Estate of Shebel v. Yaskawa Elec. America, Inc.

• Decision Date: 22 June 1999
• Docket Number: No. 46S03-9707-CV-417,46S03-9707-CV-417
• Citation: 713 N.E.2d 275
• Parties: ESTATE OF William F. SHEBEL, Jr. by Dolores SHEBEL, Personal Representative, Appellant/Cross Appellee (Plaintiff below), v. YASKAWA ELECTRIC AMERICA, INC. and Mori Seiki Co., Ltd., Appellees/Cross-Appellants (Defendants below).
• Court: Indiana Supreme Court

713 N.E.2d 275

ESTATE OF William F. SHEBEL, Jr. by Dolores SHEBEL, Personal Representative, Appellant/Cross Appellee (Plaintiff below), v. YASKAWA ELECTRIC AMERICA, INC. and Mori Seiki Co., Ltd., Appellees/Cross-Appellants (Defendants below).

No. 46S03-9707-CV-417

Supreme Court of Indiana.

June 22, 1999.

Gene M. Jones, Mark A. Lienhoop, LaPorte, Indiana, Attorneys for Appellant.

Douglas K. Dieterly, David R. Kibbe, Stanley C. Fickle, Anne N. DePrez, South Bend, Indiana, Larry G. Evans, Valparaiso, Indiana, Tracy C. Beggs, Chicago, Illinois, Attorneys for Appellee.

ON PETITION TO TRANSFER

BOEHM, Justice.

The Products Liability Act bars product liability claims for injuries sustained more than ten years after the product is delivered to its "initial user or consumer." See IND. CODE § 33-1-1.5-5 (1993).¹ We hold that a "user or consumer" under this statute includes a distributor who uses the product extensively for demonstration purposes and that the ten year statute begins with delivery for this use.

Factual and Procedural Background

On January 10, 1992, William Shebel, Jr. was struck in the chest and killed by a piece of a computer controlled lathe. The piece flew from the machine when it crashed as Shebel was delivering a bill to Bruce Kaufman who was operating the lathe.² Shebel's Estate filed a products liability action against the manufacturer of the lathe, Mori Seiki Co., Ltd., ("Mori") and an American affiliate of the company that manufactured the computer controller of the lathe, Yaskawa Electric America, ("Yaskawa").³

The lathe involved in the accident was sold by its manufacturer, Mori, to Yamazen Company, a trading company in Japan which in turn sold it to Yamazen, USA, Inc., ("Yamazen") its American subsidiary. The lathe was delivered to Yamazen on March 5, 1981. Yamazen purchased the lathe for the purpose of using it in demonstrations at trade shows, and in fact the lathe was used to make parts at three trade shows over the course of the next year. In January, 1982, the lathe was sold to Hasbach Company as a used "demo machine," but was returned in December of that year. Aegis Sales and Engineering Incorporated then purchased the lathe as a used machine at a discount from Yamazen and took delivery in January, 1983. The computer on the lathe indicated that the machine had been used for "hundreds" and "possibly thousands" of hours when it was delivered to Aegis. After another intermediate owner, Kaufman purchased the lathe in early 1990.

Mori and Yaskawa moved for summary judgment, arguing that the Estate's action was barred by the statute of repose and alternatively that several other defenses required summary judgment in their favor. The trial court held that, as a matter of law, Yamazen was a "user or consumer" of the lathe, and that uncontroverted facts established that Shebel's injury occurred more than ten years after the lathe was delivered to Yamazen. Accordingly, summary judgment was entered for both defendants based on the statute of repose.

The Estate appealed, arguing that the "initial user or consumer" of the lathe could not be determined as a matter of law where conflicting inferences could be drawn from the facts. The Estate also argued that genuine issues of material fact bore on the definition of "user or consumer," and that other issues precluded summary judgment.

The Court of Appeals, with Judge Garrard dissenting, reversed the trial court, holding that, as a matter of law on these undisputed facts, Yamazen as a distributor was a "seller" and not a "user or consumer." Estate of Shebel v. Yaskawa Elec. America, Inc., 676 N.E.2d 1091 (Ind.Ct.App.1997). We granted the defendants' petition for transfer and now affirm the trial court's grant of summary judgment.

Standard of Review

Summary judgment is appropriate when the designated evidence shows that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Ind. Trial Rule 56(C); see also Meridian Mut. Ins. Co. v. Auto-Owners Ins. Co., 698 N.E.2d 770, 773 (Ind. 1998)

. Although the Estate has the burden of persuading us that the grant of summary judgment was erroneous, we carefully assess the trial court's decision to ensure that the Estate was not improperly denied its day in court. Erie Ins. Co. v. George, 681 N.E.2d 183, 186 (Ind.1997); Mullin v. Municipal City of South Bend, 639 N.E.2d 278, 280-81 (Ind.1994). All facts and reasonable inferences drawn from those facts are construed in favor of the Estate. Foster v. Auto-Owners Ins. Co., 703 N.E.2d 657, 659 (Ind. 1998); Wright v. Carter, 622 N.E.2d 170, 171 (Ind.1993).

