Schmidt v. Boardman Co.
| Decision Date | 24 January 2011 |
| Citation | 11 A.3d 924 |
| Parties | Joyce A. SCHMIDT, Administratrix of the Estate of Erin D. Schmidt, Deceased; Joyce A. Schmidt, in her own right, and Lindsay Schmidt, a Minor, by her Mother and Natural Guardian, Joyce A. Schmidt, v. BOARDMAN COMPANY, a Division of TBC Fabrication, Inc.; Boardman, Inc.; TBC Fabrication, Inc.; Coraopolis Volunteer Fire Department; Sinor Manufacturing, Inc., n/k/a Freightliner Specialty Vehicles, Inc., and Freightliner Specialty Vehicles, Inc. and Peter Jeffress and Michele Jeffress, individually and on behalf of their Minor Daughters Joeylynne Jeffress and Lauren Jeffress v. Coraopolis Volunteer Fire Department; Boardman Company, a Division of TBC Fabrication, Inc.; Boardman Inc.; Sinor Manufacturing, Inc.; and Freightliner Specialty Vehicles, Inc. Appeal of Sinor Manufacturing, Inc., n/k/a Freightliner Specialty Vehicles, Inc., and Freightliner Specialty Vehicles, Inc. |
| Court | Pennsylvania Supreme Court |
Kim M. Watterson, Reed Smith LLP, Pittsburgh, for Sinor Manufacturing, et al.
James Michael Beck, Dechert LLP, Philadelphia, for Appellant Amicus Curiae, Product Liability Advisory Council, Inc.
Anthony John Rash, Dickie, McCamey & Chilcote, P.C., Pittsburgh, for Boardman, Inc.
Vicki Linn Beatty, Pittsburgh, Law Offices of Joseph M. Ghabour, P.C., for Coraopolis Volunteer Fire Department.
John P. Gismondi, Gismondi & Associates, P.C., Pittsburgh, for Peter Jeffress, et al.
Alan H. Perer, Swensen, Perer & Kontos, Pittsburgh, for Joyce A. Schmidt.
BEFORE: CASTILLE, C.J., SAYLOR, EAKIN, BAER, TODD, McCAFFERY, GREENSPAN, JJ.
Mr. Justice Saylor files an Opinion, expressing the rationale for affirming the order of the Superior Court with respect to the "product-line exception issues" presented in the appeal, in which the Court is unanimous as to Parts I and II.A, and in which Mr. Chief Justice Castille and Messrs. Justice Eakin, Baer, and McCaffery join as to Part II.B. Part III of the Opinion, in which Mr. Chief Justice Castille and Mr. Justice Eakin join, sets forth a rationale in support of reversing the order of the Superior Court concerning the "physical injury issue" presented in the appeal.
Mr. Justice Baer files an opinion joining in the rationale for affirming the order of the Superior Court with respect to the "product-line exception issues," and setting forth a rationale for vacating and remanding with respect to the "physical injury issue." Mr. Justice McCaffery joins this opinion and Madame Justice Todd joins this opinion in part.
Madame Justice Todd files an opinion joining part of the rationale for affirming the order of the Superior Court with respect to the "product-line exception issues," and joining in the rationale stated by Mr. Justice Baer for vacating and remanding with respect to the "physical injury issue."
1
This civil litigation arises out of an accidental, in-transit deployment of a fire-engine hose, which caused the death of one child, severe injuries to another, and emotional distress on the part of family-member witnesses.
Appeal was allowed to consider: 1) whether this Court should adopt the product-line exception to the general rule of successor non-liability in strict products liability actions, and, if so, on what terms; and 2) whether, in strict liability proceedings, a plaintiff must prove a physical injury as a threshold to recovery. For the reasons that follow, we affirm the Superior Court's order as to the first issue, albeit on different grounds. With respect to the second question, the Superior Court's order will be affirmed by operation of law, since the Court is equally divided on that point.
In 1994, the Coraopolis Volunteer Fire Department ("CVFD") invited bids for the manufacture of a large-scale fire engine, or pumper, per CVFD-selected specifications. These included three cross-lay compartments spanning the width of the truck, designed to house and carry fire hoses pre-connected to an on-board water supply. The successful bidder was the Boardman Company, a division of TBC Fabrication, Inc. ("Boardman"), which manufactured and delivered the fire engine. CVFD separately acquired the necessary hoses, and the pumper was commissioned for use throughout the next decade.
