State Farm Fire & Casualty Et Ano, Resps. v. Ford Motor Co.

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2015 FEB 17 AM 9=23
IN THE COURT OF APPEALS FOR THE STATE OF WASHINGTON
STATE FARM FIRE & CASUALTY No. 71302-7-1
COMPANY, as subrogee for CAROLE
HAUSKINS; and CAROLE
COE-HAUSKINS, a single woman,
DIVISION ONE
Respondents,
v.
FORD MOTOR COMPANY, a foreign
corporation, and PRICE FORD, INC.,
a foreign corporation, UNPUBLISHED OPINION
Appellants,
FILED: February 17. 2015
Spearman, C.J. — In this product liability action brought by Carole Coe-
Hauskins and State Farm Fire & Casualty Company against Ford Motor
Company, the trial court entered partial summary judgment against Ford on the
issue of design defect based on collateral estoppel. We reverse and remand for
trial.
FACTS
On July 11, 2010, Carol Coe-Hauskins' (Coe-Hauskins) 1994 Lincoln
Town Car was parked outside her home when a fire occurred in the engine block
of the vehicle. The fire spread to Coe-Hauskins' home, causing property damage
as well as other expenses, a portion of which were paid by Coe-Hauskins'
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insurer, State Farm Fire & Casualty Company (State Farm). A few months later,
Coe-Hauskins and State Farm (collectively, "Hauskins") initiated this action to
recover the damages incurred in the fire.
Hauskins alleged that the fire was caused by a defective speed control
deactivation switch (SCDS) in the 1994 Lincoln Town Car's speed control
system. The SCDS is a pressure-activated electrical switch designed and
manufactured by Texas Instruments. Beginning in 1992, Ford used the device in
several of its vehicles, including the 1994 Lincoln Town Car, as a redundant
means of deactivating speed control. The device has a "wet" side and a "dry"
side that are separated by seals. Clerk's Papers (CP) at 668-669. It functions by
allowing brake fluid to flow into the wet side when the brakes are applied; the
resulting fluid pressure opens the SCDS's electrical contacts and disconnects the
speed control function. If the seals are compromised, brake fluid can enter the
dry side of the SCDS and create a conductive path from the electrical contacts to
ground. When the SCDS is powered, this conductive path allows the contacts to
corrode and the corrosion byproducts increase the electrical conductivity of the
fluid. This process generates heat that, over time, can lead to fire.
In 2004, the National Highway Traffic Safety Administration's (NHTSA)
Office of Defects Investigation, with participation by Ford and Texas Instruments,
opened an investigation to assess suspected SCDS failures and related engine
compartment fires in certain Ford model year vehicles. NHTSA wanted to
"understand why certain Ford model/model [sic] year vehicles had very high rates
of key off engine compartment fire, while other models using the same part
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number SCDS had very low rates of fire." CP at 667. The results of this
investigation were published in NHTSA's August 2006 "Engineering Analysis
Closing Report." In this report, NHTSA concluded that a specific combination of
vehicle characteristics materially impacted the process that can lead to a fire at
an SCDS. These factors include: (1) high vacuum pressure due to placement of
the SCDS on the master cylinder; (2) SCDS orientation in the "vertical up"
position (as opposed to angled); and (3) continuous power to the SCDS. NHTSA
found the factors to be present in several, but not all, Ford and Lincoln vehicles
equipped with the Texas Instruments SCDS.
Notably, the 1994 Lincoln Town Car did not exhibit the first or second
factor NHTSA associated with heightened risk of fire. In that model vehicle, the
SCDS was mounted on a proportioning valve, not on the brake master cylinder
and, as a result, it did not experience high vacuum pressure. Additionally, the
SCDS in the 1994 Lincoln Town Car was mounted at a 45 degree angle, rather
than in the "vertical up" position associated with heightened risk of fire.
In response to the NHTSA investigation, Ford announced a voluntary
recall of certain Ford and Lincoln vehicles in January 2005. In August 2007, Ford
increased the scope of the recall to include additional vehicles, including the
1994 Lincoln Town Car, based on concerns over possible long term durability
issues with the SCDS. The vehicles subject to the 2007 supplemental recall did
not have the combination of factors NHTSA identified as creating a high risk of
an SCDS fire.
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When Ms. Coe-Hauskins learned of the recall, she brought her 1994
Lincoln Town Car to a Ford dealership for repair. The repair, which was
completed 17 months before the fire, modified the design of the speed control
system by installing a 2-amp fused jumper harness on the circuit powering the
SCDS. This modification was designed so that, should brake fluid leak into the
electrical cavity of the SCDS (the "dry" side), the 2-amp fuse would blow,
interrupting the process of corrosion that could otherwise lead to fire at the
SCDS.
