Title: Leong v. Sears Roebuck and Co.

State: hawaii

Issuer: Hawaii Supreme Court

Document:

970 P.2d 972 (1998) 89 Hawai`i 204 Doris C.C. LEONG, Individually and as Next Friend of Kamalii Leong, Minor, Plaintiff-Appellee, v. SEARS ROEBUCK AND COMPANY, and Doe Defendants 1-10, Defendants-Appellants. Sears Roebuck and Company, Defendant and Third-Party Plaintiff-Appellee, v. Westinghouse Electric Corporation, a Pennsylvania corporation, and Schindler Elevator Companies, a Delaware corporation, John Does 1-10; Jane Does 1-10; Doe Corporations 1-10; Doe Partnerships 1-10; Doe Joint Ventures 1-10; and Doe Governmental Entities 1-10, inclusive, Third-Party Defendants-Appellants. No. 20865 Supreme Court of Hawai`i. December 14, 1998. Paul V. Smith and David C.Schutter (of David C.Schutter and Associates) on the briefs, for the plaintiff-appellee, Doris C.C. Leong. John R. Lacy and Normand R. Lezy (of Goodsill Anderson Quinn & Stifel) on the briefs, for the defendant/third-party plaintiff-appellant, Sears Roebuck and Co. Lisa B. Ginoza and Stacey M. Robinson (of McCorriston Miho Miller Mukai) on the briefs, for the third-party defendants-appellants, Schindler Elevator Corp. and Westing-house Electric Corp. MOON, C.J., KLEIN, LEVINSON, NAKAYAMA, and RAMIL, J. LEVINSON, Justice. The plaintiff-appellee Doris C.C. Leong (Leong), individually and on behalf of Kamalii Leong (Kamalii), filed a complaint in the first circuit court against the defendant/thirdparty plaintiff-appellant Sears Roebuck and Company (Sears), alleging, inter alia, products liability, negligence, the infliction of emotional distress, and punitive damages, arising out of an accident in which Kamalii was injured by an escalator at the Sears Department Store at Ala Moana Center, in the City and County of Honolulu. Sears removed the action to the United States District Court for the District of Hawai`i (federal district court) and subsequently filed a third-party complaint against the third-party defendants-appellants Westinghouse Electric Corporation (Westinghouse) and Schindler Elevator Corporation (Schindler), seeking indemnification and/or contribution from Westinghouse and/or Schindler in the event that Leong was found to be entitled to recovery. Westinghouse and Schindler answered and counterclaimed. Leong filed a cross-claim against Westinghouse and Schindler. Westinghouse and Schindler answered and counterclaimed. *973 Westinghouse and Schindler then filed a motion for summary judgment as to all of the claims alleged by Leong in her complaint and cross-claim. Sears joined in the motion. Following the hearing on Westinghouse and Schindler's motion for summary judgment, the federal district court, pursuant to Hawai`i Rules of Appellate Procedure (HRAP) Rule 13 (1995), certified the question "[w]hether an escalator in a commercial building accessible to the general public constitutes a product for purposes of a claim for strict products liability under Hawaii law?" We accepted certification and now answer the question with a qualified "yes." The underlying facts are not disputed. On or about January 3, 1996, Leong's preschool daughter, Kamalii, was injured when her hand became caught on the handrail return component of the escalator, which descends from the mall level to the ground level of the Sears Department Store. The escalator was manufactured and installed in 1959. In her complaint against Sears, filed on April 9, 1996, and likewise in her counterclaim against Westinghouse and Schindler, filed on January 31, 1997, Leong alleged, inter alia, that Sears, Westinghouse, and Schindler were liable, pursuant to a theory of products liability, for the damages resulting from the accident. On May 5, 1997, Westinghouse and Schindler, the alleged manufacturer and distributor of the escalator, filed a motion for summary judgment as to all of Leong's claims alleged in her complaint and cross-claim. On May 21, 1997, Sears joined in the motion. The hearing on the motion generated the question that is presently before us. Sears, Westinghouse, and Schindler argue that such decisions as Bidar v. Amfac, Inc., 66 Haw. 547, 669 P.2d 154 (1983), Armstrong v. Cione, 69 Haw. 176, 738 P.2d 79 (1987), Messier v. Association of Apartment Owners of Mt. Terrace, 6 Haw.App. 525, 735 P.2d 939 (1987), and Kennedy v. Vacation Internationale, Ltd., 841 F. Supp. 986 (D.Haw.1994), compel the conclusion that the escalator at issue in the present case, being an item or fixture that is an integral part of a building, is not a "product" for purposes of Hawai`i strict products liability law. This court, however, has construed the term "product" on a case-by-case basis, taking into consideration the policies underlying the doctrine of strict products liability. Accordingly, it is useful to retrace the development of strict products liability law in Hawai`i in order to answer the federal district court's certified question. In Stewart v. Budget Rent-A-Car Corp., 52 Haw. 71, 470 P.2d 240 (1970), this court first integrated strict products liability into Hawai`i law, observing that Id. at 74-75, 470 P.2d at 243 (footnotes omitted). The Stewart court did not undertake to describe with precision the construct of a "product" for purposes of strict products liability. *974 Subsequently, however, in Kaneko v. Hilo Coast Processing, 65 Haw. 447, 654 P.2d 343 (1982), the