Holmes v. Wegman Oil Co.

• Citation: 492 N.W.2d 107
• Decision Date: 04 November 1992
• Docket Number: 15592,15593,Nos. 15591,15607,15608 and 15609,s. 15591
• Parties: Prod.Liab.Rep. (CCH) P 13,520 Christine HOLMES, Plaintiff and Appellee, v. WEGMAN OIL COMPANY, Defendant and Appellee, and White-Rodgers Division of Emerson Electric Company, and A.O. Smith Corporation, Defendants and Appellants. George P. HOLMES, as Special Administrator of the Estate of Laura Holmes, Deceased, and George P. Holmes, as Guardian ad Litem of William Holmes and George Holmes, Minors, Plaintiff and Appellee, v. WEGMAN OIL COMPANY, Defendant and Appellee, and White-Rodgers Division of Emerson Electric Company, and A.O. Smith Corporation, Defendants and Appellants. Merrell NESS, Plaintiff and Appellee, v. WEGMAN OIL COMPANY, Defendant and Appellee, and White-Rodgers Division of Emerson Electric Company, and A.O. Smith Corporation, Defendants and Appellants.
• Court: Supreme Court of South Dakota

Page 107

492 N.W.2d 107

Prod.Liab.Rep. (CCH) P 13,520

Christine HOLMES, Plaintiff and Appellee, v. WEGMAN OIL COMPANY, Defendant and Appellee, and White-Rodgers Division of Emerson Electric Company, and A.O.

Smith Corporation, Defendants and Appellants.

George P. HOLMES, as Special Administrator of the Estate of

Laura Holmes, Deceased, and George P. Holmes, as Guardian ad Litem of William Holmes and George Holmes, Minors, Plaintiff and Appellee, v. WEGMAN OIL COMPANY, Defendant and Appellee, and White-Rodgers Division of Emerson Electric Company, and A.O.

Smith Corporation, Defendants and Appellants.

Merrell NESS, Plaintiff and Appellee, v. WEGMAN OIL COMPANY, Defendant and Appellee, and White-Rodgers Division of Emerson Electric Company, and A.O.

Smith Corporation, Defendants and Appellants.

Nos. 15591, 15592, 15593, 15607, 15608 and 15609.

Supreme Court of South Dakota.

Argued April 20, 1992.

Decided Nov. 4, 1992.

Timothy M. Gebhart and Edwin E. Evans of Davenport, Evans, Hurwitz & Smith, Sioux Falls, Allen J. Eide and Thomas F. Burns of Gribbin, Burns & Eide, Watertown, for appellees Christine Holmes, George P. Holmes, and Merrell Ness.

John E. Simko of Woods, Fuller, Shultz & Smith Sioux Falls, for appellee Wegman Oil.

James C. Roby of Green, Schulz, Roby & Oviatt, Watertown, Ludwig E. Kolman and William M. Cohn of Pope & John, Ltd., Chicago, Ill., for appellants.

SABERS, Justice.

Plaintiffs recovered substantial damages for serious injuries received in an LP gas water heater explosion. Defendants appeal. We affirm.

FACTS

White-Rodgers, a division of Emerson Electric Company, Inc. (White-Rodgers), was the manufacturer of the Starstat 3700 series liquified propane (LP) gas water heater thermostatic control (control). The development of the control began in 1962. Following testing, it was placed on the market in 1964. The controls were sold to various water heater manufacturers including A.O. Smith (Smith), Sears, State Industries, Rheem and W.L. Jackson. By the end of 1969, White-Rodgers had sold three million controls without incident.

These controls were intended to operate in the following manner. First, the control knob is turned from OFF to PILOT.

Second, the knob must be manually pushed down to allow gas to flow to the pilot light. Once the pilot light is lit, the knob must continue to be depressed until the thermocouple is warmed sufficiently. The thermocouple is a thermoelectric safety switch that allows gas to flow to the pilot light and to the main burner only when it is warmed by the pilot light. Thus, the thermocouple is designed to prevent unburned gas from escaping--unless it is bypassed by a depression of the control knob.

Third, when the thermocouple is warmed, the knob is allowed to spring back to its former position, turned to ON and then the water begins to heat.

If the pilot light goes out and the knob is stuck down or depressed in the PILOT position, unburned gas will escape from the pilot light into the air. If the pilot light goes out and the knob is stuck down or depressed in the ON position, unburned gas will escape from the pilot and the main burner. LP gas is normally odorized to alert users to the presence of any unburned gas in the air.

The knob on the control was made of a relatively soft plastic material known as Styron 475. These knobs had a spline, or ridge, smaller than the head of a paper match, also made of this soft plastic. The spline was intended to prevent the knob from being depressed in the ON position or being turned to ON while depressed.

In 1969, Smith informed White-Rodgers that the knob on the control could stick down in the PILOT position due to plastic shavings from the knob which prevented the knob from springing back. These shavings resulted from depressing the knob while slightly misaligned. In July 1970, White-Rodgers also learned that tests in Japan revealed the plastic spline could be shaved after turning the knob as few as ten times. After White-Rodgers received this information, it began testing harder plastics to remedy this problem. In late 1970, White-Rodgers introduced a new Tuf-Flex knob, but did not attempt to remedy the knob problem on controls sold prior to 1970 at that time.