Procedural History
Hauskins sued Ford, alleging that a design defect in the SCDS with 2-amp
fused jumper harness repair1 caused Hauskins' damages. Hauskins asserted
that Ford was strictly liable, under the Washington Tort Reform and Product
Liability Act (WPLA), chapter 7.72 RCW, for damages caused by its defective
product. Hauskins also claimed that Ford was liable under an ordinary
negligence theory for failing to warn of the dangers associated with its product.
Hauskins moved the trial court for partial summary judgment on the issue
of design defect, an essential element of the WPLA claim.2 Hauskins argued that
Ford was collaterally estopped from re-litigating whether its product was
1 At oral argument, Hauskins asserted that the only product at issue in this case is the 2-
amp fused jumper harness. But Hauskins' motion for summary judgment plainly identifies "the
subject Ford Product (switch and repair)." CP at 23 (emphasis added). Likewise, the trial court's
order granting partial summary judgment found collateral estoppel applied regarding whether "the
SCDS and the 2-amp jumper fuse repair in the Hauskins vehicle" were defective. CP at 795.
Thus, insofar as our analysis depends on the identity of the product at issue here, we consider
the SCDS with 2-amp fused jumper harness, as installed in the Hauskins vehicle.
2 See, RCW 7.72.030, Liability of manufacturer; Soproni v. Polygon Apartment Partners,
137 Wn. 2d 319, 326, 971 P.2d 500 (1999) (citing Falkv. KeeneCorp.. 113 Wn.2d 645, 653, 782
P.2d 974 (1989)).
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defective based on prior verdicts in Duncan v. Ford Motor Company, et. al.,
2005-CP-30831 (SC District Court 2005) and Rausch v. Ford Motor Company,
73-CV-10-743 (Stearns County District Court, Minn 2010). CP at 22-39. The trial
court granted the motion, finding that Hauskins had established each element of
collateral estoppel and that application of the doctrine would not work an injustice
against Ford. The court held: "[collateral estoppel applie[s] and the SCDS and
the 2-amp jumper fuse repair in the Hauskins vehicle are held, as a matter of law,
to be defective in design. The only issues remaining for trial [on the WPLA claim]
are whether the fire was proximately caused by the Ford vehicle and the amount
of damages proximately caused by the fire." CP at 794-95.
A trial on causation and damages began on December 2, 2013.3 At trial,
Ford offered evidence of in-house testing in support of the effectiveness of the
recall repair in remedying any flaw in the SCDS. Hauskins moved to exclude the
evidence, arguing it was irrelevant in light of the summary judgment decision.
The trial court agreed and the jury never considered this evidence. The jury
deadlocked on causation and the court declared a mistrial.
Ford appeals the order granting partial summary judgment.
DISCUSSION
In this appeal we consider whether the trial court's application of collateral
estoppel and resulting order granting partial summary judgment were proper.
Because the issues on appeal arise from summary judgment proceedings, our
3The partial summary judgment motion in this case did not affect Hauskins' negligence
claim, though it is unclear from the record whether or how that claim proceeded.
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inquiry is the same as the trial court's, with questions of law reviewed de novo,
the facts and all reasonable inferences from the facts viewed in the light most
favorable to the nonmoving party. Christensen v. Grant County Hosp. Dist. No. 1,
152 Wn.2d 299, 305, 96 P.3d 957 (2004). Summary judgment is proper only in
the absence of a genuine issue of material fact. Id.; CR 56(c).
Collateral estoppel "has the dual purpose of protecting litigants from the
burden of relitigating an identical issue with the same party or his privy and of
promoting judicial economy by preventing needless litigation." Parklane Hosiery
Co. v. Shore, 439 U.S. 322, 326, 99 S.Ct. 645, 58 L.Ed.2d 552 (1979); Williams
v. Leone & Keeble, Inc., 171 Wn.2d 726, 731, 254 P.3d 818 (2011). Although the
doctrine is usually characterized as an affirmative defense, it is equally available
to the plaintiff and may be applied "offensively" to bar the defendant from
relitigating issues in a second proceeding.4 See, e.g., Hadlev v. Maxwell, 144
Wn.2d 306, 308-09, 27 P.3d 600 (2001); American Linen Supply Co. v. Nursing
Home Bldq. Corp., 15 Wn. App. 757, 551 P.2d 1038 (1976).
