Hughes v. Segal Enterprises, Inc.

• Decision Date: 27 January 1986
• Docket Number: Civ. No. 84-6045.
• Citation: 627 F. Supp. 1231
• Parties: Earl HUGHES and Tracy Hughes, Plaintiffs, v. SEGAL ENTERPRISES, INC. d/b/a Segal Manufactured Home Sales, An Arkansas Corporation; Buccaneer Homes Corp. d/b/a Buccaneer Mobile Homes, An Alabama Corporation; Weyerhaeuser Company, A Washington Corporation; Georgia Pacific Corporation, A Georgia Corporation, and John Doe III, Defendants.
• Court: U.S. District Court — Western District of Arkansas

627 F. Supp. 1231

Earl HUGHES and Tracy Hughes, Plaintiffs, v. SEGAL ENTERPRISES, INC. d/b/a Segal Manufactured Home Sales, An Arkansas Corporation; Buccaneer Homes Corp. d/b/a Buccaneer Mobile Homes, An Alabama Corporation; Weyerhaeuser Company, A Washington Corporation; Georgia Pacific Corporation, A Georgia Corporation, and John Doe III, Defendants.

Civ. No. 84-6045.

United States District Court, W.D. Arkansas, Hot Springs Division.

January 27, 1986.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

John S. Evangelisti, of LaFond & Evangelisti, Denver, Colo., and William W. Green, Hot Springs, Ark., for plaintiffs.

Wayne A. Gruber, Little Rock, Ark., for Segal Enterprises, Inc., d/b/a Segal Manufactured Home Sales.

Mel Sayes, Tom Forest Lovett, P.A., Little Rock, Ark., for Buccaneer Homes Corp. d/b/a Buccaneer Mobile Homes.

Robert K. Walsh, Friday, Eldredge & Clark, Little Rock, Ark., for Georgia Pacific Corp.

Philip M. Clay, Wood, Smith & Schnipper, Hot Springs, Ark., for Weyerhaeuser Co.

MEMORANDUM OPINION

H. FRANKLIN WATERS, Chief Judge.

Introduction

Plaintiffs, Earl Hughes and Tracy Hughes, citizens of the state of Arkansas, initiated this action on March 23, 1984, against defendants Segal, an Arkansas corporation, Buccaneer, an Alabama corporation, and John Does I, II and III, alleging that Earl Hughes purchased from Segal a new mobile home which was manufactured by Buccaneer. Plaintiffs alleged that John Does I, II and III supplied processed wood products to Buccaneer for use in the manufacturing of mobile homes. These processed wood products allegedly contain urea-formaldehyde resin and release formaldehyde gas. Plaintiffs contend that they were harmed by exposure to the formaldehyde fumes and that their mobile home was damaged when Buccaneer fumigated it with ammonia in an effort to remedy the defect.

Plaintiffs alleged various grounds for relief including (1) knowing failure to warn; (2) breach of warranties; (3) strict product liability; and (4) breach of warranty under the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301 et seq.

Plaintiffs claimed damages for pain and suffering, medical expenses, lost wages and earning capacity, lost credit and reputation, and loss of consortium, as well as punitive damages.

After Segal and Buccaneer answered, plaintiffs filed an amended complaint adding a claim for relief under the Consumer Product Safety Act, 15 U.S.C. §§ 2072, 2073 (CPSA). Neither Segal nor Buccaneer objected to the amendment.

With regard to the fourth claim for relief, under the Magnuson-Moss Act, it is alleged that plaintiffs are consumers as defined in the Act, that defendants are manufacturers, suppliers and warrantors pursuant to the language of the Act, that the mobile home is a "consumer product" as defined in the Act, and that the express warranty involved is a "written warranty" under the Act.

In plaintiffs' sixth claim for relief it is alleged that the defendants were required by the CPSA to report instances in which a product failed to comply with a safety rule or has a defect which would create a substantial hazard, but knowingly failed to do so with regard to the wood products containing formaldehyde. Plaintiffs also alleged that defendants failed to comply with section 2064(a) and (b) of the CPSA and that plaintiffs are entitled to recovery under section 2072 of the CPSA.

The remaining claims are the claims based upon state law or cognizable only in state court set forth above.

Segal and Buccaneer then moved to dismiss the fourth and sixth claims for relief. Buccaneer argued that the complaint does not allege a breach of any of the substantive provisions of the Magnuson-Moss Act, but merely alleges a breach of warranties which is not actionable. Buccaneer further alleged that the wood products involved are not "consumer products" under the CPSA, and that any action under the CPSA must be brought where the defendant "resides," must be preceded by notice to the Commission and the Attorney General, and is available only for injunctive relief.

Segal argued that an action for personal injury based upon a breach of warranty is not cognizable under the Magnuson-Moss Act, and that there must be a violation of a substantive provision of the Act resulting in "economic loss" of fifty thousand dollars or more, exclusive of interest and costs, and punitive damages, in order for the Act to be implicated.

