City of Greenville v. WR Grace & Co.

• Decision Date: 11 June 1986
• Docket Number: Civ. A. No. 85-1693-3.
• Citation: 640 F. Supp. 559
• Court: U.S. District Court — District of South Carolina
• Parties: CITY OF GREENVILLE and Greenville Water System, Plaintiffs, v. W.R. GRACE & COMPANY, Defendant.

640 F. Supp. 559

CITY OF GREENVILLE and Greenville Water System, Plaintiffs, v. W.R. GRACE & COMPANY, Defendant.

Civ. A. No. 85-1693-3.

United States District Court, D. South Carolina, Greenville Division.

June 11, 1986.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Daniel A. Speights, Hampton, S.C., Terry Richardson, Edward J. Westbrook and Pete Kumala, BLATT & FALES, Charleston, S.C., for plaintiffs.

F. Barron Grier, III, Richardson, Plowden, Grier & Howser, Columbia, S.C., Shepard M. Remis and Susan McQuay, Goodwin, Proctor & Hoar, Boston, Mass., for defendant.

AMENDED ORDER

GEORGE ROSS ANDERSON, Jr., District Judge.

On January 24, 1986, a jury awarded plaintiffs ("Greenville") $6.4 million actual damages and $2 million punitive damages in their suit to recover the cost of removing and replacing asbestos fireproofing in the City Hall. Defendant ("Grace") has moved for a new trial or judgment notwithstanding the verdict. It also seeks to interrogate the jury about certain media reports on asbestos during the trial and to be relieved from posting a judgment bond.

The motions have been extensively briefed and argued, and both sides have supplied the Court with notebooks of asbestos property damage opinions that bear on the issues. The Court has studied this material in detail and carefully considered the arguments of the parties.

For the reasons appearing below, the Court denies the motions for directed verdict and jury interrogation. The Court also denies the motion for new trial, except with respect to the issue of damages, and grants defendant a new trial nisi on the issue of damages alone, unless Greenville remits on the record the sum of $1,591,000.00 within ten (10) days of the date of this Order. The Court will not require a judgment bond, but will require Grace to make satisfactory arrangements with Greenville to provide for the security of the judgment pending appeal.

A brief review of the evidence at trial will aid disposition of the motions. When the City Hall was constructed in late 1971-72, a Grace asbestos-containing fireproofing product called "Monokote" was applied to its steel beams. Grace documents showed that as early as 1969 it was searching for an asbestos-free fireproofing because of health concerns about asbestos. Grace anticipated that an asbestos-free formula would give it a sales advantage over competing asbestos products. In 1969, a Grace official attended a lecture where a leading asbestos researcher alerted his audience to the long-term danger of asbestos contamination of buildings. The Grace official reported that the presentation had a strong impact on the audience and responsible people were listening.

By early 1970, Grace had developed several asbestos-free fireproofing formulations. During this time, Grace's documents reflect continued recognition of the problem of asbestos contamination in buildings with emphasis not only on the hazard to those applying the material, but also to building occupants and the general public during occupancy and demolition of asbestos-containing buildings.

Nevertheless, Grace continued to sell its asbestos fireproofing, while selling asbestos-free fireproofing where pressure from public officials made the sale of asbestos fireproofing impossible. In November 1971, the month that the first shipment of asbestos-containing Monokote was made to Greenville, a Grace memorandum noted that entire regions of the country had switched to asbestos-free Monokote. The substitute for asbestos in the fireproofing was paper fiber, as confirmed both by a witness with actual knowledge of the substitution and Grace research reports.

The evidence further showed that the asbestos material in the City Hall was falling off the beams in some areas and was laying in pieces on top of ceiling tiles. Greenville's experts found invisible asbestos fibers on every building surface tested in amounts of up to millions of fibers per square foot of surface area. Asbestos had contaminated ceiling tiles and carpets. These findings not only confirmed the earlier warnings of building contamination, but were consistent with Grace's internal knowledge that its asbestos-containing Monokote had poor bonding characteristics which prompted Grace to try to protect Monokote from scrutiny by outside testing laboratories.

In short, substantial evidence showed that at the time Grace sold Greenville the asbestos-containing Monokote, Grace was actually aware of the hazard to building occupants from asbestos-containing fireproofing; knew that such material could endanger occupants and the public during building renovation or demolition; knew that its asbestos formulation had bonding problems; and had developed an asbestos-free formula. In the face of this evidence, Grace nevertheless sought to convince the jury that it did not and could not have known of the hazards of asbestos contamination in buildings and the resulting property damage. With ample justification, the jury rejected Grace's position. The Court now turns to discuss Grace's individual contentions.