The party seeking collateral estoppel must establish four elements: (1) the
issue sought to be precluded is identical to that involved in the prior action; (2)
the issue was determined by a final judgment on the merits; (3) the party against
whom the plea is asserted must have been a party to or in privity with a party to
4we reject Ford's argument "that it is far from clear, however, that offensive non-mutual
collateral estoppel is permitted in Washington...." Brief of Appellant at 18. "Washington courts
have since retreated from that traditional rule in the context of civil cases and now apply non-
mutual collateral estoppel so long as the party against whom preclusion is sought was a party or
in privity with a party to the prior litigation and had a full and fair opportunity to litigate the issue in
question." E.g.. State v. Mullin-Coston. 152 Wn.2d 107, 113-14, 95 P.3d 321 (2004); see also.
Hadlev, 144 Wn.2d at 306.
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the prior adjudication; and (4) application of the doctrine must not work an
injustice on the party against whom the doctrine is to be applied. Hadlev, at 311-
12. The failure to establish any one element is fatal to the proponent's claim.
LeMond v. Dep't of Licensing, 143 Wn. App. 797, 805, 180 P.3d 829 (2008). The
first and fourth elements are at issue in this case.
Identity of Issues
The central inquiry with respect to Hauskins' WPLA claim was whether a
particular modified product, the SCDS with 2-amp fused jumper harness,
installed in the 1994 Lincoln Town Car in this case, was defective. This issue
raises questions of fact as to both the product design and the configuration of the
product in the vehicle. In order to establish identity of factual issues for purposes
of collateral estoppel, Hauskins bore the burden of showing substantial similarity
between the facts in this case and the prior cases with respect to both inquiries.
Hauskins also bore the burden of establishing that the controlling legal rules are
the same in this case and the prior cases. See, Thompson v. Dep't of Licensing,
138 Wn.2d 783, 791-92, 982 P.2d 601 (1999); LeMond. 143 Wn. App. at 805-06;
Cloud v. Summers, 98 Wn. App. 724, 730-31, 991 P.2d 1169(1999). Hauskins
failed to make either showing.
There is no dispute that the vehicle at issue in Duncan contained an
SCDS that was identical to that in 1994 Lincoln Town Car here, but the recall fix—
the 2-amp fused jumper harness-was not installed on the vehicle in that case.
Thus, the case involved a materially different product than the one presently at
issue. Hauskins concedes that the Duncan verdict alone cannot serve as a basis
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for the trial court's collateral estoppel determination because the Duncan court
did not render a verdict finding the fused jumper harness defective.
In Rausch, the jury considered a combined SCDS and 2-amp fused
jumper harness assembly identical in design to the one at issue here. However,
the configuration of the product in the Rausch and Hauskins vehicles is materially
different. In Rausch, unlike in this case, each of the three factors identified by
NHTSA as contributing to an increased risk of fire was present in that the part
was installed on the master cylinder, in the "vertical up" position, with a
continuous power source. Given this material difference between the two cases,
at minimum, there is a question of fact as to whether the issues in both cases are
identical.
With respect to identity of legal standards, Hauskins contends that the
applicable legal standards in this and the prior cases need only be substantially
similar, rather than identical. But even if this argument has merit, it is of no
consequence here because the legal standards applied in Duncan and Rausch
are not substantially similar to the one that governs Hauskins' WPLA strict liability
claim.
In both Duncan and Rausch, the jury was instructed based on an ordinary
negligence standard. Accordingly, in each case, the jury's inquiry turned on
whether Ford had failed to exercise due care in some respect. In contrast, the
WPLA strict liability claim here turns on the safety performance of the product as
designed, the safety performance of the product had the manufacturer utilized an
alternative design, the safety expectations of the consumer, and any detriment to
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No. 71302-7-1/9
the product by virtue of incorporation of an alternative design. Falk, 113 Wn.2d at
654. The manufacturer's culpability, i.e., the breach of a duty of care, is not in
issue. Id. The ordinary negligence standard followed in Duncan and Rausch is
dissimilar to the governing law of this case and, as our Supreme Court held in
Falk, application of the ordinary negligence standard under these circumstances
is prejudicial error, jd. at 655.
The plaintiff in Duncan also advanced a breach of warranty claim and the
jury was instructed accordingly. Although the WPLA contemplates product
liability claims based on breach of express or implied warranty (see, Touchet
Valley Grain Growers, Inc. v. Qpp & Seibold General Const., Inc., 119Wn.2d
334, 343, 831 P.2d 724 (1992)), in this case Hauskins does not claim that Ford is
liable for any such breach. Thus, the law governing the alleged breach of
warranty in Duncan is inapposite.
