Case Brief: Rhodes v. McDonald

Rhodes v. McDonald, 345 S.C. 500, 548 S.E.2d 220 (Ct. App. 2001), involves the installation of vinyl siding.  It stands for the principle that a plaintiff cannot recover punitive damages in a breach of warranty action.

FACTUAL BACKGROUND: Defendant Bill Gillespie ("Gillespie") owned and operated an insulation company, Defendant Southern Insulation ("SI").  345 S.C. at 502, 548 S.E.2d at 221.  Plaintiffs contracted with SI to install vinyl siding on their mobile home and extend the room over their kitchen.  Id.  After installation, plaintiffs complained that the siding was "wavy looking."  Id.  Despite assurances that it would "settle down," it became worse and began pulling apart.  Id.  It also led to the roof "bowing up."  Id.

PROCEDURE: Plaintiffs brought an action against defendants for breach of contract and breach of certain implied warranties.  345 S.C. at 501, 548 S.E.2d at 221.  A jury awarded plaintiffs $11,464.50 in actual damages and $27,500 in punitive damages.  Id. at 503, 548 S.E.2d at 221.  Defendants appealed. 

ISSUE: Whether the trial court erred in failing to grant defendants' motions for directed verdict (1) as to Gillespie's individual liability and (2) as to the availability of punitive damages in the breach of contract and breach of implied warranty causes of action.  345 S.C. at 501, 548 S.E.2d at 221.  Defendants also contended that the trial court erred in submitting an improper special verdict form to the jury.  Id.

DISPOSITION: Affirmed with regard to individual liability of Gillespie.  Reversed with regard to award of punitive damages.    The special interrogatories question was not preserved for appeal (and moot in light of the punitive damages reversal).

OPINION: With regard to the availability of punitive damages, the court agreed that the trial court should not have submitted this issue to the jury.  345 S.C. at 503-05, 548 S.E.2d at 221-23.  The measure of damages that a buyer may recover under the Uniform Commercial Code ("UCC") is set forth at S.C. Code sections 36-2-714 and 715.  Id. at 503, 548 S.E.2d at 222.  The court reviewed the wording of both statutes and concluded that the plain language of the statutes indicated intent by the legislature to limit damages recoverable for breach of warranty to actual, incidental, and consequential damages.  Id. at 503-04, 548 S.E.2d at 221-22.  There was no provision for punitive damages in either statute.  Id.  This is further supported by S.C. Code section 36-1-106(1), which provides, in part, that "neither consequential or special nor penal damages may be had except as specifically provided in the act or by other rule of law."  Id. at 505, 548 S.E.2d at 222.  Again, the court pointed out that the UCC does not include such a provision.  Id.  Although punitive damages are allowed in South Carolina in a breach of contract action where the breach is accompanied by a fraudulent act, there was no such evidence in the case.  Id. at 505, 548 S.E.2d at 222-23.

With regard to the trial court's failure to direct a verdict for Gillespie as to his individual liability, the court disagreed.  Id. at 505, 548 S.E.2d at 223.  SI was not incorporated at the time of the contract, and the general rule is that owners of unincorporated companies are not entitled to the same protection as owners of incorporated entities.  Id.

Finally, the court held that defendants had not adequately preserved their argument relating to the trial court's submission of special interrogatories to the jury.  Id. at 506, 548 S.E.2d at 223.  Therefore, the court did not address this issue, but also pointed out that it was moot in light of the reversal of the punitive damages award.

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South Carolina Bar CLE Presentation on Warnings Goes "Live"

You probably recall from a previous post that I recently participated in the South Carolina Bar's "Distance Learning" program by taping a one-hour presentation on South Carolina warnings law.  I received an email today that my presentation has gone "live" on the website. 

So...if you want to watch my ugly mug and some slides for an hour-long, fun-filled warnings extravaganza, check out this link.

Case Brief: Holst v. KCI Konecranes Int'l Corp., 390 S.C. 29, 699 S.E.2d 715 (Ct. App. 2010)

It has been awhile since I posted a Case Brief, so I thought I would provide one for Holst v. KCI Konecranes Int'l Corp, 390 S.C. 29, 699 S.E.2d 715 (Ct. App. 2010).  I originally blogged about this case when it came out, and its opinion has now been published.  This is a crane accident case involving a "KCI rubber-tired gantry crane" at a terminal of the South Carolina State Ports Authority in Charleston, South Carolina.  I was not familiar with a "gantry crane" and how it differed from a regular crane, so I did the trusty google image search to see what came up.  I am glad that I did.  As you can see from one of the the pictures (below), it is different than your typical idea of a "crane."  (This picture is only intended to give you an idea of a "rubber-tired gantry crane" generally.  I have no idea if it is the make or model of the crane at issue).

