Jordan v. Sunnyslope Appliance Propane & Plumbing Supplies Co., CA-CIV

• Decision Date: 06 January 1983
• Docket Number: CA-CIV
• Court: Arizona Court of Appeals
• Parties: J.B. JORDAN and Cathy Jordan, his wife, Plaintiffs-Appellants, v. SUNNYSLOPE APPLIANCE PROPANE & PLUMBING SUPPLIES COMPANY and Canyon Gas & Appliance Company, Defendants-Appellees. 15554.

Page 1236

660 P.2d 1236

135 Ariz. 309

J.B. JORDAN and Cathy Jordan, his wife, Plaintiffs-Appellants, v. SUNNYSLOPE APPLIANCE PROPANE & PLUMBING SUPPLIES COMPANY and Canyon Gas & Appliance Company, Defendants-Appellees.

1 CA-CIV 5554.

Court of Appeals of Arizona,

Division 1, Department D.

Jan. 6, 1983.

As Amended Jan. 12, 1983.

Rehearing Denied Feb. 18, 1983.

Review Denied Mar. 22, 1983.

Lewis & Roca by D.W. Grainger, Paul G. Ulrich, Beth J. Schermer, Phoenix, for appellants.

Robbins & Green, P.A. by Michael J. O'Grady, William H. Sandweg III, Phoenix, for Canyon Gas & Appliance Co.

Hughes & Hughes by Coit I. Hughes, Phoenix, for Sunnyslope Appliance Propane & Plumbing Supplies Co.

OPINION

MEYERSON, Judge.

The sole issue on this appeal from summary judgment is whether the trial court correctly held that dealers ¹ in used products cannot be held strictly liable for harm resulting from defective goods which may be unreasonably dangerous. We hold that a dealer in used goods may be held strictly liable under the Restatement (Second) of Torts § 402A (1965) (hereinafter cited as § 402A) as adopted by our supreme court.

I. FACTS

In December, 1975, the father of plaintiff J.B. Jordan purchased a used propane storage tank from Canyon Gas and Appliance Co. (Canyon Gas), a dealer in new and used propane tanks. The tank had been manufactured by American Pipe and Steel Co. (American Pipe) in 1947. The tank was sold without guarantees or representations regarding its condition. Jordan's father inspected the tank before buying it, removed the tank from Canyon Gas's premises and had it installed at his rental property located adjacent to his son's home. The tank was filled regularly and used for a year and a half after its purchase without incident.

On August 17, 1977, the tank was serviced by Sunnyslope Appliance Propane and Plumbing Supplies Co. (Sunnyslope). While the tank was being filled with liquid propane, the hose used in filling the tank disconnected. The propane exploded, totally destroying the plaintiff's house next door.

Plaintiffs filed a complaint alleging strict liability in tort against American Pipe and Canyon Gas. Plaintiffs alleged that the shut-off valve in the tank malfunctioned by failing to close, thereby allowing the propane to escape from the tank when the hose disconnected. They alleged that the valve was defective in design, material, construction or workmanship. Plaintiffs also sued Sunnyslope for negligently filling the tank and allowing the propane to escape.

American Pipe sought summary judgment on the grounds that it had not manufactured the valve and because there was no evidence that the valve had been installed on the tank when it left the manufacturer. The trial court granted American Pipe's motion for summary judgment and dismissed American Pipe as a defendant. No appeal was taken from that judgment.

Sometime thereafter Canyon Gas moved for summary judgment, arguing that the doctrine of strict liability in tort did not extend to a seller of used goods. The trial court granted the motion and dismissed Canyon Gas from the case. Plaintiffs have appealed from the granting of Canyon Gas's motion for summary judgment.

II. CONTENTIONS OF THE PARTIES

The dispute between the parties centers on the scope and extent of protection we are to afford those injured by unreasonably dangerous and defective products. The parties offer differing interpretations of § 402A, which provides as follows:

(1) One who sells any product in a defective condition unreasonably dangerous to the user or consumer or to his property is subject to liability for physical harm thereby caused to the ultimate user or consumer, or to his property, if

(a) the seller is engaged in the business of selling such a product, and

(b) it is expected to and does reach the user or consumer without substantial change in the condition in which it is sold.

