Deere & Company (Deere) was considering leasing a warehouse for storing equipment. Deere hired Factory Mutual Insurance Company (Factory Mutual) (defendant) to inspect the warehouse for fire safety. Factory Mutual inspected the warehouse, and Deere proceeded with leasing the warehouse and using it to store equipment. Two months later, the warehouse caught fire, destroying Deere’s equipment. The fire could have been easily extinguished, but there was insufficient water pressure in the sprinkler system. Factory Mutual did not properly test the sprinkler system as part of its fire inspection. Deere’s inventory was insured against fire loss by Royal Indemnity Company (Royal) (plaintiff). Royal paid Deere’s claim and then sued Factory Mutual for negligence. The trial court issued a directed verdict in favor of Factory Mutual, finding that Royal had failed to satisfy the element of proximate, or legal, cause for the tort of negligence. Royal appealed, arguing that Factory Mutual’s actions were the proximate cause of Deere’s injury. Royal reasoned that had Factory Mutual adequately inspected the warehouse’s sprinkler system, Deere would have decided against leasing the warehouse and thus avoided having its property destroyed.