Hazel v. Blitz United Statesa., Inc.

• Decision Date: 07 November 2018
• Docket Number: Appellate Case No. 2015-001947,Opinion No. 5604
• Citation: 425 S.C. 361,822 S.E.2d 338
• Court: South Carolina Court of Appeals
• Parties: Alice HAZEL, as GAL for Jacob N., Respondent, v. BLITZ U.S.A., INC., Fred's, Inc., Tiger Express Varnville LLC, and James Nix, Defendants, Of Whom Fred's, Inc. is the Appellant. and Melinda Cook, Respondent, v. Blitz U.S.A., Inc., Fred's, Inc., Tiger Express Varnville LLC, and James Nix, Defendants, Of Whom Fred's, Inc. is the Appellant.

425 S.C. 361

822 S.E.2d 338

Alice HAZEL, as GAL for Jacob N., Respondent,

v.BLITZ U.S.A., INC., Fred's, Inc., Tiger Express Varnville LLC, and James Nix, Defendants,Of Whom Fred's, Inc. is the Appellant.andMelinda Cook, Respondent,

v.Blitz U.S.A., Inc., Fred's, Inc., Tiger Express Varnville LLC, and James Nix, Defendants,Of Whom Fred's, Inc. is the Appellant.

Appellate Case No. 2015-001947

Opinion No. 5604

Court of Appeals of South Carolina.

Heard October 4, 2018

Filed November 7, 2018

Rehearing Denied January 17, 2019

Matthew Clark LaFave, of Crowe LaFave, LLC, of Columbia, for Appellant.

Mark David Ball, of Peters Murdaugh Parker Eltzroth & Detrick, PA, and Kathleen Chewning Barnes, of Barnes Law Firm, LLC, both of Hampton, for Respondent.

LOCKEMY, C.J.:

Melinda Cook, as the mother of Jacob N., and Alice Hazel, as guardian ad litem (collectively, Respondents), brought separate actions against Fred's, Inc. to recover for injuries Jacob N. sustained when a portable gasoline container exploded. Fred's moved to permanently enjoin or stay the claims, arguing they were subject to an injunction established during bankruptcy proceedings. The circuit court denied the motion. We affirm.

FACTS

For over two decades, Blitz USA, Inc. manufactured and distributed plastic gasoline containers, at one point becoming the largest producer in the country. Fred's is a Tennessee-based chain store operating in South Carolina and throughout the southeast. In 2005, as part of an agreement to sell Blitz gas cans, Blitz and Fred's entered into a Vendors Hold Harmless and Indemnity Agreement (Indemnity Agreement). The Indemnity Agreement stated that in exchange for the purchase and retail of its merchandise, Blitz would

protect, defend, hold harmless, and indemnify [Fred's] from and against any and all claims ... arising out of any actual or alleged ... death of or injury to any person ... resulting or claimed to result in whole or in part from any actual or alleged defect in [Blitz's] Products.

Additionally, Fred's was a certificate holder on several of Blitz's insurance policies—a commercial general liability (CGL) policy, a products liability policy, and an excess liability policy.

In November 2010, Cook's five-year-old son, Jacob N., was severely burned when a plastic gas container exploded and sprayed him with fuel. The gas can in question was manufactured by Blitz and reportedly purchased from Fred's. In November 2013, Respondents commenced separate lawsuits in Hampton County, both naming Blitz and Fred's as defendants. ¹

The complaints asserted claims against Blitz for products liability, strict liability, and breach of warranty, as well as against Fred's for breach of warranty, strict liability, and negligence. As to Blitz, it was alleged the gas can suffered from a defect that allowed gasoline vapors outside the spout to ignite and mix with the contents of the fuel container, causing a "flashback" explosion. As to Fred's, Respondents claimed Fred's knew of the containers' propensity to explode but continued to sell them in its stores anyway.

Prior to Respondents filing suit, however, Blitz was already facing an onslaught of potential liability from numerous incidents involving its gas cans. Consequently, in November 2011, Blitz filed for Chapter 11 Bankruptcy in the United States Bankruptcy Court for the District of Delaware (the Bankruptcy court). Through its subsequent liquidation and reorganization, Blitz and its insurers sought to settle numerous pending, and possible future, products liability and personal injury claims.

In January 2014, the Bankruptcy court issued an order (the Bankruptcy order) approving Blitz's First Amended Joint Plan of Liquidation (the Plan). The Plan established the Blitz Personal Injury Trust (the Trust), a single pool of assets from which to provide compensation for "Blitz Personal Injury Claims." The Trust ultimately yielded over one hundred-fifty million dollars paid by Wal-Mart—the largest retailer of Blitz cans—and "Participating Insurers" of Blitz. Among the Participating Insurers were the providers of the products liability policy and excess liability policy for which Fred's was a certificate holder.

