Marshall Indep. School Dist. v. US Gypsum Co.

• Decision Date: 20 May 1992
• Docket Number: No. 2:90 CV 8.,2:90 CV 8.
• Citation: 790 F. Supp. 1291
• Parties: MARSHALL INDEPENDENT SCHOOL DISTRICT, Plaintiff, v. UNITED STATES GYPSUM CO., Defendant.
• Court: U.S. District Court — Eastern District of Texas

790 F. Supp. 1291

MARSHALL INDEPENDENT SCHOOL DISTRICT, Plaintiff, v. UNITED STATES GYPSUM CO., Defendant.

No. 2:90 CV 8.

United States District Court, E.D. Texas, Tyler Division.

April 9, 1992.

As Amended April 15, 1992.

On Motion for Reconsideration May 20, 1992.

Francis Scott Baldwin, Baldwin & Baldwin, Marshall, Tex., Joseph B. Cox, Jr., Ness Motley Loadholt Richardson & Poole, Charleston, S.C., for Marshall Independent School Dist.

Don Wayne Kent, Christian E. Bryan, Cowles & Thompson, Tyler, Tex., for Celotex Corp.

Greg Keith Winslett, Strasburger & Price, Dallas, Tex., for GAF.

Stephen Smith Andrews, Woodard, Hall & Primm, Houston, Tex., for U.S. Gypsum Co.

AMENDED MEMORANDUM OPINION

JUSTICE, District Judge.

Plaintiff Marshall Independent School District (MISD) filed its original petition in this action in the District Court of Harrison County, 71st Judicial District of Texas, on December 18, 1989. Plaintiff, a public school district, alleged that the several defendants named in its petition had manufactured and sold to MISD acoustical spray-on ceiling materials containing asbestos, which were incorporated into various school buildings. MISD claimed that the buildings where the asbestos materials were used thus became a health hazard to their inhabitants, because of the link between inhaling asbestos fibers and various diseases and disorders. MISD alleged that it had instituted a variety of costly procedures to abate the asbestos hazards in its buildings.

On January 12, 1990, a defendant in the state court action removed the case to the United States District Court for the Eastern District of Texas, Marshall Division, in conformity with 28 U.S.C. §§ 1441 and 1446. Defendant United States Gypsum Company (USG) filed its original answer on January 15, 1990. As of the time USG moved for summary judgment on March 9, 1992, it was the sole, remaining defendant in the above-entitled and numbered civil action. Plaintiff filed its response to USG's motion for summary judgment on March 24, 1992. Defendant's summary judgment motion is now before the court.

Standard for Summary Judgment

Under Fed.R.Civ.P. 56(c), to prevail on a motion for summary judgment, the moving party bears the burden of demonstrating that the pleadings, depositions, answers to interrogatories, and admissions on file, together with any affidavits, show that there is no genuine issue as to any material fact, and that it is entitled to judgment as a matter of law. L & B Hosp. Ventures v. Healthcare Int'l, Inc., 894 F.2d 150, 151 (5th Cir.), cert. denied, ___ U.S. ___, 111 S.Ct. 55, 112 L.Ed.2d 30 (1990). The movant must identify the portion of the record that highlights the absence of genuine factual issues. Topalian v. Ehrman, 954 F.2d 1125 (5th Cir.1992).

The substantive law underlying each of the claims in issue identifies which facts are material. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986).¹ If any such facts are genuinely in dispute, summary judgment is inappropriate. A factual dispute is "genuine" if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson, 477 U.S. at 248, 106 S.Ct. at 2510. When assessing a motion for summary judgment, the court must make all factual inferences in favor of the party opposing the motion. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986); Hansen v. Continental Ins. Co., 940 F.2d 971, 975 (5th Cir.1991). However, the judge is not to weigh the evidence, nor engage in credibility determinations. Anderson, 477 U.S. at 249, 106 S.Ct. at 2510-11.

Application to the Case at Bar

Defendant USG argues that the Texas Statute of Repose, Tex.Civ.Prac.Rem.Code Ann. sec. 16.009 (Vernon 1986), bars all of plaintiff's claims. Subsection (a) of this statute provides that:

A claimant must bring suit for damages ... against a person who constructs or repairs an improvement to real property not later than 10 years after the substantial completion of the improvement in an action arising out of a defective or unsafe condition of the real property or a deficiency in the construction or repair of the improvement.

Subsection (e)(3) states that "this section does not bar an action ... based upon wilful misconduct or fraudulent concealment in connection with the performance of the construction or repair." It is undisputed that MISD brought this suit outside the period allowed by sec. 16.009. However, plaintiff argues: 1) there is a genuine issue of material fact as to whether USG comes within the terms of the statute; 2) there is a genuine issue of material fact as to whether USG's conduct falls within the wilful misconduct subsection; and 3) sec. 16.009 does not have a retroactive effect and does not apply to this case.

