Cole v. Keller Industries ( 1998 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
DAVID D. COLE,
Plaintiff-Appellant,
v. No. 94-2576
KELLER INDUSTRIES, INCORPORATED,
Defendant-Appellee.
Appeal from the United States District Court
for the Eastern District of Virginia, at Richmond.
James R. Spencer, District Judge.
(CA-94-375)
Argued: July 13, 1995
Decided: January 6, 1998
Before RUSSELL, WIDENER, and HALL, Circuit Judges.
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Vacated and remanded by published opinion. Judge Widener wrote
the opinion, in which Judge Russell and Judge Hall joined.
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COUNSEL
ARGUED: Thomas Bryan Byrne, Richmond, Virginia, for Appellant.
Terrence Mitchell Bagley, Sr., MCGUIRE, WOODS, BATTLE &
BOOTHE, L.L.P., Richmond, Virginia, for Appellee. ON BRIEF:
Stephanie L. Karfias, MCGUIRE, WOODS, BATTLE & BOOTHE,
L.L.P., Richmond, Virginia, for Appellee.
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OPINION
WIDENER, Circuit Judge:
Plaintiff-appellant David Cole appeals the grant of summary judg-
ment against him in his suit alleging products liability and breach of
warranty against defendant-appellee Keller Industries, Inc. We vacate
and remand.
In June, 1991, David Cole, an apartment maintenance man, was
injured while using a ladder manufactured by Keller Industries. Cole
alleges that as he descended to the third step of the ladder, a rivet
broke, which had fastened the left rear of the step to the ladder's side
rail, causing him to fall.
The ladder was made of aluminum, and both the side rails of the
ladder and the steps were made of channels, with the open sides of
the channels facing in on the side rails, and the open side of the chan-
nels facing down on the steps. The ends of the steps fit just inside the
channels of the side rails, and the vertical sides of the step channels
were secured to the short sides of the side rail channels by rivets.
There were two rivets in the front, that is the side facing out, and one
rivet in the rear, that is the side facing in. The six rivets secured each
step, four in the front and two in the rear.
The plaintiff had two experts examine the ladder, and the defendant
had two experts examine the ladder. At this point, it is well to con-
sider their reports and factual findings.
First, and of considerable significance, is the fact that all four of
the experts agreed that the rivet failed which held in place the left rear
of the step involved. None of the other five rivets in that step failed.
There is no doubt of the failure. The experts are not agreed as to when
the failure occurred, the effect of the failure, or the cause of the fail-
ure, but the fact of the failure is acknowledged by all.
Plaintiff's expert, Taber, concluded that the left front rivets were
loose in their holes, which caused an undue strain on the left rear
rivet, which caused the failure. Plaintiff's expert, Foster, was of opin-
ion that the ladder was defectively manufactured in that the cracking
of the failed rivet started upon the setting of the rivet, and he con-
cluded that the ladder was defectively designed because the holes in
the side rail and the step were too large for the rivet. He also con-
2
cluded that the rivets were too hard, which was a design defect. Both
of plaintiff's experts were of opinion the failing of the rivet caused
or contributed to plaintiff's fall.
The defendant's experts came to different conclusions. The Ver
Halens were of opinion that the failed rivet had been broken before
the plaintiff's use complained of here. They concluded that, since the
plaintiff had used the ladder more than 20 times and the rivet had
been broken for a considerable period of time, the plaintiff's fall was
not due to a failure of the rivet on the day in question and that the lad-
der was not defective as designed and manufactured. They found the
failed rivet was the result of excessive forces beyond normal product
use.
Defendant's expert, Lytton also concluded that the rivet fracture
did not occur at the moment of loss of balance by the plaintiff but had
occurred some time during earlier use and that the ladder was subse-
quently used with the broken rivet without incident many times. He
concluded that the ladder had no design or manufacturing defects and
that the materials used were proper for their intended use.
Cole retained attorney T. Bryan Byrne who hired engineering con-
sultant and expert witness Kenneth C. Taber to inspect the ladder. To
remove the step from the ladder, Taber ground off the heads of the
rivets at the left front of the step, forcibly broke the right rivets, and
hacksawed out a portion of the step surrounding the left rear rivet. On
June 27, 1992, Taber reported that the left front rivets were "loose in
their holes," and claimed this to be the manufacturing defect that
caused the rear rivet to fail. Byrne notified Keller of his client's claim
on October 12, 1992, and filed suit on June 14, 1993. In the interim,
Taber lost two of the right side rivets, one each from the front and
rear. On October 6, 1994, within the discovery period, Cole identified
a second expert, James Foster. Foster claimed "the rivet holes in the
siderails were too large, and the rivet material was too hard," an opin-
ion that "[a]pparently . . . does not rely upon the destroyed or lost evi-
dence." Cole v. Keller Indus., Inc., 872 F. Supp. 1470, 1472 (E.D. Va.
1994).
