Cruz v. Midland-Ross Corp., 92 C 5227.

• Decision Date: 03 February 1993
• Docket Number: No. 92 C 5227.,92 C 5227.
• Citation: 813 F. Supp. 628
• Parties: Jose Jorge CRUZ, Plaintiff, v. MIDLAND-ROSS CORPORATION, et al., Defendants.
• Court: U.S. District Court — Northern District of Illinois

813 F. Supp. 628

Jose Jorge CRUZ, Plaintiff, v.MIDLAND-ROSS CORPORATION, et al., Defendants.

No. 92 C 5227.

United States District Court, N.D. Illinois, E.D.

February 3, 1993.

Paul I. Nemoy, Philip E. Howard, Ltd., Chicago, IL, for Jose Jorge Cruz.

Timothy D. McMahon, Wiedner & McAuliffe, Ltd., Chicago, IL, for Midland-Ross Corporation.

Roderick Alan Palmore, Wildman, Harrold, Allen & Dixon, Chicago, IL, for Consol. Equipment Co.

Timothy D. McMahon, Wiedner & McAuliffe, Ltd., Edward J. Szewczyk, Jobin & Flynn, Chicago, IL, for General Surface Hardening Inc.

MEMORANDUM OPINION

GRADY, District Judge.

This case comes before the court on defendantConsolidated Equipment Company's motion for summary judgment.For the reasons given below, defendant's motion is granted.

FACTS

On July 12, 1990, Jose Cruz, an employee of General Surface Hardening ("GSH"), was injured at work when the door of an industrial furnace fell on his arm as he attempted to extract metal pieces from a tray inside the furnace.The accident resulted in a complete amputation of plaintiff's right arm.

The furnace involved was a used Forc-Aire combustion model manufactured by defendantMidland-Ross Corporation("MRC") in 1969 and sold to Besser Company of Roanoke, Illinois, that same year.Besser owned and operated the furnace until September 16, 1986, when it sold the furnace by public auction to defendantConsolidated Equipment Company("Consolidated").

Consolidated is a Michigan-based "father and son operation," engaged in the business of buying and selling pieces of used industrial equipment.Defendant's Motion for Summary Judgment, Exhibit 1at 155.The company operates as a used equipment broker, which means that it only purchases items with the intent of quickly reselling them to end-users.In the instant case, George Howell, Sr., president of Consolidated, knew that GSH was interested in buying a used combustion furnace.Based on that knowledge, Mr. Howell dispatched his son, George Howell, Jr., to Roanoke, Illinois, to participate in the Besser auction.On behalf of Consolidated, George Howell, Jr. purchased the furnace with a bid of $26,120.00.The transaction was consummated by wire transfer of funds on September 17, 1986.

Though Mr. Howell did view the furnace prior to making his winning bid, at no time, either before or after the auction, did he, or any other person acting on behalf of Consolidated, inspect, examine or test the physical condition of the furnace.Nor did Consolidated ever assume physical possession of the furnace.As is typical practice among used equipment brokers, the defendant simply purchased the equipment "AS IS," and left it in place until a buyer could be located.Defendant's Motion for Summary Judgment, Exhibit 1at 155.Thus, the furnace remained at Besser's premises in Roanoke.

On September 19, 1986, Consolidated informed GSH by phone that the Forc-Aire furnace was available for purchase.Shortly thereafter, the vice-president of GSH travelled to Roanoke, inspected the furnace and decided to purchase it.No one from Consolidated accompanied the vice-president during his visit, nor were any representations or warranties made by Consolidated regarding the condition of the furnace.On September 25, 1986, GSH purchased the furnace from Consolidated for $64,000.00 on an "AS IS, WHERE IS" basis.Shortly thereafter, GSH employees transported the furnace from Roanoke to GSH's facilities in Chicago, where the furnace was installed for use in the company's plant.

Plaintiff alleges that the furnace was sold to GSH in a defective condition and that Consolidated negligently failed to test, inspect, refurbish, repair, and warn of dangers with respect to the furnace.¹Consolidated now moves for summary judgment, arguing that under Illinois law it was under no duty to inspect, test or provide warnings regarding the use of the furnace.

DISCUSSION

Summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law."Fed.R.Civ.P. 56(c);Celotex Corp. v. Catrett,477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265(1986).A "genuine issue of material fact exists only where `there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party.'"Dribeck Importers, Inc. v. G. Heileman Brewing Co.,883 F.2d 569, 573(7th Cir.1989)(quotingAnderson v. Liberty Lobby, Inc.,477 U.S. 242, 249, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202(1986)).In considering such a motion, the court must view all inferences in the light most favorable to the nonmoving party.SeeRegner v. City of Chicago,789 F.2d 534, 536(7th Cir.1986).Once the moving party has supported its motion for summary judgment, "an adverse party may not rest upon the mere allegations or denials of the adverse party's pleadings."Fed. R.Civ.P. 56(e).The adverse party's response, by way of deposition, affidavit or otherwise, must set forth specific facts showing that there is a genuine issue for trial.Id.