1. JUDGMENT NOV

In passing on Grace's motion for judgment notwithstanding the verdict, this Court must determine whether there is evidence upon which the jury could properly find a verdict. Ralston Purina Co. v. Edmunds, 241 F.2d 164, 167 (4th Cir.1957), cert. denied 353 U.S. 974, 77 S.Ct. 1059, 1 L.Ed.2d 1136 (1957). The Court is not free to weigh the evidence, pass on the credibility of witnesses or substitute its judgment of the facts for that of the jury. It must view the evidence most favorably to Greenville and give it the benefit of all reasonable inferences from the evidence. Whalen v. Roanoke County Bd. of Supervisors, 769 F.2d 221, 224 (4th Cir.1985); Abasiekong v. City of Shelby, 744 F.2d 1055, 1059 (4th Cir.1984).

Upon review of the entire record, the Court finds that the evidence was not merely sufficient to find a verdict, but compelling. Grace's claim that there was no evidence of its negligence or the unreasonably dangerous properties of its product is groundless.

Grace has devoted most of its energies to arguing why it feels Greenville cannot recover under the two legal theories submitted to the jury (negligence and implied warranty), to wit: (1) Greenville has suffered no "property damage" actionable in negligence; (2) Greenville cannot recover in warranty because the "state of the art" at the time of sale did not recognize the dangers of asbestos in buildings; and (3) there is no evidence to support a punitive damage verdict.

a. Property Damage Versus Economic Loss

Greenville unquestionably suffered property damage in its building. The evidence was undisputed that the asbestos fireproofing had fallen off the beams in various areas of the City Hall, contaminating it with visible pieces of material and releasing invisible asbestos fibers throughout the building.

The issue of whether asbestos contamination of buildings is actionable in tort has generated a large number of opinions, mostly unreported, by trial courts around the country. In support of their respective positions, the parties have favored the Court with copies of many of these opinions. After considering the issue in detail, the Court believes that the vast majority of these rulings, which have found such asbestos contamination actionable in tort, represent the correct view. These opinions include a ruling applicable state-wide in South Carolina by The Honorable John Hamilton Smith (Spartanburg County School District Six v. National Gypsum Co., No. 83-CP-42-1756 (S.C.Cir.Ct. Aug. 2, 1984)), as well as the unanimous view of the federal judges who have considered the issue in diversity cases in this district. Lexington County School District Five v. United States Gypsum Co., No. 82-2072-0 (D.S.C. April 2, 1984); Greenville County School District v. W.R. Grace Co., et al., No. 82-3142-14 (D.S.C. July 29, 1985); Spartanburg County School District Seven v. National Gypsum Co., No. 83-1744-14 (D.S.C. July 29, 1985). Judge Wilkins reached the same conclusion in his Order denying summary judgment in this case, finding that "the defect alleged by plaintiffs is intimately related to the safety of the product and the action may be properly characterized as a negligence action." City of Greenville, et al. v. W.R. Grace Co., No. 6:XX-XXXX-XX (D.S.C. Dec. 30, 1985).

South Carolina has allowed tort recovery where the defective product has damaged only property and not threatened personal injury. See J.K.T. Co., Inc. v. Hardwick, 274 S.C. 413, 265 S.E.2d 510 (1980) (blistering roof which leaked); Carolina Home Builders v. Armstrong Furnace Co., 259 S.C. 346, 191 S.E.2d 774 (1972) (leaking air conditioning units); see also Campus Sweater & Sportswear Co. v. M.B. Kahn Const. Co., 515 F.Supp. 64 (D.S.C.1979), aff'd 644 F.2d 877 (4th Cir.1981) (leaking roof). At least one South Carolina decision would appear to go further and allow tort recovery where "economic loss" alone was suffered. Terlinde v. Neely, 275 S.C. 395, 271 S.E.2d 768 (1980) (settling house). In contrast, a recent decision by the Fourth Circuit Court of Appeals, 2000 Watermark Assn., Inc. v. Celotex Corp., 784 F.2d 1183 (4th Cir.1986), held that replacement of non-dangerous blistering shingles which had not leaked was "economic and aesthetic" and not recoverable in negligence. The Watermark opinion was careful to distinguish aesthetic problems from products that pose a risk of harm to person or property. Such safety considerations are involved here and Watermark, by its terms, does not reach this situation.

The focus of this case is not that the building owner has suffered an intangible economic loss, but that the asbestos-containing materials have contaminated the building, damaging property and posing a continual hazard to building occupants and workmen. The Court sees no indication that the South Carolina Supreme Court would reject the view that asbestos contamination in...