Case Brief: Riley v. Ford Motor Co.

I am trying to get back into blogging and catching up on some cases that have been decided in South Carolina over the last few years.  Today’s case is Riley v. Ford Motor Co., 414 S.C 185, 777 S.E.2d 824 (2015).  It is a defective door latch case where the decedent was thrown from a Ford F-150.  The substance of the case relates to (i) whether the trial judge should have granted a $600,000 additur to the verdict, and (ii) how to apply South Carolina’s setoff law.  There is no real analysis of products issues per se, but it is worth a read from a procedural standpoint.

FACTUAL BACKGROUND: Benjamin Riley was involved in an automobile accident in a Ford F-150 when another driver pulled out in front of him.  He swerved, collided anyway, and the impact caused the driver’s door of Riley’s pick-up to open.  Riley was ejected and died from his injuries.  414 S.C. at 189, 777 S.E.2d at 826.

PROCEDURE: Riley’s widow, as his Personal Representative (“Plaintiff’), filed survival and wrongful death claims against the opposing driver and Ford.  414 S.C. at 189, 777 S.E.2d at 827.  The case against Ford alleged a negligently designed door latch system that resulted in Riley’s ejection.  Plaintiff settled with the opposing driver for $25,000 and allocated $20,000 to the survival claim and $5,000 to the wrongful death claim.  The trial judge approved the settlement.  Id.

At trial, Plaintiff only submitted the wrongful death claim against Ford to the jury, and it returned a verdict for $300,000 in actual damages.  The jury found evidence of conduct to support punitive damages but declined to award them.  Id.

Plaintiff sought a new trial nisi additur (to add damages), which the trial court granted in the amount of $600,000.  This brought the total recovery to $900,000.  Id.  Ford filed post-trial motions for judgment notwithstanding the verdict and to offset the opposing driver’s settlement.  The trial judge denied these motions.  Id. at 190, 777 S.E.2d at 827.

Ford appealed and the South Carolina Court of Appeals reversed in Riley v. Ford Motor Co., 408 S.C. 1, 757 S.E.2d 422 (Ct. App. 2014).  It held the trial court erred in denying Ford’s motion for setoff and in granting Plaintiff’s motion for a new trial nisi additur.  It reinstated the jury’s $300,000 verdict.  It also held Ford was entitled to offset $20,000 against the jury’s verdict in the wrongful death action, as opposed to the $5,000 that the settling defendant agreed to allocate to that claim.  Id. at 190-91, 777 S.E.2d at 828. 

Plaintiff appealed to the South Carolina Supreme Court on both issues.

ISSUES: (1) Did the court of appeals err in reversing the trial court’s order granting a new trial nisi additur, i.e., because the trial court’s decision was an appropriate exercise of discretion and was supported? (2) Did the court of appeals err in reallocation of the underlying settlement and setoff of settlement proceeds?  414 S.C. at 192, 777 S.E.2d at 827-28. 

DISPOSITION: Reversed on both issues.  414 S.C. at 192, 777 S.E.2d at 827-28. 

RULES AND OPINION: The Court first addressed a motion by a party for a new trial based on a challenge that the verdict is either excessive or inadequate.  The rule with regard to this issue is that “’the trial judge must distinguish between awards that are merely unduly liberal or conservative and awards that are actuated by passion, caprice, or prejudice.’”  414 S.C. at 192, 777 S.E.2d at 828 (quoting Allstate Ins. Co. v. Durham, 314 S.C. 529, 530-31, 431 S.E.2d 557, 558 (1993)).  If it is the former, then the trial judge alone has the power to alter the verdict by granting of a new trial nisi.  If it is the latter, it is the duty of the trial court and the appellate court to set aside the verdict absolutely.  Id.  Although the trial judge has discretion, “compelling reasons” must be given to justify the trial court invading the jury’s province in this manner. Id. at 193, 777 S.E.2d at 829 (citing Bailey v. Peacock, 818 S.C. 13, 14, 455 S.E.2d 690, 691 (1995)). 

