Heritage v. Pioneer Brokerage & Sales, Inc., 3055

• Decision Date: 01 June 1979
• Docket Number: 3087,No. 3055,3055
• Citation: 604 P.2d 1059
• Parties: William D. HERITAGE and Arline Heritage, Appellants, v. PIONEER BROKERAGE & SALES, INC. and Moduline Industries, Inc., Appellees. MODULINE INDUSTRIES, INC., Cross-Appellant, v. PIONEER BROKERAGE & SALES, INC., Cross-Appellee.
• Court: Alaska Supreme Court

Page 1059

604 P.2d 1059

William D. HERITAGE and Arline Heritage, Appellants, v. PIONEER BROKERAGE & SALES, INC. and Moduline Industries, Inc., Appellees.

MODULINE INDUSTRIES, INC., Cross-Appellant, v. PIONEER BROKERAGE & SALES, INC., Cross-Appellee.

No. 3055, 3087.

Supreme Court of Alaska.

June 1, 1979.

A. Lee Petersen, Inc., Anchorage, for appellants.

M. T. Thomas, Robertson, Monagle, Eastaugh & Bradley, Juneau, for appellee and cross-appellant Moduline Industries, Inc.

Michael M. Holmes, Faulkner, Banfield, Doogan & Holmes, Juneau, for appellee and cross-appellee Pioneer Brokerage & Sales, Inc., Juneau.

Before BOOCHEVER, C. J., RABINOWITZ, CONNOR and BURKE, JJ., and DIMOND, Senior Justice.

RABINOWITZ, Justice.

This appeal and cross-appeal arise out of a defense verdict in a personal injury action brought by the Heritages against Pioneer Brokerage & Sales, Inc., the retailer of the Heritages' mobile home, and Moduline Industries, Inc., the manufacturer, alleging defects in the mobile home. Appellants Heritages sought recovery based upon their theory of strict products liability; however, the jury concluded in a special verdict that the mobile home was not defective. Judgment was entered on the verdict in favor of Pioneer and Moduline Industries, and they also were separately awarded costs and attorney's fees against appellants. Subsequently, the superior court granted Pioneer's motion for costs and attorney's fees against Moduline and awarded $13,000 to Pioneer, less whatever amount of Pioneer's costs and attorney's fees were to be paid by appellants. From this judgment, the Heritages have appealed the giving of certain jury instructions defining product defectiveness and evidentiary rulings of the superior court, as well as the assessment of costs and attorney's fees against them. Cross-appellant Moduline Industries separately has appealed the award of costs and attorney's fees against it and in favor of Pioneer. We reverse and remand for a new trial based on our conclusion that at least one of the instructions given was erroneous.

In their original complaint, the Heritages alleged that they had purchased a new mobile home from Pioneer which was dangerously defective because of the presence of harmful formaldehyde fumes, and that Arline Heritage had incurred "painful, disabling, and incapacitating personal injuries" as a result of her exposure to the formaldehyde fumes present in the mobile home. Three separate theories of liability were alleged, ¹ but shortly before the trial was scheduled to commence the Heritages amended their complaint to delete all claims which were not based upon strict liability. The retailer, Pioneer Brokerage and Sales, Inc., answered and cross-claimed against the manufacturer, Moduline Industries, and asserted its right to recover costs and attorney's fees incurred in defending the action. ²

On the first day of trial, the Heritages filed a motion requesting the court "to determine the law of the case as it pertains to defenses and damages recoverable under strict liability in tort." After briefing, the superior court ruled that evidence of economic loss would be admissible under the strict liability theory but that evidence of William Heritage's lost wages, due to his return from his job on the North Slope to be with his wife in Juneau, was not admissible. ³ Later, the court ruled that evidence regarding the "unknowability" of the danger inherent in the product would be admissible on the issue of whether the new mobile home was defective. ⁴ Prior to submitting the case to the jury, the superior court granted Pioneer's motion for a directed verdict against Moduline, concluding that "Moduline should be responsible to indemnify Pioneer for any damages that Pioneer must suffer. . . . "

The Heritages' first assignment of error involves the superior court's instructions on strict liability. It is argued that the instructions were erroneous because they improperly introduced negligence concepts into the jury deliberations concerning the alleged design defect. The contested instructions were the following:

Jury Instruction No. 26

Defendants are liable to plaintiffs if it is shown by a preponderance of the evidence that:

(1) the defendants placed the mobile home in question on the market for use, and that the defendants knew or in the exercise of reasonable care should have known that the mobile home would be used without inspection for defects in the particular part, mechanism or design which is claimed to be defective; and

(2) the mobile home was 'defective' in design, manufacture or inspection at the time it was placed on the market and delivered; and (3) the defect, if any, was the proximate cause of the injuries for which damages are claimed.

