A tankless water heater company based in Summerville has been ordered to dish out more than $700,000 by a Dorchester County jury.
An Upstate plumbing company, Amo, sued Eccotemp Systems after the company bought 489 units that were installed in new homes in Richland and Lexington counties.
Eric Bland, an attorney representing Amo, said that around 2008, those Eccotemp units began failing once the outside temperatures dropped and they froze, causing pipes to burst in some of those homes.
“You can imagine a homeowner in the middle of the night, pipes burst, water leaking,” Bland said. Seventy percent of the units they purchased failed, according to Bland. “If a product fails more than three percent, it’s called an epidemic failure,” Bland said.
“There really is no word in the commercial arena to describe a 70 percent failure of a product.”
Of those units that froze, 25 percent of them led to burst pipes, he said.
Mike Elrod, the founder and owner of Eccotemp, said he doesn’t believe his company was at fault.
Eccotemp’s products are sold at more than 2,000 retailers in North America, Europe and the Middle East, according to the company’s website.
Eccotemp was one of the first companies to manufacture tankless water heaters and sell them for about the same cost of a standard water heater, it said.
“The reason they are promoted is because they are energy-efficient,” Bland said. Around 2007, utility companies in the state began pressing home builders to use these types of water heaters in new homes, he said. Bland said his clients chose Eccotemp because their pricing was very competitive compared to the other companies selling tankless water heaters. They were about 30 to 40 percent less expensive than competitors’ prices, he said. Amo paid $498 per unit, a total of about $39,000.
After the units froze, Eccotemp replaced around 17 that were still under the warranty, Bland said. But 14 of those froze again within four days, he said.
Then, Amo decided to replace all of Eccotemp units with a competitor’s product, which they said they have had no problems with.
Amo filed a suit against Eccotemp claiming breach of warranty, breach of contract, and unfair trade practices.
On March 1, a jury sided with Amo on the breach of warranty claim and awarded the company $125,000. They also sided with Amo on the breach of contract claim, awarding them $158,000 and $158,000 under the South Carolina Unfair Trade Practice Act.
The jury also determined that Eccotemp’s actions were willful, so they tripled the damages awarded on the Unfair Trade Practice Act claim, according to the verdict. The final award totals about $757,000.
When asked about whether he will appeal the verdict, Elrod said he is not sure yet.
Reach Natalie Caula at 937-5594 or Twitter.com/ncaula.
70 % of the heaters Amo purchased and installed failed, according to attorneys for Amo. (Photo provided by Eric Bland)×
The units froze when the temperature reached 38 degrees, according to Amo's attorney. (Photo provided by Eric Bland)×
Seventy percent of the heaters Amo purchased and installed failed, according to attorneys for the Upstate plumbing company.×