Ffe Transp. Services, Inc. v. Fulgham

• Decision Date: 31 December 2004
• Docket Number: No. 02-1097.,02-1097.
• Citation: 154 S.W.3d 84
• Parties: FFE TRANSPORTATION SERVICES, INC., Petitioner, v. Larry FULGHAM and Debra Fulgham, Respondents.
• Court: Texas Supreme Court

154 S.W.3d 84

FFE TRANSPORTATION SERVICES, INC., Petitioner, v. Larry FULGHAM and Debra Fulgham, Respondents.

No. 02-1097.

Supreme Court of Texas.

Argued October 29, 2003.

Decided December 31, 2004.

Thad D. Spalding, Monte Keith Hurst, David Lynn Sargent, Hermes Sargent Bates, L.L.P., Dallas, for Petitioner.

Kenneth W. Fuqua, Fuqua, Hudnall & Gappelberg, L.L.P., Dallas, for Respondent.

Justice SMITH delivered the opinion of the Court.

Larry and Debra Fulgham brought products liability and negligence claims against FFE Transportation Services, Inc. arising out of a tractor-trailer accident. The trial court granted a directed verdict in favor of FFE at the close of the plaintiffs' case-in-chief, finding that FFE could not be held strictly liable and that there was no evidence to support the negligence claim.

The court of appeals reversed and remanded for a new trial, holding that strict products liability was applicable because the agreement between FFE and Larry constituted a lease of the relevant trailer, that expert testimony was not necessary to establish FFE's negligence, and that there was some evidence of each of the required elements of negligence. 152 S.W.3d 140. We disagree.

In resolving this case, we conclude:

1) strict products liability is inapplicable when, as here, a company gratuitously provides a product to an independent contractor working for the company for the sole purpose of accomplishing the company's business purposes;

2) on appeal, a trial court's determination regarding whether expert testimony is necessary to establish negligence should be reviewed de novo;

3) the trial court did not err in finding that the standard of care for the proper inspection and maintenance of a refrigerated trailer is beyond the experience of the layman and therefore must be established by expert testimony; and

4) no probative expert testimony regarding the relevant standard of care was admitted.

Accordingly, we reverse the court of appeals's judgment and remand to the court of appeals to consider the two points of error raised by the Fulghams that were not considered by it.

I

FFE was in the business of transporting freight by motor vehicle. Larry Fulgham was a long-haul trucker. On December 5, 1997, FFE and Larry signed a fourteen-page contract that was titled "Independent Contractor Agreement." The contract specified that Larry use his own tractor to transport commodities in trailers owned by FFE in exchange for a percentage of the transport fee.

On March 7, 1998, Larry was transporting a load of prepackaged meats through Kentucky for Hillshire Farms, an FFE customer. Larry had inspected the pre-loaded refrigerated trailer, including the tractor-trailer connection, before leaving the Hillshire Farms warehouse.¹ Three hours after Larry picked up the trailer, as he exited an interstate highway on a curved ramp, the trailer's upper coupler assembly² broke loose from the trailer, causing the trailer to separate from the tractor and overturn. Larry quickly lost control of the tractor, and it also overturned. As a result of the accident, Larry was injured.

Under the written contract between FFE and Larry, Larry operated his tractor and the FFE trailers assigned to him under the exclusive direction and control of FFE. As Larry testified: "You've got to be at a certain place at a certain time. They give you an appointment time, delivery time, and a time that you're supposed to pick the load up." FFE instructed Larry which trailer to pick up, and the trailer was usually different each time. The contract specified that Larry could not use the tractor he furnished to carry FFE loads to perform work for other carriers. Bill Robinson, FFE's director of equipment and maintenance, testified that this was FFE's standard policy. The contract also stated that FFE "shall have exclusive possession, control and use" of Larry's tractor. At oral argument, the Fulghams' counsel acknowledged that Larry was authorized only to use FFE's trailers for the purpose of undertaking the deliveries that FFE had dispatched to him.

Under the terms of the contract, Larry was entitled to seventy percent of the freight bill for each delivery he completed. The court of appeals concluded that the contract constituted a lease of the relevant trailer, asserting that Larry paid thirty percent of the transport fee to FFE as rent. 152 S.W.3d at 144 .³ However, under the contract, Larry was not required to pay any fee or other charge to FFE for the use of its trailers. Instead, FFE paid Larry for both his personal services and the exclusive use of his tractor.

