No. 81-410 INTHE SUPREME COURT OF THE STATE OF MONTANA 1982

NEOMA THOMPSON, Plaintiff and Appellant,

VS. NEBRASKA MOBILE HOMES CORPORATION, ARNOLD KRUSE, d/b/a AMERICAN IDEAL HOMES; and JACK BOLES, Defendants and Respondents.

Appeal from: DistrictCourt of the Eighth Judicial District, In and for the County of Cascade Honorable H. William Coder, Judge presiding. Counsel of Record: For Appellant: Frisbee, Moore & Stufft, Cut Bank, Montana David Stufftargued, Cut Bank, Montana For Respondents: Jardine, Stephenson, Blewett & Weaver, Great Falls,

Montana Lon Holden argued, Great Falls, Montana

Larsen & Neill, Great Falls, Montana Dirk Larsen argued, Great Falls, Montana

Submitted: May 28, 1982 Decided: June 23, 1982Mr. Justice Frank B. Morrison, Jr., delivered the Opinion of the Court. Plaintiff,Neoma Thompson, appeals the decision of the Eighth Judicial DistrictCourt of Montana to dismiss her claim of strict liability in tort against defendants. Itwas dismissed because the only injury suffered by plaintiff was to the product itself, the mobile home. We reverse the decision of the District Court and hold that a strict liability action can liewhen the only damage suffered is to the defective product itself. Neoma Thompsonpurchased a 1972 Magnolia Futurama from Arnold Kruse, d/b/a American Ideal Homes, and Jack Boles on September 25, 1971. Shepaid $8,465.00 for themobile home. It was designed and constructed by Nebraska Mobile Homes Corporation (Nebraska) 

# . Thepurchase agreement contains the following language: "It ismutually agreed that the buyer takes the newmobile home, trailer or other described unit, 'as is' and that there are no warranties, either express or implied, made by the dealer. The seller specificallymakes no warranty as to itsmerchantability or of its fitness for any purpose.'I Therewas also a repair clause in the agreementwhereby American Ideal Homes agreed "toreturn to service Thompson's home as required." Regarding factorywarranties,Mr. ThomasWilson, Jr., GeneralManager of Nebraska Mobile Homes, stated at trial that every mobile home sold 

### by Nebraska in 1971-72had at least a 90day warranty. Since some states required one yearwarranties, Wilson stated that itwas his practice to honor all of Nebraska's warranties for oneyear. Thompson's mobile home was delivered and setup on November 17, 1971. That night the furnacemalfunctioned.At Thompson'srequest and pursuant to the purchase agreement, American Ideal returned to Thompson's mobile home and repaired the furnace the next day. Within a month, Thompson noticed that several interlocking roof shingles had been blown from the roof. Again shephoned American Ideal,who delivered

new shingles to Thompson. She then found a friend to replace the shingles and some roof batting for her. At an unspecified later date, a sliding glass door was also repaired by American Ideal. Mrs. Thompsonwas injured in an automobile accident in 1966 and suffersmemory loss. Although much of her memory has returned, she still has someproblems. Therefore, Thompson's testimony is rather vague with respect to dates and time frames. During the first winter she owned the Futurama, 1971- 72,Thompsonwas plagued by cold air blowing through the home's outlets,cupboards and closets. She contacted American Idealregarding this problem and was told a "factoryman" (from Nebraska Mobile Homes) would be sent to repair the leaks. After several more calls to American Ideal and sometimeduring the next two years, 1973 or 1974, a factory

man did visit Thompson at her home. He spent approximately 30 to 40minutes at the mobile home and caulked her bedroom closet floorboard. He immediately left as he needed to return to Nebraska for his daughter'swedding. Thompson testified that she was unable to discuss with 

### him other problems with her mobile home due to his quick departure. The caulkingwas insufficient. Thompson found it necessary to install a gas heater as well as to purchase several electrical heaters in an effort to keep her home

warm.Sometime after the caulking was performed,Mrs. Thompson noticed that the living room ceiling was starting to sag. She called American IdealHomes about the problem, to no avail. On June 6, 1976,Mrs. Thompson saw

