McMichael v. U.S.

• Decision Date: 25 August 1988
• Docket Number: Nos. 87-1634,s. 87-1634
• Citation: 856 F.2d 1026
• Parties: , 35 Cont.Cas.Fed. (CCH) 75,546, 13 O.S.H. Cas.(BNA) 1860 Carl McMICHAEL, Administrator of the Estate of Emma McMichael, Deceased, Appellee, v. UNITED STATES of America, Appellant, Insurance Company of North America (Intervenor Below). Mrs. Lamar BARTLETT; Winfred Lowe, Administrator of the Estate of Thelma Lowe; Mrs. Edna Rogers; Mrs. Flora Weaver; and Mrs. Georgia Ray, Appellees, v. UNITED STATES of America, Appellant, Insurance Company of North America (Intervenor Below). Leonard MADISON, Administrator of the Estate of Lula Mae Madison, Deceased, Appellee, v. UNITED STATES of America, Appellant, Insurance Company of North America (Intervenor Below). Gertie B. MITCHELL, Administratrix In Succession of the Estate of Eliza Walker, Deceased, Appellee, v. UNITED STATES of America, Appellant, Insurance Company of North America (Intervenor Below). Billy Dwayne MOODY, Administrator of the Estate of Geraldine Moody, Deceased, Appellee, v. UNITED STATES of America, Appellant, Insurance Company of North America (Intervenor Below). Willie D. KELLY, Administrator of the Estate of Shirley J. Kelly, Deceased, Appellee, v. UNITED STATES of America, Appellant, Insurance Company of North America (Intervenor Below). Billy HARRISON, Administrator of the Estate of Elsie Marie Harrison, deceased, Appellee, v. UNITED STATES of America, Appellant. James STANCILE, Administrator of the Estate of Lula Mae Madison, Deceased, Appellant, Gertie B. Mitchell, Administratrix In Succession of the Estate of Eliza Walker, Deceased, Appellant, Willia H. Moody, Administrator of the Estate of Geraldine Moody, Deceased, Appellant, Willie D. Kelly, Administrator of the Estate of Shirley J. Kelly, Deceased, Appellant, v. UNITED STATES of America, Appellee, Highland Resources, Inc., Appellee. to 87-1640 and 87-1707.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1026

856 F.2d 1026

57 USLW 2180, 35 Cont.Cas.Fed. (CCH) 75,546,

13 O.S.H. Cas.(BNA) 1860

Carl McMICHAEL, Administrator of the Estate of Emma

McMichael, Deceased, Appellee, v. UNITED STATES of America, Appellant,

Insurance Company of North America (Intervenor Below).

Mrs. Lamar BARTLETT; Winfred Lowe, Administrator of the

Estate of Thelma Lowe; Mrs. Edna Rogers; Mrs.

Flora Weaver; and Mrs. Georgia Ray, Appellees, v. UNITED STATES of America, Appellant,

Insurance Company of North America (Intervenor Below).

Leonard MADISON, Administrator of the Estate of Lula Mae

Madison, Deceased, Appellee, v. UNITED STATES of America, Appellant,

Insurance Company of North America (Intervenor Below).

Gertie B. MITCHELL, Administratrix In Succession of the Estate of Eliza Walker, Deceased, Appellee, v. UNITED STATES of America, Appellant,

Insurance Company of North America (Intervenor Below).

Billy Dwayne MOODY, Administrator of the Estate of Geraldine

Moody, Deceased, Appellee, v. UNITED STATES of America, Appellant,

Insurance Company of North America (Intervenor Below).

Willie D. KELLY, Administrator of the Estate of Shirley J.

Kelly, Deceased, Appellee, v. UNITED STATES of America, Appellant,

Insurance Company of North America (Intervenor Below).

Billy HARRISON, Administrator of the Estate of Elsie Marie

Harrison, deceased, Appellee, v. UNITED STATES of America, Appellant.

James STANCILE, Administrator of the Estate of Lula Mae

Madison, Deceased, Appellant,

Gertie B. Mitchell, Administratrix In Succession of the

Estate of Eliza Walker, Deceased, Appellant,

Willia H. Moody, Administrator of the Estate of Geraldine

Moody, Deceased, Appellant,

Willie D. Kelly, Administrator of the Estate of Shirley J.

Kelly, Deceased, Appellant, v. UNITED STATES of America, Appellee, Highland Resources, Inc., Appellee.

Nos. 87-1634 to 87-1640 and 87-1707.

United States Court of Appeals Eighth Circuit.

Submitted Jan. 11, 1988.

Decided Aug. 25, 1988.

Ralph Johnson, Washington, D.C., for U.S.

Bettina Brownstein, Little Rock, Ark., for Highland.

Bernard Whetstone, Little Rock, Ark., for Mitchell, Moody, Kelly & Stancile.

James Bruce McMath, Little Rock, Ark., for McMichael, Bartlett, Madison and Harrison.

Before JOHN R. GIBSON, Circuit Judge, BRIGHT, Senior Circuit Judge, and MAGILL, Circuit Judge.

JOHN R. GIBSON, Circuit Judge.