The case has some good discussion about the necessity of alternative design in a design defect case.  There is also discussion of what the court looks at in terms of other manufacturers and industry standards when evaluating design, warnings, etc. 

FACTUAL BACKGROUND: Decedent was a checker at a terminal at the port in Charleston, South Carolina.  390 S.C. at 33, 699 S.E.2d at 718.  He was responsible for identifying containers needed for transport between the container yard and ships.  Id.  He would instruct crane operators to move and load the containers in the proper sequence.  Id. at 33-34, 699 S.E.2d at 718.  Decedent was killed when a crane operator lowered containers in an area where he was standing, crushing him.  Id. at 34, 699 S.E.2d at 718.

PROCEDURE: Plaintiff (decedent’s wife) filed suit alleging negligence, breach of warranty, and strict liability for defective design against the crane manufacturer.  390 S.C. at 34, 699 S.E.2d at 718.  The crane manufacturer moved for summary judgment, which was granted by the lower court.  Id. at 34-35, 699 S.E.2d at 718.  Plaintiff appealed.  Id.

ISSUE: Whether the circuit (trial) court erred in granting KCI's motion for summary judgment.

DISPOSITION: The South Carolina Court of Appeals affirmed the grant of summary judgment.  390 S.C. at 44, 699 S.E.2d at 723.

OPINION: Plaintiff’s first argument was that the lower court improperly weighed conflicting testimony concerning product defect, compliance with industry standards, and comparisons of the crane to others on the market.  390 S.C. at 35-36, 699 S.E.2d at 719.  Plaintiff cited to the testimony of two experts (Dr. George Pearsall and Richard Leonard) to support that the crane operator did not have obstruction-free visibility and that the crane should have been equipped with a camera.  Id. at 36, 699 S.E.2d at 719.  Even so, both experts for plaintiff conceded that a camera would not eliminate a blind spot, they did not know of other manufacturers who utilized a camera, and the crane met industry standards/regulations.  Id.  Mr. Leonard testified that he had never seen a comparable model crane with greater visibility than the one at issue.  Id.  Because of a lack of evidence of alternative design or that a risk-utility test was conducted with regard to the crane by plaintiff’s experts, the court held that plaintiff could not establish the crane was defective and unreasonably dangerous as a matter of law.  Id. at 37, 699 S.E.2d at 719-20. 

With regard to compliance with industry standards, the court reviewed American Society of Mechanical Engineers standard B30.2-1.5.1(b) and International Organization for Standardization section 8566-1.  Id. at 37-38, 699 S.E.2d at 720.  The court affirmed that the manufacturer complied with these standards from the evidence and that the operator’s access to a telephone, intercom with a loudspeaker, and two-way radio also aided in his “view” of the load block so as to bring the crane into compliance with applicable standards.  Id.  Finally, the court affirmed that plaintiff’s experts failed to provide evidence that another crane was similar enough to the one at issue so as to provide proof that other cranes on the market had better visibility.  Id. at 38-39, 699 S.E.2d at 720. 

           

Plaintiffs also argued that the lower court applied an improper legal standard by basing its grant of summary judgment on the crane’s conformity with industry custom.  Id. at 39, 699 S.E.2d at 721.  The appellate court did not agree and noted that conformity with industry standards was only one factor considered by the trial court.  Id.

Plaintiff also argued that the lower court erred in applying inapplicable legal standards from certain Fourth Circuit Court of Appeals and South Carolina state court cases (i.e., Sexton By & Through Sexton v. Bell Helmets, Inc., 926 F.2d 331 (4th Cir. 1991), Marchant v. Mitchell Distributing Co., 270 S.C. 29, 240 S.E.2d 511 (1977), and Bragg v. Hi-Ranger, Inc., 319 S.C. 531 462 S.E.2d 321 (Ct. App. 1995)). Id. at 40-42, 699 S.E.2d at 721-22.  The court distinguished each cited case on legal or factual grounds and ruled that the lower court did not err in relying on them.  Id.

