Ohio court's verdict confirms $2.5 million Heatway debt

Heatway is not radiant not about a Feb. 3 court ruling that didn't favor the company in a case against Goodyear.

Officials at Springfield's Heatway Radiant Floors and Snowmelting were "shocked and dismayed" by the verdict an Ohio jury handed down Feb. 3, Heatway officials said.

The jury ruled that 25 million feet of Entran 2, a hose manufactured by Goodyear for use by Heatway, was fit for ordinary use. Heatway had maintained that the hose was faulty and that it was the hose that was causing high-dollar, Heatway-designed radiant heating systems to fail.

The jury's verdict comes after a more than three-year legal battle between Heatway and Goodyear. In 1997, Goodyear sued Heatway for $2.5 million owed to it by the Springfield company. Heatway then filed a countersuit, claiming the Entran 2 hose Goodyear sold it was defective. The jury failed to arrive at that conclusion, and Heatway still owes Goodyear the money.

Heatway designs radiant floor heating systems for homes and for snow melting. The company began a partnership with Goodyear in 1989 to develop hoses for use in the heating systems. Entran 2 was a hose developed by Goodyear with Heatway as its partner. Heatway installed that type of hose in its radiant heating systems until 1993, when it began using a successor Goodyear product, Entran 3, said Dan Chiles, executive vice president of Heatway.

With the Feb. 3 court verdict also comes a judgment permitting Goodyear to collect what it is owed by Heatway.

Fred Haymond, a spokesman for Goodyear, said the company has requested its money, and the court has ordered its payment.

"The court has directed Heatway to pay and we would think Heatway would honor that direction," Haymond said.

The money has to come from an already financially beleaguered company, Chiles said. Chiles cofounded Heatway in 1981 with his brother, Mike Chiles.

The company has already spent $3.5 million repairing homes in which systems went bad, and its insurers have shelled out another $9.5 million.

The Goodyear claim for nonpayment on the delivery of Entran hose is not only guaranteed by Heatway, but by the Chileses personally.

"It's not just Heatway, it's us. It's this shirt; it's my kids' college money. All of that is in danger," Chiles said.

Chiles said Goodyear required the personal guarantees because the company knew the hose was defective in 1989. Heatway has maintained, throughout the entire ordeal, that the hose was faulty, he added.

"We could have taken the position that it was the installers, or our customers who were to blame for these failures, but we could not, would not, do that," Chiles said.

The earliest failure of a heating system with the Entran 2 hoses inside it was in 1992, Chiles said, in a Colorado apartment complex. The hose was hardening and the system failing to perform within a year of installation. The case is proof, Chiles said, that the hoses are the problem.

"The problem comes with repeated use, which is why most of these failures have been in New England and Colorado. If you only use the system five days a year, then you may not have a problem for a long time, but if you're using it a lot, then it will fail sooner," Chiles said.

Chiles said he and Heatway enlisted the help of a chemistry professor from Southwest Missouri State University to get evidence that the Entran 2 hose was the problem, rather than its installation or any other components of the radiant heating systems.

Goodyear has maintained that the failure is not attributable to the hose, but to "the manner in which the systems are designed, installed and maintained," according to a fact sheet on its Web site. For example, the Web page states, "inspectors have seen leaks caused by installation of the wrong kind of connectors and hose damaged by highly acidic fluid."

"It is our contention that the problems were in the design, installation and maintenance of these systems. With proper installation and maintenance, this product could last for many years of fine service," Haymond said.

Chiles said further evidence that the Entran 2 product was at fault in the failures was that Heatway systems that use other hoses, such as Goodyear's Entran 3 or the Dayco-manufactured hose Heatway now uses in its systems, have not had reports of failure. Chiles said the latest count on the number of failures is 658.

Many of those complaints are in the form of class-action lawsuits, filed against Heatway and Goodyear. There are now 14 such suits pending, Chiles said.

"The weight of the evidence of those class-action lawsuits will be too much for Goodyear to contend with, and they will ultimately have to answer to those homeowners and admit that this is a faulty product," Chiles said.

Heatway is a developer of radiant heating systems that use flexible tubing to run warm fluid under floors for heating a room, home or business, or melting snow. In 1989, the company worked with Goodyear to develop Entran 2, and continued to purchase hose from the company until 1996, when it severed all ties with Goodyear, Chiles said, and Goodyear ceased making hose for the radiant heating industry, Haymond said. Since 1996, Heatway has been using a Dayco-produced hose, Chiles said.

What does the future hold for Heatway? Chiles said "the future looks radiant."

"We're going to be around in some form. We're here to stay," Chiles said.

The money it owes to Goodyear continues to be a problem, and Chiles said he does not know what the outcome of that situation will be, but the company has considered its options, including bankruptcy. They are requesting a stay of the judge's order for collection of the debt, he added.