At trial, Plaintiff presented expert testimony to support economic damages of more than $228,000.  There were also so many witnesses to testify about non-economic damages that the trial judge ruled it became cumulative.  In short, substantial evidence supported the decedent was a wonderful human being.  Id.  The Court held the court of appeals ignored the abuse-of-discretion standard of review and focused on a de novo evaluation of whether there was sufficient justification for “invading the jury’s province.”  Id. at 194, 777 S.E.2d at 829.  The Court held this was error.  The trial court did not abuse its discretion in granting an additur of $600,000 based on the trial judge’s thorough recitation of the basis for his actions.  Id.  The Court also clarified that just because the jury awarded some amount of non-economic damages (over and above the $228,000 in actual damages) did not mean that nisi additur was not available.  “While the presence of some amount of noneconomic damages may be a factor mitigating against the granting of a new trial nisi additur, there is no categorical rule prohibiting a nisi additur where a jury verdict includes some measure of noneconomic damages.”  Id. at 194, 777 S.E.2d at 830. 

On the issue of setoff, “’[a] non-settling defendant is entitled to credit for the amount paid by another defendant who settles for the same cause of action.’”  Id. (quoting Rutland v. S.C. Dep’t of Transp., 400 S.C. 209, 216, 734 S.E.2d 142, 145 (2012)).  Allowing setoff prevents a double recovery.  The Court recounted the principle of setoff was codified as part of the South Carolina Contribution Among Tortfeasors Act at section 15-38-50(1).  Id.  However, “any ‘reduction in the judgment must be from a settlement for the same cause of action.’”  Id. at 196, 777 S.E.2d at 830 (quoting Hawkins v. Pathology Assocs. Of Greenville, P.A., 330 S.C. 92, 113, 498 S.E.2d 395, 407 (Ct. App. 1998)).  If there is more than one claim, this affects how much a non-settling defendant may be allowed to offset.  Id. 

The issue was whether the court of appeals erred in reapportioning the $25,000 settlement between the survival and wrongful death claims so as to increase the amount Ford could offset against the wrongful death verdict.  The Court found the court of appeals erred in reapportioning the settlement proceeds.  Id. at 196-97, 777 S.E.2d at 831.  It agreed with the approach of the Illinois Court of Appeals, which stated as follows:

A plaintiff who enters into a settlement with a defendant gains a position of control and acquires leverage in relation to a non-settling defendant. This posture is reflected in the plaintiff's ability to apportion the settlement proceeds in the manner most advantageous to it. Settlements are not designed to benefit non-settling third parties. They are instead created by the settling parties in the interests of these parties. If the position of a non-settling defendant is worsened by the terms of a settlement, this is the consequence of a refusal to settle. A defendant who fails to bargain is not rewarded with the privilege of fashioning and ultimately extracting a benefit from the decisions of those who do.

Id. at 197, 777 S.E.2d at 831 (quoting Lard v. AMI FM Ohio, Inc., 327 Ill. Dec. 273, 901 NE.2d at 1019 (2009).
 
The Court held the trial court-approved allocation was reasonable and should not have been disturbed.  Therefore, Ford was entitled to set off only the $5,000 the settlement agreement apportioned to the wrongful death claim, and not the $20,000 reapportioned by the court of appeals.  Id. at 198, 777 S.E.2d at 831. 

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Case Brief: Scott v. Fruehauf Corp.

Today's case brief is Scott v. Fruehauf Corp., 302 S.C. 364, 396 S.E.2d 354 (1990). To be fairly short, this case is pretty substantive in terms of the number of products liability issues it addresses. The most significant issue it addresses is the triggering date for application of the strict liability statute (which is the date of sale of the product, and not the manufacture date).

FACTUAL BACKGROUND: The case involves a defective wheel assembly manufactured by Firestone Tire and Rubber Co. and sold to a trailer manufacturer. 302 S.C. at 367, 396 S.E.2d at 356. The wheel assembly's rim and ring were not designed to be used together. Id. The trailer manufacturer sold the trailer in question to Defendant Fruehauf Corp. ("Fruehauf") in used condition. Id. Fruehauf repaired and reconditioned the trailer, including the tires, but did not break down the wheel assemblies. Id. Fruehauf then sold the trailer to Defendant Piedmont ("Piedmont"), who leased it to Plaintiff's employer. Id. Plaintiff was injured when he attempted to place the wheel assembly on the axle of a trailer. Id. The wheel rim and side ring separated, striking Plaintiff in the head and causing severe head trauma. Id.

PROCEDURE: Plaintiff settled his claim against Firestone for $675,000, with a guarantee of $200,000 if he did not recover against the other parties. 302 S.C. 367, 396 S.E.2d at 356. Plaintiff brought an action against Fruehauf and Piedmont and won $1,125,000 in actual damages against both defendants. Id., 396 S.E.2d at 355. The verdict against Fruehauf was based on strict liability and negligence, and the verdict against Piedmont was based on strict liability only. Id., 396 S.E.2d at 356. Plaintiff also won $1,125,000 in punitive damages from Fruehauf. Id., 396 S.E.2d at 355. The jury also found for Piedmont with regard to its indemnification cross claim against Fruehauf. Id.

