Amstadt v. U.S. Brass Corp.
| Citation | 39 Tex.Sup.Ct.J. 351,919 S.W.2d 644 |
| Decision Date | 10 May 1996 |
| Docket Number | Nos. 94-0008,94-0023,s. 94-0008 |
| Court | Texas Supreme Court |
| Parties | 39 Tex. Sup. Ct. J. 351 Robert and Toni AMSTADT et al., Petitioners, v. UNITED STATES BRASS CORPORATION, Respondent. UNITED STATES BRASS CORPORATION et al., Petitioners, v. Emery H. and Susan KOCHIE et al., Respondents. UNITED STATES BRASS CORPORATION, Shell Oil Company d/b/a Shell Chemical Company, and Hoechst Celanese Corporation, Petitioners, v. Nabeel ANDRAUS et al., Respondents. & 94-0123. |
George M. Fleming, Mark A. Hovenkamp, James R. Moriarty, Michael O'Brien, Houston, for petitioners.
Kurt T. Nelson, Loreta H. Rea, Mark R. Zeidman, Houston, William Powers, Jr., Austin, for respondents.
Kevin H. Dubose, Michael Samford, Houston, Marc Kasowitz, Daniel R. Benson, Susan M. Lee, New York City, Kurt T. Nelson, Loreta H. Rea, Houston, for petitioners.
Michael O'Brien, James R. Moriarty, George M. Fleming, Mark A. Hovenkamp, Houston, for respondents.
Michael Samford, Kevin H. Dubose, Houston, Marc Kasowitz, Daniel R. Benson, Susan M. Lee, Peter T. Shapiro, Hector Torres, New York City, Robert D. Daniel, Jerry L. Mitchell, Jr., Marjorie C. Bell, Daniel A. Hyde, D. Ferguson McNeil, Mary Lou Strange, Jack W. Tucker, Jr., Stephanie K. Crain, Marie R. Yeates, Houston, Robbi B. Hull, Austin, Kurt T. Nelson, Loreta H. Rea, Houston, for petitioners.
James R. Moriarty, Mark A. Hovenkamp, Michael O'Brien, George M. Fleming, Houston, for respondent.
In these three cases, homeowners have sued the manufacturers of a polybutylene plumbing system for negligence and violations of the Deceptive Trade Practices-Consumer Protection Act. TEX.BUS. & COM.CODE § § 17.41-17.63 (DTPA). The common issue is whether the Legislature intended that upstream suppliers of raw materials and component parts be liable under the DTPA when none of their misrepresentations reached the consumers. This precise issue, which to our knowledge has never before been raised in the twenty-three-year history of the DTPA, animates the appeals in Barrett v. United States Brass Corp., Knowlton/Kochie v. United States Brass Corp., and United States Brass Corp. v. Andraus. In Knowlton/Kochie we also consider a res judicata issue; in Barrett, a comparative liability issue.
We hold that, although the homeowners who obtained a jury finding of negligence may recover on that theory, no homeowner may recover from Celanese, Shell, or U.S. Brass under the DTPA because these manufacturers' alleged DTPA violations did not occur in connection with the homeowners' purchase of their homes. We accordingly reverse the judgments of the courts of appeals with regard to DTPA liability in all three causes. We remand Andraus and Kochie to the trial courts for rendition of judgment in favor of those homeowners who received favorable jury findings on their negligence claims. We reverse the court of appeals' judgment in Knowlton on res judicata grounds and render judgment that the Knowlton households take nothing, and reverse and remand Barrett to the trial court to resolve the comparative liability issue in accordance with this opinion.
In Andraus, the owners of approximately 95 homes in the Fairmont Park West subdivision in La Porte, Texas, sued General Homes Corporation (the developer and homebuilder), U.S. Brass, Shell Oil Company, and Hoechst Celanese Corporation after experiencing problems with their plumbing. U.S. Brass designed and manufactured the plumbing system.
The plumbing system used flexible plastic pipes made of polybutylene resin connected by fittings made of a plastic compound called Celcon. The pipes and fittings were joined together by a copper or aluminum crimp ring placed around the outside of the pipe at the point where the pipe and fitting were connected. The ring, fitting, and pipe were then compressed using a large wrench-like tool designed by U.S. Brass. The pressure from the crimp ring deformed the pipe and fitting, creating a water-tight seal.
Celanese manufactured Celcon and supplied Celcon pellets to U.S. Brass to be molded into fittings. Celanese promoted the use of Celcon in plumbing applications to U.S. Brass and other manufacturers, and knew that U.S. Brass used Celcon to make the fittings. Shell produced the polybutylene resin and provided it in raw form to U.S. Brass. U.S. Brass formed the resin into the pipe used in the plumbing system.
