Copenhagen Reinsurance Co. v. CHAMPION HOME BLDRS. CO.

• Decision Date: 08 August 2003
• Citation: 872 So.2d 848
• Parties: COPENHAGEN REINSURANCE COMPANY, as subrogee of Addie P. Reed v. CHAMPION HOME BUILDERS COMPANY, INC.
• Court: Alabama Court of Civil Appeals

872 So.2d 848

COPENHAGEN REINSURANCE COMPANY, as subrogee of Addie P. Reed v. CHAMPION HOME BUILDERS COMPANY, INC.

2020263.

Court of Civil Appeals of Alabama.

August 8, 2003.

Lawrence J. Seiter of Johnstone, Adams, Bailey, Gordon & Harris, L.L.C., Mobile, for appellant.

T. Julian Motes and Michael E. Gabel of Sirote & Permutt, P.C., Mobile, for appellee.

CRAWLEY, Judge.

Copenhagen Reinsurance Company ("Copenhagen"), as subrogee of Addie P. Reed, deceased, appeals from the trial court's summary judgment in favor of Champion Home Builders Company, Inc. ("Champion"). We affirm in part, reverse in part, and remand.

Following a fire resulting in the destruction of a mobile home, Addie P. Reed, Beronica R. Farmer, and Copenhagen (sometimes collectively referred to as "the plaintiffs") sued Jack Lee, individually, and d/b/a Jack Lee Mobile Homes; Showplace Housing of Alabama, Inc. ("Showplace"); and Champion (sometimes collectively referred to as "the defendants"), seeking damages under the Alabama Extended Manufacturer's Liability Doctrine ("AEMLD") and alleging negligence and wantonness, breach of express and implied warranties, and breach of contract. The plaintiffs' complaint alleged that Reed and Farmer had purchased a new mobile home from Lee and Showplace and that, immediately after the mobile home was set up, they began to notice electrical problems with the mobile home, which they described in the complaint as the "lights going on and off." They further alleged that they had contacted Lee and Showplace on numerous occasions to report the problems, that the problems were never corrected, and that, approximately three weeks after the mobile home was set up, it was destroyed by a fire. Copenhagen had issued a policy of insurance on the mobile home; it paid Reed and Farmer $89,472 for their loss. Champion was identified as the manufacturer of the mobile home. Champion filed an answer to the plaintiffs' complaint.

Copenhagen filed a motion for a default judgment against Lee, individually, and d/b/a Jack Lee Mobile Homes, and Showplace, after they failed to file a responsive pleading. The trial court entered separate default judgments—one against Lee, individually; one against Lee d/b/a Jack Lee Mobile Homes; and one against Showplace—each in the amount of $89,472. On the motion of Champion, Reed was subsequently dismissed as a plaintiff after a suggestion of her death was filed and no proper substitution of parties occurred; Farmer was also dismissed as a result of her failure to comply with a discovery order. Copenhagen, the sole remaining plaintiff, filed an amended complaint with an additional count asserting that the defendants had violated the Magnuson-Moss Warranty-Federal Trade Commission Improvement Act, 15 U.S.C. § 2301 et seq. ("the Magnuson-Moss Act"). Champion filed an answer to the amended complaint.

Champion filed a motion for a summary judgment with a brief contending that it was due to be granted a judgment as a matter of law on the following grounds: (1) spoliation of evidence because Copenhagen had failed to preserve the remnants of the mobile home; (2) improper notice pursuant to the terms of the mobile home's warranty; (3) lack of privity between Champion, on the one hand, and Reed and Farmer, Copenhagen's insureds, on the other hand; and (4) improper notice of the Magnuson-Moss Act claim. Champion filed evidentiary materials in support of its summary judgment motion. Copenhagen filed a motion in opposition to Champion's motion for a summary judgment and also filed evidentiary material. Champion filed a response to Copenhagen's motion in opposition. After conducting a hearing on the motions, the trial court entered a summary judgment in favor of Champion, without stating a rationale. Copenhagen filed a notice of appeal to the supreme court, which transferred this case to this court, pursuant to § 12-2-7(6), Ala.Code 1975.

On appeal, Copenhagen contends that the trial court erred by entering a summary judgment in favor of Champion; in its brief to this court, Copenhagen addresses the grounds that Champion asserted in support of its motion for a summary judgment. Our review of a summary judgment is de novo.