Finally, the court addressed summary judgment on each of plaintiff’s claims (strict liability, negligence – defective design, and negligence – failure to warn).  Id. at 42-44, 699 S.E.2d at 722-23.  The court cited to its prior discussion as also applying to support dismissal of the strict liability claim.  Id. at 42, 699 S.E.2d at 722.  On the negligent design claim, the court focused on the superiority of the design of the crane in comparison to others, its compliance with applicable standards, and the fact that the blind spot could not be eliminated to support its holding that there was no material issue of fact.  Id. at 42-43, 699 S.E.2d at 722-23.  The court also found that the crane included proper warnings both in the Operator’s Manual and on the crane itself so as to support summary judgment on plaintiff’s negligent failure to warn claim.  Id. at 43-44, 699 S.E.2d at 723.  Affirmed.

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Distance Learning Program on South Carolina Warnings Law Recorded at South Carolina Bar

Back in February, I posted that the South Carolina Bar asked if I would do a Distance Learning program based on my warnings article that was published in the January 2011 edition of South Carolina Lawyer, entitled "Products Liability Claims in South Carolina: What is South Carolina's Law on Warnings?"  I taped the segment this morning, and it was a great experience.  I spoke for about an hour on South Carolina warnings law.  I prepared some PowerPoint slides to illustrate certain points, and I anticipate that the program will also come with a copy of my January 2011 article for download by anyone who purchases it.

In short, I felt like a news anchor for about an hour.  The studio is set up so that you are sitting at a table and speaking on camera, with no "audience" per se.  This took a little getting used to, especially if you are more accustomed to presenting at public venues.  However, it went off without a hitch, and I enjoyed the preparation and experience.  Be on the lookout for it if you need CLE credit and want to do it in the comfort of your own home/office at your computer.

Most of my posts lately have been on various marketing and research projects that I have been working on.  However, I am going to try and post a "Case Brief" later this week so as to try and get back to some more substantive discussion.

Written Materials from DRI Presentation

I previously posted here a de-brief from my time at the 2011 DRI Products Liability Conference in New Orleans last week.  As indicated in the post, I had the opportunity to speak at the Agricultural, Construction, Mining, and Industrial Equipment ("ACMIE") Specialized Litigation Group breakout session on Thursday.  My task was to present on the "top 10" ACMIE cases from 2010. 

Although this is the "South Carolina Products Liability Law Blog" and it focuses on South Carolina law, I thought that you may find the materials to be of interest if you work with this type of equipment.  The written materials from my presentation can be found at this link, and the materials include a brief of Holst v. KCI Konecranes Int’l Corp., 699 S.E.2d 715 (S.C. Ct. App. 2010) , a South Carolina case from 2010 that I blogged about here when the South Carolina Court of Appeals issued its opinion.

You are probably wondering my "methodology" (for you Daubert v. Merrell Dow Pharmaceuticals fans) for singling out these ten ACMIE cases.  This was no small task.  Suffice it to say that I checked all the boxes for meeting a stringent Daubert analysis.  First, my methodology was "reliable" because it involved a Westlaw search that included all the products liability key words for these types of products: agricultural, construction, mining, "industrial equipment," "products liability," "strict liability," "breach of warranty," negligence...and the list goes on.  After entering all of these words into the legal database, it generated well over 200 cases in both state and federal court from 2010.  To ensure the "relevance" of the cases, I then skimmed all of them to make a first cut at whittling the list down to about thirty cases that really seemed to focus on this type of equipment and involve substantive legal issues.  From these cases, I selected ten that I thought were the most interesting.  After that, I read and briefed all the cases, which is what is set forth in the written materials. 

Hey, if you went through this drill, I am sure you would probably come up with a different list.  However, I doubt you want to take that kind of time when I have done the work for you.  These are the ones I came up with, and hopefully you find them to be of interest if you work with these types of products.

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Upcoming DRI Drug and Medical Device Seminar in Chicago, Illinois on May 5-6, 2011

I am happy to post information about legal conferences pertaining to products liability issues. I always try to provide products liability information that is useful to the defense bar, plaintiff's bar, manufacturers, and individuals. Therefore, if anyone has a seminar or conference (regardless of whether it is defense or plaintiff-oriented), please pass it along and I will be happy to post the pertinent information.