### Mr. Arnold Kruse installing anothermobile home in her court. Shewent to that site and requested Kruse to come examineher sagging roof and ceiling. He did so. He testified at trial that the roof and ceiling were sagging approximately four inches and that the walls of themobile home were bowed. He stated that he had never before seen a Magnolia in that kind of condition. Mrs. Thompson is unclear about when she first noticed her ceiling was sagging. She testified at trial that it could have been a year or a year and a half after her bedroom

was caulked. She also testified that it had been sagging for no less than one year and may be as much as two or three years prior to Mr. Kruse's visit. The exact time remains an open question of fact. Mr. Kruse phoned Nebraska Mobile Homes on June 7, 1976, and requested someone come check the Thompson mobile home. In response to that call,Mr. Bill Boyer inspected Thompson's home in either June or July of 1976. He told Mrs. Thompson that he had never seen a Magnolia act thatway and that he would call Thomas Wilson about the problem. Mr. Boyer later told Mrs. Thompson thatMr. Wilson stated there was nothing Nebraska could do as her oneyear warranty had expired. Approximately oneyear later, September 1, 1977,Thompson filed a complaint againstNebraska Mobile Homes,Arnold Kruse, d/b/a American IdealHomes and Jack Boles. The primary allegations in the complaintwere:(1) That defendantNebraska Mobile Homes had failed to use due care and had used inferiormaterials when constructing 

### her home; (2) That such actions had resulted in themobile home being in a defective condition when itwas delivered to Mrs. Thompson;and (3) That the defects constituted breach of warranties that the home was suitable forMontana's severe winters and that the home was fit for general use. The complaintwas later amended to include 

### a claim against defendants for damages, based on strict liability in tort. A jury trialwas held July 14, 1981. On that same day, Nebraska filed a motion in limine prohibiting any testimony regardingplaintiff's physical or emotional sickness allegedly caused by themobile home. Themotion was granted and there is no appeal of that issue. At the close of the trial,both defendantsmoved for dismissal of plaintiff's claim for property damages based on strict liability in tort. Plaintiff filed a brief in support of her claim, after which defendant's motions to dismiss were granted. The casewas submitted to the jury on negligence, fraud and warranty theories. The jury was instructed by the judge that disclaimers are a defense to warranties. Defendants

were thus allowed to rely on Uniform Commercial Code defenses not available for strict liability claims. The jury found for the defendants on all counts submitted to them. The only issue raised in this appeal iswhether the District Court erred in dismissing plaintiff's claim for strict liability in tort. This Court adopted strict liability in tort in Brandenburger

v. Toyota Motor Sales (1973), 162Mont. 506, 513 P.2d 268.

### We stated several reasons for so doing: (1) 

# ".

. . to place liability on the party primarily responsible for the injury occurring, that is, themanufacturer of the defective product.I'



### (2) To fulfill such public policy considerations for openly fixing responsibility on the manufacturer regardless of negligence as:

(i) requiring the manufacturer to anticipate hazards and guard against their recurrence, as the consumer is not able to do so;

(ii) placing the cost of injury on the manufacturer,who can cover the risk of injury through insurance, rather than overwhelming the injured consumer with that burden; (iii) discouraging themarketing of defective products; and

(iv) placing responsibility on the retailer and wholesaler of the defectiveproduct as they act as a conduit throughwhich liability may reach themanufacturer. Strict liability in tort is defined in 2 

### Restatement of Torts Second,Section 402(A), 

### as follows: "(1) Onewho sells any product in a defective conditionunreasonably dangerous to the user or consumer or to his property is subject to liability forphysical harm thereby caused to the ultimate user or consumer,or to his property, if "(a) the seller is engaged in the business of selling such a product, and "(b) it is expected to and does reach the user or consumer without substantial change in the condition inwhich itwas sold. 

### " (2) The rule stated in Subsection (1)applies although "(a) the sellerhas exercised allpossible care in thepreparation and sale of his product, and "(b) the user or consumerhas notbought the product from or entered into any contractual relation with the seller." In Brandenburger,we adopted the above definition and held that a claim for strict liability in tort could lie whenever a defective product caused physical harm to itsconsumer, or to the consumer's property. As the only physical harm caused by Mrs. Thompson's defectivemobile home was to themobile home itself, the DistrictCourt Judgedismissed Thompson's strict liability in tort claim. We reverse the District Court's decision to dismiss the claim and remand this case for a new trial on the theory of strict liability in tort. By doing so,we extend the doctrine of strict liability in tort to include those instanceswhere the only injury suffered is to the defective product itself. The rationale quoted in Brandenburger also applies under these circumstances. The public remains in an unfair bargaining position as compared to the manufacturer. In the

case of damage arising only out of loss of the product, this inequality in bargaining position becomes more pronounced. Warranties are easily disclaimed. Negligence is difficult, if not impossible, to prove. The consumer does not generally have large damages to attract the attention of lawyerswho must handle these cases on a contingent fee. We feel that the consumer should be protected by affording a legal remedy which causes themanufacturer to bear the cost of its own defectiveproducts. By allowing a claim for strict liability in tortwe are joiningwith the jurisdictions of New Jersey, Wisconsin, Michigan,Minnesota and Colorado in affording legal recourse to allvictims damaged by defects resulting from themanufacturing process. In Hiigel v. GeneralMotors Corporation (Colo. 1975), 544 P.2d 983,Hiigel's motor home was damaged when its wheel studs sheared off, causing the dual rear wheels to separate from the vehiclewhile itwas in operation. 