Two months ago, in another division of this district, the Hon. Joe Fisher issued a memorandum opinion, relating to the very issues presented here, in Dayton Independent School District v. U.S. Mineral Products, No. 1:87cv507, 1992 WL 62185 (E.D.Tex.Beaumont Div. Feb. 12, 1992), a case in which USG was also a defendant. Relying on the legislative history of the identical, predecessor statute of § 16.009 (Tex.Rev.Civ.Stat.Ann. art. 5536a, sec. 2) the learned judge persuasively reasoned that the repose statute was designed to protect only persons providing professional services, and that USG and the other asbestos manufacturers did not fall within its terms because they were "materialmen", who manufactured and supplied standardized goods susceptible of quality control.

However, as defendant points out, the United States Court of Appeals for the Fifth Circuit had articulated a different construction of the statute in Dedmon v. Stewart-Warner Corp., 950 F.2d 244 (5th Cir.1992), published just prior to the issuance of the opinion in the Dayton Independent School District case. Nevertheless, plaintiff argues that the Fifth Circuit did not have the legislative history relied upon by the Dayton court before it, and, therefore, Judge Fisher's reasoning should be followed here. This contention is unacceptable. Firstly, in Dedmon, the Fifth Circuit explicitly recognized that the legislative intent behind § 16.009 supported drawing a distinction between professional and non-professional economic actors, the line of analysis adopted by the Dayton court. 950 F.2d at 249-50. Despite the logic of this approach, and because an unbroken line of Texas authority was to the contrary, the panel rejected the professional/non-professional framework. Id. at 250. Secondly, even if the Dedmon panel had failed to consider the same legislative history relied upon by the Dayton court, the appellate opinion would be binding precedent nonetheless.

Dedmon interpreted Texas case law construing sec. 16.009 as focusing on what products, rather than what actors, merit the protection of the statute. Id. at 246 (emphasis in original). The panel perceived that Texas courts have looked to the concept of `improvement' for guidance in determining when to apply section 16.009.<sup>2</sup>Id. If the item qualifies as an `improvement', Texas courts will protect the manufacturer who constructs it, even if the construction takes place off premises and the manufacturer does not thereafter install, modify, or inspect it. Id. at 247. However, the Fifth Circuit noted that the Texas Supreme Court had narrowed section 16.009's application by distinguishing an `improvement' from a `component part of an improvement' and denying repose to `component part' manufacturers. Id. (citing Conkle v. Builders Concrete Products Mfg. Co., 749 S.W.2d 489, 491 (Tex.1988) (per curiam)).

The salient question posed by Dedmon, and the present situation, is whether the particular product involved is an `improvement' or a `component part of an improvement'.³ Defendant USG argues that the recent case of Trust Co. Bank v. U.S. Gypsum Co., 950 F.2d 1144 (5th Cir.1992), is determinative of this question. Trust Co. Bank considered whether USG's manufacture of fireproofing materials containing asbestos fell within the Mississippi statute of repose's definition of "improvement to real property." Miss.Code Ann. sec. 15-1-41 (Supp.1991). Noting that the Mississippi statute was "much broader than most statutes of repose", and relying on the case of Collins v. Trinity Industries, Inc., 861 F.2d 1364 (5th Cir.1988), the Trust Co. Bank panel applied the "customary meaning" of `an improvement to real property' and held that asbestos fell within the meaning of the term as used in the Mississippi statute of repose. 950 F.2d at 1151-52 (emphasis supplied).

The earlier Collins case had examined and analyzed Miss.Code Ann. sec. 15-1-41 in detail. The Fifth Circuit panel in that case relied primarily on the construction of the statute provided by the Mississippi Supreme Court in Smith v. Fluor Corporation, 514 So.2d 1227 (Miss.1987). The Mississippi Supreme Court reasoned that since the statute did not define `improvement to real property', the phrase must be given its ordinary meaning. Collins, 861 F.2d at 1365 (citing Smith v. Fluor, 514 So.2d at 1230). The state court had found the term covered "a wide range of structures and components...." Id. (emphasis added).

Therefore, in Trust Bank Co., when the Fifth Circuit applied Mississippi law to find asbestos came within that state's statute of repose, it applied a definition of `improvement to real property' that included component parts with that term. As the Fifth Circuit recognized in Dedmon, Texas law specifically excludes manufacturers of `component' parts from the protections of sec. 16.009. 950 F.2d at 247, 249-50. Necessarily, the Fifth Circuit's determination that spray on ceiling asbestos falls within the Mississippi statute of repose does not illuminate whether such asbestos products come under the Texas statute, because component parts are included within the former and...