PERSONAL INJURY
Product Liability - Defective Waterbed Heater Controller

SETTLEMENT:	$2,250,000.00 $1,750,000.00 Cash $500,000.00 Assignment
CASE/NO:	Milani v. American National Water Mattress and Sun Valley Waterbeds YC 015573 - Los Angeles Superior Court - Torrance
DATE:	October 25, 1994
JUDGE:	Douglas A. McKee, Department M - Torrance
ATTORNEYS	Plaintiff - Michael H. Whitehill (Kussman & Whitehill, Los Angeles) Defendant American National Waterbeds, Alexander Gelman (Koester Brislin & Gelman, Torrance) Defendant Sun Valley Waterbeds, Friedrich W. Seitz, James D. Carraway (Murchison & Cumming, Los Angeles)

FACTS: Plaintiffs were husband and wife and their 4 year old and 18 month old daughters. A fire started in the bedroom of the daughters in the early morning hours of July 17, 1992. The four year old sustained third degree burns to her back, arms and legs covering 25% of her body. The 18 month old and the father received minor second degree burns. The father and mother rescued the daughters from the burning room.

CONTENTIONS: Plaintiffs contended that the waterbed control heater for the 4 year old daughter's waterbed had an electrical short and caught fire. Plaintiffs contended that the controller should have been designed with a thermal cutout device in the controller which would have cut off electricity to the controller in the event of a short. The waterbed was manufactured by defendant American National and sold by defendant Sun Valley Waterbeds.

Defendants contended that the waterbed was not the source of the fire. Defendants contended that a short from a lamp manufactured by an unidentifiable company was the cause of the fire. Defendants also speculated that the 4 year old may have been playing with matches as the parents were smokers.

Defendants cross-claimed against the parents contending they were negligent in failing to install batteries in the smoke detectors located in the home. The parents' insurance carrier refused to defend the parents claiming that the "family exclusion" provision in the policy applied. Defendant retailer contended it was not liable for any non-economic damages since its liability for the alleged manufacturing defects was solely vicarious.

SETTLEMENT DISCUSSIONS: Plaintiffs initial demand was 2.5 million dollars and Defendants initial offer was 1 million dollars. Defendant manufacturer paid its policy limits of 1 million dollars. Defendant retailer paid $750,000.00. A stipulated judgment of $500,000.00 was entered on behalf of defendants against the parents. The judgment was assigned by defendants to plaintiffs' 4 year old daughter as further consideration for the settlement.

PROPERTY DAMAGE TO THE HOME: $30,000.00

PAST MEDICAL EXPENSES: $160,000.00.

FUTURE MEDICAL EXPENSES: $100,000.00 (Disputed)

TECHNICAL EXPERTS:

Plaintiff: Fred Allen, Electrical Engineer, Gerald Zamiski, Electrical Engineer, Robert Lowe, Fire Investigator

Defendant: John C. Fulton, Accident Reconstructionist, Robert Armstrong, Electrical Engineer, Robert Beauchamp, Fire Investigator, Douglas Bennett, Electrical Engineer.

MEDICAL EXPERTS: Plaintiff: Charles Spenler, M.D.

Defendant: John Perlman, M.D.