Gaines v. Excel Industries, Inc.

• Decision Date: 20 July 1987
• Docket Number: No. 1-86-0043,1-86-0038.,1-86-0043
• Citation: 667 F. Supp. 569
• Parties: Margie Sue GAINES, et vir. v. EXCEL INDUSTRIES, INC., et al. Robert Jeffery ALLEN v. The POSITIVE SAFETY MANUFACTURING COMPANY, et al.
• Court: U.S. District Court — Middle District of Tennessee

667 F. Supp. 569

Margie Sue GAINES, et vir. v. EXCEL INDUSTRIES, INC., et al.

Robert Jeffery ALLEN v. The POSITIVE SAFETY MANUFACTURING COMPANY, et al.

Nos. 1-86-0043, 1-86-0038.

United States District Court, M.D. Tennessee, Columbia Division.

July 20, 1987.

Robert E. Pryor, Pryor, Flynn, Priest & Harber, Knoxville, Tenn., Wayne F. Hairrell, Hairrell & Doerflinger, Lawrenceburg, Tenn., for plaintiffs.

Walter W. Bussart, R. Stephen Doughty, Thompson & Bussart, Nashville, Tenn., for intervenors Twin City Fire Ins. Co.

Ben Boston, Boston, Bates, Holt & Sands, Lawrenceburg, Tenn., and Schulmen, Leroy & Bennett, P.C., Angus Gillis, III, Nancy Corley, Nashville, Tenn., for Excel Industries, Inc.

MEMORANDUM

WISEMAN, Chief Judge.

Plaintiffs in these two diversity cases were injured at the Lawrenceburg, Tennessee, plant of their employer, Excel of Tennessee, Inc., in separate accidents involving stamp presses and related safety devices. Plaintiffs' employer is immune from general tort liability by virtue of Tenn.Code Ann. § 50-6-108, the Workers Compensation Law. Defendant Xcel Controls, Inc., the manufacturer of safety switches attached to the press, has been voluntarily dismissed pursuant to Fed.R.Civ.P. 41. Defendant The Positive Safety Co., manufacturer of the press, was granted summary judgment pursuant to the statute of repose, Tenn. Code Ann. § 29-28-103.

The remaining defendant is Excel Industries, Inc. (hereinafter Industries), the parent corporation of Excel of Tennessee, Inc. Plaintiffs' principal theory is that Industries assumed a duty of care to the plaintiffs when it undertook safety inspection tours of the Lawrenceburg plant and then negligently failed to see that certain safety measures were implemented.

Before the Court now in both cases are identical motions for summary judgment by defendant Industries on the grounds that plaintiffs' theory against it (1) fails to state a claim for negligence because, as a matter of law, Industries had no duty and assumed no legal duty to the plaintiffs; (2) is barred by the products liability statute of repose, Tenn.Code Ann. § 29-28-103; and (3) is barred because Industries is entitled to workers compensation immunity as an "employer" by virtue of its status as the parent of its wholly-owned subsidiary, Excel of Tennessee.

For the reasons stated below, the Court decides the first of these issues against Industries. To the extent plaintiffs make any claim against defendant in any capacity as a manufacturer of the products in question, however, the Court does grant summary judgment to defendant on that limited ground. Finally, the Court reserves until trial a decision on the question of workers compensation exclusivity.

I. Safety Inspection

Plaintiffs assert that Industries "assumed the role of safety advisor and consultant" to its subsidiary by conducting safety inspections but then failing to see that a proper program was established, including maintenance of devices, remedies of hazards, and education of workers. The plaintiffs' theory, thus, is that (1) defendant undertook a duty to monitor safety in the Lawrenceburg plant; (2) defendant discharged that duty negligently both by its conduct of the inspections and by its failure to see that its subsidiary put into effect certain followup measures that were reasonably required as the result of a competent safety inspection; and (3) that this failure was a proximate cause of plaintiffs' injuries.

The parties agree that this theory, if established in fact and sound as a matter of law, would require the application of the Restatement (Second) of Torts § 324A. That section states:

One who undertakes, gratuitously or for consideration, to render services to another which he should recognize as necessary for the protection of a third person or his things, is subject to liability to the third person for physical harm resulting from his failure to exercise reasonable care to protect¹ (sic) his undertaking, if

(a) his failure to exercise reasonable care increases the risk of such harm, or

(b) he has undertaken to perform a duty owed by the other to the third person, or

(c) the harm is suffered because of reliance of the other or the third person upon the undertaking.

Restatement (Second) of Torts § 324A (1965).

