Pa. SC holds company's successor liable

Jessica M. Karmasek Jan. 27, 2011, 3:38pm


HARRISBURG, Pa. (Legal Newsline) - The Pennsylvania Supreme Court upheld the decision of a superior court on Monday, holding the successor to a fire truck maker liable for the accidental deployment of a hose that left one child dead and injured another.

In 1994, the Coraopolis Volunteer Fire Department invited bids for the manufacture of a large-scale fire engine, or pumper. The successful bidder was the Boardman Company, a division of TBC Fabrication, Inc., 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., purchased the Boardman name from TBC for use in relation with emergency vehicles. Three years later, 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.

In 2004 -- 10 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, 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 10-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; Erin's sister, Lindsay Schmidt; and Joeylynne's sister, Lauren Jeffress.

Following the accident, the Schmidt and Jeffress families filed civil actions in the court of common pleas, naming as defendants CVFD; TBC and its Boardman division; BI; and Sinor and Freightliner Specialty Vehicles, Inc.

The families sought redress 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, the families asserted that BI was liable as a mere continuation of TBC. They grounded their claims against the company on the theory that it perpetuated the relevant Boardman product line, thus triggering the "product-line exception" to the rule against successor liability.

The families asserted that the Boardman fire engine was defective because it lacked a retaining device to secure fire hoses in suppression vehicles and, in fact, had manufactured "woods trucks" with fire suppression capability. To support the emotional-distress claims, the families produced substantial evidence of the mental anguish and post-traumatic stress suffered by Joyce and Lindsay Schmidt and Lauren Jeffress.

Sinor and Freightliner Specialty Vehicles, Inc., for their part, had an expert testify that a hose retaining device was unnecessary and would interfere with the fire engine's utility by impeding ready access.

Additionally, the companies stressed the substantial differences between pumper fire engines and the smaller rescue vehicles that Sinor had manufactured, which did not serve a fire suppression function. In response to the contention that the woods trucks were in the same product line as Boardman fire engines, the companies demonstrated that the two trucks Sinor manufactured were based on a Ford pickup truck platform, equipped with a removable skid unit equipped with a bladder designed to hold a modest amount of water.

The companies, however, did not deny the emotional distress suffered by family member witnesses to the accident but sought to mitigate the damages.

The companies also argued negligence on the behalf of CVFD, saying the accident couldn't have happened had the hoses been packed into the compartment properly.

The jury returned a verdict in favor of the families, finding the companies and the CVFD each 50 percent liable.

The companies sought post-trial relief, arguing they were entitled to judgment notwithstanding the verdict. However, the trial court denied relief and they appealed to the superior court.

In the ensuing appeal, a divided superior court panel affirmed the lower court's ruling.

The state's high court, in this case, was charged with considering whether it 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 whether, in strict liability proceedings, a plaintiff must prove a physical injury as a threshold to recovery.

The Court affirmed the superior court's order as to the first issue, but on different grounds. It also affirmed the superior court's order with respect to the physical injury issue by operation of law, since the Court was equally divided on the point.

Justice Thomas G. Saylor, who wrote the Court's majority opinion, said, "The evident disparities are particularly acute in this case, where Appellant has been held to answer for a defect in a product it did not manufacture (and never manufactured), based on a successor-liability theory unique to strict-liability jurisprudence."

The Court said it has "no doubt" that the bystander witnesses in the case suffered severe emotional trauma.

"Nevertheless, the social effects of expanding a scheme of liability without fault must be considered carefully before such innovations may be rationally implemented. As Appellant suggests, legislative involvement in addressing such effects is desirable," Saylor wrote.

"Unless and until the Legislature intervenes, however, this Court remains charged with the reasoned administration of the common law. In this landscape, we have determined that the present system of strict products liability should be closely limited according to its existing theoretical underpinnings pending reevaluation."

The Court added, "In particular, this means that negligence concepts simply are not available to support continuing expansions of a strict liability scheme premised on the notion that negligence theory has no place there."

The Court held that, for purposes of a strict products liability claim, a plaintiff's recovery for emotional distress is limited to that which is proximately caused by "contemporaneous" physical impact.

Former Justice Jane Cutler Greenspan did not participate in the decision of this case.

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