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#7 OF THE NATION'S TOP 10 JURY VERDICTS OF 2007

Jan 14, 2008

Exploding Water Heater Brings $50M

By Dick Dahl
Lawyers USA

An Alabama jury awarded $50 million to the family of a man who was killed by an exploding water heater, which the plaintiffs' lawyer likened to a "time bomb."

Richard Krantz, a 55-year-old real-estate broker in Daphne Ala., was critically injured on July 1, 2005, when he attempted to relight a malfunctioning pilot with an electric starter button, causing gas that had collected in the area to explode.

He died four days later.

The plaintiffs' lawyer, Joseph M. "Buddy" Brown, said the incident was caused by faulty design and a series of negligent actions and inactions that ensured the problem was not fixed.

"If it wasn't so tragic a case, you'd call it a comedy of errors," Brown said.

Faulty response to a faulty valve
Krantz, along with his wife Michele and their two adopted infants, moved from California to a new house in the suburbs of Mobile, Ala., and almost immediately experienced problems with the new water heater made by A.O. Smith Water Products Co.

First, the water ran extremely hot. Then, when Krantz adjusted the setting, there was no hot water at all. He tried to relight the pilot, but each time he did so, the pilot would go out again as soon as he released the control knob on the gas valve.

Krantz called the builder, who told him to contact the plumbing subcontractor who had installed the water heater. The plumbing company changed the unit's thermocouple, but was unable to restore operation. When the owner of the plumbing company came by to solve the problem, he told Mrs. Krantz he was not familiar with the heater and that she needed to contact the manufacturer.

The manufacturer sent a repairman from Michael Reinhart Plumbing & Heating, Inc., to deal with the problem, but the repairman was not trained in the new safety standards adopted by the water heater industry in 2003. These standards called for the use of "flammable vapor ignition-resistant technology," or FVIR, which required new residential gas water heaters to incorporate features that make them resistant to igniting flammable vapors outside the heater.

So the repairman contacted the customer care center at A.O. Smith, which directed him while he replaced the control valve.

According to Brown, the customer care representative failed to ascertain that the repairman was not qualified to do the job a step that's required by the manufacturer's own policies. The representative also failed to confirm proper installation and a part number for the replacement valve to ensure it would work on the water heater.

As a result, the manufacturer failed to learn that the repairman was installing a seven-year-old valve that turned the water heart into a bomb destined to explode.

The hot water returned for two days, but on the morning of July 1, Krantz got up for a client meeting and found that the water heater had failed once again. He went to the garage to light the pilot. According to Brown, the faulty valve had allowed gas to leak through the flue stack into the upper portions of the garage, and when Krantz pressed the starter button, the spark ignited the fumes and the garage exploded, sending the door 145 feet out onto the road.

Krantz suffered third-degree burns over 95 percent of his body and was flown by helicopter to the University of South Alabama Medical Center's burn treatment facility, where he died four days later. His wife and two children suffered second degree burns and temporary hearing loss.

Defense argument
Brown has handled a number of cases involving heater and furnace explosions, once winning a $61.5 million verdict in a case involving an exploding furnace. He said these cases can be won, to a large degree, based on "common sense."

"Here you had a brand-new water heater with a 7 1/2-year old valve that we know is defective," he said. "This is not some beat-up old water heater."

Brown, who headed a four-lawyer team from his firm, said that as his team developed multiple theories of the case, A.O. Smith "sat at the top" of each one.

The plaintiffs' team argued that the heater lacked a multi-function gas control valve with sensors that would have shut off the heater automatically if it detected vapors. They argued that the defendant had patented that very device, but only included it on its more expensive heaters. They also contended that the defendant should be held liable for designating a service person who was unfamiliar with its products and in directing him to install a defective valve.

The plaintiffs - Mrs. Krantz and the two children - settled with the plumbers and the builder for $1 million each prior to trial. Brown said A.O. Smith made no settlement offers until the trial started. "They ignored us until the day we went to trial, then offered us a pittance," he said. "As the trial went on, it went up a bit."

Defense lawyers did not respond to calls for comment, but Brown said that they focused on one argument at trial: The gas in the garage resulted from a natural-gas leak and not from the water heater.

Therefore, Brown concluded that the outcome of the trial would hinge on jurors' response to a simple, black-and-white question: Did the gas come from the water heater or the street?

The defense lined up 17 experts to testify about natural-gas leakage and migration. Collectively, he said, they represented his biggest obstacle going into trial.

"I was in fear that, with the number of experts they had lined up, they'd get somebody on the witness stand who we wouldn't be able to crush," he said.

But Brown said the first two defense witnesses "self destructed" on the stand, and the defendant pulled the remaining 15.

Brown also called his own mechanical engineering expert to cast doubt on the defense argument about gas migration from the street.

The verdict
The jury found the manufacturer liable and awarded $50 million, including $37.25 million in punitive damages. They apportioned $42.25 million to the Krantz family estate, $2.5 million to each of the children and $2.75 million to Mrs. Krantz.

Following the verdict, A.O. Smith announced that it would appeal the award. The company also issued a statement that concluded, "The evidence submitted by A.O. Smith at the trial established clearly that the water heater preformed properly and was not the source of the gas leak in the Krantz home."

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