Allenberg v. BENTLEY HEDGES TRAVEL

• Decision Date: 06 March 2001
• Docket Number: No. 95,400.,95,400.
• Parties: Jack ALLENBERG, Surviving next-of-kin of AvaPattee Allenberg, Deceased, Plaintiff/Appellant, v. BENTLEY HEDGES TRAVEL SERV. INC., Bentley Hedges Park & Fly Inc., Lowell Hite Arvieux, Defendants, and Arkansas Bus Exchange Corp., Defendant/Appellee. Arkansas Bus Exchange Corp., Third Party Plaintiff. v. National Coach Corp., Eldorado Nat'l Co., Thor Indus., Inc., EBC, Inc., Gelco Corp., and John Doe, Mfr., and Budget Rent-A-Car Systems, Inc., a Delaware Corp., Third Party Defendants. Nancy (Leigh) Norman Gray, Personal Representative of the Estate of Gwinn Norman, Plaintiff/Appellant, v. Bentley Hedges Travel Serv. Inc., Bentley Hedges Park & Fly Inc., Lowell Hite Arvieux, Defendants, and Arkansas Bus Exchange Corp., Defendant/Appellee. Arkansas Bus Exchange Corp., Third Party Plaintiff, v. National Coach Corp., Eldorado Nat'l. Co., Thor Indus., Inc., EBC, Inc., Gelco Corp. and John Doe, Mfr., and Budget Rent-A-Car Systems, Inc., a Delaware Corp., Third Party Defendants.
• Court: Oklahoma Supreme Court

22 P.3d 223

2001 OK 22

Jack ALLENBERG, Surviving next-of-kin of AvaPattee Allenberg, Deceased, Plaintiff/Appellant, v. BENTLEY HEDGES TRAVEL SERV. INC., Bentley Hedges Park & Fly Inc., Lowell Hite Arvieux, Defendants, and Arkansas Bus Exchange Corp., Defendant/Appellee.

Arkansas Bus Exchange Corp., Third Party Plaintiff. v. National Coach Corp., Eldorado Nat'l Co., Thor Indus., Inc., EBC, Inc., Gelco Corp., and John Doe, Mfr., and Budget Rent-A-Car Systems, Inc., a Delaware Corp., Third Party Defendants.

Nancy (Leigh) Norman Gray, Personal Representative of the Estate of Gwinn Norman, Plaintiff/Appellant, v. Bentley Hedges Travel Serv. Inc., Bentley Hedges Park & Fly Inc., Lowell Hite Arvieux, Defendants, and Arkansas Bus Exchange Corp., Defendant/Appellee.

Arkansas Bus Exchange Corp., Third Party Plaintiff, v. National Coach Corp., Eldorado Nat'l. Co., Thor Indus., Inc., EBC, Inc., Gelco Corp. and John Doe, Mfr., and Budget Rent-A-Car Systems, Inc., a Delaware Corp., Third Party Defendants.

No. 95,400.

Supreme Court of Oklahoma.

March 6, 2001.

Rehearing Denied April 24, 2001.

Ed Abel, Lynn B. Mares, Oklahoma City, OK, for Plaintiffs/Appellants.

Chris Harper, Harry R. Palmer, Jr., Phillip P. Owens II, Oklahoma City, OK, for Defendant/Third Party, Plaintiff/Appellee.

Tom Cooper, Oklahoma City, OK, for Budget Rent-A-Car/Third Party Defendant.

KAUGER, J.:

¶ 1 The first impression question presented is whether manufacturers' products liability is applicable to the commercial seller of a used product if the alleged defect was not created by the seller, and if the product is sold in essentially the same condition as when it was acquired for resale.¹ We have determined that it is not.

FACTS

¶ 2 On July 16, 1997, Bentley Hedges Travel arranged transportation to the airport for Ava Pattee Allenberg and her daughter, Gwinn Norman (passengers), in a used shuttle bus which it had purchased from the appellee, Arkansas Bus Exchange (Arkansas Bus). While en route to the airport, the driver of the bus ran a red light causing the bus to collide with other vehicles in an intersection. Both passengers were seated on the left side of the bus facing the center aisle. The bus was not equipped with seat belts, and the passengers were flung from their seats and injured in the collision. Ava Allenberg died a few days after the accident.

¶ 3 On February 19, 1998, Gwinn Norman, filed a lawsuit on her own behalf and another lawsuit as the personal representative of her mother's estate. She sued Bentley Hedges Travel and the driver of the bus alleging that they were negligent. She also sued Arkansas Bus alleging that it had distributed and sold a defective, unreasonably dangerous shuttle bus because the bus was not equipped with seat belts, adequate handholds, or secured luggage compartments. Bentley Hedges and the bus driver were later dismissed from the lawsuit.

¶ 4 Arkansas Bus filed answers in both causes, denying the allegations and asserting that it could not be liable because it did not manufacture, design, or produce the bus, nor did it alter, change or modify the bus in any way from its original condition. It also filed third party indemnity claims against National Coach Corp., Eldorado National Corp., Thor Industries, Ebc, Inc., Gelco Corp., John Doe, Manufacturer, and Budget Rent-A-Car Systems (Budget) as manufacturers of the bus and/or predecessors, successors or subsidiaries. According to the pre-trial order, the third party indemnity claims, with the exception of the claim against Budget, were later dismissed without prejudice or summary judgment was entered in their favor.²

¶ 5 On April 27, 1999, Arkansas Bus filed motions for summary judgment in both causes, arguing that the bus was neither defective nor the proximate cause of Ava Allenberg's or Gwinn Norman's injuries. The trial court denied the motions on July 23, 1999. While the lawsuits progressed, Gwinn Norman died of causes unrelated to the accident and her brother, Jack Allenberg (estate representative), was substituted as surviving next-of-kin of Ava Allenberg. Gwinn Norman's daughter, Nancy Gray, was substituted as her mother's personal representative.