In 1971, 1973 and 1974 White-Rodgers was informed of lawsuits arising from explosions caused by these knobs. The plastic knobs had been damaged and then turned from PILOT to ON while partially depressed thereby overriding the safety mechanism. White-Rodgers instructed its personnel, during this time period, to approach damage claims stemming from its controls with "the foregone conclusion that we are not involved."

In response to these lawsuits and explosions, White-Rodgers began testing a new knob for the control. A new control, which included an improved knob, went into production in 1976. In late 1976, White-Rodgers again improved the control by using a stronger material for the knob and spline and by making the spline four times larger. After making these changes, White-Rodgers destroyed its inventory of old knobs. Despite these design changes to prevent the known dangers of the prior knobs, no effort was made to remedy knob problems on controls sold prior to 1976.

From 1976 to 1979, eleven more accidents were reported to White-Rodgers which resulted from the control knob. This brought the total number of explosions to twenty-two since the control was first introduced and included five deaths and nineteen injuries. White-Rodgers had previously implemented a recall program on another product after receiving only one reported incident. In 1980, White-Rodgers began production of a redesigned control with a reinforcing collar around the knob and a warning not to use tools on the knob. All of these changes, including the thicker spline and stronger materials, were feasible in the mid-1960's at a cost of five to ten cents per control.

In late 1980, White-Rodgers began a recall campaign. ¹ The recall included all controls produced between 1961 and 1980. The recall was approved by the Consumer Product Safety Commission (CPSC) and consisted of mailing notices to all LP dealers. One of these dealers was Wegman Oil Company (Wegman) in Raymond, South Dakota. These notices informed the dealers of the knob problems and requested that they send White-Rodgers their customer lists. White-Rodgers intended to use these customer lists to send recall notices directly to the consumers. However, many LP dealers did not respond due to concerns over the loss of customer name confidentiality, potential dealer liability, and/or unreimbursed expenses. White-Rodgers began to contact these unresponsive dealers alphabetically by phone in April and May of 1981, but stopped after reaching the letter "C". No other attempt was made to contact unresponsive dealers, including Wegman, for their customer lists until after this explosion.

Despite his failure to comply with White-Rodgers' request for his customer list, Wegman did participate in the recall program. Shortly after the notices were sent to the LP dealers in December 1980, one of Wegman's customers read about the recall in the newspaper and contacted White-Rodgers. White-Rodgers in turn contacted Wegman and sent him a free control to replace the customer's recalled control. From January 1981 to June 26, 1983, Wegman changed 16 recalled controls, including his own and that of his son.

In May 1983, Christine Holmes (Holmes) and her children moved into a house she bought in Henry, S.D. The water heater and other appliances were fueled by LP gas. Holmes called Wegman to fill the tanks and to hook up the gas. On May 31, 1983, while at the Holmes' residence, Wegman noticed the control on the water heater was corroded due to water drippage. He told Holmes it needed replacement and suggested a used or salvaged control he had on his truck. Holmes agreed.

The salvaged control was a White-Rodgers control manufactured in 1967 and subject to the recall. Wegman testified he had placed the control in his truck, after removing it from another water heater prior to the 1980 recall. Wegman testified that, after inspecting the control for damage, he installed it on Holmes' water heater and then checked to make sure it was working properly. He then instructed Holmes' boyfriend, Allen Ness, in the proper manner of lighting the pilot light.

Over the next three weeks, the pilot light on Holmes' water heater went out several times. Each time Allen Ness relit it. On June 26, 1983, Holmes started to the basement to re-light the pilot when Allen's brother, Merrell Ness (Ness), arrived. She asked him to light the pilot. Ness and Holmes went to light the pilot and Holmes' children followed. As soon as Ness lit the match, an explosion occurred.

As a result of the explosion, Holmes was burned over 70 percent of her body and underwent five operations; Ness had second and third-degree burns over 62 percent of his body and underwent two skin-grafting operations; George Ness, 10, had second and third-degree burns over 38 percent of his body and also had two skin-grafting operations; Bill Holmes, 15, was burned over 15 percent of his body; and Laura Holmes, 5, had second and third-degree burns over 92 percent of her body--she died eighteen days after the accident.

Testing revealed unodorized gas escaping from the water heater. Testing of Holmes' control showed the knob was depressed in the ON position leaving the safety valve open and allowing gas to escape through the main burner. The soft plastic spline of the knob had been damaged and still had a shaving attached to it. Examination of the knob did not reveal any tool use.

Holmes and others brought suit against White-Rodgers, Smith, Wegman and several other defendants. ² Following a month long trial in 1986, ³ the jury found White-Rodgers and Smith strictly liable and guilty of fraudulent concealment. The jury also found all remaining defendants guilty of negligence. The jury apportioned fault...