Title: ALLENBERG v. BENTLEY HEDGES TRAVEL SERV. INC

State: oklahoma

Issuer: Oklahoma Supreme Court

Document:

ALLENBERG v. BENTLEY HEDGES TRAVEL SERV. INC  ALLENBERG v. BENTLEY HEDGES TRAVEL SERV. INC 2001 OK 22 22 P.3d 223 72 OBJ 815 Case Number: 95400 Decided: 03/06/2001 Mandate Issued: 05/03/2001 JACK ALLENBERG, Surviving next-of-kin of AvaPattee Allenberg, deceased, Plaintiff/Appellant v. BENTLEY HEDGES TRAVEL SERV. INC., BENTLEY HEDGES PARK & FLY INC., LOWELL HITE ARVIEUX, Defendants, andARKANSAS BUS EXCHANGE CORP., Defendant/Appellee.ARKANSAS BUS EXCHANGE CORP., Third Party Plaintiff NATIONAL COACH CORP., ELDORADO NAT'L CO., THOR INDUS., INC., EBC, INC., GELCO CORP. and JOHN DOE, Mfr., and BUDGET RENT-A-CAR SYSTEMS, INC., a Delaware Corp., Third Party Defendants. NANCY (LEIGH) NORMAN GRAY, Personal Representative of the Estate of GWINN NORMAN Plaintiff/Appellant v. BENTLEY HEDGES TRAVEL SERV. INC., BENTLEY HEDGES PARK & FLY INC., LOWELL HITE ARVIEUX, Defendants, and ARKANSAS BUS EXCHANGE CORP., Defendant/Appellee.ARKANSAS BUS EXCHANGE CORP., Third Party Plaintiff, v. NATIONAL COACH CORP., ELDORADO NAT'L. CO., THOR INDUS., INC., EBC, INC., GELCO CORP. and JOHN DOE, Mfr., and BUDGET RENT-A-CAR SYSTEMS, INC., a Delaware Corp., Third Party Defendants. APPEAL FROM THE DISTRICT COURT OF OKLAHOMA COUNTY Honorable Daniel L. Owens, Trial Judge ¶0 Bentley Hedges Travel transported two passengers to the airport in a used shuttle bus which it had purchased from the appellee, Arkansas Bus Exchange (Arkansas Bus). While en route to the airport the bus was involved in an accident and both passengers were injured. One of the passengers died a few days after the accident and the other subsequently died of causes unrelated to the accident. The representatives of their estates brought actions against Arkansas Bus asserting a claim for manufacturers' products liability. Arkansas Bus moved for summary judgment, arguing that the doctrine of manufacturers' products liability does not apply to commercial sellers of used products. The trial court entered judgment in favor of Arkansas Bus. We hold that manufacturers' products liability is inapplicable to the commercial seller of a used product if the alleged defect was not created by the seller, and if the product is sold in essentially the same condition as when it was acquired for resale. TRIAL COURT AFFIRMED. Ed Abel, Lynn B. Mares, Oklahoma City, Oklahoma, for Plaintiffs/Appellants Chris Harper, Harry R. Palmer, Jr., Phillip P. Owens II, Oklahoma City, Oklahoma, for Defendant/Third Party, Plaintiff/Appellee Tom Cooper, Oklahoma City, Oklahoma, for Budget Rent-A-Car/Third Party Defendant KAUGER, J.: [22 P.3d 224] ¶1 The first impression question presented is whether manufacturers' products liability is applicable to the commercial seller of a used product if the alleged defect was not created by the seller, and if the product is sold in essentially the same condition as when it was acquired for resale. FACTS ¶2 On July 16, 1997, Bentley Hedges Travel arranged transportation to the airport for Ava Pattee Allenberg and her daughter, Gwinn Norman (passengers), in a used shuttle bus which it had purchased from the appellee, Arkansas Bus Exchange (Arkansas Bus). While en route to the airport, the driver of the bus ran a red light causing the bus to collide with other vehicles in an intersection. Both passengers were seated on the left side of the bus facing the center aisle. The bus was not equipped with seat belts, and the passengers were flung from their seats and injured in the collision. Ava Allenberg died a few days after the accident. ¶3 On February 19, 1998, Gwinn Norman, filed a lawsuit on her own behalf and another lawsuit as the personal representative of her mother's estate. She sued Bentley Hedges Travel and the driver of the bus alleging that they were negligent. She also sued Arkansas Bus alleging that it had distributed and sold a defective, unreasonably dangerous shuttle bus because the bus was not equipped with seat belts, adequate handholds, or secured luggage compartments. Bentley Hedges and the bus driver were later dismissed from the lawsuit. ¶4 Arkansas Bus filed answers in both causes, denying the allegations and asserting that it could not be liable because it did not manufacture, design, or produce the bus, nor did it alter, change or modify the bus in any way from its original condition. It also filed third party indemnity claims against National Coach Corp., Eldorado National Corp., Thor Industries, Ebc, Inc., Gelco Corp., John Doe, Manufacturer, and Budget Rent-A-Car Systems (Budget) as manufacturers of the bus and/or predecessors, successors or subsidiaries. According