Keller moved for summary judgment. The district court held that
plaintiff's destructive testing substantially prejudiced Keller and justi-
fied imposing a sanction. Cole, 872 F. Supp. at 1473. The court dis-
3
missed plaintiff's suit on grounds that barring plaintiff from relying
on the lost or damaged evidence would preclude him from establish-
ing a prima facie case. Cole, 872 F. Supp. at 1473. The court said
defendant was entitled to judgment on the breach of warranty claim
independently because the three and one-half month delay between
the expert's report and plaintiff's notice of claim was unreasonable as
matter of law under Virginia Code § 8.2-607(3)(a). Cole, 872 F. Supp.
at 1474-75.
Summary judgment is appropriate where there is no genuine issue
of material fact, and the moving party is entitled to judgment as a
matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). We
review the district court's grant of summary judgment de novo. Myers
v. Finkle, 950 F.2d 165, 167 (4th Cir. 1991). The trial court has broad
discretion to permit a jury to draw adverse inferences from a party's
failure to present evidence, the loss of evidence, or the destruction of
evidence. Vodusek v. Bayliner Marine Corp., 71 F.3d 148, 155-57
(4th Cir. 1995). Application of the rules with respect to the spoilation
of evidence are rules of evidence administered at the discretion of the
trial court. Vodusek, 71 F.3d at 155-57.
We turn first to the question of spoilation of evidence and the ques-
tion of the district court's exclusion of plaintiff's evidence and then
granting judgment. This circuit has addressed the spoilation of evi-
dence rule in only one case and held that it is a rule of evidence.1
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1 Virginia has not decided whether a presumption results after spoila-
tion of evidence. See 9 Wigmore, Evidence§ 2524 (Chadbourn rev.
1981); 29 Am. Jur. 2d Evidence § 244 (1994). We express no opinion on
that question and decline to decide whether there is such a presumption
under Virginia law. Nevertheless, when a State decides that a presump-
tion arises as Kentucky had in Welsh v. United States, 844 F.2d 1239,
1245-47 (6th Cir. 1988), Federal Rule of Evidence 302 was applied to
apply state law. If Guaranty Trust Co. of New York v. York, 326 U.S. 99
(1945), as construed in Hanna v. Plumer, 380 U.S. 460 (1965), were
applied here, to avoid different results depending on whether state or fed-
eral law applied, and no federal rule intervened, precedent would seem
to indicate that Virginia law should apply, and bad faith would be
required before a case could be dismissed for spoilation. The Virginia
court so held in Gentry v. Toyota Motor Corp. , 471 S.E.2d 485 (Va.
1996). Thus, for the present appeal, the result, no matter how arrived at,
would be the same as we reach in this decision. We decide neither of
these other questions, however, and include mention of the same for the
sake of completeness.
4
Vodusek, 71 F.3d at 155-57. In Vodusek, not basing our ruling on bad
faith, we approved the trial court's instruction to the jury that it could
draw an adverse inference from the plaintiff's destruction of evidence
under much the same circumstances as were present here. Vodusek,
71 F.3d at 155-57. We did not address any more severe action than
drawing an adverse inference, and stated that bad faith was not
required to permit the jury to draw an adverse inference. Neverthe-
less, the vast weight of authority, including the Virginia Supreme
Court, holds that absent bad-faith conduct applying a rule of law that
results in dismissal on the grounds of spoilation of evidence is not
authorized. See Berthold-Jennings Lumber Co. v. St. Louis, I. M. &
S. Ry. Co., 80 F.2d 32, 41-42 (8th Cir. 1935); Trupiano v. Cully, 84
N.W.2d 747 (Mich. 1957); Gentry v. Toyota Motor Corp., 471 S.E.2d
485 (Va. 1996).
We do not find bad faith, or any like action, in the case at bar and
therefore do not agree with the district court's drastic remedy. The
plaintiff's attorney gave the ladder to Taber to determine the cause of
the accident. In the course of his testing, he ground off the head of
two front rivets and removed the third step. Nevertheless, there is no
evidence that Taber's actions were undertaken in an effort to prevent
the defendant from inspecting and testing the ladder. In fact, the
defendant was able to inspect and test the ladder. It hired two experts,
both of whom were able to reach conclusions regarding the cause of
the accident despite Taber's mistake. They found that the rivet failed,
but concluded that the rivet was not the cause of the accident because
it failed during some earlier usage. (JA 71, para. 7; JA. 127, para. 5.)
Indeed, this record does not show that the defendant's experts ever
stated that the mistake by Taber had interfered with their investiga-
tion. Because the plaintiff, in fact, destroyed evidence, however inno-
cently, a jury instruction, as in Vodusek, permitting an adverse
inference to be drawn might have been appropriate. But that question
is not before us, and because the plaintiff did not intentionally destroy
the evidence, and bad faith was not shown, excluding plaintiff's evi-
dence and granting judgment was excessive and was an abuse of dis-
cretion. The remedy chosen by the district court was simply too
severe in the circumstances.