The United States Department of Defense contracted with Celesco Industries, Inc., an independent contractor, to produce explosive photo-flash cartridges. On March 8, 1976, an explosion occurred at the Celesco plant in East Camden, Arkansas, killing seven employees, seriously injuring five, and causing minor injuries to numerous others. Consolidated cases were filed against the United States under the Federal Tort Claims Act (FTCA), 28 U.S.C.A. Secs. 1346, 2671-2680 (1982) and Highland Resources, Inc. under state law, the owner and lessor of the building where the explosion occurred. The government appeals from the district court's ¹ award of damages to the injured or killed employees, arguing that the court erred in ruling that the claims were not barred by the discretionary function exception to the FTCA and in holding that the government was negligent in failing to enforce safety standards at the plant. The employees cross-appeal, contending that the district court erred in ruling that Highland Resources was not liable under Arkansas products or strict liability statutes, or common law principles of negligence. For the reasons set forth below, we affirm.

This case is before us for the third time. The factual background is outlined in our first opinion, Madison v. United States, 679 F.2d 736, 737-38 (8th Cir.1982), and the procedural and appellate history is set forth in our second opinion, McMichael v. United States, 751 F.2d 303, 304-05 (8th Cir.1985). ² After a bench trial in January 1986 the district court made factual findings, which we recite below.

On June 20, 1975, the United States awarded Celesco a contract to produce highly explosive photo-flash cartridges. Before submitting the bid, the government required Celesco to secure a manufacturing facility. Celesco leased a former naval ammunition plant in East Camden, Arkansas from Highland Resources, a commercial lessor. Celesco, an experienced munitions manufacturer, had leased other buildings for similar purposes and had special knowledge of the construction requirements for buildings to be used in the production of munitions. Highland, on the other hand, did not possess such special knowledge.

Before awarding the contract to Celesco, the Defense Department required the Safety Manager of the Defense Contract Administrative Services Region (DSCAR) to review Celesco's safety procedures, processes, facility and personnel to determine whether Celesco could comply with the Department of Defense safety requirements. The survey concluded that Celesco and the facility complied with the department guidelines. It developed at trial, however, that the Safety Manager did not conduct an on-site evaluation of the plant at the time of the survey.

The contract between Celesco and the government required Celesco to promulgate safety provisions and comply with safety standards established by the Department of Defense Contractor's Safety Manual for Ammunition, Explosives and Related Dangerous Materials (DOD Manual) and the provisions of the Armed Services Procurement Regulations. See 32 C.F.R. Sec. 7.104-79 (1984). These requirements and standards were incorporated into the contract. The contract delegated primary responsibility for safety to Celesco, and Celesco hired a full-time safety staff, headed by a safety engineer. Pursuant to the contract terms, the government provided Celesco with three on-site quality assurance representatives, or inspectors. One inspector was placed in Building M-35, the building where the explosion occurred, on a full-time basis. Although the primary responsibility of the inspector was to oversee Celesco's compliance with the quality requirements of the contract, safety review was also an integral part of his assigned tasks. The inspectors' regular procedures included a fifty-one step procedures review checklist for safety compliance. The Armed Services Procurement Regulations and the Celesco contract gave the inspectors the authority to require on-the-spot corrective action, and the contracting officer was authorized to cease production by withdrawing government inspectors until the safety violations were corrected. ³

The district court found a number of conditions at the Celesco plant did not comply with the safety requirements of the contract. For example, the lightning protection system was inadequate and there was no humidity control in Bay 4 of Building M-35, where the explosion occurred. Water was present in an area where detonation was likely to occur. (Moisture, in the form of water or humidity, is an initiating force for the photo-flash). Despite a sign directing that the steel blast doors to Bay 4 remain shut at all times, the doors were constantly left open. The open doors allowed the blast to spread down a hallway, where all but one of the killed or injured employees were at the time of the explosion. In addition, although there was conflicting testimony concerning the precise amount of the photo-flash in Bay 4, by any account the amount exceeded the limit approved by the government. ⁴ Shortly before the explosion, the Building M-35 government inspector informed Celesco's line supervisor that Bay 4 was overloaded. There was also testimony that defective loaded components, or "rejects," were stored in Bay 4, contrary to the safety requirements of the contract. Finally, the Department of Defense manual required evacuation of personnel in the event of an electrical storm, and the district court found that although on the morning of March 8, 1976, there was rain, thunder and lightning in the East Camden area, no evacuation of the plant was ordered. An explosion occurred in Building M-35, killing and injuring numerous employees.

The district court found that the government was negligent in failing to enforce the safety standards incorporated in its contract with Celesco. Specifically, the court ruled that the government inspectors were negligent in failing to order an evacuation until the storm passed and that this was the proximate cause of the employees' injuries. The court also concluded that the lessor of the Celesco Plant, Highland Resources, Inc. was not liable on any of the theories advanced by the employees and dismissed the counts against them.

I.

The government first argues that the action is barred by the discretionary function exception to the FTCA, 28 U.S.C. 2680(a) (1982), and that the district court erred in refusing to consider whether the exception applied. For purposes of the government's motion for summary judgment, the parties entered into a stipulation of fact, which was before, and substantially relied upon by, this court in our earlier decisions. See McMichael, 751 F.2d at 305; Madison, 679 F.2d at 738 n. 3. The essence of the stipulation was that the contract imposed numerous mandatory safety standards on Celesco, but that the government, despite its "three onsite assurance inspectors," failed to enforce Celesco's compliance with those standards and thereby caused plaintiffs' injuries. ⁵ The government expressly reserved the right to contest all assertions set forth in the stipulation at trial. ⁶ After this court affirmed the district court's ruling that the discretionary function exception did not bar the employees' claim and remanded the case for trial, McMichael, 751 F.2d at 310, the government moved to vacate the stipulation, alleging that the stipulation was "fragmented" and "flawed." Although the district court vacated the stipulation, the court ruled that it was bound by this court's rulings in Madison and McMichael that the discretionary function exception did not apply. In view of the...