Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-94-01187/USCOURTS-ca10-94-01187-0/pdf.json

Parties Involved:
Bernstein Investment Co.
Appellant
Glenn Investment Partnership
Appellant
Morrison Northglenn Partnership
Appellant
National Gypsum Company
Not Party
Jordon Perlmutter
Appellant
Gerard Rudofsky
Appellant
Harley Rudofsky
Appellant
Leland Rudofsky
Appellant
United States Gypsum Co.
Appellee

Document Text:

PUBLISH 

. FILED 

Un1ted States Court or App~tJ 

Tenth Circuit 

UNITED STATES COURT OF APPEALS fvlAY 0 D i995 

TENTH CIRCUIT PATRICK FISHER ------------- Clerk 

JORDON PERLMUTTER, individually and as 

trustee for the Abe Perlmutter Testamentary 

Trust; LELAND RUDOFSKY; GERARD RUDOFSKY; 

HARLEY RUDOFSKY; BERNSTEIN INVESTMENT CO., 

a Colorado limited partnership; MORRISON 

NORTHGLENN PARTNERSHIP, a ColoradD general 

partnership; GLENN INVESTMENT PARTNERSHIP, 

a Colorado General Partnership, 

Plaintiffs-Appellants, 

v. 

UNITED STATES GYPSUM CO., 

Defendant - Appellee, 

and 

NATIONAL GYPSUM COMPANY, 

Defendant. 

No. 94-1187 

APPEAL FROM THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF COLORADO 

(D.C. No. 87-M-510) 

Kenneth B. McClain, Humphrey, Farrington & McClain, Independence, 

Missouri (WilliamS. Silverman, Silverman & Riley, Denver, 

Colorado, with him on the briefs) for the Appellants. 

Kell M. Damsgaard, Morgan, Lewis & Beckius, Philadelphia, 

Pennsylvania (Peter H. Blair, Jr., Foster & Blair, Denver, 

Colorado, with him on the briefs) for the Appellee. 

Appellate Case: 94-1187 Document: 01019290509 Date Filed: 05/09/1995 Page: 1 
Before TACHA and MCWILLIAMS, Circuit Judges, and BURRAGE,* 

District Judge. 

TACHA, Circuit Judge. 

Plaintiffs, developers of a shopping mall in Northglenn, 

Colorado, sued defendant United States Gypsum Company, 

manufacturer of a plaster product containing asbestos, under 

several legal theories, including negligence and strict liability. 

After a jury verdict for plaintiffs on the negligence cause of 

action, defendants appealed to this court. Because we found error 

in the district court's jury instructions, we reversed and 

remanded. Perlmutter v. United States Gypsum Co., 4 F.3d 864, 875 

(lOth Cir. 1993) (Perlmutter I). On remand, the district court 

granted defendant summary judgment, which plaintiff now appeals. 

We have jurisdiction pursuant to 28 U.S.C. § 1291 and affirm. 

I. 

Plaintiffs are developers who built a shopping mall in 

Northglenn, Colorado, in 1967. Defendant sold plaintiffs an 

acoustical plaster product for use in construction of the mall's 

ceiling~ The product, which contained asbestos, was sold under 

the trade name Audicote. At the time plaintiffs purchased the 

Audicote for the Northglenn Mall, defendant did not label or 

advertise the product's asbestos content. Over the next twenty 

years, the Audicote in Northglenn Mall was periodically disturbed 

* The Honorable Michael Burrage, District Judge, United States 

District Court for the Eastern District of Oklahoma, sitting by 

designation. 

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Appellate Case: 94-1187 Document: 01019290509 Date Filed: 05/09/1995 Page: 2 
when plaintiffs repaired water damage and performed routine 

maintenance on the ceiling. Plaintiffs claim that asbestos was 

released into the mall when this work was performed. 

In 1987, plaintiffs negotiated a sale of the mall. The 

parties abandoned the proposed transaction, however, when they 

discovered that the mall contained asbestos. Plaintiffs then 

removed the asbestos-containing Audicote at a cost of $1.75 

million, and subsequently sold the mall to a different purchaser. 

Plaintiffs then sued defendant to recover the cost of 

removing the Audicote. Plaintiffs sued for failure to warn of the 

hazards of Audicote under theories of both strict liability and 

negligence. A jury found in favor of plaintiffs on the negligence 

claim but for defendant on the strict liability claim. Both 

parties appealed that judgment to this court. 

On appeal, although we affirmed the district court's 

evidentiary decisions, Perlmutter I, 4 F.3d at 870-71, we reversed 

the district court on several important issues related to 

plaintiffs' negligence claim. First, we held that Colorado law 

imposed on defendant no post-sale duty to warn plaintiffs of 

Audicote's dangers, because Audicote was not defective at the time 

that defendant sold it to plaintiffs. Id. at 869-70. Second, we 

concluded that the district court's refusal to issue jury 

instructions concerning intervening causes and misuse of product 

was reversible error. Id. at 872-73. Consequently, we reversed 

the judgment and remanded the case for a new trial on plaintiffs' 

negligence claim. Id. at 875. 

