School Dist. of City of Independence, Mo., No. 30 v. U.S. Gypsum Co.
| Decision Date | 01 March 1988 |
| Docket Number | No. WD,WD |
| Citation | 750 S.W.2d 442 |
| Parties | , 46 Ed. Law Rep. 1241, Prod.Liab.Rep. (CCH) P 11,717 SCHOOL DISTRICT OF the CITY OF INDEPENDENCE, MISSOURI, NO. 30, Appellant, v. U.S. GYPSUM COMPANY, Respondent. 39135. |
| Court | Missouri Court of Appeals |
Humphrey, Farrington & McClain, P.C., Norman Humphrey, Jr., Kenneth B. McClain, Steven P. Callahan, Independence, for appellant.
Deacy & Deacy, Spencer J. Brown, Kansas City, Morgan, Lewis & Bockius, James D. Pagliaro, Amelia C. Benton, Philadelphia, Pa., for respondent.
Before PRITCHARD, J., Presiding, and GAITAN and COVINGTON, JJ.
This case presents cross appeals from an action for damages based on strict products liability. Plaintiff, the School District of the City of Independence, Missouri, No. 30 (School District), sought recovery for injury to property arising out of the use of Audicote, a ceiling plaster containing asbestos, in seven of its schools. Plaintiff brought suit against defendant United States Gypsum Company (USG), the manufacturer of Audicote, to recover the costs of removing Audicote and certain asbestos-contaminated furnishings from the seven school buildings. Plaintiff alleged that at the time the Audicote was sold and installed by defendant in plaintiff's school buildings, the Audicote was in a defective condition and unreasonably dangerous. The sole defect alleged was that Audicote released asbestos into the atmosphere of the buildings, contaminated the buildings and furnishings, and thereby exposed occupants of the buildings to a continuing health hazard. The School District also alleged strict liability for failure to warn of the danger.
In addition to the strict liability claims for actual damages, the School District sought punitive damages on the theory that USG knew of the defect and danger of Audicote when it sold the product to plaintiff, and that USG thereby showed complete indifference to, or conscious disregard for, the safety of others.
The jury awarded the School District $650,000.00 in actual damages ($61,000.00 less than requested) and $400,000.00 in punitive damages. The trial court granted defendant's motion for judgment notwithstanding the verdict as to the punitive damage award, but sustained the award of actual damages. The School District appeals from the judgment n.o.v., seeking reinstatement of the jury's punitive award. USG cross-appeals from the adverse judgment. Affirmed.
Asbestos is the generic name for a class of naturally-occurring fibrous minerals. There are four major varieties of asbestos: chrysotile, crocidolite, tremolite, and anthophyllite. Each type of asbestos has unique physical properties. Asbestos has been commonly used as a component of various building materials such as insulation, fireproofing, and acoustical ceiling tiles and plasters. Prior to 1972, USG manufactured an acoustical ceiling plaster, Audicote, which contained 10 to 12 percent chrysotile asbestos and 3 to 5 percent tremolite or anthophyllite asbestos. Between the years 1957-1969, USG sold Audicote to the School District for installation as a ceiling material in seven schools being constructed by the School District.
Since 1982, the United States Environmental Protection Agency (EPA) has required school districts to inspect to determine whether their buildings contained asbestos materials. At the time of the trial of this case, however, the EPA had not established guidelines for determining the existence of a hazard sufficient to justify removal or abatement.
In 1979, Independence school administrators, in response to recommendations promulgated by the EPA, undertook an inspection of the Independence schools in order to determine whether any of the building materials used in the schools contained asbestos. As a result of this inspection and subsequent testing of materials, the School District determined that Audicote had been installed in seven of its schools, and that Audicote contained asbestos.
Because Audicote was considered a "friable" material (i.e., a material capable of being crumbled, pulverized or powdered in the hand), and because School District officials had become aware, through consultation with the E.P.A., that friable asbestos-containing ceiling materials presented some potential for release of asbestos, the School District undertook a program of "encapsulating" the Audicote ceilings in its schools in order to minimize the possibility of asbestos release. Encapsulation consisted of painting the ceilings with a heavy paint, recommended by the E.P.A., in order to entrap and prevent release of asbestos fibers.
