Beattie v. Beattie

• Decision Date: 01 February 2001
• Docket Number: C.A. No. 91C-12-141-JRS.
• Citation: 786 A.2d 549
• Parties: Margaret S. BEATTIE, Plaintiff, v. Michael F. BEATTIE, Defendant, and Robert L. Boyles and Asplundh Tree Expert Co., a Pennsylvania corporation, Defendants/Third-Party Plaintiffs, v. Martin Chevrolet-Buick, Inc., a Delaware corporation, and General Motors Corporation, Third-Party Defendants.
• Court: Delaware Superior Court

786 A.2d 549

Margaret S. BEATTIE, Plaintiff, v. Michael F. BEATTIE, Defendant, and Robert L. Boyles and Asplundh Tree Expert Co., a Pennsylvania corporation, Defendants/Third-Party Plaintiffs, v. Martin Chevrolet-Buick, Inc., a Delaware corporation, and General Motors Corporation, Third-Party Defendants.

C.A. No. 91C-12-141-JRS.

Superior Court of Delaware, New Castle County.

Submitted: January 12, 2001.

Decided: February 1, 2001.

Michael F. Bonkowski, Kimberly Gattuso, Saul Ewing LLP, Wilmington, Delaware, for Third Party-Plaintiffs, Asplundh Tree Expert Company and Robert L. Boyles.

Somers S. Price, Jr., Potter Anderson & Corroon, LLP, Wilmington, Delaware; Edward A. Gray, Michael P. Kinkopf, Lavin, Coleman, O'Neil, Ricci, Finarelli & Gray, Philadelphia, Pennsylvania, for Third-Party Defendants, Martin Chevrolet-Buick, Inc. and General Motors Corporation.

MEMORANDUM OPINION

SLIGHTS, J.

INTRODUCTION

The Court once again is called upon to delineate the bounds in Delaware of strict liability in tort for personal injury caused by allegedly defective products. The genesis of this dispute is an automobile accident that occurred on July 15, 1991, when a vehicle operated by Michael Beattie ("Beattie") collided with the rear of a truck owned by the Asplundh Tree Expert Company ("Asplundh") and operated by Robert L. Boyles ("Boyles"). Margaret Beattie, Michael Beattie's wife, occupied the rear center seat of the vehicle and suffered serious injuries in the accident. Third-party defendant, Martin Chevrolet-Buick, Inc. ("Martin Chevrolet"), employed Michael Beattie as a car salesman. Martin Chevrolet supplied a "demonstrator vehicle" to each member of its sales staff, including Beattie, as a perquisite of employment. Beattie was operating his demonstrator vehicle at the time of the accident.

Margaret Beattie initiated this action against her husband (Beattie), Asplundh, and Boyles. Asplundh and Boyles, in turn, filed a third-party complaint against Martin Chevrolet and General Motors Corporation ("General Motors") for contribution and indemnification. Mrs. Beattie settled her claims against the defendants leaving only Asplundh's and Boyles' third-party claims unresolved. The gravamen of the third-party claim at issue is that Martin Chevrolet, as a lessor of Beattie's demonstrator vehicle, is strictly liable for alleged defects in the design of the vehicle's passenger restraint system.¹ Martin Chevrolet has moved for summary judgment on the ground that the strict liability claim fails to state a cause of action as a matter of Delaware law because Martin Chevrolet was neither a lessor nor a bailor of the vehicle involved in the accident.² To resolve this motion for summary judgment, the Court must determine whether the transaction which transferred possession of the demonstrator vehicle from Martin Chevrolet to Beattie is the sort of transaction which will give rise to strict liability in tort. Specifically, the Court must consider whether a car dealership can be strictly liable for defects which exist in demonstrator vehicles it supplies to its employees for the purpose of promoting the sale or lease of such vehicles or other similar vehicles. The issue is one of first impression in Delaware.

For the reasons that follow, the Court concludes: (i) the transaction reflected in the Demonstrator Agreement is neither a lease nor a bailment; and (ii) Martin Chevrolet, nevertheless, may be held strictly liable for defects in demonstrator vehicles it supplies to its sales staff as a means of promoting either the use or consumption of its vehicles for sale or lease. Accordingly, Martin Chevrolet's motion for summary judgment must be DENIED.

FACTS

On July 15, 1991, while traveling southbound on Delaware Route 1, Michael Beattie drove a 1991 Oldsmobile Cutlass Supreme into the rear of an Asplundh spray truck which was engaged in a spraying operation in the left-hand lane of the roadway. With Beattie were his wife, Margaret, seated in the middle rear seat, and his son, Alexander, seated in the right rear seat. Mrs. Beattie was secured in the vehicle by a lap belt restraint system. This system allegedly was inadequate to protect Mrs. Beattie from serious injury in that she was propelled to the front of the vehicle compartment during the accident while still wearing her lap seat belt. It is alleged that the vehicle should have been equipped with a shoulder harness in the rear center seat.