The Defense Research Institute is holding their annual Drug and Medical Device Conference at the Sheraton Chicago in Chicago, Illinois on May 5-6, 2011.  It has been quite a few years since I attended this conference (last went to it in 2005 when it was in New York...a good time), but it is a must-attend if you defend drug and medical device manufacturers and sellers.

All the details for the conference, including a brochure of the agenda, registration, etc., can be found here.

Cut and paste of the information from DRI's website follows:

Overview

DRI’s Drug and Medical Device Seminar is the preeminent program for lawyers who represent pharmaceutical and medical device manufacturers. We are pleased again to feature a number of nationally recognized attorneys, both in-house and outside counsel, and other professionals who will address cutting-edge topics that are relevant to all who practice in this area, whether they are associates, lead trial counsel or in-house attorneys. This year’s program will offer a mixture of presentations, including trial skills demonstrations, a panel discussion of a groundbreaking defense and litigation insights from leading defenders of drug and device cases. In addition to the outstanding program, there will be numerous networking opportunities, including our annual Young Lawyers Blockbuster. Be sure to register now to reserve your place in Chicago at DRI’s 27th annual Drug and Medical Device Seminar.

Registration

The registration fee is $895 for members and those who join DRI when registering and $1,125 for non-members. The registration fee includes CD-ROM course materials, continental breakfasts, refreshment breaks and networking receptions. If you wish to have your name appear on the registration list distributed at the conference and receive the course materials in advance, DRI must receive your registration by April 15, 2011 (please allow 10 days for processing mailed registrations). Registrations received after April 15, 2011, will be processed on-site.

In-house counsel are eligible for free registration to DRI seminars. In-house counsel are defined as licensed attorneys, who are employed exclusively by a corporation or other private sector organization, for the purpose of providing legal representation and counsel only to that corporation, its affiliates and subsidiaries. In order to qualify for free registration, the individual must also be a DRI member and a member of DRI’s Corporate Counsel Committee. Offer excludes DRI Annual Meeting.

Hotel

A limited number of discounted hotel rooms have been made available at the Sheraton Chicago Hotel and Towers, 301 East North Water Street, Chicago, Illinois 60611. For reservations, contact the hotel directly at 312.464.1000. Please mention DRI’s Drug and Medical Device Seminar to take advantage of the group rate of $255 Single/$285 Double. The hotel block is limited and rooms and rates are available on a first-come, first-served basis. You must make reservations by April 12, 2011, to be eligible for the group rate. Requests for reservations made after April 6 are subject to room and rate availability.

Travel Discounts

DRI offers discounted meeting fares on various major air carriers for DRI seminar attendees. To receive these discounts, please contact Hobson Travel Ltd., DRI’s official travel provider at 800.538.7464 or you can book your travel on online at RESX.com. If you are a first time user use dri as company, your first initial and last name as Member ID and leave password blank the first time you login to enter a password. As always, to obtain the lowest available fares, early booking is recommended.

Special Discounts

No special discounts are provided for the Diversity for Success or Young Lawyers Seminars, Fidelity and Surety Roundtable, Defending Drug and Medical Device Litigation Young Lawyer Primer, the DRI Annual Meeting, or any non-CLE DRI meeting. For all other seminars, the first and second registrations from the same firm or company are subject to the fees outlined above. The registration fee for additional registrants from the same firm or company is $50 off the member rate, regardless of membership status. All registrations must be received at the same time to receive the discount.

Refund Policy

The registration fee is fully refundable for cancellations received on or before April 15, 2011. Cancellations received after April 15 and on or before April 22, 2011, will receive a refund, less a $50 processing fee. Cancellations made after April 22 will not receive a refund, but the course materials on CD-ROM and a $100 certificate good for any DRI seminar within the next 12 months will be issued. All cancellations and requests for refunds must be made in writing. Fax to DRI’s Accounting Department at 312.795.0747. All refunds will be mailed within four weeks after the date of the conference. Substitutions may be made at any time without charge and must be submitted in writing.

Article Published in SCDTAA Publication "The Defense Line"

I am pleased to announce that my article entitled "Limits on the Duty to Warn in South Carolina Products Liability Law" was recently published in the Spring 2011 edition of The Defense Line, which is published by the South Carolina Defense Trial Attorneys' Association. You can find a .pdf of the article here.

