Leasing Company Which Never Had Possession of the Product (Here a Garbage Truck) and Which Was a Financial Arm of the Purchaser, Not the Manufacturer, of the Product, Entitled to Dismissal of Strict Products Liability Cause of Action/However, a Question of Fact Was Raised Whether the Finance Lessor Was Liable for Failure to Inspect the Product on the Ground It Had Designated an Agent for Inspection on Its Behalf

The Fourth Department, over a two-justice dissent, determined Supreme Court should have granted summary judgment dismissing the strict products liability cause of action against a “finance lessor” of a garbage truck, H Leasing Company.  The lawsuit stemmed from an accident involving the truck.  The court explained that a strict products liability action will not lie against a “finance lessor” which is not in the business of leasing equipment to the general public, which never had possession of the leased equipment, which was not a financial arm of the manufacturer, and which neither marketed the product nor placed it in the stream of commerce.  Here H Leasing Company was a financial arm of the purchaser of the truck:

“It appears universally accepted as New York law that strict products liability will not apply to finance lessors which merely offer the use of money to acquire goods but otherwise neither market a product nor place it in the stream of commerce” … . We reject plaintiff’s contention that H Leasing is the owner and lessor of the truck, and it is therefore subject to strict products liability because it is in the business of leasing equipment. The cases permitting strict products liability actions against lessors involve leasing entities that either actually take possession of the equipment at issue and lease it to the public …, or are financing arms of the manufacturer … . In those situations, the principles of strict products liability may properly be applied to such lenders in order to further the policy goals of such liability, i.e., ensuring that products are safe by permitting an action to go forward “when imposing liability would provide injured consumers with a greater opportunity to commence an action against the party responsible, fix liability on one who is in a position to exert pressure on the manufacturer to improve the safety of the product, or ensure that the burden of accidental injuries occasioned by products would be treated as a cost of production by placing liability upon those who market them” … . Such goals would not be served by allowing a strict products liability cause of action against H Leasing, however, because it did not take possession of the truck, it is not in the business of leasing equipment to the general public, and it is a financial arm of the purchaser of the truck, not the manufacturer … . Consequently, we agree with H Leasing “that strict products liability should not be imposed upon [it], a finance lessor which merely offered the use of money and neither marketed the machine nor placed it in the stream of commerce” … . Houston v McNeilus Truck & Mfg Inc, 2015NY Slip Op 00001, 4th Dept 1-2-15

In a separate decision in the same case, again over a two-justice dissent, the Fourth Department determined that a cause of action against H Leasing alleging negligent failure to inspect the truck properly survived a summary judgment motion.  The allegation that H Leasing designated the company which leased the truck as its agent for the inspection of the truck raised a triable question of fact:

Here, the lease for the garbage truck, which was submitted in support of H Leasing’s motion for summary judgment, stated in relevant part that H Leasing appointed decedent’s employer as its agent for purposes of inspection and acceptance of the garbage truck from the supplier. Moreover, a vice-president of H Leasing, who was decedent’s employer, acknowledged at his deposition, that the lessees inspected the equipment upon delivery in their capacities as H Leasing’s agents as “laid out in the lease agreement,” and that deposition testimony was also submitted in support of H Leasing’s motion. Viewing those submissions in the light most favorable to plaintiff and affording her the benefit of every reasonable inference, we conclude that H Leasing’s own submissions raise a triable issue of fact whether it was liable in negligence for the failure of one of its agents, decedent’s employer, to inspect and warn of a dangerous condition. Houston v McNeilus Truck & Mfg Inc, 2015 NY Slip OP 00002, 4th Dept 1-2-15