Cacha v. Montaco, Inc.

• Decision Date: 06 November 2001
• Docket Number: No. COA00-374.,COA00-374.
• Court: North Carolina Court of Appeals
• Parties: Cyril Z. CACHA, and wife, Renata Cacha, Plaintiffs, v. MONTACO, INC., American Drywall Company, and Dryvit Systems, Inc., Defendants.

554 S.E.2d 388

147 NC App. 21

Cyril Z. CACHA, and wife, Renata Cacha, Plaintiffs, v. MONTACO, INC., American Drywall Company, and Dryvit Systems, Inc., Defendants.

No. COA00-374.

Court of Appeals of North Carolina.

November 6, 2001.

Lewis & Roberts, P.L.L.C., by Daniel K. Bryson and F. Murphy Averitt, III, Raleigh, for plaintiff-appellants.

Pinto Coates Kyre & Brown, PLLC, by Kenneth Kyre, Jr. and Brady A. Yntema, Greensboro, for defendant-appellee Montaco, Inc.

Hill, Evans, Duncan, Jordan & Davis, by Joseph P. Gram, Greensboro, for defendant-appellee, American Drywall Company.

Womble Carlyle Sandridge & Rice, PLLC, by Jerry S. Alvis, Mary S. Pollard, Charles L. Becker, Robert E. Fields, III, and Scott P. Mebane, Winston-Salem, for defendant-appellee, Dryvit Systems, Inc.

JOHN, Judge.

Plaintiffs appeal the trial court's 2 December 1999 entry of summary judgment in favor of defendants. We affirm.

The instant action arises out of defendant Montaco, Inc.'s ("Montaco"), construction and sale of a house clad with an exterior insulation and finish system ("EIFS") known as synthetic stucco. Montaco began work on the residence in 1990 and retained defendant American Drywall Company ("American Drywall") as a subcontractor to install the EIFS. American Drywall purchased the EIFS from defendant Dryvit Systems, Inc. ("Dryvit"), a manufacturer and distributor of the EIFS product, and the system was installed in 1991. Construction of the home was completed and a certificate of occupancy was issued 21 September 1991 by the Town of Cary.

On 2 October 1992, plaintiffs Cyril Z. and Renata Cacha purchased the house from Montaco (the closing). In April 1996, plaintiffs became concerned that the residence was experiencing "severe and serious moisture intrusion problems" due to "inadequate and improper installation and application" of the EIFS.

In January 1996, a purported class action, Ruff v. Parex, 96-CVS-0059, was filed in New Hanover County Superior Court against various EIFS manufacturers, including Dryvit, asserting claims essentially identical to those alleged by plaintiffs against Dryvit herein. Ruff v. Parex was later certified as a class action and plaintiffs were designated class members. On 29 June 1999, plaintiffs opted out of the Ruff v. Parex class action, see Crow v. Citicorp Acceptance Co., 319 N.C. 274, 284, 354 S.E.2d 459, 466 (1987)(class members may be "given an opportunity to request exclusion from the class within a specified time"), and filed the present action 19 August 1998 to pursue their claims on an individual basis. American Drywall, Montaco and Dryvit moved for summary judgment herein on 28 May, 27 September and 29 September 1999, respectively. Plaintiffs subsequently filed an amended complaint. On 2 December 1999, the trial court entered an order granting each defendant's summary judgment motion. Plaintiffs appeal.

In the case sub judice, plaintiffs advance three separate contentions in maintaining the trial court erred by granting defendants' summary judgment motions. First, plaintiffs argue their claims against Dryvit were filed within six years of the "first purchase for use for consumption" of the residence, and thus complied with the products liability statute of repose, see N.C.G.S. § 1-50(a)(6)(1999). Alternatively, plaintiffs maintain the statute of repose was tolled with respect to their claims against Dryvit by the filing of Ruff v. Parex in 1996. Finally, relying upon G.S. § 1-50(a)(5)(e), an exception to the real property statute of repose, see G.S. § 1-50(a)(5)(a), plaintiffs contend a jury question existed as to whether the alleged actions of Montaco and American Drywall constituted willful and wanton negligence. We consider plaintiffs' arguments ad seriatim.

Regarding plaintiffs' claims against Dryvit, we note initially the undisputed circumstances that Dryvit was a remote manufacturer and that the EIFS made its way to plaintiffs' home through the commerce stream, thus implicating the products liability statute of repose, G.S. § 1-50(a)(6). See Forsyth Memorial Hospital v. Armstrong World Industries, 336 N.C. 438, 445, 444 S.E.2d 423, 427 (1994) (products liability statute of repose, as opposed to real property statute of repose, G.S. § 1-50(5)(b)(9), applies to remote manufacturer whose materials find their way to job site indirectly through the commerce stream; such manufacturer would not be a materialman who furnished materials to the job site under G.S. § 1-50(a)(5)(b)(9)).

We therefore apply the products liability statute of repose, G.S. § 1-50(a)(6), which provides as follows:

No action for the recovery of damages ... 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.

