Boudreau v. Baughman, 409PA87

CourtUnited States State Supreme Court of North Carolina
Citation322 N.C. 331,368 S.E.2d 849
Decision Date02 June 1988
Docket NumberNo. 409PA87,409PA87
Parties, 6 UCC Rep.Serv.2d 1393, Prod.Liab.Rep. (CCH) P 11,895 Herbert Dean BOUDREAU v. Milo BAUGHMAN and Milo Baughman Design, Inc.

Faison, Brown, Fletcher & Brough by O. William Faison, Timothy C. Barber and Gary R. Poole, Durham, for plaintiff-appellant.

Hutchins, Tyndall, Doughton & Moore by Richard Tyndall and H. Lee Davis, Jr., Winston-Salem, for defendants-appellees.

MARTIN, Justice.

The sole issue for review on this appeal is whether the trial court properly granted defendants' motion for summary judgment. As a preliminary matter, however, this case poses a choice of law dilemma. We must determine which statute of repose applies to this products liability action: that of North Carolina, the forum state, or that of Florida, the state where the injury occurred. We hold that the Florida statute of repose applies and that summary judgment was inappropriately entered on plaintiff's negligence and strict liability claims.

Plaintiff brought this action on 5 March 1985, naming as defendant in both an individual and a corporate capacity the North Carolina designer of a chrome-plated, tub-style chair designated as model number 1183. The complaint alleged that plaintiff, a resident of Massachusetts, had injured his foot on the metal surface of the chair in question while visiting friends in Florida. Plaintiff claimed compensatory and punitive damages based on theories of negligent design, breach of implied warranty of merchantability, breach of implied warranty of fitness for a particular purpose, and strict liability for injecting an inherently dangerous product into the stream of commerce.

Defendants' answer denied the material allegations of the complaint and asserted defenses of, inter alia, contributory negligence, independent negligence of the chair's manufacturer, accord and satisfaction, and lack of personal jurisdiction. On 24 June 1986, defendants moved for summary judgment. On 14 July 1986, defendants were permitted to amend their answer to include a further defense based on North Carolina statutes of repose. Thereafter the trial judge granted summary judgment in defendants' favor. The Court of Appeals affirmed.

Plaintiff contends that the applicable statute of repose is Florida Statutes § 95.031(2), which provides as follows:

Actions for products liability and fraud under s. 95.11(3) must be begun within the period prescribed in this chapter, with the period running from the time the facts giving rise to the cause of action were discovered or should have been discovered with the exercise of due diligence, instead of running from any date prescribed elsewhere in s. 95.11(3), but in any event within 12 years after the date of delivery of the completed product to its original purchaser or within 12 years after the date of the commission of the alleged fraud, regardless of the date the defect in the product or the fraud was or should have been discovered. 1

(Emphasis added.)

Defendants, on the other hand, maintain that N.C.G.S. § 1-50(6) controls. Section 1-50(6) provides:

No action for the recovery of damages for personal injury, death or damage to property based upon or arising out of any alleged defect or any failure in relation to a product shall be brought more than six years after the date of initial purchase for use or consumption.

(Emphasis added.)

The record indicates that defendants sold the design for model number 1183 to Thayer-Coggin, Inc., a North Carolina furniture manufacturer, in 1967. Thayer-Coggin manufactured the chair and sold it to a furniture store in Florida, which in turn sold it to plaintiff's Floridian hosts on 26 January 1979. Plaintiff's injury occurred on 7 March 1982 and the complaint was filed on 5 March 1985. Applying these dates, plaintiff brought the action within the twelve-year period prescribed by the Florida statute but not within the six-year period prescribed by N.C.G.S. § 1-50(6). Defendants therefore contend that plaintiff's action is time-barred under North Carolina law. 2

Our choice of law analysis is somewhat complicated by the fact that plaintiff raises four distinct theories of recovery in four separate counts of the complaint. We first address plaintiff's claims of negligence and strict liability.

Our traditional conflict of laws rule is that matters affecting the substantial rights of the parties are determined by lex loci, the law of the situs of the claim, and remedial or procedural rights are determined by lex fori, the law of the forum. Charnock v. Taylor, 223 N.C. 360, 26 S.E.2d 911 (1943). For actions sounding in tort, the state where the injury occurred is considered the situs of the claim. Thus, under North Carolina law, when the injury giving rise to a negligence or strict liability claim occurs in another state, the law of that state governs resolution of the substantive issues in the controversy. Leonard v. Johns-Manville Sales Corp., 309 N.C. 91, 305 S.E.2d 528 (1983); Bernick v. Jurden, 306 N.C. 435, 293 S.E.2d 405 (1982); Howard v. Howard, 200 N.C. 574, 158 S.E. 101 (1931); Williams v. General Motors Corp., 19 N.C.App. 337, 198 S.E.2d 766, cert. denied, 284 N.C. 258, 200 S.E.2d 659 (1973).

