Monday, August 22, 2011

New SC Products Liability Case: 5 Star, Inc. v. Ford Motor Co.

Recently, the South Carolina Court of Appeals issued its decision in 5 Star, Inc. v. Ford Motor Company.  You can find the opinion on page 120 here, and also here.  This is a negligent design defect case, and the court basically re-affirms that a negligence theory requires conduct evidence.

FACTUAL BACKGROUND: Plaintiff 5 Star, Inc. (“Plaintiff”) is a lawn maintenance/pressure washing company.  It bought a 1996 Ford F-250 pickup truck in February 2005.  In September 2005, Plaintiff’s owner parked the truck in a warehouse containing tractors, trailers, lawnmowers, and other business equipment.  Upon returning a couple of days later, Plaintiff’s owner discovered a fire had occurred.  Although there were no personal injuries, the truck was destroyed and the building and certain equipment was severely damaged.  Before the lawsuit and before Ford could inspect the truck, Plaintiff’s owner had the truck towed and crushed.

PROCEDURE: Plaintiff filed a products liability action against Ford Motor Co. ("Ford") alleging that negligence in the design of a speed control deactivation switch in the truck caused the fire.  Ford asked the circuit court to dismiss the case as a sanction for spoliation of evidence.  The circuit court declined but instructed the jury that it could draw a negative inference from Plaintiff’s actions.  Ford moved for a directed verdict at the close of Plaintiff’s case and at the end of trial, both of which were denied.  The case was submitted to the jury exclusively on the claim of negligent design.  The jury returned a verdict for $41,000 in actual damages.

ISSUE(S): (1) Whether the circuit court erred in declining to dismiss the action as a sanction for Plaintiff’s spoliation of evidence; (2) whether the circuit court erred in denying Ford’s motion for a directed verdict based on a lack of evidence that Ford was negligent in design of the speed control deactivation switch.

DISPOSITION: The court did not reach the question of whether the circuit court abused its discretion in ruling on the motion to dismiss based on spoliation, citing to Futch v. McAllister Towing of Georgetown, Inc., 335 S.C. 598, 518 S.E.2d 591, 598 (1999) and its recognition that an appellate court need not address remaining issues when resolution of one issue is dispositive.  (See footnote 2).  With regard to denial of Ford’s directed verdict motion, the court reversed the jury verdict and entered judgment in favor of Ford.

RULES AND OPINION: In addition to the three elements common to all products liability claims, a plaintiff asserting a negligent design theory must prove that the defendant manufacturer’s conduct in designing the product breached its duty of due care.  Ford argued on appeal that Plaintiff failed to present such conduct evidence, or to present evidence that the product was in essentially the same condition as when it left the defendant (i.e., one of the three common elements).  (The court did not discuss whether the product was in essentially the same condition for the same reason that it did not address spoliation).

Instead, the court focused on Plaintiff’s failure to present evidence of negligent conduct in the design of the product on or before the time of manufacture.  The court elaborated on how a negligence theory is different in that “’[t]he focus [in a negligence action] is upon the action of the defendant.  The mere fact a product malfunctions does not demonstrate the manufacturer’s negligence.”  Quoting Sunvillas Homeowner’s Ass’n v. Square D Co., 301 S.C. 330, 333, 391 S.E.2d 868, 870 (Ct. App. 1990). 

Ford conceded the switch was defective.  However, Plaintiff was obligated to offer evidence that Ford’s conduct was negligent.  Plaintiff failed to offer any evidence of Ford’s conduct whatsoever.  Neither the City Fire Investigator witness nor Plaintiff’s cause and origin expert testified to any events at or before the manufacture of the truck and switch.  Furthermore, neither witness was qualified as an expert in automotive design or other expertise so as to enable them to offer opinions on whether Ford’s conduct was negligent.  The only other witness who could have provided conduct testimony was a desgn analysis engineer for Ford.  He was qualified as an a vehicle fire cause and origin expert, but he offered no conduct facts/opinions, and Plaintiff's counsel did not ask him any questions relating to Ford's conduct in designing the switch that occurred in 1996 or earlier.

In short, the court held that Plaintiff failed to present expert testimony to prove that Ford was negligent in its design of the switch in 1996.  Therefore, the circuit court erred in not directing a verdict in favor of Ford.  The court distinguished its opinion from the holding in Duncan v. Ford Motor Co., 285 S.C. 119, 128, 682 S.E.2d 877, 881 (Ct. App. 2009) because the plaintiff in Duncan presented expert testimony concerning Ford's conduct.  (See footnote 4). 

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Friday, August 5, 2011

Drilling Down: Implied Warranty of Fitness for a Particular Purpose a/k/a The Stiletto Heel Warranty

You are probably wondering why there are pictures of a red stiletto heel and a hiking shoe at the beginning of this blog post.  Although you may not realize it, the contrast in function and use of these shoes provides the perfect example of this particular warranty.  How?  Read on, as we drill down a bit on the implied warranty of fitness for particular purpose.
The implied warranty of fitness for particular purpose is set forth in S.C. Code § 36-2-315.  It states:

Where the seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller's skill or judgment to select or furnish suitable goods, there is unless excluded or modfied under the next section (§ 36-2-316) an implied warranty that the goods shall be fit for such purpose.
So what exactly does this mean?  Official Comment 2 provides some guidance.  A particular purpose differs from an ordinary purpose for which goods are used because it envisages a specific use by the buyer that is peculiar to his/her business.  "For example, shoes are generally used for the purpose of walking upon ordinary ground, but a seller may know that a particular pair was selected to be used for climbing mountains."  (S.C. Code § 36-2-315, Off. Cmt. 2).