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Appellate Case: 94-1187 Document: 01019290509 Date Filed: 05/09/1995 Page: 3 
On remand, the district court granted defendant's motion for 

summary judgment, agreeing with defendant that plaintiffs could 

not "prove an essential element of the negligence claim -- that 

Audicote created an unreasonable risk of harm as it was applied in 

the mall in 1967." Plaintiffs then petitioned this court for a 

writ of mandamus ordering the district court to hold a trial on 

plaintiffs' negligence claim. We denied plaintiffs' petition, 

reasoning that plaintiffs could obtain adequate relief through an 

appeal. Plaintiffs now appeal the summary judgment, arguing (1) 

that the district court's summary judgment order is inconsistent 

with our decision in Perlmutter I, and (2) that the district court 

incorrectly held that a finding that Audicote created an 

unreasonable risk of harm was an essential element of plaintiffs' 

negligence claim. In addition, plaintiffs renew their claim for 

prejudgment interest and punitive damages. 

II. 

As a federal court sitting in diversity, "our task ... is 

to ascertain and apply Colorado law to the end that the result 

obtained in federal court is the result that would have been 

reached if this litigation had been pursued in a Colorado court." 

Lutz Farms v. Asgrow Seed Co., 948 F.2d 638, 641 (lOth Cir. 1991). 

We regard the pronouncements of the Supreme Court of Colorado as 

authoritative statements of Colorado law. Romero v. International 

Harvester Co., 979 F.2d 1444, 1449 n.3 (lOth Cir. 1992). And, 

although we are not obligated to follow the pronouncements of 

lower state courts, "in the absence of any compelling reason to 

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Appellate Case: 94-1187 Document: 01019290509 Date Filed: 05/09/1995 Page: 4 
disregard [them]," we follow decisions of the Colorado Court of 

Appeals as well. Id. Our review of the district court's 

determinations of state law is de novo. Salve Regina College v. 

Russell, 499 U.S. 225, 239 (1991). 

Although we apply Colorado law to the substantive legal 

questions in this case, we review the grant of summary judgment 

using federal standards. See Romero, 979 F.2d at 1449. "We 

review the grant of summary judgment de novo, using the same 

standard applied by the district court." Universal Money Ctrs .. 

Inc. v. AT&T, 22 F.3d 1527, 1529 (lOth Cir.), cert. denied, 115 S. 

Ct. 655 (1994). Summary judgment is properly granted by a 

district court when there is no genuine issue of material fact in 

dispute, and the moving party is entitled to judgment as a matter 

of law. Fed. R. Civ. P. 56(c). In applying this standard, we 

review the factual record in the light most favorable to the 

nonmoving party. Applied Genetics Int'l. Inc. v. First Affiliated 

Sec .. Inc., 912 F.2d 1238, 1241 (lOth Cir. 1990). 

III. 

Plaintiffs contend that the district court failed to follow 

our mandate ordering a new trial because it decided the issue on 

summary judgment. The district court is bound to act in 

accordance with a mandate from this court. See Hicks v. Gates 

Rubber Co., 928 F.2d 966, 969 (lOth Cir. 1991). Nevertheless, 

" [a] mandate from [an appellate] court ordering a new trial does 

not preclude the district court from entering summary judgment if 

all of the appropriate requirements are met." Sales v. State Farm 

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Appellate Case: 94-1187 Document: 01019290509 Date Filed: 05/09/1995 Page: 5 
Fire & Casualty Co., 902 F.2d 933, 935 (11th Cir. 1990); see also 

United States v. United States Gypsum Co., 340 U.S. 76, 86 (1950); 

Cameo Convalescent Ctr., Inc. v. Percy, 800 F.2d 108, 110 (7th 

Cir. 1986). "To decide whether the district court violated [our] 

mandate, it is necessary to examine the mandate and then look at 

what the district court did." Hicks, 928 F.2d at 969. 

In Perlmutter I, we reversed "the trial court's imposition of 

a post-sale duty to warn upon [defendant]." 4 F.3d at 875. 

Finding "error in the denial of jury instructions requested by 

[defendant]," we remanded the case "for a new trial on the 

question of negligence." Id. In our remand for a new trial on 

the negligence cause of action, we limited plaintiffs to "proving 

that, at the time of sale, [defendant] was negligent in the 

selling of Audicote. The issue will be whether [defendant] 's 

conduct in the development, design, and marketing of Audicote, 

prior to 1967, failed to meet the appropriate standard of care." 

Id. at 870 n.4. Moreover, because "[t]he jury's verdict on the 

strict liability cause of action found that Audicote was not a 

defective, unreasonably dangerous product when sold," our mandate 

precluded plaintiffs "from arguing that the Audicote was defective 

under the standards existing before 1967." Id. 

