Chicopee, Inc. v. Sims Metal Works, Inc.

• Decision Date: 15 May 1990
• Docket Number: No. 8911SC745,8911SC745
• Citation: 98 N.C.App. 423,391 S.E.2d 211
• Court: North Carolina Court of Appeals
• Parties: , Prod.Liab.Rep. (CCH) P 12,525 CHICOPEE, INC., Plaintiff-Appellant, v. SIMS METAL WORKS, INC., American Tool and Machine Company and Commercial Union Insurance Company, Defendants-Appellees.

Page 211

391 S.E.2d 211

98 N.C.App. 423, Prod.Liab.Rep. (CCH) P 12,525

CHICOPEE, INC., Plaintiff-Appellant, v. SIMS METAL WORKS, INC., American Tool and Machine Company and Commercial Union Insurance Company,

Defendants-Appellees.

No. 8911SC745.

Court of Appeals of North Carolina.

May 15, 1990.

Harlow, Reilly, Derr & Stark by Jay R. Sloane and William L. London, Research Triangle Park, for plaintiff-appellant.

Young, Moore, Henderson & Alvis by Thomas J. White, III and Theodore S. Danchi, Raleigh, for defendant-appellee, Sims Metal Works, Inc.

Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan by Mark A. Ash and Stuart B. Dorsett, Raleigh, for defendant-appellee, Commercial Union Ins. Co.

ARNOLD, Judge.

The first issue on appeal is whether the trial court properly granted a directed verdict against plaintiff on the ground that the products liability statute of repose, N.C.Gen.Stat. § 1-50(6), barred plaintiff's action. Plaintiff has the burden of proving the condition precedent that its cause of action is brought no "more than six years after the date of initial purchase for use or consumption." Bolick v. American Barmag Corp., 306 N.C. 364, 370, 293 S.E.2d 415, 420 (1982). Whether a statute of repose has expired is a question of law, Lamb v. Wedgewood South Corp., 308 N.C. 419, 425, 302 S.E.2d 868, 871-2 (1983). If plaintiff fails to prove that its cause of action is brought before the repose period has expired, a directed verdict for defendant is appropriate, since plaintiff's case is insufficient as a matter of law.

The controlling statute on the question before us is N.C.Gen.Stat. § 1-50(6), which 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.

Plaintiff contends that the products "purchase[d] for use" were the two drying ranges and that the "initial purchase for use" of those ranges was made by plaintiff. Defendants, on the other hand, argue that the product "purchase[d] for use" was the pressure vessel that exploded and that the "initial purchase for use" was made by American Tool, when it purchased the pressure vessels from Sims to assemble them into drying ranges.

Neither N.C.Gen.Stat. § 1-50(6) nor Chapter 99B defines "initial purchase for use." Plaintiff relies on Tetterton v. Long Manufacturing Co., 314 N.C. 44, 332 S.E.2d 67 (1985), which upheld N.C.Gen.Stat. § 1-50(6) against several challenges to its constitutionality. In Tetterton, defendant Long Manufacturing Company, Inc. (Long) manufactured a tobacco harvester, sold the harvester to a dealer and distributor, who subsequently sold it to Jimmy Ray Casey, a farmer. Id. at 46, 332 S.E.2d at 68. The farmer used the equipment on his farm until he sold it to defendant Revels Tractor Company, Inc. (Revels). Id. Revels subsequently sold the harvester to plaintiff appellant's husband, also a farmer. Id. Plaintiff's husband was killed while operating the harvester on his farm. Id. Plaintiff's products liability claims against manufacturer Long were dismissed on Long's summary judgment motion on the ground that plaintiff's action against Long was barred by N.C.Gen.Stat. § 1-50(6). Id. On appeal, plaintiff challenged the language "initial purchase for use or consumption" as unconstitutionally vague. Id. at 54, 332 S.E.2d at 73. Plaintiff argued that the language in question could reasonably refer to any of three different dates: (1) the date the manufacturer Long sold the harvester to the dealer-distributor; (2) the date the dealer-distributor sold the harvester to the farmer Casey; (3) the date Revels Tractor Company sold the harvester to plaintiff's intestate Tetterton. Id. at 54-5, 332 S.E.2d at 73. The Supreme Court rejected plaintiff's vagueness challenge and found that "[t]he first purchase in this case 'for use or consumption' was by farmer Casey" (date (2) above). Id. at 56, 332 S.E.2d at 74. A dealer-distributor's purchase of a product for the purpose of resale is not the "initial purchase for use" within the meaning of N.C.Gen.Stat. § 1-50(6). See id. Accord Whittaker v. Federal Cartridge Corp., 466 N.E.2d 480 (Ind.App.1984).

