Sales v. Autobuses

• Decision Date: 17 December 2010
• Docket Number: No. 09-0048.,09-0048.
• Citation: 329 S.W.3d 475
• Parties: MCI SALES AND SERVICE, INC., f/k/a Hausman Bus Sales, Inc. and Motor Coach Industries Mexico, S.A. de C.V., f/k/a Dina Autobuses, S.A. de C.V., Petitioners, v. James HINTON, Individually and as Representative of the Estate of Dolores Hinton, Deceased, et al., Respondents.
• Court: Texas Supreme Court

329 S.W.3d 475

MCI SALES AND SERVICE, INC., f/k/a Hausman Bus Sales, Inc. and Motor Coach Industries Mexico, S.A. de C.V., f/k/a Dina Autobuses, S.A. de C.V., Petitioners,
v.
James HINTON, Individually and as Representative of the Estate of Dolores Hinton, Deceased, et al., Respondents.

No. 09-0048.

Supreme Court of Texas.

Argued March 24, 2010.
Decided Dec. 17, 2010.

329 S.W.3d 479

Wanda McKee Fowler, Thomas C. Wright, Wright Brown & Close LLP, Chad Michael Forbes, The Forbes Firm, PLLC, Michael A. Choyke, Wright Brown & Close LLP, Houston, TX, John C. Dacus, Dallas, TX, Darrell L. Barger, Corpus Christi, TX, Hartline Dacus Barger Dreyer & Kern, L.L.P., James R. Dunnam, Dunnam & Dunnam, L.L.P., Waco, TX, for Motor Coach Industries Mexico, S.A. de C.V.

John C. Dacus, Dallas, TX, Darrell L. Barger, Corpus Christi, TX, Hartline Dacus Barger Dreyer & Kern, L.L.P., Wanda McKee Fowler, Thomas C. Wright, Michael A. Choyke, Wright Brown & Close LLP, Houston, TX, for MCI Sales and Service, Inc.

Stephen E. Harrison II, Harrison Davis Steakley, P.C., Waco, TX, William Guy Arnot III, Justin Joseph Presnal, Winstead PC, Thomas K. Brown, Wayne Fisher, Fisher, Boyd, Brown, Boudreaux, & Huguenard, L.L.P., Houston, TX, Timothy M. Sulak, Morris Craven & Sulak, L.L.P., Craig T. Enoch, Winstead PC, Austin, TX, for James Hinton.

Justice GUZMAN delivered the opinion of the Court, in which Justice HECHT, Justice WAINWRIGHT, Justice MEDINA, Justice JOHNSON, Justice WILLETT, and Justice LEHRMANN joined, and in which Chief Justice JEFFERSON joined as to Parts I and II.

This appeal arises from a jury's verdict in a suit brought against the manufacturer, importer, and distributor of a motorcoach. In 1995, when the motorcoach at issue here was manufactured, federal safety regulations governing the performance of these motorcoaches neither required nor forbade passenger seatbelts. These same regulations allowed manufacturers to choose between several types of glazing materials for use in the motorcoaches' windows, and a manufacturer complied by using one of the required types. We must decide whether that regulatory silence and that choice evidence a congressional intent to preempt a McLennan County jury's finding that the manufacturer of a motorcoach should have installed passenger seatbelts and should have used another permitted type of glazing material. Because we conclude that the jury's verdict which is grounded in this state's common law does not present any obstacle to the accomplishment of the federal regulatory scheme's purpose, we hold that the federal safety standards at issue do not preempt state law.

We also apply Chapter 33 of the Texas Civil Practice and Remedies Code to a plan adopted by a bankruptcy court to apportion a debtor's insurance proceeds among a group of creditors who filed claims against the bankruptcy estate. The unique plan allowed the claimants to either accept a mediated percentage of the proceeds or to litigate their claims before a

329 S.W.3d 480

special judge. Even if the claimants chose the latter course, their recovery was capped at 110% of the mediator's award, and the claimants could agree at any time to full or partial distributions to any or all of the claimants. We must decide if this plan renders the debtor—who purchased the insurance policy funding the plan and whose further liability was discharged in bankruptcy—a settling person under Chapter 33 for purposes of determining proportionate liability. We conclude that it does. Accordingly, we affirm the court of appeals' judgment and remand to the trial court for further proceedings consistent with this opinion.

I. Background

On February 14, 2003, a group of friends chartered a bus ¹ from Central Texas Trails to take them from Temple to Dallas for a concert. Heavy rain and fog reduced visibility, and as the bus crested a hill on Interstate 35 south of Waco, the driver saw that traffic had stopped due to an accident farther north. He attempted to change lanes to increase his stopping distance, but another car cut him off, so he steered into the earthen median and lost control of the bus. It crossed the median into southbound traffic and collided with a large sport utility vehicle, spun counterclockwise, and tipped over on its right side. The bus slid across the southbound lanes and came to rest in the ditch on the far side of the road. Most of the large, non-laminated glass windows on the right side of the bus shattered when it tipped over. The passengers were tossed from their seats and some were ejected through the broken windows. Five passengers were killed and several others were injured to varying degrees.