The encapsulation was considered a short-term solution to the problem. Because the heavy paint used to encapsulate Audicote ceilings allowed water to build up behind the painted surfaces, leaks which eventually developed were more serious than had previously been experienced, sometimes causing dropouts of Audicote material. The School District also experienced continuing damage to ceilings from vandalism and accidental impacts and received numerous reports of dusting. The School Board became increasingly concerned about the hazards of asbestos exposure, and in 1984 voted to remove asbestos-containing materials, including Audicote, from the schools.
In its first point of error, the School District alleges that the trial court erred in granting judgment notwithstanding the verdict on the issue of punitive damages. The School District argues that the jury's $400,000 punitive damage award was supported by substantial and competent evidence that USG knew its product Audicote was unreasonably dangerous and defective, and that USG, by selling Audicote to the School District with such knowledge, and without adequate warning, demonstrated complete indifference to, or conscious disregard for, the safety of others.
A motion for judgment n.o.v. presents the same question as a motion for directed verdict at the close of all the evidence; i.e., whether the plaintiff made a submissible case. Anderson v. Childers, 686 S.W.2d 38, 39 (Mo.App.1985); Dockery v. Mannisi, 636 S.W.2d 372, 376 (Mo.App.1982). A defendant's motion for judgment n.o.v. is properly granted if the motion identifies one or more elements of the plaintiff's case which are not supported by the evidence. Stegeman v. First Mo. Bank of Gasconade Cty., 722 S.W.2d 349, 352 (Mo.App.1987). In reviewing the trial court's ruling, the appellate court must consider the evidence in a light most favorable to the plaintiff and accept such evidence as true, giving plaintiff the benefit of all favorable inferences that may reasonably be drawn from that evidence, and disregarding defendant's evidence except as it aids the plaintiff's case. Dockery v. Mannisi, 636 S.W.2d at 376. (The School District argues extensively that the standard for submissibility applied by the trial court was improper; however, because the reviewing court determines whether a submissible case is made, it is unnecessary to evaluate the School District's argument in this regard.)
Punitive damages were submitted to the jury by an instruction based on MAI 10.04, under which punitive damages in a product liability action may be awarded if the jury finds that the defendant knew of the defect and danger of the product at the time it sold the product, and that the defendant thereby showed complete indifference to or conscious disregard for the safety of others. Relying upon the Committee's Comments to MAI 10.04, the court in Lewis v. Envirotech Corp., 674 S.W.2d 105, 114 (Mo.App.1984) defines "knowledge" in this context as actual knowledge.
No Missouri case has permitted submission of a punitive damage claim in a strict products liability case on the theory that the defendant should have known of a dangerous defect in its product. See, e.g., Bhagvandoss v. Beiersdorf, Inc., 723 S.W.2d 392, 397-98 (Mo. banc 1987); Love v. Deere and Co., 684 S.W.2d 70, 77 (Mo.App.1985); Sparks v. Consolidated Aluminum Co., 679 S.W.2d 348, 354 (Mo.App.1984); Racer v. Utterman, 629 S.W.2d 387, 397 (Mo.App.1981), all requiring actual knowledge of product defect. See also, Laney v. Coleman Co., Inc., 758 F.2d 1299, 1304-05 (8th Cir.1985), ("Missouri law does not permit submission of a punitive damage claim on a theory of constructive knowledge of product defect").
The School District's allegation of defect in the product Audicote was that Audicote released asbestos fibers into the atmosphere. To make a submissible case for punitive damages, the School District was required to produce evidence that USG had actual knowledge of the product Audicote's propensity to release asbestos fibers. The record is devoid of evidence to support a finding of actual knowledge.
The School District's evidence established that Audicote would release asbestos fibers if abraded (rubbed against, scraped) and that asbestos fibers had been released from the Audicote ceilings in the School District's schools. The School District produced no evidence, however, that, at the time USG sold Audicote to the School District, USG had knowledge of these facts. The School District's only factual allegations relating to USG's knowledge of the properties of Audicote were mere suggestions that USG received reports of water damage to Audicote ceilings, which would release asbestos. The School District's allegations are not supported by evidence. While the School District did produce evidence of water damage to Audicote ceilings, it did not show that USG was aware of the problem. USG's quality assurance manager, John Hernan, who had observed flat-roofed schools containing Audicote in the 1960's, conceded on cross-examination that "the potential for leaking is greater with a flat roof than a pitched roof." Contrary to the School District's...
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