Nibco, Inc. v. Continental Water Systems Company of Central Texas ( 1994 )

IN THE COURT OF APPEALS, THIRD DISTRICT OF TEXAS,

AT AUSTIN









NO. 3-93-522-CV





NIBCO, INC.,

APPELLANT

vs.





CONTINENTAL WATER SYSTEMS COMPANY OF CENTRAL TEXAS,

APPELLEE

FROM THE COUNTY COURT AT LAW NO. 1 OF TRAVIS COUNTY NO. 196,896, HONORABLE J. DAVID PHILLIPS, JUDGE PRESIDING

Nibco, Inc. appeals from a judgment rendered against it on the jury's verdict, and for a stipulated amount of damages, in a suit brought by Continental Water Systems Company of Central Texas ("Continental"). We will reverse the trial-court judgment and remand the cause to the trial court.

THE CONTROVERSY

Continental purchased a pipe fitting manufactured by Nibco. The fitting cracked soon after Continental installed it as a component part of a customer's water system, causing the customer $23,000.70 in property damage. Continental paid that sum to its customer by way of settlement and compromise, then sued Nibco to recover the $23,000.70 as indemnity, alleging causes of action for breach of warranty and strict liability for furnishing a defective product.

In the course of the trial, Continental adduced evidence in support of both causes of action. Nibco, on its part, introduced evidence in support of its claim for contribution under the common law and the Texas Civil Practice and Remedies Code. See Tex. Civ. Prac. & Rem. Code Ann. §§ 32.001-.003 (West 1986); 33.001-.016 (West Supp. 1994). Nibco based its claim on allegations that Continental negligently installed the fitting by tightening it excessively and by using improper tools, and thereby proximately caused the cracking of the fitting and the resulting property damage. In composing the charge, the trial court denied Nibco's request for submission of a jury issue on its claim for contribution. The jury found in Continental's favor on the issues pertaining to defective-product and breach-of-warranty. The trial court rendered judgment accordingly in the stipulated sum of $23,000.70.

DISCUSSION AND HOLDING

In its first point of error, Nibco contends the trial court committed reversible error in refusing to submit its requested issues on contribution. Continental rejoins that the disputed issue at trial was whether the pipe fitting was defective or whether Continental "altered" the fitting by installing it improperly; therefore, Nibco's claim was within an instruction that accompanied Question One included in the charge at Continental's request. ⁽¹⁾ Consequently, Nibco's requested question amounted to a mere phase or shade of Question One that the trial court properly refused. See Tex. R. Civ. P. 278. Continental concludes that, by answering Question One "yes," the jury failed to find Continental had altered the fitting and implicitly attributed to Nibco one hundred percent of the responsibility for the failure of the fitting.

A manufacturer is not required to pay for all damages sustained by a consumer when unforeseeable mishandling or "alteration" of the product contributed to the harm. Duncan v. Cessna Aircraft Co., 665 S.W.2d 414, 423 (Tex. 1984) (citing General Motors Corp. v. Hopkins, 548 S.W.2d 344, 351 (Tex. 1977), overruled on other grounds by Duncan, 665 S.W.2d at 428)). If the product was unforeseeably misused or altered, the manufacturer's liability is limited to that portion of the harm caused by the product defect itself. Id. Moreover, evidence of misuse or alteration may be relevant to prove a product was not defective when it left the manufacturer's hands. See Hopkins, 548 S.W.2d at 349. Product alteration may also combine with a product defect to cause the total amount of damages. Id.; see also Duncan, 665 S.W.2d at 428 (noting product defect and negligent conduct may combine to cause entirety of plaintiff's damages). Thus, product alteration or misuse may be either the sole proximate cause or a concurring proximate cause of damages.

In Duncan, the supreme court adopted a system of comparative causation, applicable in cases of strict liability for defective products, as a means of apportioning liability between the defective product and any parties whose negligent conduct combined with the defect to cause the harm. "The trier of fact is to compare the harm caused by the defective product with the harm caused by the negligence of the other defendants, any settling tortfeasors and the plaintiff." Duncan, 665 S.W.2d at 427. Since the Duncan decision, product alteration and misuse are no longer defenses in a products-liability action; rather, they are within the doctrine of comparative causation. Placencio v. Allied Indus. Int'l, Inc., 724 S.W.2d 20, 21 n.1 (Tex. 1987) (citing Duncan, 665 S.W.2d at 428); see also Mooney Aircraft Corp. v. Altman, 772 S.W.2d 540, 544 (Tex. App.--Dallas 1989, writ denied).

