Unified School Dist. No. 490, Butler County v. Celotex Corp.

• Decision Date: 29 May 1981
• Docket Number: No. 51030,51030
• Citation: 6 Kan.App.2d 346,629 P.2d 196
• Court: Kansas Court of Appeals
• Parties: UNIFIED SCHOOL DISTRICT NO. 490, BUTLER COUNTY, Kansas, Plaintiff-Appellee, v. The CELOTEX CORPORATION, Defendant-Appellant, and Sunflower Roofing and Industries, Inc., Defendant-Appellee.

Page 196

629 P.2d 196

6 Kan.App.2d 346

UNIFIED SCHOOL DISTRICT NO. 490, BUTLER COUNTY, Kansas Plaintiff-Appellee, v. The CELOTEX CORPORATION, Defendant-Appellant and Sunflower Roofing and Industries, Inc., Defendant-Appellee.

No. 51030.

Court of Appeals of Kansas.

May 29, 1981.

Review Denied July 16, 1981.

Syllabus by the Court

1. Statutes of limitation do not run against the state when the action arises out of the performance of a governmental function such as a school board's construction of a school building.

2. A cross-claim that asserts an affirmative claim must be filed within the applicable period of the statute of limitations.

3. There can be no concealment that will prevent the running of the statute of limitations when the cause of action is known to the complaining party or there is a presumption of such knowledge. When the defendant does not occupy a fiduciary or confidential relationship toward the plaintiff, neither affirmative nor passive conduct of the defendant will constitute such a concealment that will prevent the running of the statute of limitations if by reasonable diligence the plaintiff could have learned of the existence of the cause of action.

4. The failure to raise an affirmative defense as required by K.S.A. 60-208(c), which results in trial of the case on the theory the defendant is liable for claims arising out of the manufacture and sale of a product by a predecessor company, bars consideration of the affirmative defense on appeal.

5. A defendant has the right to introduce evidence of any mitigating circumstances that might operate to reduce punitive damages.

6. The imposition of punitive damage awards, although penal in nature, does not approach the severity of criminal sanctions and does not demand the same safeguards as do criminal prosecutions.

7. The nature, extent, and enormity of the wrong, the intent of the party committing it and all circumstances attending the transaction involved should be considered when assessing punitive damages. A jury may consider the amount of actual damages recovered, defendant's financial condition and the probable litigation expenses.

8. Punitive damages are imposed not because of any special merit in the case of the injured party but to punish the wrongdoer for malicious, vindictive, or willful and wanton invasion of the injured party's rights, the purpose being to restrain and deter others from the commission of like wrongs.

9. A political corporation, which can ordinarily avail itself of any legal remedy or form of action open to a private suitor under similar circumstances, can recover punitive damages.

10. One who makes a fraudulent misrepresentation or concealment is subject to liability for pecuniary loss to the person or class of persons he intends or has reason to expect to act or to refrain from acting in reliance on the misrepresentation or concealment.

11. The existence of fraud is ordinarily a question of fact. When a verdict is attacked for insufficiency of the evidence, the duty of the appellate court is to search the record to determine whether there is substantial competent evidence to support the findings. The appellate court will not weigh the evidence or pass on the credibility of the witnesses, but will review the evidence in the light most favorable to the party prevailing below.

12. In civil actions based on fraud, a trial court has wide discretion whether to admit evidence of similar acts or occurrences as proof that a particular act was done or a certain incident occurred, and its ruling thereon will not be disturbed on appeal absent a showing of abuse of discretion.

13. In actions involving fraud, evidence of the same or similar fraudulent misrepresentations made to others is competent and relevant for the purposes of establishing the elements of knowledge, motive and intent to defraud.

14. K.S.A. 60-609 provides for a change of venue when it is made to appear that a fair and impartial trial cannot be had in the county where the suit is pending, and the trial court's allowance or refusal of an application for change of venue rests largely within its discretion.

15. The interest which a taxpayer shares with the whole community can generally be regarded as too remote and minute to over-balance the taxpayer's innate sense of justice and fairness to all parties concerned and such an interest does not automatically disqualify a juror.

16. Mere publication does not ipso facto render a learned treatise admissible as independent substantive evidence. Such a work becomes admissible when a proper foundation has been laid establishment of its reliability either by means of judicial notice being taken or by the attestation of an expert witness. The determination of reliability requisite to the admission into evidence of learned treatises rests in the sound discretion of the trial court.