to the pre-trial order, the third party indemnity claims, with the exception of the claim against Budget, were [22 P.3d 225] later dismissed without prejudice or summary judgment was entered in their favor. ¶5 On April 27, 1999, Arkansas Bus filed motions for summary judgment in both causes, arguing that the bus was neither defective nor the proximate cause of Ava Allenberg's or Gwinn Norman's injuries. The trial court denied the motions on July 23, 1999. While the lawsuits progressed, Gwinn Norman died of causes unrelated to the accident and her brother, Jack Allenberg (estate representative), was substituted as surviving next-of-kin of Ava Allenberg. Gwinn Norman's daughter, Nancy Gray, was substituted as her mother's personal representative. ¶6 On July 17, 2000, Arkansas Bus again filed motions for summary judgment in both causes, arguing that the doctrine of manufacturers' products liability is inapplicable to commercial sellers of used products. On July 24, 2000, Budget Rent-A-Car also filed motions for summary judgment. On August 16, 2000, both causes were consolidated for trial. However, on September 27, 2000, the trial court entered judgment in favor of Arkansas Bus, finding that the shuttle bus was a used vehicle when the bus exchange purchased it and that it did not alter, modify, rebuild or restore the bus. It also determined that Budget's motion for summary judgment was moot. ¶7 The estate representatives appealed on October 23, 2000, and filed a motion to retain the cause in this Court. On December 18, 2000, we retained the cause to address the first impression question regarding the application of manufacturers' products liability to the seller of a used product if the alleged defect was not created by the seller, and if the product is sold in essentially the same condition as when it was acquired for resale. ¶8 MANUFACTURERS' PRODUCTS LIABILITY IS INAPPLICABLE TO THE COMMERCIAL SELLER OF A USED PRODUCT IF THE ALLEGED DEFECT WAS NOT CREATED BY THE SELLER, AND IF THE PRODUCT IS SOLD IN ESSENTIALLY THE SAME CONDITION AS WHEN IT WAS ACQUIRED FOR RESALE. ¶9 We note at the outset that the basis of the estate representatives' lawsuits was that the shuttle bus was defective because it "had no seat belts, no protection from hard rails and surfaces, and that seats and luggage came loose in the collision" causing the passengers severe injuries. We have not previously addressed whether, under these circumstances, the bus may be defective, ¶10 Arkansas Bus contends that the undisputed facts reveal that any defects were created by the manufacturer and that it purchased the shuttle bus in a used condition and, other than changing the oil and/or tires, it did not warrant, recondition, change, alter, modify, or rebuild the bus before it sold it to Bentley Hedges. [22 P.3d 227] ¶11 Oklahoma adopted the theory of manufacturers' products liability in Kirkland v. General Motors Corp., 1974 OK 52, 521 P.2d 1353 . The Kirkland teaching is that the seller of a product in a defective condition, which is unreasonably dangerous to the user or consumer, is strictly liable for the physical harm to the person or property caused by the defect. This theory of recovery is based on the Restatement (Second) of Torts, §402A (1965). ¶13 We have not previously determined whether manufacturers' products liability should apply to commercial sellers of used products when the alleged defect was not created by the seller, and the product was sold in essentially the same condition as when it was acquired for resale. However, since Kirkland, and consistent with its rationale, manufacturers' products liability has been applied to various members of the manufacturers' marketing chain. ¶14 The estate representatives contend that manufacturers' products liability should extend to anyone in the business of placing a product in the stream of commerce, including those who sell used goods. They rely on our application of strict liability to retailers in Moss v. Polyco, 1974 OK 53, 522 P.2d 622 , and our extension of strict liability to lessors in Dewberry v. LaFollette, 1979 OK 113, 598 P.2d 241 . They also cite to the few jurisdictions which have extended strict liability to commercial sellers of used products. ¶15 In Moss v. Polyco, 1974 OK 53, 522 P.2d 622 , we explained the rationale for holding non-manufacturer-suppliers to the same liability standard as manufacturers. Relying on cases from other jurisdictions, we noted that: 1) retailers like manufacturers, are engaged in the business of distributing goods to the public; 2) because they are an integral part of the overall producing and marketing enterprise, they should bear the cost of injuries