Opinion ID: 1358226
Heading Depth: 1
Heading Rank: 6

Heading: Risk of Serious Bodily Harm

Text: In light of our framework of focusing on activity, not just consequences, it is our view that parties should not have to wait until a dangerous and defective product causes serious bodily injury before seeking a tort action. In this regard, we see no reason to treat commercial parties differently from home buyers or other consumers. See JKT Co. v. Hardwick, 274 S.C. 413, 418, 265 S.E.2d 510, 512 (1980) (noting that there is no justifiable reason why an innocent corporate consumer should be denied recovery [for lack of privity in an implied warranty action] when a manufacturer places a defective article into commerce). Extending the legal duty to manufacture products that do not pose a serious threat of physical harm to the commercial context would protect commercial plaintiffs in the same way we sought to protect home buyers: a manufacturer placing a dangerous, defective product into the stream of commerce would not unfairly escape liability because only the defective product was injured and no one was seriously hurt. Further, the traditional lines between tort and contract are not blurred by our decision because tort liability for purely economic losses only attaches where there is a breach of these legal duties beyond the contractual duties. Kennedy, 299 S.C. at 345-46, 384 S.E.2d at 737. Extending the serious threat of physical (bodily) harm exception generally is consistent with our policy of providing a remedy where a duty outside the contract is breached. Manufacturers have a duty, separate and apart from contractual duties, to create safe products, and they are liable for poorly made products used in a foreseeable manner. See Salladin v. Tellis, 247 S.C. 267, 269-71, 146 S.E.2d 875, 876-77 (1966) (noting a manufacturer of an imminently dangerous product is liable in tort for physical harm caused, regardless of whether the injured party is in privity of contract, when put to its intended use). Other jurisdictions providing an exception where a defective product poses a serious threat of physical harm have expressed the same concerns regarding protecting an injured party in a general commercial context from a fortuitous tortfeasor that we expressed in Kennedy. See Morris v. Osmose Wood Pres., 340 Md. 519, 667 A.2d 624, 631-32 (1994) (noting that, while not proven by the parties, Maryland nevertheless allows recovery for purely economic losses where it is shown that there is a clear danger of death or serious injury); Council of Co-Owners v. Whiting-Turner, 308 Md. 18, 517 A.2d 336, 345 (1986) (focusing on the duty owed in an economic loss case, rather than on the fortuitous circumstance of the nature of the resultant damage, and finding that one could recover in tort for purely economic losses where the risk is of death or personal injury); [7] see also Philadelphia Nat'l Bank v. Dow Chem. Co., 605 F.Supp. 60, 64 (E.D.Pa.1985) ( PNB ) (noting that while the court was reluctant to rely solely on evidence of damage to other property, the court found Pennsylvania would allow recovery in strict liability because there was also evidence that the defective product posed a serious risk to passers-by); Trustees of Columbia Univ. v. Mitchell/Giurgola Assocs., 109 A.D.2d 449, 492 N.Y.S.2d 371, 376 (N.Y.App.Div.1985) ( Columbia ) (finding that the economic loss rule did not bar recovery, and the codefendants were entitled to contribution from supplier, because a wall rendered defective and in imminent danger of collapse by improperly fabricated materials constitutes the type of dangerous product for which the manufacturer owes a duty to the ultimate user under the doctrine of strict liability bespeaks itself). [8] We are mindful that extending the serious threat of harm exception may raise concerns that manufacturers would essentially become insurers against every remote threat of harm. This is not our intent, and we emphasize that the exception applies to serious threats with recovery calculated as the costs to repair or remove the dangerous product. [9] In order to limit situations where the exception applies, we adopt Maryland's balancing test: the nature of the damage threatened and the probability that the damage would occur should be examined to determine whether there is a clear, serious, and unreasonable risk of death or personal injury. Morris, 667 A.2d at 631-32 (We examine both the nature of the damage threatened and the probability of damage occurring to determine whether the two, viewed together, exhibit a clear, serious, and unreasonable risk of death or personal injury. Thus, if the possible injury is extraordinarily severe, i.e., multiple deaths, we do not require the probability of the injury occurring to be as high as we would require if the injury threatened were less severe, i.e., a broken leg or damage to property.). For the foregoing reasons, we conclude the legal duties to avoid making products which pose a serious risk of physical injury as found in Kennedy, extend to manufacturers. Accordingly, we answer the first certified question, no, if there is merely a breach of industry standards without an accompanying breach of a legal duty owed, and yes, if there is a breach of duty accompanied by a clear, serious and unreasonable risk of bodily injury or death.
