Corbin v. Coleco Industries, Inc.

• Decision Date: 14 November 1984
• Docket Number: No. 83-1578,83-1578
• Citation: 748 F.2d 411
• Parties: 39 UCC Rep.Serv. 1242 Joe A. CORBIN and Marta C. Corbin, Plaintiffs-Appellants, v. COLECO INDUSTRIES, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 411

748 F.2d 411

39 UCC Rep.Serv. 1242

Joe A. CORBIN and Marta C. Corbin, Plaintiffs-Appellants, v. COLECO INDUSTRIES, INC., Defendant-Appellee.

No. 83-1578.

United States Court of Appeals, Seventh Circuit.

Argued May 11, 1984.

Decided Nov. 14, 1984.

Ronald R. Gilbert, Detroit, Mich., for plaintiffs-appellants.

Donald J. Graham, Bingham, Summers, Welsh & Spilman, Indianapolis, Ind., for defendant-appellee.

Before CUMMINGS, Chief Judge, ESCHBACH, Circuit Judge, and FAIRCHILD, Senior Circuit Judge.

ESCHBACH, Circuit Judge.

Joe and Marta Corbin brought this product liability action in Indiana state court, seeking to recover for injuries Joe Corbin received when he hit his head on the bottom after diving into an above-ground swimming pool made by defendant Coleco Industries, Inc. ("Coleco"). Coleco removed the case to federal district court, which ultimately entered summary judgment for Coleco on all counts. The Corbins appeal, assigning as error the district court's determination that they cannot recover for breach of warranty and its finding that there is no genuine issue of material fact with respect to the remaining counts. We affirm the district court's disposition of the breach of warranty counts (II and IV) and reverse its disposition of the remaining counts (I and III).

I

In the spring of 1978 Kristen Webb and Joe Corbin agreed that Corbin could have her Coleco swimming pool if he would dismantle it and remove it from her yard. Kristen Webb had herself acquired the pool from a previous owner. Corbin removed the above-ground pool, reassembled it in his own back yard, and filled it to a depth of about four feet.

On June 3, 1978, a hot day, Corbin returned home in the early evening after playing softball. He jumped up onto the lip of the pool (a six-inch wide flat rim running around the top edge), balanced himself, and dove in. He intended to do a "belly flopper," but for some reason his waist bent in mid-air and he entered the water head first. He hit his head on the bottom and suffered a fracture dislocation at vertebras C-5 and C-6. From that moment on, he has been quadriplegic. At the time of the accident he was 27 years old and in good health.

On June 2, 1980, Corbin and his wife, Marta, filed a four-count complaint against Coleco in the Circuit Court of Johnson County, Indiana. Count I charged Coleco with negligence in manufacturing the swimming pool with a concealed hazard to the user and without a warning that the pool was unsafe for diving. Count II charged Coleco with breach of implied warranty, alleging that the pool was not fit for its intended or foreseeable uses. Count III, a strict liability theory, charged that the pool was unreasonably dangerous, throwing divers off balance because of its lack of rigidity and making them enter the water at a steeper angle than intended. Count IV charged that Coleco expressly warranted to purchasers and users that its pool was safe for diving, knowing that it was not.

Coleco removed the case to federal district court on the basis of diversity of citizenship. On March 19, 1982, Coleco moved for partial summary judgment on the warranty counts (II and IV). The Corbins objected to summary judgment on Count II but apparently abandoned Count IV. On June 30, 1982, the district court granted Coleco's motion. The court concluded that while breach of implied warranty (Count II) may sound in contract or in tort, the Corbins could not recover on either theory. If sounding in contract, the claim is barred by the absence of privity between the Corbins and Coleco. If sounding in tort, it merely duplicates the strict liability claim, Count III. The court held that Count IV failed to state a claim for which relief can be granted. The Corbins were not in privity of contract with Coleco, and Coleco made no representations or express warranties to them.

Coleco moved for summary judgment on Counts I and III on August 13, 1982. Ruling on March 1, 1983, the court held that it was obviously dangerous for a six-foot man to dive into four feet of water, and that Corbin knew it. The court held additionally that Coleco had no duty to warn of open and obvious dangers and that a product is not defectively designed when its dangerous properties are patent. The district court found that the cause of Corbin's injuries was his own error of judgment in executing a shallow dive. Finding no genuine issue of material fact, the court granted Coleco's motion. The Corbins filed a timely notice of appeal.