As background, South Carolina Lawyer was kind enough to publish my article, "South Carolina Products Liability Law: What is South Carolina's Law on Warnings?" in its January 2011 edition. (See my post about this publication here). The original draft of the article was intended to be a comprehensive review of South Carolina warnings law, with the exception of the doctrine of preemption (which is a topic for an entirely different article by itself). The problem was that the article was extremely long and nearly double the word limitations requested by South Carolina Lawyer. To prepare it for publication, I had to cut a substantial amount of material from the section dealing with exceptions to and limitations on the duty to warn. My hope was that I could use this material to create a separate article and have it published in a different publication.

Fast forward to the Spring edition of The Defense Line, and there you have it: the "lost material" from the original article. This article has substantially more information on limitations/exceptions to the duty to warn in South Carolina than what was in the original South Carolina Lawyer article, with more case law and analysis. Enjoy.

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De-Brief From 2011 DRI Products Liability Law Conference

I am back from the 2011 DRI Products Liability Law Conference in New Orleans. I had a great time at this year's conference and wanted to provide a quick re-cap of everything that went on.

I arrived in New Orleans at about 3:30 on Tuesday afternoon. After checking out the Hilton New Orleans Riverside and walking around a bit, I attended the networking reception that evening and met numerous attorneys and vendors from across the country who do products liability work. I went to dinner with a large group of attorneys that evening, and we enjoyed a great meal at Mr. John's Steakhouse. I highly recommend the red snapper special. Crazy delicious. Fantastic meal and group of attorneys.

On Wednesday, I attended the full session, which began at 8:15 a.m. My favorite presentation of the entire conference was later that morning and was presented by Richard S. Levick of Levick Strategic Communications. I have heard Richard speak before at a retreat at my prior law firm, and he is always extremely informative and very entertaining in discussing how to manage crisis communications in the world of litigation. He also has an excellent blog, entitled "BulletProofBlog: The Blog on Crisis Communications." After the morning session, I went to a "luncharound" with nine other attorneys at Palace Cafe, which was also very good. As I had learned from the previous night's dinner, good food is never "quick" in New Orleans, so we were a bit late for the afternoon session. When we returned, I attended the Manufacturer's Risk Prevention Specialized Litigation Group ("SLG") breakout meeting. After the breakout, I attended another networking reception, and dinner on Wednesday night was at Arnaud's with some of my friends and colleagues on the Agricultural, Construction, Mining and Industrial Equipment ("ACMIE") SLG. John Phelps entertained our table with some great war stories about litigation and politics in Arkansas.

Thursday was more of the same, and I attended the full session where Mark Kircher gave a really good presentation on "High Tech Demonstrative Exhibits that Work." The presentation involved animations used in cases to prove the defense's theory of the case, and some of them were really impressive. After another luncharound with attorneys at Restaurant August, it was time to prepare for my presentation at the ACMIE SLG breakout session. Our breakout session was two hours during the afternoon and the primary focus was on equipment fire cases. We had some great speakers, including John Phelps, representatives of John Deere and Caterpillar, and a forensic fire investigator. My presentation lasted approximately 20 minutes as was entitled "Who Needs Letterman? The Annual ACMIE Top 10 Cases." (I hope to post a link to the written materials once I get them on my biography website, but in the meantime, email me if you would like a copy of the written materials I prepared for my presentation). We got very good feedback from the SLG attendees after the session on all of the presentations. After another networking reception that evening, I went to Tommy's Cuisine with Lois Yamaguchi, Amy Fischer, Larry Ottaway, and Beth Anderson. Lois, Amy and Larry are attorneys affiliated with the Primerus group of law firms (of which Collins & Lacy, P.C. is a proud member), and Beth is an engineer with Anderson Engineering of New Prague, Inc. We had a great meal, and I would say that Tommy's was probably my favorite restaurant from the entire time I was in New Orleans.

Friday was the end of the conference, and I attended the Products Liability Committee meeting. Planning has already begun for next year's conference, and my congratulations to Nick Pappas, outgoing ACMIE SLG Chairman, who was selected to head up the planning of next year's conference in Las Vegas. I look forward to attending and hope to play a role in the planning of next year's activities.