¶ 6 On July 17, 2000, Arkansas Bus again filed motions for summary judgment in both causes, arguing that the doctrine of manufacturers' products liability is inapplicable to commercial sellers of used products. On July 24, 2000, Budget Rent-A-Car also filed motions for summary judgment. On August 16, 2000, both causes were consolidated for trial. However, on September 27, 2000, the trial court entered judgment in favor of Arkansas Bus, finding that the shuttle bus was a used vehicle when the bus exchange purchased it and that it did not alter, modify, rebuild or restore the bus. It also determined that Budget's motion for summary judgment was moot.

¶ 7 The estate representatives appealed on October 23, 2000, and filed a motion to retain the cause in this Court. On December 18, 2000, we retained the cause to address the first impression question regarding the application of manufacturers' products liability to the seller of a used product if the alleged defect was not created by the seller, and if the product is sold in essentially the same condition as when it was acquired for resale.

¶ 8 MANUFACTURERS' PRODUCTS LIABILITY IS INAPPLICABLE TO THE COMMERCIAL SELLER OF A USED PRODUCT IF THE ALLEGED DEFECT WAS NOT CREATED BY THE SELLER, AND IF THE PRODUCT IS SOLD IN ESSENTIALLY THE SAME CONDITION AS WHEN IT WAS ACQUIRED FOR RESALE.

¶ 9 We note at the outset that the basis of the estate representatives' lawsuits was that the shuttle bus was defective because it "had no seat belts, no protection from hard rails and surfaces, and that seats and luggage came loose in the collision" causing the passengers severe injuries. We have not previously addressed whether, under these circumstances, the bus may be defective,³ and we need not decide the issue today. The only issue presented is the question of law regarding whether the commercial seller of a used product can be subjected to manufacturers' products liability for alleged defects not created by the seller, and if the product is sold in essentially the same condition as when it was acquired for resale.

¶ 10 Arkansas Bus contends that the undisputed facts reveal that any defects were created by the manufacturer and that it purchased the shuttle bus in a used condition and, other than changing the oil and/or tires, it did not warrant, recondition, change, alter, modify, or rebuild the bus before it sold it to Bentley Hedges.⁴ It argues that, under these circumstances, commercial sellers of used goods are not subject to strict liability for injuries caused by defects which were present at the time of original distribution. It urges us to join the majority of jurisdictions which have considered the issue and which have determined that strict liability does not extend to commercial sellers of used products if the alleged defect was not created by the seller, and if the product is sold in essentially the same condition as when it was acquired for resale.⁵ ¶ 11 Oklahoma adopted the theory of manufacturers' products liability in Kirkland v. General Motors Corp., 1974 OK 52, 521 P.2d 1353. The Kirkland teaching is that the seller of a product in a defective condition, which is unreasonably dangerous to the user or consumer, is strictly liable for the physical harm to the person or property caused by the defect. This theory of recovery is based on the Restatement (Second) of Torts, § 402A (1965).⁶

¶ 12 To maintain a cause of action under manufacturers' products liability, the plaintiff must prove the product was the cause of the injury, that the product was defective when it left the control of the manufacturer and that the defect made the product unreasonably dangerous beyond which would be contemplated by the ordinary consumer who purchases it.⁷ In Kirkland, we defined manufacturers as "processors, assemblers, and all other persons who are similarly situated in processing and distribution." We recognized that manufacturers' products liability is founded upon public interest in human safety and that the rationale for adopting the rule is that the manufacturer of the product is responsible for the product reaching its market, and the manufacturer is best situated to provide protection against the risk of injuries caused by a defective product.⁸

¶ 13 We have not previously determined whether manufacturers' products liability should apply to commercial sellers of used products when the alleged defect was not created by the seller, and the product was sold in essentially the same condition as when it was acquired for resale. However, since Kirkland, and consistent with its rationale, manufacturers' products liability has been applied to various members of the manufacturers' marketing chain.⁹ For instance, it has been held applicable to retailers,¹⁰ dealers or distributors,¹¹ importers,¹² and lessors.¹³

¶ 14 The estate representatives contend that manufacturers' products liability should extend to anyone in the business of placing a product in the stream of commerce, including those who sell used goods. They rely on our application of strict liability to retailers in Moss v. Polyco, 1974 OK 53, 522 P.2d 622, and our extension of strict liability to lessors in Dewberry v. LaFollette, 1979 OK 113, 598 P.2d 241. They also cite to the few jurisdictions which have extended strict liability to commercial sellers of used products.¹⁴

¶ 15 In Moss v. Polyco, 1974 OK 53, 522 P.2d 622, we explained the rationale for holding non-manufacturer-suppliers to the same liability standard as manufacturers. Relying on cases from other jurisdictions, we noted that: 1) retailers like manufacturers, are engaged in the business of distributing goods to the public; 2) because they are an integral part of the overall producing and marketing enterprise, they should bear the cost of...