Considering the question of notice, the district court held that this
non-purchaser who sued on warranty for personal injuries, was
5
required under Va. Code § 8.2-607 to provide notice to the manufac-
turer pursuant to § 8.2-607(3).2 Excluding the district court's opinion
in the present case, every reported case which has come to our atten-
tion, save one, has taken the position that a non-purchaser in a suit on
warranty, need not comply with the notice requirement of the Uni-
form Commercial Code in order to recover for personal injuries rather
than for economic loss. See McKnelly v. Sperry Corp., 642 F.2d 1101,
1107 (8th Cir. 1981) (applying Iowa statute); Chapman v. Brown, 198
F. Supp. 78, 85 (D. Hawaii), aff'd, 304 F.2d 149 (9th Cir. 1962)
(table); Simmons v. Clemco Indus., 368 So. 2d 509, 514-15 (Ala.
1979); Tomczuk v. Town of Cheshire, 217 A.2d 71 (Super. Ct., Tol-
land County, Conn. 1965); Chaffin v. Atlanta Coca Cola Bottling Co.,
194 S.E.2d 513, 515 (Ga. Ct. App. 1972); Mattos Inc. v. Hash, 368
A.2d 993, 996-97 (Md. 1977); Frericks v. General Motors Corp., 363
A.2d 460, 463 (Md. 1976); Hill v. Joseph T. Ryerson & Son, Inc., 268
S.E.2d 296, 305 (W.Va. 1980). But see Ratkovich v. SmithKline, 711
F. Supp. 436 (N.D. Ill. 1989).3 Ronald A. Anderson, Anderson on the
Uniform Commercial Code, § 2-607:130 (1997 Revision) observes:
"When a non-purchaser is entitled to sue a seller for the third person's
harm resulting from a condition or defect which in itself was a breach
of warranty, the requirement of notice to the seller is not applicable."
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2 Code of Virginia § 8.2-607(3)(a) follows: "the buyer must within a
reasonable time after he discovers or should have discovered any breach
notify the seller of breach or be barred from any remedy." The term
"buyer" is defined as "a person who buys or contracts to buy goods,"
§ 8.2-103(a), and "seller" is defined as"a person who sells or contracts
to sell goods." § 8.2-103(d).
3 The district court relied on Ratkovich v. SmithKline, 711 F. Supp. 436
(N.D. Ill. 1989). Ratkovich held that the notice provisions of the Illinois
Uniform Commercial Code applied to a non-buyer suing a manufacturer
on a warranty for personal injuries sustained in utero as a result of her
mother's ingestion, during pregnancy, of Dexadrine, a drug manufac-
tured by the defendant. In reaching that conclusion, the court relied on
Berry v. G.D. Searle Co., 309 N.E.2d 550 (Ill. 1979), a case involving
a buyer, who suffered personal injury from using birth control pills,
suing the seller of the pills, Planned Parenthood Association of Chicago.
Since Berry concerns a buyer and a seller and is within the literal terms
of the statute on notice, we think the reliance of Ratkovich on that case
and the comment to the Uniform Commercial Code was misplaced, as
was the reliance of the district court on Ratkovich.
6
But see James J. White & Robert S. Summers, Uniform Commercial
Code, § 11-10, at 425 (2d ed. 1980) (noting that notice may be
required, but not concluding that notice is required).
We are of opinion that the proper reading of the statute is that a
non-purchaser is not required to give notice, under Va. Code § 8.2-
607 to the manufacturer, as a condition precedent to suing on a war-
ranty under the Virginia law for personal injuries. We recognize that,
even though the text of the statute does not, the language of Official
Comment 5 accompanying § 8.2-607 could be interpreted as requiring
a claimant seeking relief to assume the position of the buyer and thus
to comply with the notice requirement. But, if the Official Comment
were meant to apply to facts such as those presently before us, that
holding would reintroduce into Virginia law a requirement of privity
that Virginia previously has abandoned. See Va. Code§ 8.2-318
(1991); Blake Construction Co. v. Alley, 353 S.E.2d 724, 725-26 (Va.
1987); Brockett v. Harrell Bros. Inc., 141 S.E.2d 897, 901 (Va. 1965).
Consequently, we hold that Official Comment 5 and§ 8.2-607(3)(a)
are inapplicable to require notice from the non-purchaser user to the
manufacturer in a suit on a warranty for personal injuries.
The judgment of the district court is vacated and the case remanded
for further proceedings not inconsistent with this opinion.
VACATED AND REMANDED.4
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4 This case was held in abeyance for some time because Keller Indus-
tries was in Chapter 11 bankruptcy. The bankruptcy court, by order
entered May 2, 1997, modified the automatic stay so as to permit this
case to proceed. Accordingly, the case is no longer held in abeyance.
Each of the parties following argument in this case has made objection
to the other party bringing authority to the attention of the court. All of
the objections of the parties subsequent to the argument of the case to the
manner or form of briefing, or with respect to authorities, are overruled.
We also have a motion to add a party to this case pursuant to a reorga-
nization of Keller Industries in the suit in bankruptcy. We think that
motion is more appropriately made in the district court on remand, and
we are confident the district court will approve an agreed order to effect
the changes.
7