In the early 1980s, U.S. Brass and Shell promoted the plumbing system to municipal officials in La Porte in order to obtain building code approval of the system for residential use. U.S. Brass and Shell also marketed the system to homebuilders, including General Homes. General Homes installed U.S. Brass' plumbing system in homes it built in 1980, 1981, and 1982.
In 1982, some of these systems began to fail. Cracks developed in the Celcon fittings that eventually caused leaks. At trial, the parties vigorously disputed what caused the fittings to fail. Some of the experts testified that degradation of the Celcon from exposure to the households' chlorinated water caused the cracks in the fittings. Others testified that inadequate design, defective manufacture, and improper installation, or a combination of these problems along with chemical degradation created excessive stress, which caused the fittings to crack.
The homeowners 1 sued General Homes, U.S. Brass, Shell, Celanese, and Vanguard Plastics, Inc. (a competitor of U.S. Brass, later dismissed from the suit). General Homes is not a party to this appeal. The homeowners alleged that the plumbing system's failure caused property damage and mental anguish. They sought damages based on negligence, fraud, and violations of the DTPA.
A jury found that U.S. Brass, Shell, and Celanese had made misrepresentations under the DTPA and were negligent. The jury also found that U.S. Brass had acted unconscionably and was grossly negligent. The trial court ruled that the statute of limitations barred the negligence claims of fifty-six households, and rendered a take-nothing judgment against five households for unspecified reasons. Three households elected to recover on the negligence findings, and the trial court rendered judgment accordingly. The trial court also rendered judgment for the eighty-six households that elected recovery under the DTPA.
Celanese, Shell, and U.S. Brass appealed. The court of appeals reversed the trial court's judgment in part and affirmed it in part. 1993 WL 313208. Specifically, the court of appeals affirmed DTPA liability because it concluded that "there was a link between the representations made and the use of the plumbing system in the plaintiffs' homes, which ultimately caused damage." Id. at * 17.
Knowlton v. U.S. Brass, Shell, and Celanese;
Kochie v. U.S. Brass.
In Knowlton/Kochie, homeowners sued General Homes, Buckner Boulevard Plumbing Company (a plumbing contractor), Celanese, Shell, U.S. Brass, and Vanguard. They asserted claims for negligence, strict liability, and misrepresentation and unconscionability under the DTPA based on the defendants' representations about the characteristics of the plumbing systems to homebuilders. They claimed that absent such representations, General Homes would not have installed the defective systems.
Celanese, Shell, U.S. Brass, and General Homes moved for summary judgment based on res judicata and the statute of limitations. The trial court granted the motion with respect to five households, led by the Knowltons, without specifying the grounds. The Knowlton households had bought their homes from people who had previously sued and recovered damages caused by the plumbing systems.
The remaining households, led by the Kochies, dismissed their claims against General Homes, Buckner, Celanese, and Shell, and proceeded to trial against U.S. Brass and Vanguard. After closing argument but before the jury returned a verdict, they also settled with Vanguard. The jury returned a verdict in favor of sixty-nine households. Forty-eight households elected recovery under the DTPA and twenty-one elected recovery for negligence. The trial court rendered judgment accordingly against U.S. Brass.
U.S. Brass appealed, complaining that the Kochie homeowners were not consumers under the DTPA. The court of appeals rejected that complaint. 864 S.W.2d 585, 592-93. The Knowlton homeowners also appealed. The court of appeals reversed the summary judgment rendered against them, holding that neither res judicata nor the statute of limitations barred their actions. Id. at 605-06.
In Barrett, several hundred homeowners sued nine companies, including U.S. Brass, alleging negligence, strict liability, and violations of the DTPA. The trial court put thirty-six homeowners to trial as a test group. The group settled with all defendants except U.S. Brass.
The trial proceeded against U.S. Brass. The trial court directed a verdict against nine households because U.S. Brass' products were not used in their homes. These nine did not appeal. The jury found in favor of twenty-three households for negligence and DTPA violations, but found against four households. The trial court rendered judgment against the four latter households, who were also unsuccessful at the court of appeals. The twenty-three households that obtained favorable jury findings elected to recover under the DTPA. The trial court, however, granted U.S. Brass' motion to disregard the jury's answers under the DTPA and rendered judgment based solely on negligence.
The court of appeals reversed the judgment in part, holding that all the homeowners were consumers under the DTPA, but that only seven of the twenty-three homeowners had produced sufficient evidence that U.S. Brass' misrepresentations...
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