With regard to the CPSA, Segal asserted that the wood products are not "consumer products" as defined by the CPSA, and therefore the CPSA is unavailable to the plaintiffs.

In March, 1985, Buccaneer filed "cross"-claims against Georgia Pacific Corporation and Weyerhaeuser Company for contribution and/or indemnity, and requested that they be substituted for John Does I and II as defendants. On April 10, 1985, Judge Harris ordered Georgia Pacific and Weyerhaeuser to be substituted as defendants in place of John Doe I and John Doe II.

Georgia Pacific and Weyerhaeuser Company both moved to dismiss the "cross"-claims, Weyerhaeuser arguing that it is not a co-party and that a cross-claim is therefore inappropriate, and Georgia Pacific arguing that the court lacks subject matter jurisdiction of plaintiffs' claim against Buccaneer and therefore the court lacks jurisdiction over the cross-claim. Weyerhaeuser's motion was denied on September 5, 1985.

Plaintiffs again moved to amend their complaint on September 27, 1985, so as to add Georgia Pacific and Weyerhaeuser as party defendants in place of John Does I and II and clarifying their Magnuson-Moss Act and CPSA claims. All defendants objected to the proposed amendment. Buccaneer contends that the amendment does not cure defects pertaining to the Magnuson-Moss Act claim and that the statute of limitations precludes plaintiffs' amended complaint.

Segal reiterated its argument that the Magnuson-Moss Act is inapplicable and that the court therefore lacks subject matter jurisdiction of plaintiffs' claims because plaintiffs and Segal are citizens of Arkansas and therefore complete diversity under 28 U.S.C. § 1332 is lacking. On December 3, 1985, the court was notified that Segal and the plaintiffs had settled the issues as between them, and Segal has now been dismissed from this action.

Georgia Pacific contends that plaintiffs assert no federal claims against it, that pendent jurisdiction over the state claims is inappropriate, and that the claims are barred by the statute of limitations.

Weyerhaeuser joined the other defendants in opposing the amendment and moved for summary judgment on the asserted grounds that the action is barred by the statute of limitations.

All of the parties have responded, replied, and "re-responded" to the various motions until the court's file is almost unmanageable; nonetheless, the court will attempt to wade through the ever-increasing paper in order to resolve the various claims and contentions of the parties.

Because Buccaneer, Georgia Pacific and Weyerhaeuser all contend that plaintiffs' claims against them are barred by the statute of limitations, the court will first discuss that issue.

Statute of Limitations

It is not disputed that plaintiffs have contended that Buccaneer fumigated the mobile home with ammonia on April 24, 1982, and that the fumigation caused damage to the home. Assuming that the statute of limitations began running on that date and that a three-year limitations period applies, as Buccaneer, Georgia Pacific and Weyerhaeuser contend, the statute of limitations would have expired on April 24, 1985. Because the cross-claims for contribution and indemnity arising from the same facts as alleged in the complaint were served upon Weyerhaeuser and Georgia Pacific in March, 1985, and because Weyerhaeuser and Georgia Pacific were made party defendants and substituted for John Does I and II by order dated April 10, 1985, the court believes that the statute of limitations is no barrier.

An amendment changing a party relates back when the claim asserted in the amended pleading arises out of the conduct, transaction, or occurrence set forth in the original pleading, and within the limitations period the opposing party has received such notice of the action that he will not be prejudiced and knew or should have known that but for a mistake concerning the identity, the action would have been brought against him. Rule 15(c), Fed.R. Civ.P. A primary factor is whether the defendants received adequate notice of the claims against it. Crowder v. Gordons Transports, Inc., 387 F.2d 413 (8th Cir. 1967); see also Campbell v. Bergeron, 486 F.Supp. 1246 (M.D.La.1980).

Weyerhauser and Georgia Pacific were not merely served with process within the limitations period, they were substituted as party defendants by Judge Harris' April 10, 1985, order. Thus, the court believes that the urged amendment of the complaint would relate back to a point in time prior to the expiration of the limitations period.

The Magnuson-Moss Warranty Act Claims

The second amended complaint, insofar as it purports to allege a cause of action under the Magnuson-Moss Act, states that the defendants are "suppliers" and "warrantors" as defined by the Act, that the mobile home is a "consumer product" under the Act, and that the written warranty is a "written warranty" as covered by the Act. See sections 2301(1), (4), (5), (6). It is contended that defendants breached express and implied warranties of merchantability and habitability, actionable under section 2310(d)(1), and that the written warranty provided by Buccaneer violated section 2303(a) by not being clearly labeled a "limited" warranty and was defective under section 2304(a)(2) because it limits the duration of implied warranties. Plaintiffs allege that all defendants failed to repair, replace or refund as required by section 2304(a)(4). By making the limitations of duration and liability unclear and inconspicuous, it is argued that defendants violated sections 2302, 2...