In 1995, soon after CVFD acquired the Boardman fire engine, TBC liquidated based on the assertion that it was insolvent. Management of Sinor Manufacturing, Inc. ("Sinor") was interested in manufacturing and marketing ambulances and rescue vehicles, and apparently it was believed that name recognition associated with Boardman's fire-engine business would facilitate such an enterprise. Thus, Sinor purchased the Boardman name from TBC for use in relation with emergency vehicles. The purchase included engineering drawings for Boardman fire engines; additionally, Sinor bought certain inventory and equipment from TBC at an auction. Other facilities and assets of TBC—including manufacturing and sale facilities which were used in producing fire engines; assets and facilities associated with TBC's other principal line of business in custom steel fabrication; and the Boardman name relative to this latter line of products—were acquired by Boardman, Inc. ("BI"). Apparently BI was a sister company to TBC.2 Finally, TBC sold proprietary rights associated with telescoping aerial platforms used in fire suppression to Aerial Innovations, Inc., an unrelated company.
In 1998, Sinor's ownership interests were restructured, with a majority interest being acquired by Freightliner LLC, and Sinor was combined with a Freightliner division and renamed Freightliner Specialty Vehicles, Inc. ("Appellant").
In 2004—ten years after CVFD's purchase of the Boardman fire engine and nine years after its manufacturer's liquidation—CVFD dispatched its Boardman pumper in response to an emergency call. While en route, unbeknownst to the operators, a 200-foot, pre-connected fire hose fell from one of the cross-lay compartments, unraveled, and lodged under the tire of a parked car. After it broke free with accumulated force, the hose or nozzle struck two ten-year-old bystanders, Erin Schmidt and Joeylynne Jeffress, causing severe injuries to both. Erin died the next day. The accident was witnessed by: Erin's mother, Joyce Schmidt; 3 Erin's sister, Lindsay Schmidt; and Joeylynne's sister, Lauren Jeffress.
Subsequently, Appellees, the Schmidt and Jeffress families, commenced civil actions in the court of common pleas, naming as defendants: CVFD; TBC and its Boardman division; BI; and Appellant (denominated in the complaint both as Sinor and Freightliner Specialty Vehicles, Inc.). Redress was sought for the wrongful death of Erin Schmidt, the injuries sustained by Joeylynne Jeffress, and the emotional distress suffered by Joyce and Lindsay Schmidt and Lauren Jeffress. Despite the prevailing general rule of law that the purchaser in an asset sale does not acquire the seller's tort liabilities, Appellees asserted that BI was liable as a mere continuation of TBC. Appellees grounded their claims against Appellant on the theory that it perpetuated the relevant Boardman product line, thus triggering the "product-line exception" to the rule against successor liability, as reflected in prevailing Superior Court precedent. See, e.g., Dawejko v. Jorgensen Steel Co., 290 Pa.Super. 15, 434 A.2d 106 (1981) (); Hill v. Trailmobile, Inc., 412 Pa.Super. 320, 603 A.2d 602 (1992) (). Although the complaint asserted claims sounding in both negligence and strict liability against Appellant, Appellees subsequently opted to proceed solely in strict liability.
At the pretrial stage, the Schmidt and Jeffress actions were consolidated. Appellant unsuccessfully sought to preclude plaintiffs Joyce and Lindsay Schmidt and Lauren Jeffress from pursuing recovery for emotional distress damages on the ground that such damages are not recoverable in a strict products liability action. CVFD settled with Appellees, tendering the maximum damages recoverable under the law consistent with governmental immunity. Nevertheless, trial proceeded against CVFD on Appellant's cross-claim for indemnity and contribution. Appellees also discontinued their claims against TBC.
Just before trial, Appellees settled with BI and withdrew their opposition to BI's summary judgment motion, which the trial court granted. Further, on Appellees' motion, Appellant was precluded at trial from adducing evidence concerning BI's retention of TBC management personnel and acquisition of various of its assets, facilities, and business operations in the 1995 liquidation.
At trial, the jury was tasked with resolving three principal liability issues: 1) was there a product defect in the Boardman fire truck; 2) could Appellant be held liable under the product-line exception to the general rule of successor non-liability; and 3) was CVFD negligent. Appellees asserted that the Boardman fire engine was defective, because it lacked a retaining device to secure fire hoses in the cross-lay compartments. Expert testimony was offered in support of this proposition. To advance the product-line exception, Appellees adopted the theme that, under Pennsylvania law, "you take the good with the bad." N.T., Sept. 5, 2006, at 110; see also id. at 112-13, 129, 132, 138. In this regard, they relied substantially on Sinor's sales advertising, which misleadingly portrayed Sinor as a continuation of Boardman, for example, as by possessing the latter's 65 years' experience in the manufacture of emergency vehicles. Further, Appellees highlighted that Sinor claimed in its product literature to make fire suppression vehicles and, in fact, had manufactured "woods trucks" with fire suppression capability. Appellees also offered proof that Sinor acquired the engineering drawings for full-scale fire trucks from TBC in connection with its limited...
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