On remand, the district court analyzed plaintiffs' negligence 

claim in light of our holding in Perlmutter I that defendant had 

no duty to warn of risks it learned of subsequent to the sale. 

The court recognized that defendant may have had a duty to warn 

persons "who might reasonably be expected to use, consume or be 

affected by . . . Audicote" of any unreasonable risks of harm that 

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Appellate Case: 94-1187 Document: 01019290509 Date Filed: 05/09/1995 Page: 6 
defendant was aware of at the time of sale. Such a duty, however, 

would be predicated on a finding that Audicote created an 

unreasonable risk of harm. Thus, the court reasoned, "the element 

of an unreasonable risk of harm was common to" plaintiffs' strict 

liability and negligence claims. Because the jury found for 

defendant on this common element that Audicote was not an 

unreasonably dangerous product when sold -- the court concluded 

that, "as a matter of law, the plaintiffs cannot prove negligence 

on a new trial of this case." 

We conclude that the district court's order is not 

inconsistent with our decision in Perlmutter I. Plaintiffs' 

assertion that our decision in Perlmutter I "relie[d] on the 

belief that no essential element of [plaintiffs'] negligence claim 

is absent" is simply incorrect. In Perlmutter I, we held that the 

jury had been improperly instructed on the negligence claim, and 

therefore remanded the case. 4 F.3d at 875. We did not prescribe 

the essential elements of plaintiffs' negligence claim. The 

district court thus properly analyzed defendant's motion for 

summary judgment . 

IV. 

Plaintiffs also contend that the district court misconstrued 

Colorado law to require a finding of product defect in negligent 

failure to warn claims. As plaintiffs correctly point out, strict 

liability and negligence are conceptually different theories of 

product liability. Grasmick v. Otis Elevator Co., 817 F.2d 88, 90 

(lOth Cir. 1987) (applying Colorado law). 

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Appellate Case: 94-1187 Document: 01019290509 Date Filed: 05/09/1995 Page: 7 
The difference between negligence and strict liability is the 

focus of the trier of fact. Under a negligence theory, the 

reasonableness of the manufacturer's conduct must be 

determined. Under a strict liability theory, the 

determination is whether the product is defective, or, if not 

defective, unreasonably unsafe, and whether . . . a warning 

was required. 

Downing v. Overhead Door Corp., 707 P.2d 1027, 1032 (Colo. Ct. 

App. 1985); see also Fibreboard Corp. v. Fenton, 845 P.2d 1168, 

1174-75 (Colo. 1993). "When a manufacturer or seller knows or 

should know of unreasonable dangers associated with the use of its 

product [that are] not obvious to product users, it has a duty to 

warn of these dangers; and a breach of this duty constitutes 

negligence." Palmer v. A.H. Robins Co., 684 P.2d 187, 198 (Colo. 

1984). In the context of a negligent failure to warn claim, the 

manufacturer's duty is to warn of dangers that it knew or should 

have known of. Grasmick, 817 F.2d at 90. 

Despite the theoretical differences between the two claims, 

"Colorado caselaw . . . suggests that there need not be a rigid 

distinction between negligence and strict liability failure to 

warn concepts." Romero, 979 F.2d at 1452 (referring to 

Halliburton v. Public Serv. Co., 804 P.2d 213, 217 (Colo. Ct. App. 

1990), cert. denied, (Jan. 29, 1991) and Downing, 707 P.2d at 

1032). "[T]he reasons which impose a duty to warn under [strict 

liability] also exist where the claim is based on negligence and, 

generally, the law applicable to warnings under [strict liability] 

are instructive in negligence cases as well." Halliburton, 804 

P.2d at 217. One critical area of overlap is that, "[r]egardless 

of whether a product liability action is grounded in negligence or 

strict liability, a plaintiff must prove that the product was 

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Appellate Case: 94-1187 Document: 01019290509 Date Filed: 05/09/1995 Page: 8 
defective." Mile Hi Concrete. Inc. v. Matz, 842 P.2d 198, 205 

(Colo. 1992) (emphasis added). "If a plaintiff fails to present 

sufficient evidence that a product is defective, he cannot satisfy 

the burden of persuasion or establish a prima facie case and a 

court will direct a verdict for the defendant." Id. 

Here, plaintiff cannot show that Audicote was defective 

because that issue was conclusively determined in the first trial. 

See Perlmutter I, 4 F.3d at 870 n.4. Plaintiffs therefore cannot 

establish a prima facie case for negligence under Colorado law and 

the district court properly granted defendant summary judgment. 

CONCLUSION 

For t~e reasons stated, we AFFIRM the district court's order 

granting defendant summary judgment. Coasequently, we need not 

address plaintiffs' claims for prejudgment interest and punitive 

damages. 

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