The vehicle Beattie was operating at the time of the accident was supplied to him by Martin Chevrolet pursuant to a demonstrator vehicle program. The program was governed by a Demonstrator Agreement, the relevant provisions of which provided:

1. The demonstrator vehicle was provided "in consideration of employment";

2. The demonstrator vehicle was not to be used for personal errands, vacations, etc.;

3. The demonstrator vehicle was to be operated only by the employee (no family, friends, etc. were to operate the vehicle);

4. The employee was responsible for all repairs on the demonstrator vehicle beyond those necessitated by "normal wear and tear";

5. The employee was to "furnish oil and gasoline" for the demonstrator vehicle;

6. Martin Chevrolet was to supply liability, collision and comprehensive insurance coverage on the demonstrator vehicles, but the employee was responsible for insurance deductibles;³

7. The employee was to furnish the demonstrator vehicle to customers for "demonstrator rides" and to accompany the customers during such rides; and

8. The employee's use of the demonstrator vehicle was "at the sole discretion of Martin [Chevrolet]."

Beattie executed a Demonstrator Agreement on December 19, 1989, and was subject to its terms at the time of the accident. The parties agree that Beattie was using his demonstrator vehicle to travel to a vacation destination when the accident occurred. Martin Chevrolet contends that Beattie's use of the demonstrator vehicle for a personal vacation was in clear violation of the express terms of the Demonstrator Agreement. In response, Asplundh and Boyles point to deposition testimony of Martin Chevrolet employees, including Beattie, to the effect that the "personal use" restriction in the Demonstrator Agreement was never enforced. In any event, regardless of Beattie's purpose for operating the vehicle on any given occasion, both parties agree that the Demonstrator Agreement contemplated that Beattie would operate the demonstrator vehicle on public roadways so that potential customers, upon seeing the demonstrator vehicle, might be enticed to purchase or lease a similar vehicle from Martin Chevrolet.

DISCUSSION

A. Summary Judgment Standard

When considering a motion for summary judgment, the Court's function is to examine the record to determine whether genuine issues of material fact exist.⁴ If, after viewing the record in a light most favorable to the non-moving party, the Court finds that there are no genuine issues of material fact, and that the moving party is entitled to judgment as a matter of law, summary judgment will be granted.⁵

Summary judgment will not be granted, however, if the record indicates that a material fact is in dispute, or if judgment as a matter of law is not appropriate.⁶

B. Strict Liability In Delaware

That a manufacturer of a defective product may be held liable in tort to those injured by the product even absent fault is a concept well-known to Delaware courts.⁷ The purpose of strict liability is to ensure "that the costs of injuries resulting from defective products are borne by the manufacturers that put such products on the market rather than by the injured persons who are powerless to protect themselves."⁸ Since strict liability first was recognized in Hearn Bros., "the doctrine has been in a constant state of extension and refinement."⁹

In Martin, the court determined that strict liability will apply in instances where a defective product is "place[d] in circulation" by means of a lease or bailment transaction.¹⁰ The court was persuaded that the Uniform Commercial Code, 6 Del. C. § 2-101, et seq., did not preempt strict liability in the context of lease or bailment transactions because it did not apply to such transactions.¹¹Martin reserved for another day an answer to the question of whether the Uniform Commercial Code provided the exclusive remedy for individuals injured by defective products distributed to the public in sales transactions.¹²

The question passed over in Martin was addressed four years later by an en banc Delaware Supreme Court.¹³ In Cline, the court held that the Uniform Commercial Code preempted strict liability in "sale of goods" transactions.¹⁴ The court clearly stated, however, that its decision in Martin was preserved intact because "the U.C.C. makes no reference to a bailment-lease."¹⁵

Delaware courts have been faithful to the distinction between sales transactions and lease/bailment transactions when determining whether to allow a claim for strict liability to survive summary judgment.¹⁶ Delaware courts have not, however, addressed the question of whether strict liability should apply when defective goods are placed in circulation for public consumption by means of a transaction which is neither a sale of goods nor a lease/bailment. In keeping with the "step-by-step" development of the doctrine of strict liability, and the "steady and consistent expansion" of the doctrine in the common law,¹⁷ the Court will address this issue in the context of the transaction memorialized in Martin Chevrolet's Demonstrator Agreement.

C. The Demonstrator Agreement Is Neither A Lease Nor A Bailment.

The parties agree that the Demonstrator Agreement does not provide for the sale of goods. Their interpretation of the transaction is well founded in the Uniform Commercial Code, specifically, 6 Del. C. § 2-106(1), which provides: "A `sale' consists in [sic] the passing of title from the seller to the buyer for a price." The...