In the order requesting certification, the district court asked for clarification regarding whether a remote purchaser may maintain a UTPA suit. Based on the way this question is posed, we answer, yes. Under the UTPA, [u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are unlawful. S.C.Code Ann. § 39-5-20(a) (1985). Persons or any legal entity suffering an ascertainable loss of money or real or personal property  as a result of the use or employment by another person of an unfair or deceptive method, act or practice may bring an action to recover actual damages. S.C.Code Ann. § 39-5-140(a) (1985) (emphasis added). To recover under the Act, a plaintiff must prove a violation of the Act, proximate cause, and damages. Charleston Lumber Co. v. Miller Housing Corp., 318 S.C. 471, 482, 458 S.E.2d 431, 438 (Ct.App.1995). In their UTPA discussions, the district court and the parties to this action focus primarily on Reynolds v. Ryland Group, Incorporated, 340 S.C. 331, 531 S.E.2d 917 (2000), and request clarification of whether this case holds a general privity requirement for UTPA claims. In Reynolds, this Court answered the following certified question from the district court: Under South Carolina law, can Plaintiffs in a residential construction defects case sue Defendant builder, seller and developer under the South Carolina Unfair Trade Practices Act if Plaintiffs did not purchase their residences from Defendant but from the original homeowner more than three years after the original sale? Reynolds, 340 S.C. at 333, 531 S.E.2d at 918. The Reynolds court discussed a Texas causation case and acknowledged there was no specific provision in UTPA limiting a cause of action to an immediate purchaser. In discussing the plaintiff's request that the Court find privity of contract was not required in a UTPA claim by a subsequent purchaser, the Reynold 's court noted that it has taken a very active role in the construction area to protect innocent purchasers including the elimination of privity to protect an innocent purchaser who has invested his life savings from latent defects in a mobile society where it is foreseeable that more than the original owner will enjoy a home from a builder. Reynolds, 340 S.C. at 334, 531 S.E.2d at 919. However, the Court answered the certified question in the negative, noting that subsequent purchasers had other remedies against the builder in tort, negligence, and implied warranties. Reynolds, 340 S.C. at 335, 531 S.E.2d at 919-20. The dissent in Reynolds pointed out that: the plain meaning of the UTPA statute did not limit remedies to the initial purchaser; requiring privity would contravene South Carolina's long policy of protecting home owners and prior precedent stating the privity requirement was abolished; [10] imposing a privity requirement would bar UTPA suits by competitors; and the lack of a privity requirement would not lessen a plaintiff's need to prove a causal connection between the deceptive practices and their injury. Reynolds, 340 S.C. at 336-39, 531 S.E.2d at 920-22 (Burnett, J., dissenting). In answering the certified question, the Reynolds Court did not: impart any particular legal theory to deny UTPA actions to subsequent home buyers; use the word privity in its ruling or pronounce that all UTPA actions required privity; or offer guidance as to UTPA claims by remote purchasers or competing entities generally. Id. Reynolds focused on a subsequent purchaser's ability or options to prove his losses were the result of the original builder's deceptive trade practice. As the dissent in Reynolds pointed out, to hold privity is required before a party may maintain a UTPA action would lead to an absurd result. Such a finding would prohibit UTPA actions by all remote buyers and competitors, who have traditionally been allowed to proceed under the Act, because there could be no privity. See Global Prot. Corp. v. Halbersberg, 332 S.C. 149, 156-57, 503 S.E.2d 483, 487 (Ct.App.1998) (allowing recovery in a UTPA claim between competitors for trademark infringement). Accordingly, we answer the second certified question, yes. CERTIFIED QUESTIONS ANSWERED.