As defendant points out, no Tennessee court has expressly adopted the "Good Samaritan" doctrine enunciated in the Restatement's §§ 323 and 324A. See Moody v. United States, 774 F.2d 150, 155-56 (6th Cir.1985). However, the general principle inherent in the Restatement sections was endorsed as "ancient learning" in Nidiffer v. Clinchfield Railroad Co., 600 S.W.2d 242, 246 (Tenn.App.1980), and two federal courts post-Nidiffer have used the Restatement "Good Samaritan" sections in Federal Tort Claim Act cases employing Tennessee law. See Lemar v. United States, 580 F.Supp. 37, 39-40 (W.D.Tenn.1984); Neal v. Bergland, 646 F.2d 1178 (6th Cir.1981), aff'd sub nom. Block v. Neal, 460 U.S. 289, 103 S.Ct. 1089, 75 L.Ed.2d 67 (1983).²

This Court agrees with Judge McRae's reading of Nidiffer that, "faced with a situation similar to this case, a Tennessee court would apply the Restatement formulation." Lemar, 580 F.Supp. at 40. The Good Samaritan doctrine is well established in American law, as the Nidiffer court recognized when it cited as authority for its views both Judge Cordozo and Dean Prosser. 600 S.W.2d at 246 (citing Glanzer v. Shepard, 233 N.Y. 236, 135 N.E. 275 (1922); W. Prosser, Law of Torts § 56 (4th ed. 1971)); see also Indian Towing, Inc. v. United States, 350 U.S. 61, 64-65, 76 S.Ct. 122, 124, 100 L.Ed. 48 (1955) (Good Samaritan doctrine "hornbook tort law").

Defendant further argues that, even if the Tennessee courts would recognize the principles of section 324A, the facts of this case do not state a claim under this theory.

In affidavits submitted by employees of Industries and of its subsidiary, defendant acknowledged that one of its employees reviewed safety programs and records, conducted safety audits, and participated in safety inspection tours of the Lawrenceburg plant along with a representative of the companies' common insurer. This employee also received copies of reports sent by the insurer to the subsidiary that apparently suggested changes in safety procedures. See Affidavit of Kenneth P. Nemes, Jan. 9, 1987, at 3-4. Mr. Nemes further acknowledges that

In my plant visits, I was attempting to check and see if Excel of Tennessee, Inc. had implemented a safety policy designed to minimize press injuries and had made reasonable efforts to see that the safety practices they employed were continued on a routine basis.... If any safety procedures were not being followed or documented, the subsidiary corporation was advised of this so they could implement the appropriate program.

Id. at 2-3.

Notwithstanding these descriptions, defendant's affidavits further elaborate that the Lawrenceburg safety program "was administered entirely on a local basis" by the Tennessee subsidiary, Affidavit of Joel William Mow at 3, that Industries never "undertook to manage the safety program" of the subsidiary, Nemes affidavit at 3, that the subsidiary did not "require" safety inspections by the parent, Affidavit of Robert Pabreza at 3, and that "all responsibility for maintaining the presses in a safe condition and for placing the presses in a safe condition rested with Excel of Tennessee, Inc." Nemes affidavit at 3.

Therefore, defendant argues, plaintiff cannot state a claim under any of the three alternative subparts of section 324A.³ The Court disagrees.

First, defendant argues, plaintiff cannot prevail under subpart (a) because inaction⁴ by Industries could not "increase the risk of harm" to plaintiffs but at most would leave that risk constant. The Court observes, at the outset, that inaction is not inevitably associated with a constant risk of harm. If safety conditions were deteriorating, for example, inaction could occur in the face of an increasing risk of harm. Moreover, inaction could occur over a period of time in which the absolute risk of harm might be constant, but the risk relative to that level of safety which might be achieved using state-of-the-art equipment or procedures was in fact increasing. Inaction by a safety inspector might also lull the person primarily responsible for safety into a sense that minimum standards were being met, result in less diligent safety monitoring by the primary actor, and thereby cause an increase in the risk of harm.

Put at its simplest, defendant's argument that inaction inevitably leaves the risk of harm constant ignores the possibility that, had defendant made positive recommendations to its subsidiary that were acted upon by the subsidiary, plaintiffs' risk of cumulative exposure to an existing risk might have been lessened. Notwithstanding defendant's citation of older cases to the contrary, the modern view is that failure to perform a safety inspection adequately, otherwise characterized as an "omission" or "inaction," is nonetheless affirmative misconduct. See Ember v. B.F.D., Inc., 490 N.E.2d 764, 770-71 (Ind.App.1986); Fudge v. City of Kansas City, 239 Kan. 369, 720 P.2d 1093, 1098-99 (1986).

Subpart (b) of section 324A imposes liability on one who has undertaken to perform "a duty owed by the other to a third person." Defendant argues that it may be liable under this subpart only if it supplanted, not merely supplemented, its subsidiary's duty to inspect, citing Ricci v. Quality Bakers of America Cooperative, Inc., 556 F.Supp. 716 (D.Del.1983), and only if its conduct was intended exclusively, or at least primarily, to render services for the benefit of either the subsidiary or its employees, citing Rick v. RLC Corp., 535 F.Supp. 39 (E.D.Mich.1981) and Philadelphia Manufacturers Mutual Insurance Co. v. Gulf Forge Co., 555 F.Supp. 519 (S.D.Tex.1982). See also Smith v. Allendale Mutual Insurance Co., 410 Mich. 685, 303 N.W.2d 702 (1981)...