### In extending strict liability in tort to cover damages to themotor home itself, the Colorado court stated: "Sinceunder S402A the

### burden of having cast a 

### defective product into the stream of commerce falls upon themanufacturer, it appears inconsistent to limit his responsibility to property other than the product sold." Hiigel, 544 P.2d at 989. Gautheirv. Mayo (Mich. 1977), 258 N.W.2d 748, involves

a

### modular home rendereduninhabitable due tomanufacturer created defects. In finding the manufacturer liable to the purchaser, theMichigan court enunciated the same "streamof commerce" rationale and held that "(a) consumer has a cause of action directly against a manufacturer for economic loss resulting from a defective product, when said defect is attributable to themanufacturer. 

# . ." Gautheir, 258 N.W.2d

Santorv. A 

### and M Karagheusian, Inc. (1965), 44N.J. 52, 207

### A.2d 305, 

### is one of the first,aswell as the bestrea~oned~opinionsin this area. In finding the manufacturer of a defective carpet liable to the purchaser for the value of the carpet when the defective condition was first discovered, the New Jersey court stated: 

# ".

. . the greatmass of the purchasing public has neither adequate knowledge nor sufficient opportunity to determine if articles bought or used are defective. Obviously theymust rely upon the skill, care and reputation of themaker. 

# . . Itmust be said, therefore, that when the manufacturerpresents his goods to the public for salehe accompanies themwith a representation that they are suitable and safe for the intended use. 

# .. The obligation of themanufacturer thus becomes what in justice it ought to be 

## -- an enterprise liability



# . .

# . Thepurpose of such liability is to insure that the cost of injuries or damages, either to the goods sold or to other property, resulting from defective products, is borne by the makers of the products who put them in the channels of trade,rather than by the injured or damaged persons who ordinarily are powerless to protect themselves." Santor, 207A.2d at 311, 312.Other cases applying strict liability in tort to instances where the only injury is to the defectiveproduct itself are City of Lacrosse

### v. Schubert,Schroeder and Associates

(1976), 72Wis.2d 38, 240N.W.2d 124; Superwood Corp. v. SiempelkampCorp. (Minn. 1981), 311N.W.2d 159;and C & S Fuel, Inc. v. Clark Equipment Co. (E.D. 

### Ky. 1981), 524 F.Supp. 949. Finally,respondent Nebraska Mobile Homes asserts that

even if the District Court erred in dismissing the strict liability in tort claim, the error was harmless for two

reasons: (1) Implied warrantability of fitness for use is the

same thing as strict liability. Since the jury returned a verdict for defendants on the warranty theory, they would have also done so on the theory of strict liability,had itbeen submitted to them. (2) The Statute of Limitations for filing the strict liability in tort claim had run, thus barring that claim. We disagree. The courtdid instruct on the breach of implied warranty of fitness. However, the court also instructed that such 

### a warranty could be disclaimed. The purchase agreement, as quoted at the outset of this opinion,disclaims the warranty. Therefore, the jurymight well have determined that the disclaimer barred any action against defendant for a breach of an implied warranty of fitness for use. Strict liability is not governed by the Uniform Commercial Code. It cannot be disclaimed. Therefore,the jury could logically have held forMrs. Thompson under the strictliability theory even though they held against her under the warranty theory. It was prejudicial error for the judge to fail to give the strict liability instruction. The evidence of when Mrs. Thompson first discovered her ceiling to be defective is both inconsistentand unclear. It is a question of fact for the jury to determine. We cannot ascertain from the jury's general verdict whether or not they found the statuteof limitations to have run. The applicableperiod of limitations is three years and commences to run fromdate of discovery, although the period may be further tolled by acts creating an estoppel. These are factquestions to be considered at a future trial with the defendant having the burden to prove this affirmativedefense. The decision of the District Court is reversed and this

cause is remanded for a new trial on the theory of strict liability in tort.

We Concur: 

# '3~4 

# &%dl. Chief,Justice