ISSUES: The appellate issues that are most substantive in terms of products liability law are as follows: (1) whether strict liability applied where the wheel assembly was placed in the stream of commerce prior to July 9, 1974 (the effective date of the strict liability statute); (2) whether a supplier of a defective product can be liable for negligence if there is no privity between the supplier and injured party; (3) whether the trial court's decision to deny Fruehauf's motions for directed verdict and j.n.o.v. concerning certain issues and submit them to the jury was proper; (4) whether the jury's award of punitive damages against Fruehauf in a strict liability case was proper; and (5) whether the trial judge erred in submitting Piedmont's cross claim for indemnity to the jury. 302 S.C. at 368-71, 396 S.E.2d at 356-58.

RULES AND OPINION: With regard to the first issue, the court disagreed that the manufacture dates of the mismatched ring (1968) and rim (1972) were the pertinent dates for triggering application of the strict liability statute. 302 S.C. at 368, 396 S.E.2d at 356. "The pertinent date to determine [the strict liability statute's] application is the date the product was sold by the seller," and not the manufacture date." Id. (citing Schall v. Sturm, Ruger Co., 278 S.C. 646, 300 S.E.2d 735 (1983)). Since Fruehauf sold the trailer to Piedmont in 1976 and Piedmont leased the trailer in 1979, the strict liability statute applied. 302 S.C. at 369, 396 S.E.2d at 356.

The court also disagreed with Fruehauf's contention that Plaintiff failed to establish that Fruehauf owed him a duty of care since it did not design or manufacture the wheel assembly and was merely a seller. 302 S.C. at 369, 396 S.E.2d at 357. "In South Carolina, . . . the supplier of a defective product is accountable to an injured party on ordinary negligence principles despite a lack of privity." Id. (citing Carolina Home Builders, Inc. v. Armstrong Furnace Co., 259 S.C. 346, 191 S.E.2d 774 (1972)).

The court agreed with the trial court's decision to deny Fruehauf's motions for directed verdict and j.n.o.v. with regard to the issue of whether it breached its duty of care. Id. The evidence supported that Fruehauf was aware of the danger of a mismatched rim as early as 1963 and failed to properly inspect the wheel assembly. Id. Therefore, the issue of breach of duty was properly submitted to the jury. Id. Similarly, there was evidence that Plaintiff's employer warned him to put the tires in a cage before inflating them to avoid exploding rims. 302 S.C. at 369-70, 396 S.E.2d at 357. Therefore, whether Plaintiff assumed the risk or was contributorily negligent were also issues for the jury, and the trial court properly denied Fruehauf's directed verdict and j.n.ov. motions on these issues. Id.

With regard to Fruehauf's punitive damages issue, the court agreed that Barnwell v. Barber Colman Co., 301 S.C. 534, 393 S.E.2d 162 (1989) disallowed punitive damages in an action based solely on strict liability. 302 S.C. at 370, 396 S.E.2d at 357. However, in this case, the jury found Fruehauf liable on both strict liability and negligence causes of action. Id. Punitive damages are recoverable in a negligence cause of action when the conduct rises to the level of a willful, wanton or malicious violation of the plaintiff's rights. Id. (citing Harris v. Burnside, 261 S.C. 190, 199 S.E.2d 65 (1973)). From the evidence, the jury could have reached this conclusion, so the court affirmed the award. Id.

Finally, the court agreed that the trial judge erred in submitting Piedmont's cross claim for indemnification to the jury. Id. Fruehauf and Piedmont shared a common liability to Plaintiff under South Carolina' strict liability law. 302 S.C. at 371, 396 S.E.2d at 358. Both contributed to Plaintiff's injury by selling a defective product. Id. "Parties that have no legal relation to one another and who owe the same duty of care to the injured party share a common liability and are joint tortfeasors without a right of indemnity between them." Id. (citing Atlantic Coast Line R.R. v. Whetstone, 243 S.C. 61, 132 S.E.2d 172 (1963)). This principle required reversal of the trial court's decision. Id. Since both defendants were jointly liable, the court also held that each was entitled to benefit from the setoff for the $675,000 Firestone settlement. Id. The setoff should apply to the award for actual damages instead of the punitive damages award. Id.

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