Macmillan v. Redman Homes, Inc.

• Decision Date: 11 September 1991
• Docket Number: No. 04-90-00429-CV,04-90-00429-CV
• Parties: Prod.Liab.Rep. (CCH) P 12,976 Michael D. MACMILLAN, et al., Appellants, v. REDMAN HOMES, INC., et al., Appellees.
• Court: Texas Court of Appeals

Page 87

818 S.W.2d 87

Prod.Liab.Rep. (CCH) P 12,976

Michael D. MACMILLAN, et al., Appellants, v. REDMAN HOMES, INC., et al., Appellees.

No. 04-90-00429-CV.

Court of Appeals of Texas,

San Antonio.

Sept. 11, 1991.

Rehearing Denied Oct. 8, 1991.

Darby Riley, San Antonio, for appellants.

Clayton E. Devin, McCauley, MacDonald, Love, Devin & Brinker, Dallas, Karl G. Johnson, Jr., Wilson, Grosenheider & Burns, Austin, Michael R. Hedges, Hedges & Walsh, San Antonio, Randall W. Wilson, Mary Kathryn Sammons, Susman Godfrey, Houston, Daniel L. Bates, Michael W. Minton, Decker, Jones, McMackin, McClane, Hall & Bates, Fort Worth, P. Keith O'Gorman, Michael Black, Dale Weyand, Burns & O'Gorman, San Antonio, for appellees.

Before CHAPA, PEEPLES and BIERY, JJ.

OPINION

PEEPLES, Justice.

In this wrongful death and personal injury suit, plaintiffs appeal from an order sustaining special exceptions and dismissing their case for failure to state a cause of action. Plaintiffs contend that the air inside their mobile home contained unsafe levels of formaldehyde gas. The dismissal rests on the ground federal law preempts claims for damages caused by too much formaldehyde in the ambient air. The federal formaldehyde standards focus on the emissions from component products; plaintiffs want to litigate the level of emissions in the ambient air of the home, an approach that federal law rejects. We hold that federal law preempts the ambient air standard that plaintiffs want to urge in their state-court tort suit against the manufacturing defendants but not against the repair defendants.

Because the trial court sustained special exceptions and dismissed plaintiffs' case for failure to state a cause of action, we accept the pleaded facts as true. El Chico Corp. v. Poole, 732 S.W.2d 306, 309 (Tex.1987); City of Round Rock v. Smith, 687 S.W.2d 300, 301 (Tex.1985). In June 1986 plaintiffs bought a used mobile home from defendant Security Pacific Housing Services, Inc., which had repossessed it from the original owner and repaired it, using nine sheets of plywood paneling bought from defendant Builder's Square, Inc. The home had been manufactured by defendant Redman Homes, Inc., which filed a third-party action for contribution and indemnity against Georgia Pacific Corporation, which had supplied wood products to Redman. In 1989 the Macmillan family filed suit for personal injuries, and various beneficiaries brought suit for the wrongful death of their mother, Nera Morgan, who lived in the home with the Macmillans until her death in February 1987. ¹ Plaintiffs' Original Petition alleged that the home was unsafe "because of excessive levels of formaldehyde gas," which caused their injuries and Mrs. Morgan's death. Plaintiffs alleged four theories of recovery: strict liability, negligence, deceptive trade practices, and breach of express and implied warranties. Formaldehyde is contained in the glue that binds together the layers of wood in plywood paneling and the chips of wood in particle board.

The defendants answered and filed special exceptions contending that federal law preempts suits that allege excessive levels of formaldehyde in the air of a mobile home. Defendants cited the National Manufactured Housing Construction and Safety Standards Act of 1974, 42 U.S.C. §§ 5401-5426, and the formaldehyde regulations promulgated under that act by the Secretary of the Department of Housing and Urban Development (HUD). See 24 C.F.R. §§ 3280.308 et seq. (1990). The regulations expressly dictate the maximum level of formaldehyde gas that component products in mobile homes can emit, and they specify the precise warnings that must be given when a mobile home is sold. Plaintiffs did not allege that defendants had failed to comply with the federal regulations, which focus on the formaldehyde gas emitted by the component wood products. Instead they alleged only that there was excessive formaldehyde in the air of the mobile home.

At a series of hearings the court sustained defendants' special exceptions and gave plaintiffs several chances to replead and state a cause of action not preempted by federal law. Plaintiffs stood by their original allegation that challenged the safety of the formaldehyde level in the ambient air. Eventually the court dismissed the plaintiffs' lawsuit for failure to state a cause of action, a ruling that rests explicitly on the court's conclusion that federal law preempts the plaintiffs' four theories of recovery.