17. Rules relating to the admissibility of the testimony of expert witnesses are stated and applied.

18. In an appeal by a defendant manufacturer of roofing materials from a jury award of actual and punitive damages and actual damages against a roofing contractor in a products liability case, it is held : The trial court erred in not finding that the statute of limitations barred the roofing contractor's claim against the manufacturer. The trial court did not err (1) in refusing to admit certain physical evidence and testimony into evidence, (2) in admitting certain physical evidence and testimony into evidence, (3) in overruling defendant's motion for directed verdict for alleged insufficient evidence, and (4) in submitting the questions of fraud and actual and punitive damages to the jury.

John D. Jones, of Greene, Buckley, DeRieux & Jones, Atlanta, Ga., and Jerry W. Hannah, of Hannah & Focke, Topeka, for defendant-appellant.

Wayne T. Stratton and Harold S. Youngentob, of Goodell, Stratton, Edmonds, Palmer & Wright, Topeka, and Fred W. Rausch, Jr., Topeka, for plaintiff-appellee.

O. J. Connell, Jr., of Connell & Connell, El Dorado, for defendant-appellee.

Before ABBOTT, P. J., and REES and SPENCER, JJ.

ABBOTT, Judge:

This appeal is from a judgment entered in an action by Unified School District No. 490, Butler County, Kansas (USD 490), for both actual and punitive damages, claiming the defendant The Celotex Corporation (Celotex) sold and Sunflower Roofing and Industries, Inc. (Sunflower), had installed a two-ply, built-up roofing system on the El Dorado High School building. USD 490 claimed recovery for fraud and breach of warranty. The jury returned a verdict in favor of USD 490 in the amount of $100,000 compensatory damages and $600,000 punitive damages. The compensatory damages were apportioned between Celotex and Sunflower, attributing $98,000 to Celotex and $2,000 to Sunflower. All of the $600,000 punitive damages award was assessed against Celotex. On the cross-claim of Sunflower against Celotex on a theory of fraud, the jury awarded Sunflower actual damages of $15,000 and punitive damages of $28,000. Celotex appeals from the judgment, alleging numerous errors.

To understand the issues, it is necessary to give some background of the events that occurred prior to the planning of the new high school at El Dorado. Most of the background is found in the voluminous record (more than 2,000 pages, and in excess of 200 exhibits), and some was furnished at oral argument. Barrett Roofing Company (Barrett) was an established and well-respected manufacturer of roofing materials. At some unspecified time prior to this controversy, Barrett was purchased by Allied Chemical Corporation (Allied) and became the Barrett Division of Allied Chemical Corporation. The Barrett Division of Allied was not a separate corporation. In the late 1950's or early 1960's, the Barrett Division of Allied developed a two-ply, built-up roofing system. Prior to that development, the most commonly used built-up roofing system incorporated four plies of felt saturated with asphalt, which were applied in alternating layers. Each ply was mopped with hot asphalt and covered by a flood coat of hot asphalt into which gravel was embedded. Such a roof normally could be expected to give 20 years or more of satisfactory service. Allied referred to its new two-ply system as the Bond Ply system. When Allied began marketing the Bond Ply system in 1964, it advertised the system extensively as 1 k 1 = 4; i. e., that the two plies of Bond Ply equaled the conventional four-ply roof. The two-ply system was considerably more profitable to Allied than the existing four-ply roof system. The record reflects evidence that at least some experts of Allied were skeptical of the two-ply system prior to 1964, and that considerable difficulty was encountered with installed two-ply roofs, particularly in climates that experienced severe winter weather.

A number of significant events took place in 1967. At some point during the year, prior to August 31, 1967, Allied sold the Barrett Division to Celotex, a subsidiary of The Jim Walter Corporation. The sale was made pursuant to an agreement that Celotex assume all liabilities which the Barrett Division had as to previous sales. Following its purchase, most of the employees of the Barrett Division of Allied continued in the employment of Celotex. On March 21, 1966, USD 490 had employed The Shaver Partnership (Shaver) to provide architectural and engineering services for a new high school. Shaver then contracted with Prigmore & Allen, architects, for a portion of those services. Shaver specified the two-ply system for use on the high school roof. John Shaver testified he relied on representations of Celotex's roofing specialists that the two-ply system was equal to or greater in strength and durability than the four-ply system. On May 4, 1967, USD 490 entered into a contract with Coonrod, Walz & Vollmer Construction Company, Inc. (Coonrod), whereby it agreed to construct the El Dorado High School building. Coonrod...