In this case, American Tool's "use" of the eighty pressure vessels was to assemble those and other component parts into the two drying ranges and install those ranges in plaintiff's plant in accordance with their contract with plaintiff. We hold that American Tool's purchase of the component parts for the purpose of assembly into a drying range, like a dealer-distributor's purchase of a product for the purpose of resale, is not the "initial purchase for use" within the meaning of N.C.Gen.Stat. § 1-50(6). 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. Accord Wilson v. Studebaker-Worthington, Inc., 699 F.Supp. 711 (1987) (Under Indiana statute of repose, company which ordered assembled product was "user or consumer," not subcontractor which, by assembling product, functioned as a go-between.); Witherspoon v. Sides Constr. Co., 219 Neb. 117, 362 N.W.2d 35 (1985) (Under 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.); see Am.Law of Prod.Liab. 3d § 47.46 at 60.

This construction of the statutory language "initial purchase for use" does not offend the policy behind the statute of repose. As our Supreme Court stated in Tetterton, the intent of the legislature in enacting the statute of repose was "to limit the manufacturer's liability at some definite point in time." Tetterton at 56, 332 S.E.2d at 74 (emphasis added). The legislature wanted to avoid subjecting manufacturers to " 'open-ended' liability created by allowing claims for an indefinite period of time after the product was first sold and distributed." Id. at 54, 332 S.E.2d at 73 (emphasis added). The issue in this case is determining that definite point in time, six years after which manufacturers will no longer be subject to products liability actions. As we have construed the statutory language, defendants' liability would end six years from the date their pressure vessels, as assembled into drying ranges, were purchased by Chicopee, the initial user.

Defendants argue under this statutory construction, that if American Tool kept defendants' component parts in inventory for a time, defendants' liability would extend more than six years from the date of their sale to American Tool. While this is a possibility, it is not a consequence that offends the purpose behind the statute of repose. Defendants will still be shielded from liability after six years from the date American Tool sells the completed product to its ultimate user. Defendants' position is no different from that of the tobacco harvester manufacturer in Tetterton, whose liability will not end until after six years from the date the equipment is sold by a dealer-distributor to an ultimate user. Neither defendants here, nor the defendant manufacturer in Tetterton, can control when the "initial purchase for use" occurs, and they will nevertheless be shielded from liability at a definite point in time. See id. at 56, 332 S.E.2d at 74. Other state statutes of repose begin their limitations period as of "the date of first sale, lease or delivery" of the product, Ill.Rev.Stat. ch. 110, para. 13-213(b), or "the date that the party last parted with possession or control of the product," Conn.Gen.Stat. § 52-577a, giving manufacturers control over when the limitations period begins. Our legislature, however, chose to begin the limitations period at the date of "initial purchase for use," not landmarks such as those chosen by the Illinois or Connecticut legislatures.

Having determined that Chicopee, not American Tool, was the "initial purchaser for use," we next decide if Chicopee's products liability action against defendants was brought no more than "six years after the date of initial purchase for use." Plaintiff argues that the date all component parts of the drying ranges, which were to be assembled on plaintiff's premises, were received at plaintiff's plant determines the date of purchase. Defendants contend that, because "purchase" is not defined in N.C.Gen.Stat. § 1-50(6) or in Chapter 99B, we should look to the Uniform Commercial Code (UCC) to determine the date of purchase. We disagree. Plaintiff's claims against defendants for negligent manufacture and inspection do not arise under the UCC. Under these circumstances, the UCC is not authoritative on the question of when plaintiff purchased the drying ranges.

Plaintiff filed its complaint on 19 September 1986. Therefore, for its products liability action to be timely under N.C.Gen.Stat. § 1-50(6), plaintiff must show that the drying ranges were initially purchased for use after 19 September 1980. Plaintiff's evidence showed that on 19 September 1980, component parts of the drying ranges were still being shipped to plaintiff's plant for assembly and installation. Therefore, without determining precisely when plaintiff's purchase of the drying ranges was complete, we find that plaintiff discharged its burden of proving that its action was brought no more than six years after the initial purchase for use or consumption.

Plaintiff next assigns error to the denial of its motion to amend its complaint. Plaintiff's original complaint, alleging negligent manufacture and inspection of the pressure vessels by defendants Sims and Commercial Union, was filed on 19 September 1986. On 1 February 1988, plaintiff moved to amend its complaint 1) to allege fraud and unfair trade practices in the inspection of the pressure...