Initial User or Consumer

The threshold question in this case is whether Yamazen, who received the lathe in March of 1981, was a "user or consumer" of the lathe. If so, the Estate's action for damages resulting from the January 1992 accident is barred by the statute of repose found at Indiana Code § 33-1-1.5-5(b) (1993). That statute provides that "a product liability action must be commenced ... within ten years after the delivery of the product to the initial user or consumer."⁴ Indiana, along with several other states,⁵ has enacted a statute of repose to bar lawsuits after a product-related initiating event. See 4 LOUIS R. FRUMER & MELVIN I. FRIEDMAN, PRODUCTS LIABILITY § 26.05[1] (1998). The policies underlying this provision have been described as both a concern for the lack of reliability and availability of evidence after long periods of time and a public policy to allow manufacturers, after a lapse of a reasonable amount of time, to plan their affairs with a degree of certainty, free from unknown potential liability. Id. (citing Johnson v. Star Mach. Co., 270 Or. 694, 530 P.2d 53, 56 (1974)). Presumably there is also an underlying assumption that after ten years a product failure is due to reasons not fairly laid at the manufacturer's door. In any event, the legislature has determined that a product in use for ten years is no longer to be the source of its manufacturer's liability. The wisdom of this policy is for the legislature. Dague v. Piper Aircraft Corp., 275 Ind. 520, 528, 418 N.E.2d 207, 212 (Ind.1981). The starting point for this ten year period is the "delivery to the initial user or consumer." The term "user or consumer" was defined at the time relevant to this case as:

a purchaser, any individual who uses or consumes the product, or any other person who, while acting for or on behalf of the injured party, was in possession and control of the product in question, or any bystander injured by the product who would reasonably be expected to be in the vicinity of the product during its reasonably expected use.

IND.CODE § 33-1-1.5-2 (1993). As a matter of syntax, this language is susceptible to the reading that any "purchaser," including a distributor or retailer, is a "user or consumer." However, it was early held, and we agree, that "user or consumer" does not include one who merely acquires and resells. Thiele v. Faygo Beverage, Inc., 489 N.E.2d 562 (Ind.Ct.App.1986); Whittaker v. Federal Cartridge Corp., 466 N.E.2d 480 (Ind.Ct.App. 1984).⁶

The Estate cites Whittaker for the proposition that the identity of the "initial user or consumer" is a question of fact that cannot be resolved on summary judgment. Whittaker closes with the statement that the timeliness of the complaint presented a question of fact. Id. at 484. However, on the facts before it, Whittaker held that delivery to an intermediary retailer did not trigger the statute of repose because the retailer as a matter of law was not a "user or consumer." There remained only a failure of the moving party to establish when the first user or consumer took delivery, not a dispute over any factual proposition.

We agree with the Court of Appeals in this case that "[w]ho is a `user or consumer' is a purely legal question." Estate of Shebel v. Yaskawa Elec. America, Inc., 676 N.E.2d 1091, 1092 (Ind.Ct.App.1997); see also State ex rel. Paynter v. Marion County Superior Court, 264 Ind. 345, 350, 344 N.E.2d 846, 849 (1976)

(whether entity falls within statutory term is a question of law).

Also relying on Whittaker, the Estate argues that Yamazen, as a distributor, was a seller⁷ and therefore cannot be a "user or consumer." Whittaker did express the view that the terms "seller" and "user or consumer" are mutually exclusive. 466 N.E.2d at 482. However, the Court of Appeals has acknowledged more recently that a "seller" may become a "user or consumer." In Wenger v. Weldy, 605 N.E.2d 796 (Ind.Ct.App. 1993), the court held that the statute of repose began to run when the defendant, a distributor, transferred a hay baler from his business inventory and used it in his farming operation. Whittaker may have been correct that the "seller" before it was not also a "user or consumer," but Wenger demonstrates that the two terms are not mutually exclusive, at least in the sense that one who acquires for resale may by subsequent use become a "user or consumer."

It is uncontroverted that Yamazen sold lathes, and, as the trial court acknowledged, Yamazen is "generally a distributor." However, the trial court went on to conclude that "[i]n this instance however, they clearly became a user or consumer of this lathe." Isolated or incidental use may not be sufficient to render a distributor a user, but here the undisputed facts establish repeated and extensive use of the lathe. Yamazen purchased the lathe for use as a demonstration model. The lathe was first used within weeks of delivery at a March 1981 show to manufacture several hundred parts. The lathe was then shipped to Colorado in June 1981 for another trade conference and then to Oregon for a show in September of that year. It was next sold as used equipment to Aegis. Dorsey Roth, the owner of Aegis, stated that when he checked the computer on the lathe to determine how many hours the machine had been used before he acquired it, the computer...