So imagine this hypothetical: Gisele Bundchen walks into a shoe store and says, "Tom and I were thinking about getting away this weekend for a hike somewhere...maybe on the Appalachian Trail.  Can you give me some shoes for that?"  Overwhelmed by her beauty, the merchant automatically reaches for a pair of fire engine red stiletto heels and gawks as Gisele tries them on.  Speechless, he hands her the change as she buys the heels and heads out the door. 

If Gisele breaks a heel and her ankle while on her hiking trip, then she may have an action for breach of implied warranty of fitness for particular purpose against the seller.  Why?  Because she conveyed to him a very particular purpose for which she needed some gear, and it was different from the ordinary purpose for which shoes are generally used (i.e., walking on ordinary ground). 

Obviously, this is an oversimplification of a cause of action for breach of this implied warranty.  However, you get the point.  This implied warranty contemplates -- as its name suggests -- a very specific purpose for the product.  Whether this warranty arises is basically a question of fact determined by the circumstances of the contracting.  The buyer does not necessarily have to prove knowledge of the particular purpose or reliance thereon by the buyer if the circumstances are such that the seller has reason to know of the purpose or reliance.   (S.C. Code § 36-2-315, Off. Cmt. 1).

This really is not known as "The Stiletto Heel Warranty" (and you probably figured out by now that I made that up).  However, it helps me remember how this implied warranty differs from ordinary use encompassed by the implied warranty of merchantability.
Have a nice weekend all.

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Tuesday, August 2, 2011

Case Brief: Soaper v. Hope Industries, Inc., 309 S.C. 438, 424 S.E.2d 493 (1992)

Today's Case Brief is for Soaper v. Hope Indus., Inc., 309 S.C. 438, 424 S.E.2d 493 (1992).  Soaper involved a color film processor and printer, and it is significant because it illustrates a merger of “fitness for particular purpose” with the warranty of merchantability under its facts.

FACTUAL BACKGROUND: Plaintiff purchased a color film processing machine from Defendant for use in his fast photo business.  309 S.C. at 439, 424 S.E. 2d at 494.  The machine malfunctioned over a period of three years, and Plaintiff ultimately had to close his business.  Id.

PROCEDURE: Plaintiff sued Defendant alleging (1) breach of express warranty, (2) breach of the implied warranty of merchantability, and (3) breach of the implied warranty of fitness for particular purpose.  309 S.C. at 439, 424 S.E. 2d at 494.  At trial, Plaintiff proceeded solely on the cause of action for breach of implied warranty of fitness for a particular purpose.  The jury returned a verdict for Plaintiff for $84,783.40 (i.e., the full value of the machine and its component parts).  Id.  The South Carolina Court of Appeals affirmed, finding ample evidence that "the goods were defective so as to be unfit for their intended use in Soapers fast photo business."  306 S.C. 531, ----, 413 S.E.2d 38, 40 (Ct. App. 1992).  Defendant sought rehearing, which the Court of Appeals denied.  309 S.C. at 439, 424 S.E. 2d at 494.  The South Carolina Supreme Court granted certiorari on the issue sought for re-hearing by Defendant.  Id.

ISSUE(S): "Does a purchaser establish a warranty of fitness for a particular purpose when goods, purchased solely for their ordinary purpose, are found to be unfit for any and all purposes?"  309 S.C. at 439, 424 S.E. 2d at 494.

DISPOSITION:  "[W]here a product is not fit for any purpose, it is not fit for its particular purpose.  Accordingly, the Court of Appeals opinion is affirmed as modified."  309 S.C. at 441, 424 S.E.2d at 495.

RULES AND OPINION: The implied warranty of fitness for a particular purpose arises under the Uniform Commercial Code, S.C. Code section 36-2-315 (1976).  309 S.C. at 439, 424 S.E. 2d at 494.  Defendant maintained that this warranty applies only when the buyer has a particular purpose for a product other than its ordinary/contemplated use.  Id. at 440, 424 S.E.2d at 494.  The court recognized that there was authority for this position but declined to follow it.  Id., 424 S.E.2d at 495.  The court referred to comment 2 to section 2-315, which states that "a contract may of course include both a warranty of merchantability and one of fitness for a particular purpose."  Id.  Section 2-317 also requires that warranties arising under the UCC "be construed as consistent with each other and as cumulative."  Id. 

When Plaintiff purchased the product, he made known to Defendant that his particular purpose for the machine was fast film developing.  Id. at 441, 424 S.E.2d at 395.  When it failed in that purpose, it was both unmerchantable and unfit for its particular purpose.  Id.

We hold that, where the particular purpose for which a product is purchased is also the ordinary or intended purpose of the product, the warranties of merchantability and of fitness for a particular purpose merge and are cumulative, such that a plaintiff may proceed upon either theory. 

Id. at 440, 424 S.E.2d at 495.  This holding accords with other jurisdictions.  Id. at 441, 424 S.E.2d at 495.

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Monday, August 1, 2011

Passing of the Honorable Matthew J. Perry, Jr.

I was saddened to learn of the passing of U.S. District Judge Matthew J. Perry, Jr. over the weekend.  Approximately one year ago to the day, I tried a products liability case before Judge Perry that lasted a couple of weeks.  During that time, I had the opportunity to get to know Judge Perry, see him interact with the attorneys and the jury, and generally watch him run his courtroom.  He was a true gentleman and an icon in South Carolina's history.  I saw him again a few months ago while shopping for groceries and had the opportunity to reminisce with him about our case and how he was doing. 

Judge Perry had an almost "regal" air about him.  He was a delight to be around, but also had the ability to strike fear in even the most seasoned lawyer with his booming voice and his ability to get his point across in as few words as possible.  I cannot say that I knew him "well," but I feel lucky to have had a chance to try a case before him toward the end of his storied career.  He will be missed.