Control Solutions, Inc. v. Gharda USA, Inc.

Decision Date29 November 2012
Docket NumberNo. 01–10–00719–CV.,01–10–00719–CV.
Citation394 S.W.3d 127
PartiesCONTROL SOLUTIONS, INC., United Phosphorus, Inc., and Mark Boyd, Appellants v. GHARDA USA, INC. and Gharda Chemicals, Ltd., Appellees.
CourtTexas Court of Appeals


Karen K. Milhollin, Jeffrey E. Fahys, George Howard Lugrin, Westmoreland Hall Maines & Lugrin, P.C., Houston, TX, for Appellants.

Charles W. Lyman, John B. Wallace, Hartline Dacus Barger Dreyer LLP, John P. Abbey, Spagnoletti & Co., Scott Patterson, Barker, Lyman, Twining, Weinberg & Ferrell, P.C., Houston, TX, for Appellees.

Panel consists of Justices KEYES, HIGLEY, and MASSENGALE.



Appellants, Control Solutions, Inc., United Phosphorous, Inc. (UPI), and Mark Boyd (collectively, CSI),1 appeal from the trial court's judgment notwithstanding the verdict (“JNOV”) that they take nothing by their claims against appellees, Gharda Chemicals, Ltd. (Gharda) and Gharda USA, Inc. (GUSA). In four issues, CSI argues that the trial court erred in (1) granting JNOV on the ground of unreliable expert testimony based solely on CSI's experts' failure to test chemical properties and characteristics; (2) granting JNOV on the jury's findings and award against GUSA for a marketing defect when the elements of that claim were not encompassed within the unreliable expert testimony on manufacturing defect and causation; (3) granting JNOV on CSI's negligence claim because legally and factually sufficient evidence supports the verdict without the expert testimony found unreliable by the trial court; and (4) granting summary judgment on limitations grounds against building owner Mark Boyd. Gharda and GUSA filed cross-points, arguing that: (1) if we reverse the JNOV, the proper disposition of the case is to remand the case to the trial court; (2) the evidence of damages is legally and factually insufficient; and (3) in the case of GUSA, the amount of its damages is limited by Texas Business and Commerce Code section 7.19(a)(1) to the amount CSI paid for the product.

We overrule Gharda and GUSA's cross-points on appeal, and we reverse and remand for the trial court to enter judgment in favor of CSI on the jury verdict.

A. Summary

This case arose out of a fire that destroyed CSI's chemical manufacturing operation and warehouse in Harris County, Texas in 2004. CSI alleged and argued at trial that Gharda and GUSA sold “off-spec” chemicals that were the cause of the fire. Following a jury verdict in favor of CSI, the trial court granted a take-nothing JNOV in favor of Gharda and GUSA. This appeal followed.

B. Relationship of Parties

CSI is a Texas company that makes insecticides and pesticides. Mark Boyd is the president of CSI, and he is the owner of the warehouse in Pasadena where CSI does its chemical manufacturing. The lease between Boyd and CSI requires CSI to obtain insurance covering all property owned by CSI and Boyd. The policy identifies “Control Solutions Inc. doing business as CJ Martin Co. and/or Gamat, Inc., Mark Boyd, Individual,” as the insured. CSI claims that the underwriters paid $3,163,185.50 for covered damage.

In its chemical production, CSI uses a generic chemical produced by Gharda and sold in the United States by GUSA called chlorpyrifos technical (“chlorpyrifos”). Gharda makes three grades of chlorpyrifos: a 99% pure grade sold in the U.S., a 98% pure grade sold in Europe, and a 94% pure grade sold to rest of world. At the time leading up to the trial, it sold approximately 500 tons of chlorpyrifos per month. CSI had been purchasing chlorpyrifos from Gharda since approximately 2001.

On March 8, 2004, a CSI employee placed thirty-two drums containing the solid chemical chlorpyrifos into a “hot box” in CSI's warehouse for melting. Each drum had been sealed at Gharda's plant in India, and the seals remained intact until the CSI employee moved the drums into the hot box. The next morning, on March 9, 2004, CSI distribution manager Robert Blair arrived at work at 5:00 a.m. He was working in the distribution building when he heard a “boom” followed approximately thirty seconds later by the fire alarm. CSI's chemical production facility was destroyed by the resulting fire. The fire also destroyedsome of the products of another company, UPI, which stored materials in CSI's buildings.

C. Suit Filed/Pre–Trial Procedural History

In December 2004, CSI filed suit against Gharda and GUSA for products liability, breach of express warranty, breach of implied warranty of merchantability, and negligence.2 UPI subsequently intervened in this suit.