"Initial purchase for use or consumption" is not defined by statute.

Our Supreme Court has explained that:

[i]n construing this language, the normal rules of statutory construction apply: the intent of the legislature controls; words in a statute are normally given their natural and recognized meanings; and the statute will be interpreted so as to avoid absurd consequences.

Tetterton v. Long Manufacturing Co., 314 N.C. 44, 55, 332 S.E.2d 67, 73 (1985)(citing Sheffield v. Consolidated Foods Corp., 302 N.C. 403, 276 S.E.2d 422 (1981)). Further,

the obvious intent of the legislature ... was to limit ... the manufacturer's [ ] liability after a certain period of years had elapsed from the date of initial purchase for use or consumption. "Initial" is defined... to mean "of or relating to the beginning: marking the commencement: incipient, first."

Id. at 56, 332 S.E.2d at 74 (citations omitted). "Use" is defined as the act of using; the application or employment of something for some purpose. American Heritage Dictionary, 2nd College Edition. 1331 (1985). "Consumption" is defined as "the utilization of economic goods in the satisfaction of wants or in the process of production resulting chiefly in their destruction, deterioration, or transformation." Id. at 179.

In maintaining the instant claims against manufacturer Dryvit were brought within the limitation period proscribed by G.S. § 1-50(a)(6), plaintiffs note their complaint including the claims against Dryvit was filed 19 August 1998, less than six years after 2 October 1992. According to plaintiffs, 2 October 1992 qualifies as the "date of initial purchase for use or consumption" of the EIFS under G.S. § 1-50(a)(6). In support of this assertion, plaintiffs rely upon Chicopee, Inc. v. Sims Metal Works, Inc., 98 N.C.App. 423, 391 S.E.2d 211 (1990), and Tetterton.

In Chicopee, the plaintiff textile manufacturer contracted with defendant American Tool and Machine Company (American Tool) to manufacture and install two drying ranges which incorporated allegedly defective pressure vessels. Id. at 424, 391 S.E.2d at 212. The ranges were used in the plaintiff's manufacture of fiber products. Id. American Tool had subcontracted with defendant Sims Metal Works, Inc. to manufacture the pressure vessels. Id. at 425, 391 S.E.2d at 212.

This Court held American Tool's "use" of the pressure vessels was limited to installing them with other component parts into the drying ranges delivered to Chicopee's plant. Id. at 428, 391 S.E.2d at 214. We explained that:

American Tool's purchase of the component parts for the purpose of assembly into a drying range ... [wa]s not the "initial purchase for use" with the meaning of N.C. Gen.Stat. § 1-50(a)(6). [Rather,] Chicopee's purchase of the drying ranges for the purpose of manufacturing textiles was the "initial purchase for use" because manufacturing textiles was the ultimate or intended use of this product.

Id.

Based on the foregoing, plaintiffs reason that the closing "represents the first time the [EIFS] was purchased for its ultimate intended use as a cladding on the residence." Until that time, plaintiffs maintain, the EIFS was merely a component part of the structure having no independent value. Plaintiffs also emphasize that this Court cited with approval in Chicopee a Nebraska decision holding that

[u]nder Nebraska statute of repose, plumbing pipe was first sold for use when homeowner took possession of house of which pipe was a part, not when plumbing subcontractor purchased pipe from pipe manufacturer.

Id. (citing Witherspoon v. Sides Construction Co., 219 Neb. 117, 362 N.W.2d 35 (1985).)

Tetterton involved a products liability action arising out of the 1981 death of plaintiff's intestate while operating a tobacco harvester. Tetterton, 314 N.C. at 46, 332 S.E.2d at 68. The harvester had been sold by defendant Long Manufacturing Co. to a dealer in 1974; in 1975, the dealer sold it to a farmer who thereafter sold it to defendant Revels Tractor Company, Inc. ("Revels"), in 1981; finally, Revels sold the tractor to plaintiff's intestate that same year. Id. Our Supreme Court ruled that "[t]he first purchase in this case `for use or consumption' was by [the] farmer []" in 1975. Id. at 56, 332 S.E.2d at 74.

Based upon Tetterton, plaintiffs argue the statute of repose does not begin to run until a product is purchased by its ultimate consumer. As applied to the case sub judice, plaintiffs contend the 2 October 1992 closing constituted the date upon which the EIFS was purchased for its ultimate intended use as a cladding on the residence. Therefore, plaintiffs continue, the intermediary purchase of the EIFS by American Drywall was not a "purchase for use or consumption" under G.S. § 1-50(a)(6) and plaintiffs are the "ultimate" consumer of the EIFS. Chicopee, 98 N.C.App. at 428, 391 S.E.2d at 214.

Dryvit likewise considers G.S. § 1-50(a)(6) the applicable statute of repose. However, Dryvit contends the statute began to run when the EIFS was purchased for its intended use or function, i.e., installation on a residence for the purpose of providing a weather-resistant barrier...