In arguing that strict liability should be imposed on dealers in used goods, plaintiffs urge that § 402A and the comments thereto can be read to show the drafters meant to include used goods or at least did not mean to exclude them from the section. Section 402A states that one who sells "any" product is liable, not one who sells "any new" product. Comment (f) specifies there is an exception for one who is an "occasional" seller, not engaged in the business of selling the particular kind of product. It does not state that an exception applies to those in the business of selling particular used goods.

Plaintiff urges that the requirement that the product be "unreasonably dangerous" allows the trier of fact to inquire into the age and condition of the product and the knowledge of the buyer, and serves to limit liability to those cases where injury was caused by a defect below the degree of safety which the ordinary purchaser of a used product could reasonably expect. Plaintiff points out that strict liability is a cost spreading device to shift the cost of injuries from the injured party to those responsible for placing the product on the market and who are more aware and better able to control the actual risks involved. Plaintiff contends that the seller is able to adjust the cost of products he sells to include the cost of liability, insure against losses, and choose whether to place any particular product on the market at all. Plaintiff urges that a seller of used goods, just like a seller of new goods, is able to distribute the cost of doing business among his customers or shift liability to others in the chain of production.

In urging this court not to impose the doctrine of strict liability on used good dealers, Canyon Gas stresses the differences between dealers in used and new goods. It argues that the dealer in used products is not an integral part of the producing and marketing chain, having had no part in placing the product into the hands of consumers in the first instance. Because he has no continuing relationship with the manufacturer, Canyon Gas argues that a dealer in used products cannot exert pressure on the manufacturer nor adjust the cost of liability imposed upon him during the course of such relationship. Furthermore, according to Canyon Gas, the dealer in used goods cannot obtain indemnity because the product has changed hands since leaving the manufacturer. Finally, Canyon Gas argues that the cost of insurance would be prohibitive and trying to pass liability and insurance costs on to customers would drive used good dealers out of the market.

III. DECISIONS FROM OTHER JURISDICTIONS

Most of the arguments proffered by the parties have been discussed at length by those courts which have faced this issue to date. The question of whether or in what circumstances a dealer in used products should be held strictly liable for a defect attributable to the initial design or manufacturing of the used product has produced a split in authority. Annot., 53 A.L.R.3d 337 (1973).

In Hovenden v. Tenbush, 529 S.W.2d 302 (Tex.Ct.App.1975), a plaintiff sought to impose strict liability upon a dealer in used brick. Relying on its understanding of the language in § 402A and the policy behind it as set forth in the official comments, the court held that a seller of used products is not insulated from liability. The court observed that nothing in § 402A or its comments suggested that the rule was not meant to apply to sellers of used goods:

We find nothing in Sec. 402A, or in the accompanying comments, which suggests that the rule there announced is not applicable to dealers in used products. The liability is imposed on the seller of "any product." Neither the rule nor the commentary contains any language which can fairly be interpreted as making the rule applicable only to sellers of new products.

529 S.W.2d at 306.

The court concluded that because enterprise liability is the basis for the rule, dealers in used goods should be treated the same for strict liability purposes as dealers in new goods. According to the court, both obtain profit from selling the product and often are able to distribute the cost and shift liability. The court observed that "Sec. 402A imposed liability on sellers of used products where the evidence showed that the injury resulted from an inherent defect in the product, rather than from a condition brought about by normal use of the chattel." 529 S.W.2d at 309.

In Turner v. International Harvester Company, 133 N.J.Super. 277, 336 A.2d 62 (1975) a New Jersey court held that § 402A applied to dealers in used goods; the plaintiff was fatally injured when a truck collapsed on him. The court found enterprise liability to be the justification for the products liability doctrine and found that the same considerations for holding sellers of new goods strictly liable applied to dealers in used goods:

An economic analysis of enterprise liability, which includes direct as well as indirect costs, would charge those in the business of selling a defective product with responsibility for all harms, physical and economic, which result from its use. To a considerable extent--with respect to new goods--the manufacturer bases the cost of his product on his expenses, which include damages caused by the product and insurance to cover those damages. This cost is spread among all the customers for that product; it reflects the justifiable expectations of customers regarding safety, quality and durability of new goods. Sellers of used goods may similarly distribute their costs of doing business which, in turn, will reflect what is considered by the public to be justifiable expectations regarding safety, quality and durability of used goods.

Id. at 288-89, 336 A.2d at 69 (citations omitted).

The Turner court rejected the notion that the public did not expect used products to be safe from manufacturing and design defects when purchasing a serviceable product as opposed to junk parts. The court observed that while buyers of used products could not expect the same...