The Plan defined Blitz Personal Injury Claims as

all claims for damages or other relief for, based upon, arising out of, relating to, or in any way involving bodily injury ... and shall include asserted and unasserted claims, whether known or unknown, based upon, arising out of, or in any way involving the products, premises or operations of [Blitz] ... and without any limitation of the foregoing shall include ... any direct action claims by a claimant against the participating insurers.

According to the terms of the Bankruptcy order, no such claims could be maintained against Blitz or any "Released Parties"; instead, the "the sole and exclusive remedies of Blitz Personal Injury Trust Claims" would be against the Trust. Released Parties included Blitz, "the Participating Insurers, Wal-Mart, and any other person or entity insured under the Subject Policies, including but not limited to (i) any distributor or retailer of [Blitz]'s products." The Plan provided that

[a] Vendor ... sued on a Blitz Personal Injury Claim might be entitled to coverage under the Participating Insurer Policies. If any of the foregoing are insureds under the respective policies, they could tender the Blitz Personal Injury Claims to the Participating Insurers for defense and indemnity. Accordingly, any settlement relating to, and the buy-back of, the Participating Insurer Policies must also resolve all claims against Vendors ... to the same extent such claims are being resolved against [Blitz], which justifies the inclusion of Vendors ... as [Released] Parties under the [ ] Plan.

The Bankruptcy order stated that the release of certain parties from liability was appropriate, "[i]n view of the substantial contribution to the [Trust]," and that Blitz and the Released Parties had "[a]n identity of interests ... such that a claim asserted against a [Released] Party gives rise to a claim against [Blitz] by contract and/or operation of the law of indemnity and/or contribution."

In order to facilitate the settlement of Blitz Personal Injury Claims, the Bankruptcy order imposed a "Channeling Injunction," defined as "an injunction ... that ... (i) permanently enjoins and channels to the [ ] Trust all Blitz Personal Injury Claims, and (ii) permanently enjoins the prosecution of all Blitz Personal Injury Claims against any Released Party." The Bankruptcy order stipulated, however, that the Channeling Injunction "shall not enjoin ... the rights of any Entity to assert any claim, debt, obligation, or liability for payment against a Non-Participating Insurer."

Following the Bankruptcy court's approval of the Plan in early 2014, Respondents filed a claim with the Trust and received $2,872,315 to settle their suit against Blitz. Respondents subsequently amended their complaint to remove all other causes of action except for a general negligence claim against Fred's. On August 26, 2014, Fred's moved to permanently enjoin or alternatively to stay the proceedings, arguing Respondents' claims were Blitz Personal Injury Claims subject to the Channeling Injunction. Additionally, Fred's contended it qualified as a Released Party under the Plan because it was a Vendor insured under a Participating Insurer policy—specifically, Blitz's products liability policy. The circuit court disagreed, finding the Plan did not operate to release and enjoin claims against a Vendor for its own independent negligence and which would be recovered from a Non-Participating Insurer.

Fred's filed a motion to reconsider, arguing the negligence claim was really a products liability claim and was therefore covered under Blitz's products liability policy. Fred's also contended it was entitled to indemnification from Blitz pursuant to the 2005 Indemnity Agreement. The circuit court denied the motion. This appeal followed.

STANDARD OF REVIEW

"The party seeking an injunction has the burden of demonstrating facts and circumstances warranting an injunction." Strategic Res. Co. v. BCS Life Ins. Co. , 367 S.C. 540, 544, 627 S.E.2d 687, 689 (2006). "An order granting or denying an injunction is reviewed for [an] abuse of discretion. An abuse of discretion occurs when the trial court's decision is unsupported by the evidence or controlled by an error of law." Id ."As a general rule, judgments are to be construed like other written instruments. The determinative factor is the intent of the court, as gathered, not from an isolated part thereof, but from all the parts of the judgment itself." Doe v. Bishop of Charleston , 407 S.C. 128, 135, 754 S.E.2d 494, 498 (2014).

LAW ANALYSIS

Initially, Respondents argue Fred's cannot appeal the circuit court's denial of its motion for a permanent injunction because Fred's only appealed the denial of its motion to reconsider. Respondents therefore assert the circuit court's ruling regarding the interpretation of the Bankruptcy order is the "law of the case" and the only issue properly before this court is whether the circuit court correctly ruled the negligence claim differed from a products liability claim. See Shirley's Iron Works, Inc. v. City of Union , 403 S.C. 560, 573, 743 S.E.2d 778, 785 (2013) ("An unappealed ruling is the law of the case and requires affirmance."). Contrary to Respondents' assertion, we believe Fred's motion to reconsider encompassed its objections to the circuit court's original ruling with regard to the motion for a permanent injunction. Accordingly, we decline to construe Fred's appeal of the motion to reconsider as a failure to appeal the circuit court's order denying the motion for an injunction pursuant to the Bankruptcy order.

Turning to the merits of the appeal, Fred's argues the circuit court erred in: (1) finding Respondents' negligence claim was outside the scope of the release and Channeling Injunction, and (2) holding the claim did...