exercise was undertaken: 50 Ill.App.3d at 383, 8 Ill.Dec. at 542, 365 N.E.2d at 928. In further refining the definition of "product" expressed in Lowrie, the court in Dubin v. Michael Reese Hospital & Medical Ctr., supra, at 939, 30 Ill.Dec. at [557], 393 N.E.2d at 593 expressed the following: Id. at 453-55, 654 P.2d at 347-49 (footnotes omitted). Guided by the principles enumerated above, the Kaneko court determined that a "prefabricated mill building" was a product to which the doctrine of strict products liability applied. The court reasoned: 50 Ill.App.3d at 384-85, 8 Ill.Dec. at [543], 365 N.E.2d at 929. The court also concluded *976 that the parking spaces which were part of the structure itself were not products contemplated by Section 402A. Id. at 456-58, 654 P.2d at 349-50. Notwithstanding the Kaneko analysis, this court subsequently held in Bidar that "a portion of a leased or rented premises that prove[d] defective" was not a product. 66 Haw. at 556-57, 669 P.2d at 161 (brackets, ellipsis points, and internal quotation signals omitted). In Bidar, a hotel guest was injured when the towel bar that she grasped in order to pull herself to an upright position after using the toilet tore loose from the wall, causing her to lose her balance, fall, and become wedged between the toilet and the bathtub, thereby fracturing her hip and wrist. Id. at 549, 669 P.2d at 157. In her suit for damages, Bidar alleged, inter alia, that the hotel owner and operator was "strictly liable to [her] for the damages sustained." *977 Id. (internal quotation signals omitted). In addressing Bidar's claim, this court Id. at 555-57, 669 P.2d at 160-61 (footnote omitted). This court expanded its "product" analysis in Armstrong, in which it held that a renter who had been injured when a glass shower door had broken, thereby lacerating his arm, could not recover against his landlord on a strict products liability basis because a 69 Haw. at 183-85, 738 P.2d at 83-85 (footnote omitted). As the federal district court noted in Kennedy, the common thread binding the Bidar /Messier/Armstrong line of cases was the "appl[ication of] the doctrine of strict product liability to landlord-tenant scenarios." (Emphasis added.) Under the circumstances of those cases, the allegedly defective item was not the defendant landlord's "product" because the defendant landlord had not manufactured or commercially distributed the item, but, rather, had utilized the item as an element of the residential accommodations they had offered for lease. Nonetheless, it is intuitively obvious to us that the towel bar at issue in Bidar, the metal roof panel at issue in Messier, and the glass shower enclosure at issue in Armstrong were "products" vis-a-vis the companies that manufactured and marketed them commercially. This distinction is the key to our analysis in the present matter. *979 Sears's position is analogous to that of the landlords in Bidar, Messier, and Armstrong. Because Sears did not manufacture or commercially distribute the escalator that allegedly caused Kamalii's injuries, the escalator cannot be Sears's "product." As in the case of the landlords, none of the public policy rationales justifying the doctrine of strict products liability would be served by concluding otherwise. Like the landlords, Sears cannot adjust the costs of protecting the consumer up the chain of distribution. Inasmuch as Sears did not produce the escalator, it is unable to protect against defects by means of the exercise of greater care during manufacture and assembly. Moreover, Sears, and the numerous other businesses that utilize escalators in their buildings, cannot be presumed to have the expertise necessary to know of and correct defects in their escalators so as to justify imposing responsibility for dangerous conditions regardless of negligence. See Armstrong, 69 Haw. at 185, 738 P.2d at 84. Thus, Sears cannot be liable in strict products liability with respect to the escalator. However, Westinghouse and Schindler are not similarly situated. Analogously to the manufacturer of the prefabricated building in Kaneko, Westinghouse and Schindler have allegedly created a component part that has "merely [been] incorporated into something larger [without] change in the component part itself[;] [accordingly,] strict liability is applicable." See Kaneko, 65 Haw. at 456, 654 P.2d at 349. On this record, the public policy considerations articulated in Stewart and its progeny would be furthered by applying the doctrine to Westinghouse and Schindler. Such an application affords maximum protection to persons injured by defective products. Westinghouse and Schindler, the alleged commercial manufacturer and distributor, are positioned most appropriately to bear the burden of shouldering the risk of accidental injuries caused by defective escalators as a cost of doing business. And, finally, applying the doctrine of strict products liability to Westinghouse and Schindler in this instance creates "an incentive to guard against ... defects in the future." See Stewart, 52 Haw. at 75, 470 P.2d at 243 (footnote omitted). For the reasons discussed above, we hold that the escalator at issue in the present matter is not a "product" for purposes of Leong's claim against Sears, but that the escalator is a "product" for purposes of Leong's claims against Westinghouse and Schindler.