In 1987, the legislature enacted a system of comparative responsibility substantially similar to the supreme court's comparative causation formulation in Duncan. Act of June 3, 1987, 70th Leg., 1st C.S., ch. 2, § 2.03, 1987 Tex. Gen. Laws 40 (codified at Tex. Civ. Prac. & Rem. Code Ann. §§ 33.001-.016 (West Supp. 1994)). Section 33.003 of the comparative responsibility statute provides: "The trier of fact, as to each cause of action asserted, shall determine the percentage of responsibility with respect to: (1) each claimant; (2) each defendant; and (3) each settling person." Tex. Civ. Prac. & Rem. Code Ann. § 33.003 (West Supp. 1994) (emphasis added). ⁽²⁾

"Percentage of responsibility" means that percentage attributed by the trier of fact to each claimant, each defendant, or each settling person with respect to causing or contributing to cause in any way, whether by negligent act or omission, by any defective or unreasonably dangerous product, by other conduct or activity violative of the applicable legal standard, or by any combination of the foregoing, the personal injury, property damage, death or other harm for which recovery of damages is sought.

Tex. Civ. Prac. & Rem. Code Ann. § 33.011(4) (West Supp. 1994).

Under the statutory scheme, the claimant is barred from recovery if the jury assigns to the claimant as much as sixty percent of responsibility for the damages. Tex. Civ. Prac. & Rem. Code Ann. § 33.001(b) (West Supp. 1994). If the jury finds the claimant less than sixty percent responsible, the claimant's recovery of damages is reduced by that percentage. Tex. Civ. Prac. & Rem. Code Ann. § 33.012(a) (West Supp. 1994).

In the present case, Continental pled an action for common-law indemnity from Nibco. ⁽³⁾ Indemnity is defined as the total reimbursement of the plaintiff's claim by one tortfeasor to another who has paid it to the injured party. B & B Auto Supply, Sand Pit & Trucking Co. v. Central Freight Lines, Inc., 603 S.W.2d 814, 816 (Tex. 1980); see also Gus M. Hodges, Contribution and Indemnity Among Tortfeasors, 26 Tex. L. Rev. 150, 151 (1947). When the supreme court adopted a system of comparative causation in Duncan, it abolished the common-law doctrine of indemnity between joint tortfeasors in strict liability cases. Bonniwell v. Beech Aircraft Corp., 663 S.W.2d 816, 819 (Tex. 1985). However, a vestige of the common-law action for indemnity survives in products liability cases to protect the innocent retailer in a chain of distribution. Id.; Aviation Office of Am., 751 S.W.2d at 180. In Duncan the court stated:

Comparative causation does not affect the right of a retailer or other member of the marketing chain to receive indemnity from the manufacturer of the defective product when the retailer or other member of the marketing chain is merely a conduit for the defective product and is not independently culpable.

Duncan, 665 S.W.2d at 432 (emphasis added).

Thus, in order to obtain indemnity from Nibco, Continental must establish: (1) Nibco manufactured a defective product that was the producing cause of the damages sustained by Continental's customer; and (2) Continental was merely a conduit for the defective product and was not independently culpable. See W. R. Grace Co. v. Scotch Corp., 753 S.W.2d 743, 747 (Tex. App.--Austin 1988, writ denied), overruled on other grounds by Roark v. Stallworth Oil & Gas Co., Inc., 813 S.W.2d 492 (Tex. 1991); see also Thiele v. Chick, 631 S.W.2d 526, 533 (Tex. App.--Houston [1st Dist.] 1982, writ ref'd n.r.e.) (stating distributor entitled to indemnity where there was no evidence it altered product). A joint tortfeasor who is independently culpable has no right to indemnity. USX Corp. v. Salinas, 818 S.W.2d 473, 489 (Tex. App.--San Antonio 1991, writ denied); Ford Motor Co. v. Russell & Smith Ford Co., 474 S.W.2d 549, 561 (Tex. Civ. App.--Houston [14th Dist.] 1971, no writ). ⁽⁴⁾ Therefore, Continental would have recovered nothing from Nibco if the jury had assigned to Continental even a slight percentage of responsibility for the cracked fitting. The inquiry reduces then, to whether the charge fairly submitted to the jury this issue: Did Continental's alleged negligence contribute to the failure of the fitting?