In early 1998, FFE arranged for loads to be carried on approximately 600 trucks driven by owner-operators like Larry and on about 1,300 company trucks driven by FFE employees. The owner-operators were independent contractors who provided their own tractors. Significantly, FFE did not lease or otherwise provide any of its 3,000 trailers for use in carrying loads other than those that FFE contracted to transport. Neither Larry nor the other drivers for FFE had any direct contractual relationships with FFE's customers. Instead, all of their assignments for hauling commodities originated with FFE. Larry, like the other drivers for FFE, took temporary possession of various FFE trailers, including the one at issue here, incident to his exclusive work for FFE.

It is undisputed that the specific trailer in this case, designated by FFE as trailer number 16634, was never released by FFE to anyone except its employees and independent contractors for the sole purpose of transporting FFE loads. FFE was the owner and end user of trailer number 16634, and Larry used it only when acting as FFE's paid agent.

In their Third Amended Original Petition, the Fulghams alleged that trailer number 16634 was defective because the bolts and plates anchoring the upper coupler assembly to the trailer were missing or weak or both due to rust and inadequate torque.⁴ The Fulghams also alleged that FFE failed to timely and properly inspect and maintain the trailer, and more specifically, its upper coupler assembly.

After the Fulghams rested, FFE orally moved for a directed verdict. FFE asserted that there was no evidence of duty, breach, or causation to support the negligence claim, and that the Fulghams had failed to present the necessary expert testimony. As to the strict liability claim, FFE asserted that there was no evidence that it had placed the trailer into the "stream of commerce." With regard to the Fulghams' negligence claim, the trial court concluded that expert testimony was required to establish the applicable standard of care, and that the Fulghams had not presented any probative expert testimony. The trial court also determined that the Fulghams' products liability claim should not go to the jury. Accordingly, the trial court granted FFE's motion for directed verdict.

The court of appeals reversed and remanded, concluding that expert testimony on the standard of care and breach of the standard of care was not necessary to establish negligence in this case because "the inspection and detection of loose and rusty bolts connecting parts of a trailer" was not a factual inquiry beyond the experience of the layman. 152 S.W.3d at 143. Additionally, the court concluded that products liability was applicable because the contract between FFE and Larry was a "lease" through which FFE had introduced the trailer into the "stream of commerce." Id. at 144.

II

In McKisson v. Sales Affiliates, Inc., 416 S.W.2d 787, 788-89 (Tex.1967), we adopted section 402A of the Restatement (Second) of Torts on the scope of strict products liability. Section 402A(1) provides:

(1) One who sells any product in a defective condition unreasonably dangerous to the user or consumer or to his property is subject to liability for physical harm thereby caused to the ultimate user or consumer, or to his property, if

(a) the seller is engaged in the business of selling such a product, and

(b) it is expected to and does reach the user or consumer without substantial change in the condition in which it is sold.

Restatement (Second) of Torts § 402A(1) (1965). Even though section 402A literally applies only to the sale of a defective product, McKisson concluded that strict products liability would apply to a product that was given free of charge, if the product were given "with the expectation of profiting therefrom through future sales [of the product]." McKisson, 416 S.W.2d at 792.

To incur strict liability in Texas, "it is not necessary that the defendant actually sell the product, but only that he be engaged in the business of introducing the product into the channels of commerce." Armstrong Rubber Co. v. Urquidez, 570 S.W.2d 374, 375 (Tex.1978). "Where one is engaged in the business of introducing products into the channels of commerce, he will be subject to strict liability for physical harm caused by such products if they are unreasonably dangerous to the user or consumer whether he sells or leases the products." Rourke v. Garza, 530 S.W.2d 794, 800 (Tex.1975).⁵ However, we have declined to apply strict liability where "there has been no sale of the product by the manufacturer but a bailment for mutual benefit," when the product bailment was to an employee of an independent contractor of the bailor for the sole purpose of accomplishing the bailor's business purposes. Urquidez, 570 S.W.2d at 375.

In Urquidez, the widow of a test driver employed by an independent tire testing company unsuccessfully sought to hold Armstrong Rubber Company, a tire manufacturer, strictly liable for the death of her husband due to a tire blowout. The specific tire that blew out was "never sold and, more importantly, never entered the stream of commerce," though it was identical to thousands of other tires that had been placed in the "channels of commerce" by Armstrong Rubber. Id. at 376. The tire that blew out had been supplied by Armstrong...