The product is 'defective' if the amount of scientifically knowable danger inherent in the product at the time it was sold to plaintiffs outweighs the utility of the product as it was designed, manufactured and sold for its intended use.

Jury Instruction No. 29

The maker of an article for sale or use by others must use reasonable care and skill in designing it and in providing specifications for it so that it is reasonably safe for the purposes for which it is intended. And a person who undertakes such manufacturing will be held to the skill of an expert in that business and to an expert's knowledge of the arts, materials and processes. He must keep reasonably abreast of scientific knowledge and discoveries touching his product and of techniques and devices used by practical men in his trade.

Whether a manufacturer's "reasonable care and skill" as an expert in designing a product and its duty to "keep reasonably abreast of scientific knowledge and discoveries . . . and of techniques and devices used by practical men in his trade" are to be considered in a strict products liability action for design defect was settled in our recent decision in Caterpillar Tractor Co. v. Beck, 593 P.2d 871 (Alaska, 1979). ⁵ In the Beck case, we expressly rejected the approach taken by some legal commentators of reinserting negligence terminology into the jury's inquiry into the "diverse factors related to the product's desirability and to its dangerousness," which is the crucial analysis in the jury's overall determination that a product's design is defective and the manufacturer should bear legal responsibility for the mistake. ⁶ We emphasized there that "(t)he focus of strict products liability is on the condition of the product, not on the manufacturing and marketing decision of the defendant." ⁷ Beck adopted the California Supreme Court's guidelines for instructing a jury regarding defectiveness of a product's design as they are articulated in Barker v. Lull Engineering Co., 20 Cal.3d 413, 143 Cal.Rptr. 225, 573 P.2d 443 (1978). We held in Beck that a trial court may instruct the jury that a product is defectively designed if:

'(1) the plaintiff proves that the product failed to perform as safely as an ordinary consumer would expect when used in an intended or reasonably foreseeable manner, or (2) the plaintiff proves that the product's design proximately caused injury and the defendant fails to prove, in light of the relevant factors that on balance the benefits of the challenged design outweigh the risk of danger inherent in such design.' ⁸

Since Jury Instruction No. 29 in the case at bar conflicts with the prohibition articulated in the Beck opinion barring the use of negligence concepts in defining a design defect, the judgment of the superior court must be reversed and the case remanded for a new trial on all issues. ⁹

At the new trial certain evidentiary issues which were raised in the present appeal may recur. Therefore, we deem it expedient to provide guidance on those matters at this time. Appellants assert that the superior court erred in allowing evidence of "scientific unknowability" to be admitted in determining the defectiveness of the mobile home in this strict products liability case. The evidence adduced at trial over appellants' objections apparently consisted of expert testimony to the effect that exposure to the concentrations of formaldehyde which were measured in the Heritages' mobile home for the length of time that the Heritages resided there are not known scientifically to cause permanent deep lung damage of the type suffered by Arline Heritage. ¹⁰

Admission of the bulk of this expert testimony did not constitute error under our decision in Caterpillar Tractor Co. v. Beck, 593 P.2d 871 (Alaska, 1979). In Beck, we held that the defendant in a strict liability case may prove that the product was not defective by introducing evidence showing the various trade-offs in the design process. We stated there that the fact-finder is required "to consider and compare a number of competing factors, including but not limited to '. . . the mechanical feasibility of a safer alternative design . . . .' " ¹¹ A determination of the "scientific knowability" of the unsafe character of the product is relevant to the above inquiry in that it underlies evaluation of the manufacturer's ability to eliminate the harmful aspects of the product. This is because where no indication of danger exists and no techniques for obtaining such information are available, a manufacturer has no basis for concluding that the product should not be marketed. ¹² Thus, we think that "scientific knowability" of the injurious nature of the product should be considered because, otherwise, imposition of liability for a design defect would effectively mean absolute liability even though there is no alternative way for the manufacturer to discover the risk and remedy it. Such a situation would be incompatible with our previous decisions holding that manufacturers are not absolute insurers of their products. ¹³

Further, we are not persuaded that consideration of "scientific knowability" would reintroduce elements of negligence concepts into the determination...