The manufactured housing act clearly preempts state administrative rules and regulations that are not identical to the federal formaldehyde standards. See 42 U.S.C. § 5403(d); Liberty Homes, Inc. v. Department of Indus., Labor, & Human Relations, 125 Wis.2d 492, 374 N.W.2d 142, 153 (Ct.App.1985), aff'd, 136 Wis.2d 368, 401 N.W.2d 805 (1987). The question before us is whether the trial court was correct in holding that the act also preempts state law damage suits concerning the formaldehyde level that do not allege a violation of federal standards. We hold that the statutory scheme and the HUD regulations preempt such common-law and statutory damage suits and prevent state courts from litigating formaldehyde levels on any basis that is not identical to the HUD product standards.

I. THE FORMALDEHYDE STANDARDS.

The record shows that when HUD adopted the product standard it specifically considered and rejected the ambient air standard that plaintiffs want to present to a court and jury as the standard of care. HUD's August 1984 report sets forth the rulemaking process that led to its formaldehyde regulations. See 49 Fed.Reg. 31,996 et seq. (August 9, 1984). HUD adopted its product formaldehyde standard after lengthy and careful study. In June 1979 it solicited public comment about mobile home standards. In August 1981 it focused on formaldehyde emissions and "solicited comment on 21 different aspects of formaldehyde outgassing, including adverse health effects, test methods, and the economic impact of regulation." Id. It received comment from "individual consumers and consumer organizations, manufactured home builders, wood product producers, trade associations, government agencies, universities, and the chemical industry." Id. Concerning formaldehyde standards, the major issue was "whether a standard should regulate the amount of formaldehyde in the total home environment or the amount emitted from the major sources of formaldehyde in the home." Id. (emphasis added).

In August 1983 HUD published its proposed standards and again solicited comment from interested groups and individuals. After extending the time for submission of comments to April 1984, it received 253 comments, "many of them quite extensive." Id. In the meantime the standards were reviewed by the 24-member National Manufactured Home Advisory Council, which is created by Congress and whose membership is chosen in equal thirds by industry, government agencies, and consumer groups. 42 U.S.C. § 5404. After subcommittees of the council considered the standards in workshop sessions for three days, the full council made several changes.

At the end of this process, HUD adopted (effective October 29, 1984) the formaldehyde product standard that is at issue in the present litigation. 49 Fed.Reg. at 31,996. That standard seeks to minimize the amount of formaldehyde in manufactured housing by limiting the emissions from its plywood and particle board components. "The rule requires that formaldehyde emissions not exceed 0.2 parts per million (ppm) from plywood and 0.3 ppm from particle board as measured by a specified air chamber test." Id. See 24 C.F.R. § 3280.308 et seq. HUD expressly considered and rejected an ambient air standard, such as the one that plaintiffs want to present as the standard of care in this case, which would measure the formaldehyde level in the air of the finished home. It found that the formaldehyde level in the air of the finished home will vary with the temperature, humidity, ventilation, and living habits of the homeowner. It heard arguments that these variables would make ambient air measurements unreliable. It heard opposing arguments that such variables could be controlled and factored out and that an ambient air standard could be effective and accurate.

After considering the competing arguments, HUD concluded that the product standard would be more effective and easier to enforce. According to its report, the component wood products of a mobile home are easy to test under standardized conditions, which avoids the difficulty of "compensating for variations in home temperature and humidity levels." The product standard also permits detection of a potential formaldehyde problem before the home has already been constructed. "Therefore, based on its effectiveness, the availability of reliable test methods, and the potential to prevent formaldehyde problems before the homes are sold, [HUD] concluded that a product standard is appropriate." 49 Fed.Reg. at 31,997.

HUD balanced many competing factors and resolved several conflicting contentions. It recognized that in warmer parts of the country formaldehyde emissions may increase, and that some groups (such as the elderly, small children, and those suffering from allergies or other respiratory ailments) may be more affected by formaldehyde in the air than the population generally. Concerning the seriousness of formaldehyde's irritant effects, HUD found the evidence inconclusive and decided to continue studying the matter and change the standards if further research justified it. HUD heard arguments that the allowable level of formaldehyde emissions should be lower, and arguments that the level should be higher. It evaluated different kinds of testing procedures. It considered the cost of testing and of compliance with its standards. Its health notice shows an awareness that goals of energy efficiency and mobile home ventilation can conflict with each other; the notice says...