This Court has consistently adhered to the lex loci rule in tort actions. Smith, Choice of Law in the United States, 38 Hastings L.J. 1041 (1987); Wurfel, Choice of Law Rules in North Carolina, 48 N.C.L.Rev. 243 (1970); see, e.g., Henry v. Henry, 291 N.C. 156, 229 S.E.2d 158 (1976); Young v. R.R., 266 N.C. 458, 146 S.E.2d 441 (1966); Petrea v. Tank Lines, 264 N.C. 230, 141 S.E.2d 278 (1965); Frisbee v. West, 260 N.C. 269, 132 S.E.2d 609 (1963); Shaw v. Lee, 258 N.C. 609, 129 S.E.2d 288 (1963). We note that this continues to be the majority rule in the United States. Smith, Choice of Law in the United States, 38 Hastings L.J. 1041, app. at 1172-74; Kay, Theory into Practice: Choice of Law in the Courts, 34 Mercer L.Rev. 521, 582 & app. at 591-92 (1983). We see no reason to abandon this well-settled rule at this time. It is an objective and convenient approach which continues to afford certainty, uniformity, and predictability of outcome in choice of law decisions. We hold that the substantive law of Florida applies to plaintiff's negligence and strict liability claims.

We next consider the choice of law question with respect to plaintiff's breach of warranty claims. A warranty, express or implied, is contractual in nature. Wyatt v. Equipment Co., 253 N.C. 355, 117 S.E.2d 21 (1960). Traditionally, under the lex loci rule, the substantive features of warranty claims were controlled by the law of the state where the contract was made or, in certain instances, by the law of the state of performance. Bernick v. Jurden, 306 N.C. 435, 293 S.E.2d 405. However, actions for breach of implied warranty are now governed by the Uniform Commercial Code, adopted in North Carolina in 1965 as chapter 25 of the General Statutes. The Uniform Commercial Code applies to warranty claims in products liability actions. See Morrison v. Sears, Roebuck & Co., 319 N.C. 298, 354 S.E.2d 495 (1987); Bernick v. Jurden, 306 N.C. 435, 293 S.E.2d 405; Smith v. Cessna Aircraft Co., 571 F.Supp. 433 (M.D.N.C.1983); Freedman, Products Liability under the Uniform Commercial Code, 10 Prac.Law. 49, 50 (No. 4, 1964).

The Uniform Commercial Code is generally in accord with prior North Carolina law on the subject of warranties. See N.C.G.S., North Carolina Comment, introduction to art. 2, ch. 25 (1986). However, the Code provides its own choice of law rule, modifying the traditional place-of-contract-or-performance rule previously applied in this state. Bernick v. Jurden, 306 N.C. 435, 293 S.E.2d 405. The Code provision states that, in the absence of an agreement between the parties, North Carolina law will be applied to "transactions bearing an appropriate relation to this State." N.C.G.S. § 25-1-105(1) (1986). The Code is silent on the meaning of the term "appropriate relation," leaving its interpretation to judicial decision. See N.C.G.S. § 25-1-105 Official Comment. This Court has yet to define the term. We have therefore consulted decisions in other jurisdictions for guidance.

Our research reveals that some jurisdictions have interpreted the "appropriate relation" provision as requiring the application of forum law whenever the forum itself has significant contact with the case. See Siegel, The U.C.C. and Choice of Law: Forum Choice or Forum Law?, 21 Am.U.L.Rev. 494, 496 n. 2 (1972); Note, Conflicts of Laws and the "Appropriate Relation" Test of Section 1-105 of the Uniform Commercial Code, 40 Geo.Wash.L.Rev. 797, 803 n. 29 (1971-72).

This approach comports with a very literal-minded reading of the Code, but such an interpretation is at best outmoded. The language of the Code's choice of law provision was originally intended to encourage the application of forum law in those jurisdictions which had enacted the Code, thereby assuring that the Code would govern the transaction at issue when a non-Code jurisdiction was also involved. See Nordstrom & Ramerman, The Uniform Commercial Code and the Choice of Law, 1969 Duke L.J. 623; Weintraub, Choice of Law for Products Liability: The Impact of the Uniform Commercial Code and Recent Developments in Conflicts Analysis, 44 Tex.L.Rev. 1429 (1966). The drafters of the provision did not foresee the widespread enactment of the Code throughout the country. With all but one state having enacted the Code, a strictly forum-oriented choice of law rule is no longer necessary to ensure application of the Code in accordance with the intentions of the drafters. Id. Moreover, such an approach is likely to foster forum shopping. United Overseas Bank v. Veneers, Inc., 375 F.Supp. 596 (D.Md.1974). For these reasons we reject the forum-oriented approach.

Other jurisdictions interpret the appropriate relation test as an invitation for the forum state to...

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