Under Illinois law, all persons who place defective products into the "stream of commerce," including suppliers, distributors, wholesalers and retailers, "may be held liable to an injured user."Hammond v. North American Asbestos Corp.,97 Ill.2d 195, 73 Ill.Dec. 350, 356-57, 454 N.E.2d 210, 216-17(1983).This does not mean, however, that Illinois law blindly imposes product liability on all re-sellers, no matter how remotely connected to the "stream of commerce."Rather, in order to be liable to an injured user, the re-seller of a defective product must be deemed to fall within "the original producing and marketing chain."Peterson v. Lou Bachrodt Chevrolet Co.,61 Ill.2d 17, 329 N.E.2d 785, 786(1975);Skarski v. Ace-Chicago Great Dane Corp.,138 Ill.App.3d 301, 93 Ill.Dec. 102, 106, 485 N.E.2d 1312, 1316(1985)("There are many parties who conceivably have some relation with the manufacture and sale of the product, but their relationship is peripheral and not directly related to the distributive process.");see alsoMechanical Rubber v. Caterpillar Tractor,80 Ill.App.3d 262, 35 Ill.Dec. 656, 657-58, 399 N.E.2d 722, 723-24(1980)(a party may be involved with the sale of a product but still be outside the distributing system contemplated by products liability theories).

Judicial determination of whether a party falls within "the original producing and marketing chain" ultimately turns on public policy concerns.The policy behind imposing liability on suppliers, distributors, wholesalers and retailers "is justified on the ground that their position in the marketing process enables them to exert pressure on the manufacturer to enhance the safety of the product."Peterson v. Lou Bachrodt Chevrolet Co.,61 Ill.2d 17, 329 N.E.2d 785, 787(1975);see alsoDunham v. Vaughan & Bushnell Mfg. Co.,42 Ill.2d 339, 247 N.E.2d 401, 404(1969)("The strict liability of a retailer arises from his integral role in the overall producing and marketing enterprise and affords an additional incentive to safety.").

In Peterson, the Illinois Supreme Court declined to apply the principle of strict products liability to a used car dealer which sold a vehicle in an allegedly defective condition because, in the court's view, used car dealers are not in a position to pressure manufacturers into building safer products.Peterson,329 N.E.2d at 786-87.Thus, imposition of strict liability upon used car dealers would unfairly require them "to become an insurer against defects which had come into existence after the chain of distribution was completed, and while the product was under the control of one or more consumers."Id.,329 N.E.2d at 787.

Though the rule in Peterson dealt with strict liability in tort, it has since been expanded to include products liability claims sounding in negligence.Rahn v. Gerdts,119 Ill.App.3d 781, 74 Ill.Dec. 378, 455 N.E.2d 807(1983).In Rahn, the Gerdts were engaged in the business of leasing motor homes.Defendant Deluxe Motor Home Sales sold a used motor home to the Gerdts, which the Gerdts in turn leased to the plaintiff.Subsequently, a fire occurred in the motor home, causing personal injury to plaintiff.Plaintiff sought damages from Deluxe for negligent inspection and negligent failure to inspect.The court invoked Peterson to hold that the seller of a used motor vehicle is sufficiently outside the production and marketing chain "to negate any duty to generally inspect or discover defects."Rahn,74 Ill. Dec. at 382, 455 N.E.2d at 811.

Peterson and Rahn make clear that under either theory of liability (strict tort or negligence), a seller of products must occupy a position within the "original producing or marketing chain" in order to be liable for injuries caused by those products.Moreover, Rahn and Peterson together indicate that, under Illinois law, sellers of used equipment do not fall within the "original producing or marketing chain" and therefore are not typically liable under traditional products liability theories.

Other jurisdictions share the view of the Illinois courts on this issue.In Tillman v. Vance Equipment Co.,286 Or. 747, 596 P.2d 1299(1979), the Oregon Supreme Court held that a used-equipment dealer who sold a crane in a defective condition could not be held strictly liable for injuries caused by the defective equipment.As in Peterson,the Tillman court acknowledged that the policy behind imposing strict tort liability on retailers and distributors was predicated "on the assumption that these groups would place pressure on the manufacturer to produce safe products."Id.,596 P.2d at 1302.And similar to Peterson,the Tillman court also found used-goods dealers to be "entirely outside the chain of distribution of the product."Id.,596 P.2d at...