"In reviewing the disposition of a motion for summary judgment, `we utilize the same standard as the trial court in determining whether the evidence before [it] made out a genuine issue of material fact,' Bussey v. John Deere Co., 531 So.2d 860, 862 (Ala.1988), and whether the movant was `entitled to a judgment as a matter of law.' Wright v. Wright, 654 So.2d 542 (Ala.1995); Rule 56(c), Ala. R. Civ. P. When the movant makes a prima facie showing that there is no genuine issue of material fact, the burden shifts to the nonmovant to present substantial evidence creating such an issue. Bass v. SouthTrust Bank of Baldwin County, 538 So.2d 794, 797-98 (Ala.1989). Evidence is `substantial' if it is of `such weight and quality that fair minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved.' Wright, 654 So.2d at 543 (quoting West v. Founders Life Assurance Co. of Florida, 547 So.2d 870, 871 (Ala. 1989)). Our review is further subject to the caveat that this Court must review the record in a light most favorable to the nonmovant and must resolve all reasonable doubts against the movant. Wilma Corp. v. Fleming Foods of Alabama, Inc., 613 So.2d 359 (Ala.1993); Hanners v. Balfour Guthrie, Inc., 564 So.2d 412, 413 (Ala.1990)."

Hobson v. American Cast Iron Pipe Co., 690 So.2d 341, 344 (Ala.1997).

I. Spoliation of Evidence

Copenhagen first argues that not all of its claims were due to be dismissed because of spoliation of evidence. The pertinent facts relating to this issue, stated in a light most favorable to Copenhagen, Hobson, supra, are as follows. The mobile home was purchased in August 1998 and set up on September 30, 1998. Immediately after moving in, Farmer began noticing problems with the electrical system such as lights blinking on and off and some electrical outlets not working. Farmer called Lee on at least four occasions, resulting in one of Lee's employees unsuccessfully attempting to fix the electrical problem on one occasion. The mobile home was destroyed by a fire on October 20, 1998. The following morning, Farmer called Lee to tell him that the mobile home had been destroyed by a fire. Lee told Farmer that he would replace the mobile home, but he did not do so. Copenhagen hired two experts to investigate the fire scene in an effort to determine the cause of the fire. Larry Dewberry was the first to examine the fire scene on October 25, 1998; Dewberry was unable to determine the cause of the fire. Owen Posey then examined the fire scene on November 13, 1998; on November 23, 1998, Posey issued a report that stated, in pertinent part:

"It appears the wiring may have shorted in the breaker panel and melted back down to below the floor. The breaker panel is not available to determine if a short did occur in it which ignite[d] the fire.

"There was a short found in a receptacle branch circuit on the outside wall of the kitchen area, which could have also ignited the fire.... It appears from the burn patterns, on the wood structure, that was not completely burned, that the fire had burned faster under the floor than above it. The heavy burning was in the south end, ... where the breaker panel and branch circuit short were located.

"The mobile home duplex receptacles and switches had sharp edge slots that the wires were forced into to create a circuit junction connection. If this connection becomes loose it can create a hot spot in the connection and melt the wires as was found. This is what appears to have happened to cause the short ... that appears to have ignited the fire.

"Conclusion:

"The mobile home was almost a complete burn down with some charred stud near the center of the house ... The heaviest burning was at the south end of the house and kitchen area where the inside breaker panel was located and the melted receptacle wiring was found.

"... It appears a short occurred in the wall or floor near the breaker panel which caused the power problem and ignited the mobile home. The fire spread under the floor and overhead to the remaining [areas] of the mobile home."

Some wiring and the receptacle-branch unit referred to in the report were kept by Posey. Both Dewberry and Posey took photographs of the fire scene during their investigations.

A few days after Posey issued his report, Copenhagen paid for the debris from the fire scene to be removed and discarded. The location of the discarded debris is unknown, leaving the wiring and the receptacle-branch unit kept by Posey as the only physical evidence remaining from the mobile home. Champion did not receive notice of the fire until the lawsuit was filed on August 14, 2000. In support of its motion for a summary judgment, Champion submitted an affidavit by Michael Southerland, its fire investigator, that stated, in pertinent part:

"5. I have been unable to inspect the remnants of the mobile home that was owned by Addie Reed and made the subject of this subrogation lawsuit by Copenhagen.... It is my understanding that the insurance company failed to preserve the home after the fire.

"6. I have reviewed the available reports related to the fire and the photographs taken by the insurance company's adjuster and the insurance company's cause and origin investigator, Larry Dewberry, within several days of the fire. I have also reviewed the photos taken by the insurance company's second investigator, Owen Posey, several weeks after the fire, as well as Mr. Posey's report.... I have also reviewed the deposition testimony of Larry Dewberry and Owen Posey.

"7. In addition to my review of the reports, on July 17, 2001, I traveled to Mobile, Alabama to examine wire fragments that had been retained by Owen Posey. Based upon my examination of the wire fragments, it

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