Among the many pre-trial filings, on August 12, 2009, Gharda and GUSA moved for summary judgment on damages, arguing, among other things, that CSI did not have the capacity to recover damages for the real property actually owned by Boyd. CSI responded to this motion on the merits. CSI also filed an amended petition adding Boyd as a named plaintiff as the owner/lessor of the facility. Gharda subsequently moved to strike Boyd as a plaintiff based on limitations and moved for summary judgment as to all of Boyd's claims. On November 10, 2009, the trial court denied the motion to strike “without prejudice to the Defendants of reconsideration after verdict” and further stated, “because the Court finds Defendants' motions for summary judgment are conditioned upon the Court striking the intervention of Mark Boyd, the merits of those motions are not reached at this time.”

Gharda also moved pre-trial to exclude CSI's expert witnesses. The trial court conducted Daubert/Robinson hearings on the admissibility of the expert testimony on May 5, 2009.3 Several experts testified at the hearing, including Sammy Russo, CSI's fire-origin expert; Andy Armstrong, a forensic chemist and chemical fire expert; Nicholas Cheremisinoff, a chemist; and Shannon Rusnak, a forensic accountant and CSI's damages expert. The trial court denied Gharda's motions to exclude the testimony of these experts. 4

D. Trial to a Jury

The trial lasted for approximately two weeks and included testimony from twenty-two witnesses, many of them expert witnesses, and at least eleven volumes of exhibits. Gharda and GUSA renewed their objections to CSI's expert witnesses at trial, and the trial court overruled those objections.

Robert Blair, the CSI employee who was present when the fire first broke out, stated that he heard a sound like a truck crashing into the building, and, about forty-five seconds later, he heard the fire alarms go off and saw smoke billowing out of vents on the west side of the building. Firefighters responded. They reported that the building was locked and they had to force their way inside. When they entered the northwest quadrant of the building, they observed evidence of the fire to their right, which was the southwest quadrant of building where the hot box was located. Furthermore, firemen indicated that they did not open the hot box doors in the course of fighting the fire.5

Sammy Russo, CSI's fire-origin expert witness, investigated the fire. He opined that the fire began in the hot box containing chlorpyrifos and spread to the rest of the facility. Other experts, including Armstrong, a forensic chemist and chemical fire expert, and Cheremisinoff, a chemist, testifying on behalf of CSI, opined that the fire was caused by ignitable vapors produced during the chlorpyrifos's rapid decomposition and that the rapid decomposition was caused by a contaminant in the chlorpyrifos.

Gharda presented expert testimony from Lloyd Hawkins, a certified fire investigator, opining that the fire did not start in or near the hot box, but rather, it started in the northwest quadrant of the warehouse. It also presented expert witnesses Wayne Britton and John Cayais, expert chemists, who tested chlorpyrifos to determine its flammability and who tested the retained samples (“retains”) from the batches of chlorpyrifos sold to CSI and found that there was no contamination.

Shannon Rusnak, a forensic accountant and expert on damages, Mark Boyd, and others presented evidence of CSI's damages as a result of the fire.

The jury reached the following conclusions:

• Question One: “Did the negligence, if any, of those named below proximately cause the occurrence in question?” The jury was instructed on the meaning of negligence, ordinary care, and proximate cause, and it answered “no” as to CSI and “yes” as to both GUSA and Gharda.

• Question Two: “Was there a manufacturing defect in the Chlorpyrifos Technical at the time it left the possession of [Gharda] that was a producing cause of the occurrence in question?” The jury answered “yes.”

• Question Three: “Did [GUSA] exercise substantial control over the content of the warning or instruction that accompanied the Chlorpyrifos Technical sold to [CSI]?” The jury answered “yes.”

• Question Four: “Was the warning or instruction inadequate?” The jury was instructed on what constitutes “adequate” warnings, and it answered “yes.”

• Question Five: “Did the plaintiffs' damages, if any, result from the inadequacy of the warning or instruction?” The jury answered “yes.”

• Questions Six and Seven: “Did [GUSA] make an express factual representation to [CSI] about a material aspect of the Chlorpyrifos Technical?” The jury answered “yes,” but it also found, in Question Seven, that the factual representation was not materially incorrect.

• Questions Ten and Eleven: “Was there a defect in the marketing of the Chlorpyrifos Technical at the time it left the possession of [Gharda] that was a producing cause of the occurrence in question?” The jury was instructed on the meaning of “marketing defect,” “adequate” warnings, “unreasonably dangerous” products, and “producing cause.” The jury answered “no.” The jury also responded “no” to the same question asked about GUSA.

• Question Twelve: “For each company you found caused or contributed to cause the occurrence, find...

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