and that's what the metal locks the metal it's was a school that enter into a commercial transaction for light fixtures there subrogate soon and so i don't i don't believe there was a change in interest it was it was something on behalf of the school with i've already discussed citizens it was the same over the owner there wasn't a real estate transaction in the middle of that affiliated there was a real estate transaction all these cases are from one thousand nine hundred and eighty by the way and the case i cited the in qana is from two thousand and twenty years i've found one published case where they may apply that doctrine to real estate the affiliated was an unpublished case where light fixtures were installed and the new building owner obtained a ruling system that was added to a ship and then the ship was resold a ship is a movable good it qualifies as a good that is different and affiliated was the the court there was that they incorrectly relied on the transfer of a ship and compared it to the transfer of real estate because the ship is a good so i disagree with councils representation that all the law favors their position on this i think it does not in fact what i've had to do is go through improvement negative the negative is that there isn't a lot out there where there is a real estate transaction in the middle and then you apply the economic loss dr to the person who was the purchaser of real estate except that i did find in qana and they they tend to say that they did say that michigan law does not apply economic loss doctrine to real estate and then in terms of the time frame again the seventeen years that was raised over and over the the parties the plaintiff only gets three years from the time the harm they're still protected by whether they timely make their product liability claim and a company that produces a substance that they know is going to into plumbing that will be used for years decades they should be aware of that and if they want to protect themselves there are plenty of ways to do it with how limiting an area of law such as you know tort law products liability law