Question One asked the jury to determine whether there was a manufacturing defect in the fitting that was a producing cause of the occurrence in question. The accompanying instructions explained in part: "A product is not in a defective condition, thus not unreasonably dangerous when sold, if the unreasonably dangerous condition is solely caused by a substantial change or alteration of the product after it is sold . . . ." (Emphasis added). These instructions effectively directed the jury to consider product alteration only if they determined it was the sole proximate cause of the crack. Although it is true that product alteration may be the sole proximate cause of damages and thus, negate the existence of a defect, it is also true that an alteration and a product defect may concur to cause damages. Nibco pled both of these theories. Because there was no comparative-responsibility query in the charge, the jury was unable to consider Nibco's theory that a product defect and alteration combined to cause the failure. ⁽⁵⁾

Moreover, section 33.003 provides in mandatory language that the trier of fact shall determine the percentage of responsibility attributable to the claimant and the defendant. Nibco was entitled to have the jury determine if Continental bore some degree of culpable responsibility for the cracked fitting; such responsibility would defeat Continental's indemnity claim. See USX Corp., 818 S.W.2d at 490 (stating alleged indemnitor must submit separate questions to establish indemnitee's culpability and percentage of responsibility to defeat indemnity claim of one professing to be mere conduit). A judgment may not stand when a party is denied proper submission of a vital defensive issue that is raised by the pleadings and the evidence. Exxon Corp. v. Perez, 842 S.W.2d 629, 631 (Tex. 1992); Texas & Pac. Ry. v. Van Zandt, 317 S.W.2d 528, 530 (Tex. 1958); Tex. R. App. P. 81(b)(1). We sustain Nibco's first point of error.

In light of our disposition of Nibco's first point of error, we need not address Nibco's second point contending that the trial court erred in failing to grant Nibco's motion for new trial.

We reverse the trial-court judgment and remand the cause to the trial court.

John Powers, Justice

Before Justices Powers, Aboussie and Jones

Reversed and Remanded

Filed: August 31, 1994

Do Not Publish

1.   Question One and its accompanying instructions were as follows:

Was there a manufacturing defect in the pipe fitting at the time it left the possession of Nibco, Inc., that was a producing cause of the occurrence in question?

A "defect" means a condition of the product that renders it unreasonably dangerous. An "unreasonably dangerous" product is one that is dangerous to an extent beyond that which would be contemplated by the ordinary user of the product, with the ordinary knowledge common to the community as to the product's characteristics.

A product is not in a defective condition, thus not unreasonably dangerous when sold, if the unreasonably dangerous condition is solely caused by a substantial change or alteration of the product after it is sold, and but for which unreasonably dangerous condition the event would not have occurred. "Substantial change or alteration" means that the configuration or operational characteristics of the product are changed or altered by affirmative conduct of some person in a manner that the defendant could not have reasonably foreseen would occur in the intended or foreseeable use of the product. Substantial change or alteration does not include reasonably foreseeable wear and tear or deterioration.

2.   Under the statute, Continental qualifies as a claimant, which is defined as "a party seeking recovery of damages pursuant to the provisions of Section 33.001, including a plaintiff, counterclaimant, cross-claimant, or third-party plaintiff seeking recovery of damages. In an action in which a party seeks recovery of damages for . . . damage to the property of another person, ``claimant' includes both that other person and the party seeking recovery of damages pursuant to the provisions of Section 33.001." Tex. Civ. Prac. & Rem. Code Ann. § 33.011(a) (West Supp. 1994). Nibco qualifies as a defendant which "includes any party from whom a claimant seeks recovery of damages pursuant to the provisions of Section 33.001 at the time of the submission of the case to the trier of fact." Tex. Civ. Prac. & Rem. Code Ann. § 33.011 (b) (West Supp. 1994).

3.   The right to indemnity may rest on an express contract, a contract implied at common law, or may be conferred by statute. See Aviation Office v. Alexander & Alexander, 751 S.W.2d 179, 180 (Tex. 1988). In the present case, there is no express contract between the parties for indemnification, nor is there a statutory right. But see Tex. Civ. Prac. & Rem. Code Ann. § 82.002 (West Supp. 1994) (providing for manufacturer's duty to indemnify, effective for cases filed after September 1, 1993).

4.   A joint tortfeasor who is independently culpable may have a right to contribution, as opposed to indemnity. Ford Motor Co., 474 S.W.2d at 561. Contribution is the payment by each tortfeasor of his proportionate share of the plaintiff's damages to any other tortfeasor who has paid more than his proportionate share. Hodges, supra, at 151. Because Continental did not seek contribution from Nibco, it is not entitled to recover a proportionate share of damages.

5.   Continental argues that because Nibco did not object to the definition of alteration, it waived any error in connection with its submission. See Tex. R. Civ. P. 274. There was no reason for Nibco to object to the definition because the evidence raised the issue and the instruction was correct. See Woods v. Crane Carrier Co., 693 S.W.2d 377, 380 (Tex. 1985); 3 Tex. P.J.C. 70.05 (1993). However, because the separate "defense" of alteration is now subsumed within the doctrine of comparative causation since Duncan, when the evidence raises the issue of alteration or misuse as a cause of damages, the trial court should submit a comparative responsibility question in addition to the instruction on alteration.