Given the lack of identity between the factual issues and legal standards
at issue in this case and the prior cases, the trial court's entry of partial summary
judgment against Ford based on collateral estoppel was error.
Injustice to the Defendant
In determining whether application of collateral estoppel will work an
injustice, "'Washington courts focus on whether the parties to the earlier
proceeding had a full and fair hearing on the issue.'" Hadlev, 144 Wn. 2d at 311(quoting Neff v. Allstate Ins. Co., 70 Wn. App. 796, 801, 855 P.2d 1223 (1993)).
In addition, with regard to the issue of fairness in the context of the offensive use
of collateral estoppel, the United States Supreme Court has identified four
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specific non-exclusive factors courts should consider. Parklane Hosiery. 439 U.S.
at 330-32. These include whether:
1. The plaintiff had the incentive to adopt a 'wait and see'
attitude in the hope that the first action by another plaintiff
would result in a favorable judgment which might then be
used against the losing defendant;
2. The defendant had the incentive to defend the first suit with
full vigor, especially when future suits are not foreseeable;
3. One or more judgments entered before the one invoked as
preclusive are inconsistent with the latter or each other,
suggesting that reliance on a single adverse judgment
would be unfair; and,
4. The defendant might be afforded procedural opportunities in
the later action that were unavailable in the first "and that
could readily cause a different result.
Id.; see also. Swerson v. International Business Machines Corp., 472 F.3d 1072,
1079 (9th Cir. 2007).
Ford contends that giving preclusive effect to the Rausch case was
fundamentally unfair under the fourth Parklane Hosiery factor. We agree. A
number of courts have concluded that the opportunity to introduce evidence not
before the fact finder in the prior action is a new procedural opportunity that
precludes application of collateral estoppel. See e.g. Rye v. United States Steel
Mining Co., 856 F. Supp. 274, 279 (E.D. Va. 1994) ("Because the defendants
were unable to or precluded from introducing evidence which may have affected
the Court's ruling [in the prior case]... the Court does not believe it would be
appropriate to preclude this issue from being litigated in [later] actions.");
Strietmatter v. Procter & Gamble Co.. 657 F. Supp. 548, 550 (D. N.M. 1983)
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No. 71302-7-1/11
("While I do not know how I will rule when presented with this situation [whether
to admit evidence with a limiting instruction not given in the first case], it may be
that the trial in the present action will afford the Procter & Gamble companies a
procedural opportunity which was not available to them in [the prior case] and
which may cause a different result."); Herzog v. Lexington Township, 167 III.2d
288, 296, 657 N.E.2d 926 (1995) (fact that prejudicial evidence admitted in the
first case was not admissible in the second case was a "procedural opportunity"
not available in the first case, making application of collateral estoppel unfair).
Here, Ford proffered evidence of in-house testing probative of whether the
SCDS with 2-amp fused jumper harness repair is defective. This evidence was
excluded by the trial court in Rausch. Hauskins contends that Ford's testing
evidence is inadmissible and, therefore, provides no new procedural opportunity.
But, because Hauskins did not move to strike any of Ford's testing evidence
during summary judgment proceedings, it was properly before the trial court on
summary judgment and is part of the record on appeal. RAP 9.12; ER 103;
Jacob's Meadow Owners Ass'n v. Plateau 44 II. LLC, 139 Wn. App. 743, 756,
162 P.3d 1153 (2007) ("[B]ecause the evidence proffered by SSB in conjunction
with its first motion for reconsideration was considered by the trial court, and
because the trial court made no ruling on the admissibility of this evidence to
which any error has been assigned, the evidence constitutes part of the record
before the trial court in ruling on the motion and is, consequently, properly before
this court as well"); Lamon v. McDonnell Douglas Corp., 91 Wn.2d 345, 352, 588
P.2d 1346 (1979) ("The record before us, however, does not reveal any motion to
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No. 71302-7-1/12
strike the affidavit or any portion thereof prior to the trial court's action."). Given
that new, favorable testing evidence was proffered by Ford and was not excluded
by the trial court, this case offered Ford an important procedural opportunity that
was unavailable in Rausch. Application of collateral estoppel in the face of this
opportunity worked an injustice against Ford.
Conclusion
Because there is no identity of factual or legal issues between this case
and the prior cases and application of collateral estoppel worked an injustice
against Ford, the trial court's order granting partial summary judgment based on
collateral estoppel was error. We reverse and remand for trial.
Reversed and remanded.
WE CONCUR:
Wv,Aj&£
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