resulting from defective products; 3) in some cases the retailer may be the only member of the marketing chain reasonably available to the public; and 4) in other cases the retailer may play a substantial part in insuring that the product is safe or may be in a position to exert pressure on the manufacturer to make the product safer. ¶16 Following the trend of other jurisdictions, in Dewberry v. LaFollette, 1979 OK 113, 598 P.2d 241 , we expanded strict liability to include lessors engaged in the business of leasing chattels even when no sale is involved on the basis that such persons put products into the stream of commerce in a fashion not unlike a manufacturer or retailer. Adopting [22 P.3d 229] the reasoning of the Pennsylvania Supreme Court in Francioni v. Gibsonia Truck Corp., 472 Pa. 362, 372 A.2d 736 , we noted that: 1) in some instances the lessor, like the commercial seller, may be the only member of the marketing chain available to the injured plaintiff for redress; 2) as in the case of the commercial seller, imposition of strict liability upon the lessor serves as an incentive to safety; 3) the lessor is in a better position than the consumer to prevent circulation of defective products; and 4) the lessor can distribute the cost of compensation for injuries resulting from defects by adjusting the rental terms. The estate representatives now ask that the same liability be imposed upon the commercial seller of used shuttle buses. ¶17 For three decades, courts from other jurisdictions have struggled with the question of whether or under what circumstances the commercial seller of used products should be liable for a defect attributable to the initial design or manufacturing of a used product. ¶18 Some courts have imposed strict liability on commercial sellers of used products because they conclude that the Restatement (Second) of Torts, §402A ¶19 In contrast, courts which have declined to extend the strict liability to commercial sellers of used products have noted that the policy reasons which underlie strict liability are not fully applicable to [22 P.3d 230] commercial sellers of used products. For instance, in Tillman v. Vance Equipment Co., 286 Or. 747, 596 P.2d 1299 , 1301 (1979), the Oregon Supreme Court held that a commercial seller of a used crane was not strictly liable for a defect created by the manufacturer. The court looked to the purposes behind the strict liability doctrine and found them inapplicable to used product commercial sellers ----- at least in the absence of some representations of quality beyond the sale itself or of a special position of the commercial seller vis-a-vis the original manufacturer or others in the chain of original distribution. ¶20 In refusing to subject the commercial seller of used goods to the same liability as manufacturers, the Tillman Court reasoned that: 1) generally, used goods markets operate on the apparent understanding that the commercial seller makes no particular representation about the quality of the used goods simply by offering them for sale; 2) if the buyer wants assurances of quality, the buyer typically either bargains for it or seeks out dealers who routinely offer it; 3) the sale of a used product, without more, may not be found to generate the kind of expectations of safety that the courts have held are justifiably created by the introduction of a new product into the stream of commerce; 4) the position of the used-goods dealer is normally entirely outside the original chain of distribution of the product; 5) and there is typically no ready channel of communication by which the dealer and the manufacturer exchange information about possible dangerous defects in particular product lines or about actual and potential liability claims. ¶21 Although the Tillman court did not address whether a lessor would be subject to strict liability, it also noted that a commercial seller of used products differs from a lessor in that: "the lessor chooses the product which he offers in a significantly different way than does the typical dealer in used goods; the fact that he offers them repeatedly to different users as product he has selected may constitute a representation as to their quality; and it may well be that he has purchased them, either new or used, from a dealer who is directly related to the original distribution chain." CONCLUSION ¶23 Strict liability is imposed upon manufacturers because the manufacturer of the product is responsible for the product reaching its market, and the manufacturer is best situated to provide protection against the [ 22 P.3d 231 ] risk of injuries caused by a defective product. TRIAL COURT AFFIRMED. ¶24 ALL JUSTICES CONCUR. FOOT