The Corbins challenge summary judgment on Count II on the asserted grounds that an implied warranty claim sounding in contract is available to them and that an implied warranty claim sounding in tort does not duplicate a strict liability claim. They challenge summary judgment on Counts I and III on the grounds that there are genuine issues of material fact, notably whether there were latent defects in the pool, whether the reasonable consumer knows that he risks paralysis or death in diving into an above-ground pool, and whether Corbin in fact knew of the risk.

II

The district court held that if Corbin's breach of implied warranty count (Count II) sounded in contract, it failed to state a cause of action because there was no privity of contract between Corbin and Coleco, but if the count sounded in tort, it duplicated the strict liability count (Count III). For these reasons the court granted summary judgment for Coleco on implied warranty Count II. Corbin argues strenuously that Indiana law does not require privity of contract between the plaintiff and the defendant in order for the plaintiff to recover for breach of implied warranty sounding in contract, and that under Indiana law breach of implied warranty sounding in tort is different from strict liability.

While we basically agree with the district court, we frame our analysis of Indiana law in somewhat different terms. We think that the distinction between "breach of implied warranty sounding in contract" and "breach of implied warranty sounding in tort" is archaic in Indiana with respect to warranties arising out of the sale of goods. Above-ground swimming pools are goods within the meaning of Article 2 of the Uniform Commercial Code as enacted in Indiana ("UCC"). Ind.Code Secs. 26-1-2-102, -105(1) (1982), see Thompson Farms v. Corno Feed Products, 173 Ind.App. 682, 702-704, 366 N.E.2d 3, 15-16 (1977). The UCC contains provisions for actions for breach of implied warranty, and we think the Indiana legislature intended those provisions to displace any common law actions for breach of implied warranty (in connection with the sale of goods) that may have previously existed. See Sec. 26-1-1-103 (implying that particular provisions of UCC displace common law principles covering same subject). Consequently, we think that any action for breach of implied warranty against the manufacturer of an above-ground swimming pool must be analyzed within the framework of the UCC as adopted in Indiana.

Under the UCC a warranty that goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect to goods of that kind. Ind.Code Sec. 26-1-2-314(1) (1982). To be merchantable, goods must at least be fit for the ordinary purposes for which such goods are used. Sec. 26-1-2-314(2)(c). In addition, there is an implied warranty that the goods shall be fit for a particular purpose of the buyer, provided that the seller has reason to know that purpose at the time of contracting and that the buyer is relying on the seller's skill and judgment to select or furnish suitable goods. Sec. 26-1-2-315. The seller may exclude or modify both implied warranties by following the rules of Sec. 26-1-2-316. In general, the measure of damages for breach of warranty is the difference between the value of the goods accepted and the value they would have had if they had been as warranted. Sec. 26-1-2-714(2). But consequential damages may be recovered in a proper case for injury to person proximately resulting from any breach of warranty. Secs. 26-1-2-714(3), -715(2)(b).

We construe Count II of Corbin's complaint as attempting to state a cause of action under the UCC, seeking consequential damages for breach of one or both of the implied warranties recognized in Article 2. It is clear from the undisputed facts that Corbin, who received the pool at third hand, is not in privity of contract with Coleco. The question we must resolve is whether under Indiana law the absence of privity defeats his cause of action.

Several recent Indiana cases have held that recovery for breach of implied warranty under the UCC requires that the plaintiff be in privity of contract with the defendant. Candlelight Homes, Inc. v. Zornes, Ind.App., 414 N.E.2d 980 (1981); Lane v. Barringer, Ind.App., 407 N.E.2d 1173 (1980); Richards v. Goerg Boat & Motors Co., 179 Ind.App. 102, 384 N.E.2d 1084 (1979). In Candlelight Homes the court denied the buyer of a defective mobile home any recovery from the manufacturer for breach of implied warranty, on grounds that the buyer had bought the home from a dealer and there was no privity between the buyer and the manufacturer. 414 N.E.2d at 982. In Lane the plaintiff was injured when her daughter dropped a container of drain opener in a store as she was on her way to pay for it. The court held that even if there was a sale, the plaintiff could not recover from the manufacturer for breach of implied warranty, because there was no privity of contract between her daughter and the manufacturer. 407 N.E.2d at 1175. In Richards the court upheld the privity requirement but reversed summary judgment for the manufacturer of a defective houseboat on grounds that the manufacturer had participated in the sale sufficiently to establish the necessary privity. 384 N.E.2d at 1092. While in Candlelight Homes and Richards the plaintiffs sought to recover only for their loss of bargain, Lane is clearly a personal injury case. It...