Fugate v. Brockway, Inc.
| Decision Date | 11 July 1991 |
| Docket Number | Nos. 89-2711,89-2719,s. 89-2711 |
| Citation | 937 F.2d 960 |
| Parties | 15 UCC Rep.Serv.2d 1018 Gene C. FUGATE; Pearl H. Fugate, t/a Fugate Contract Carrier, Plaintiffs-Appellees, v. BROCKWAY, INC.; Marine Indemnity Insurance Company of America, Defendants-Appellants. Edward C. NEAL, t/a Neal's Warehouse, Defendant, v. Ricky GRAHAM, t/a Graham's Exterminating Service, Third Party Defendant. Gene C. FUGATE, Pearl H. Fugate, t/a Fugate Contract Carrier, Plaintiffs-Appellants, v. BROCKWAY, INC.; Marine Indemnity Insurance Company of America, Defendants-Appellees, and Edward C. NEAL, t/a Neal's Warehouse, Defendant, v. Ricky GRAHAM, t/a Graham's Exterminating Service, Third Party Defendant. |
| Court | U.S. Court of Appeals — Fourth Circuit |
Robert T. Vaughan, Jr., argued (James A.L. Daniel, of counsel), Daniel, Vaughan, Medley & Smitherman, P.C., Danville, Va., for defendants-appellants.
James Warren Haskins, argued (Robert L. Bushnell, of counsel), Young, Haskins, Mann & Gregory, P.C., Martinsville, Va., for plaintiffs-appellees.
Before SPROUSE and WILKINSON, Circuit Judges, and CHAPMAN, Senior Circuit Judge.
This appeal concerns a dispute between a warehouseman, Fugate Contract Carrier ("Fugate"), 1 and Brockway, Inc. ("Brockway"), a depositor of glass bottles, concerning liability for pest infestation of the area in Fugate's warehouse where the bottles were deposited. A jury found that Fugate's negligence proximately caused the damages resulting from the infestation, but found that Brockway could not recover because it had been contributorily negligent. The principal issue is whether the district court correctly charged the jury that Brockway's claim could be defeated by its contributory negligence. Finding that, as a matter of law, Brockway was not contributorily negligent, we reverse.
Brockway manufactures glass bottles and sells many of its bottles to Miller Brewing Company. The business relationship between Brockway and Fugate began in 1978, when Fugate transported glass bottles by truck from Brockway's plant in Pittsylvania County, Virginia, to a Miller Brewing Company facility in Eden, North Carolina. In January 1985, however, Fugate became an independent warehouseman and began to store Brockway's bottles, initially in a warehouse located in the Laurel Park area of Henry County, Virginia (the "Laurel Park facility").
Brockway customarily inspected all warehouses before approving them. Pursuant to this policy, its representatives inspected and approved the Laurel Park facility. At that time, Brockway provided Fugate with basic instructions on its needs regarding warehouse operations and sanitation criteria, which included minimum guidelines regarding pest control. Brockway also provided Fugate with a copy of the Brockway Handbook (the "Handbook"), which contains instructions for receiving, storing, shipping, and loading wares. The Handbook text is prefaced by the statement that "[i]t is the responsibility of a Brockway public warehouse to be accountable for Brockway's inventory as it passes through their [sic] warehouse facility." (Emphasis in original.) The Handbook also emphasizes the need for an insect-free environment and the correlative need to regularly exterminate the warehouse. It is undisputed that Fugate understood that it was responsible for complete elimination of any insects prior to storing Brockway's bottles and for maintaining the warehouse in that condition while the bottles were stored there.
To comply with its contractual responsibility to exterminate the Laurel Park facility, Fugate employed Ricky Graham, a professional exterminator. Gene Fugate explained to Graham that the facility must be completely insect-free and that the warehouse must be maintained to the standards required by Brockway. He suggested that Graham contact Brockway's representative for details concerning its standards. In a telephone conversation initiated by Graham, a Brockway employee reiterated that the extermination procedures must be complete and, in response to Graham's question, provided the latter with a list of extermination chemicals that Brockway considered adequate for use in insect control. Graham "bombed" the Laurel Park facility and performed other extermination services twice a month there. The parties concede that during the fourteen months the Brockway bottles were stored at the Laurel Park facility there was no evidence of any insects nor were there complaints from any customers concerning the condition of the bottles.
In March 1986, Fugate desired to change its warehouse operation from Laurel Park to a facility in Danville, Virginia, known as Neal's warehouse. Jim Wescott, a Brockway customer service representative with twenty-seven years of experience, visited and inspected Neal's warehouse. Wescott recommended that Brockway approve Neal's warehouse, subject to Fugate fencing away from the warehouse an outdoor basketball court, weed cutting, and pest control. Gene Fugate acknowledged that he understood that proper extermination was completely Fugate's responsibility. It is also uncontroverted that during Wescott and Fugate's joint inspection, Neal's warehouse appeared "clean," free of insects and other problems, and superior to the Laurel Park facility.
Fugate again employed Graham to conduct the extermination before Fugate received any of Brockway's wares at that facility. It is undisputed that Graham understood the necessity for an insect-free warehouse and utilized the extermination procedures he thought would produce that environment at Neal's warehouse. Within a very short time, Brockway diverted its delivery of bottles from the Laurel Park warehouse to Neal's warehouse.
Some six weeks later, however, Miller Brewing Company discovered cockroaches in some of the bottles delivered to them from Neal's warehouse. A consequent inspection revealed that thousands of cockroaches were present under the concrete slabs of the warehouse floor. They could not be seen under normal conditions but when pesticide was forced through the expansion joints between the concrete slabs, they emerged from their hidden nesting places. The discovered infestation required the removal of the glassware, "bottle-by-bottle" inspection, and increased extermination efforts.
Fugate sued Brockway to recover its expenses of $88,134.88 and other contended damages. Brockway counterclaimed, demanding that Fugate reimburse it in the amount of $273,346. Fugate then filed a third-party complaint against Graham, seeking to hold the latter liable for the damages. After jury trial, the district court issued seven special interrogatories. The first three asked:
1. Do you find from a preponderance of the evidence that the roaches discovered in Neal's warehouse on April 28, 1986 were already in Neal's warehouse on March 15, 1986 and did not come from a Brockway source?
JURY ANSWER: Yes.
2. Do you find from a preponderance of the evidence that the Fugates failed to exercise reasonable care to prevent or control the insect infestation which occurred at Neal's warehouse and that such failure to use reasonable care proximately caused, in whole or in part, the contamination of Brockway glassware in the warehouse?
JURY ANSWER: Yes.
3. Do you find from a preponderance of the evidence that Brockway failed to use reasonable care to inspect the warehouse for sanitation considerations and that such failure to use reasonable care contributed to the contamination of the Brockway glassware in the warehouse?
JURY ANSWER: Yes.
The four remaining interrogatories related to other possible failures by Fugate to use reasonable care, to the possible failure by Graham to use reasonable care, and to damages. Following the court's instruction, the jury, after answering the first three interrogatories affirmatively, proceeded no further, finding that Brockway could not recover because of its contributory negligence.
After judgment, Brockway filed a motion for judgment notwithstanding the verdict, claiming that the question concerning contributory negligence, implicit in interrogatory number three, was legally improper and that,...
To continue reading
Request your trial