The bus owner and operator, Central Texas Trails, Inc., Central Texas Bus Lines, Inc., and Kincannon Enterprises, Inc. (collectively Central Texas), filed for Chapter 11 bankruptcy protection shortly after the accident. The bus crash victims filed creditor claims against Central Texas in the bankruptcy court. Central Texas maintained a $5 million liability insurance policy, and the carrier paid the policy limits into the bankruptcy court's registry, creating a liability fund. The bus crash claimants participated in non-binding mediation, the goal of which was to formulate a plan for apportioning the fund. The mediator assigned a percentage of the fund to each claimant, and these percentages were incorporated into a plan submitted to the bankruptcy court for approval, which was given on October 21, 2003. Under the "Apportionment Plan," a claimant could accept the mediator's percentage and immediately receive that portion of the liability fund. If the claimant chose not to accept the mediator's allocation, the claimant participated in a "Litigation Plan." Under this plan, the claimants tried their claims to a special judge agreed to by the participants, and their recovery under this plan was capped at 110% of the mediator's allocation. Further, the parties could agree at any time to approve a full or partial distribution to any or all participants. Central Texas's tort liability in excess of the liability fund was discharged upon approval of its reorganization plan the following year.

On June 26, 2003, a group of the injured bus occupants (or their estates) and their relatives (the Plaintiffs) ² filed suit against

329 S.W.3d 481

Motor Coach Industries Mexico, S.A. de C.V., and MCI Sales and Service, Inc., the bus's manufacturer, importer, and distributor (collectively MCI), alleging the motorcoach was defectively designed because it lacked passenger seatbelts and laminated-glass windows. MCI attempted to join Central Texas and the bus driver as responsible third parties, but the trial court denied the motion and also refused to submit a question asking the jury if Central Texas and the driver were liable as responsible third parties or as settling parties to determine proportionate liability. Following a jury trial, the jury found for the Plaintiffs, making separate causative findings as to each claim. The jury found that the lack of seatbelts caused injuries to all of the Plaintiffs, and the lack of laminated-glass windows caused injuries to those ejected from the bus. The jury awarded over $17 million in damages.

After the jury's verdict but before entry of judgment, the Plaintiffs, all of whom opted for resolution of their claims against Central Texas via the Litigation Plan, appeared before the special judge. The judge found that the bus driver's negligence proximately caused the accident that produced the Plaintiffs' injuries and that he was acting within the scope of his employment with Central Texas. Further, the judge determined that the jury's damage awards in this case, with one exception, significantly exceeded the 110% maximum recovery under the Litigation Plan. Limiting the one participant's recovery to what the jury awarded, the judge capped the remaining damage awards at the 110% maximum. Because of the limited funds, however, the awards were prorated so that each participant received a relative percentage of the actual award. In the end, each Litigation Plan participant (again, with the one exception) received a sum that is within two percent of the amount allocated by the mediator.³ The bankruptcy judge approved the special judge's report, and the payments were made. Thereafter, the trial court in this case entered judgment, adjusting the damage awards to account for the funds received under the Litigation Plan.

MCI appealed, and the court of appeals reversed and remanded. 272 S.W.3d 17, 20. As relevant here, the court rejected MCI's preemption arguments but agreed that the trial court abused its discretion by not submitting a question to the jury regarding Central Texas and the bus driver's proportionate liability as settling persons. MCI then petitioned this Court for review of the preemption issues, and the Plaintiffs cross-petitioned for review of the proportionate responsibility issue. We granted both petitions and consider the issues in order, beginning with federal preemption.

II. Federal Preemption

The Supremacy Clause dictates that the "Constitution, and the Laws of the United States which shall be made in Pursuance thereof ... shall be the supreme Law of the Land; ... any Thing in the Constitution or Laws of any State to the Contrary notwithstanding." U.S. CONST. art. VI, cl. 2. Thus, a law passed by Congress—acting within its enumerated powers—and signed by the President preempts any state law to the contrary, rendering it without effect.

329 S.W.3d 482

Maryland v. Louisiana, 451 U.S. 725, 746, 101 S.Ct. 2114, 68 L.Ed.2d 576 (1981); Mills v. Warner Lambert Co., 157 S.W.3d 424, 426 (Tex.2005) (per curiam); see also Wyeth v. Levine, 555 U.S. 555, 129 S.Ct. 1187, 1206-07, 173 L.Ed.2d 51 (2009) (Thomas, J., concurring in the judgment) (noting the two structural limitations on the federal government's power to preempt state laws, namely, the enumerated powers of Congress and the procedural requirements to enact a law...