physical harm to the product itself and harm caused to "other" property. Moreover, in Seely v. White Motor Co., supra, upon which defendant relies, recovery in strict liability was denied plaintiff for physical damages to a truck allegedly built with a defect only because plaintiff failed to show the defect caused the damage. See Annot. 16 A.L.R. 3d 683. See also Kriegler v. Eichler Homes, Inc., 269 Cal. App. 2d 224, 74 Cal. Rptr. 749 (1969) (recovery in strict liability for defective construction of home upheld).
Asarco cites Fentress v. Van Etta Motors, 157 Cal. App. Supp. 2d 863, 323 P.2d 227 (1958), which does stand for the proposition that internal injury, not caused by collision with an external object, is not recoverable in tort. However, in view of Gherna and Seely, and the disapproval of Fentress and its requirements, in the context of residential construction, See Sabella v. Wisler, 59 Cal. 2d 21, 27 Cal. Rptr. 689, 377 P.2d 889 (1965), its present viability is at best doubtful. Moreover, Anthony v. Kelsey-Hayes Co., supra, also cited by Asarco in support of its economic loss argument, distinguishes damage arising out of loss of business use and loss of bargain from recoverable "ponderable physical property damage to the property sold and purchased." 102 Cal. Rptr. at 116. Plaintiff has at least raised a factual issue as to the existence and the extent of such ponderable damage in this case.
Just as the California courts did in Gherna, the Texas Court of Civil Appeals in Ford Motor Co. v. Grimes, 408 S.W. 2d 313 (Tex. Civ. App. 1966), upheld product liability recovery without a showing of negligence for fire damage caused to an automobile by a defective component. Moreover, in Melody Home Mfg. Co. v. Morrison, 455 S.W. 2d 825, 828 (Tex. Civ. App. 1970), physical damage to a trailer resulting from defective components in the trailer itself was found sufficient, if proven, to uphold recovery on a strict liability theory. The case at bar, and Melody Home, are distinguishable from Eli Lilly & Co. v. Casey, supra, and Thermal Supply of Texas, Inc. v. Asel, supra, where commercial damages resulted from a mere non-violent failure of the products therein to operate.
Asarco also raises the economic loss-physical harm distinction under the negligence claim against it. This distinction does exist under California law, Anthony v. Kelsey-Hayes Co., supra, 102 Cal. Rptr. at 915-916. However, its application to the instant facts is subject to the analysis hereinabove set forth in connection with the strict liability claim. See Gherna v. Ford Motor Co., supra.
Movant also contends there can be no recovery in strict liability in that Section 402A(1) (b), Restatement of Torts 2d, requires that the product sold must be "expected to and does reach the user or consumer without substantial change in the condition in which it is sold." The ingots sold by it, Asarco points out, were cast into propellers by Avondale, an operation which Asarco argues resulted in a substantial change in the original product.
This "substantial change" argument is too simplistic a reading of Section 402A(1) (b). A change in the shape of the product, however noticeable, is not dispositive of the "change" issue. As the court found in Sharp v. Chrysler Corp., 432 S.W. 2d 131, 136 (Tex. Civ. App. 1968): "The rule is that if the manufacturer or assembler surrenders possession and control of a product in which change will occur, or in which the change can be anticipated to occur so as to cause a product failure. . ." recovery cannot be had (emphasis supplied). Accord, Mazzi v. Greenlee Tool Co., 320 F.2d 821 (2d Cir. 1963); Dennis v. Ford Motor Co., 332 F. Supp. 901, 903 (W.D. Pa. 1971), aff'd, 471 F.2d 733 (3d Cir. 1973). Moreover, whether the requisite change is present is an issue ordinarily left for determination by the fact finder, Finnegan v. Havir Mfg. Co., 60 N.J. 413, 290 A.2d 286 (1972), especially in a case such as this where the qualities of the alloy, regardless of its shape, are apparently under attack.
Asarco also attacks plaintiff's implied warranty of fitness theory. It reasserts the uncontested fact that there is no privity of contract between it and plaintiff and notes "it is settled law in California that privity between the parties is a necessary element to recovery on a breach of an implied warranty of fitness." Anthony v. Kelsey-Hayes Co., supra, 102 Cal. Rptr. at 116. What may be settled law in California, however, is far from settled in Texas. Several cases hail the end of the privity requirement in implied warrant of fitness cases. Olsen v. Royal Metals Corp., 392 F.2d 116, 118 (5th Cir. 1968); Ford Motor Co. v. Lemieux Lumber Co., 418 S.W. 2d 909 (Tex. Civ. App. 1967). Others insist privity still stands as an obstacle. Eli Lilly & Co. v. Casey, supra. In the absence of a resolution of the conflict by the Texas Supreme Court, and in light of the recent trend towards the diminution of the privity requirement generally, this court is reluctant to dismiss plaintiff's claim of an implied warranty at this time, on this incomplete factual record.
Asarco finally claims that States' claims brought under implied warranty and strict liability theories could be dismissed, as a matter of law, because there can be no recovery by a user against a supplier of a mere component part. For this proposition Asarco cites Goldberg v. Kollsman Instrument Corp., 12 N.Y. 2d 432, 240 N.Y.S. 2d 592, 191 N.E. 2d 81 (1963), where the New York Court of Appeals denied recovery to an airline passenger on an implied warranty theory in an action against the manufacturer of a component part. Although Goldberg is still good law in New York in strict liability and warranty, Smith v. Squire Homes, Inc., 38 A.D. 2d 879, 329 N.Y.S. 2d 243 (1973), defendant cites no authority from Texas, California, or anywhere else, directly in accord.
Although California cases cite Goldberg they do not cite it for its component parts limitation. Moreover, in Boeing Airplane Co. v. Brown, 291 F.2d 310 (9th Cir. 1961), an action for negligence, it was held that both the manufacturer and the component supplier owe a duty of care to the ultimate user. Accord, Ford Motor Co. v. Mathis, 322 F.2d 267 (5th Cir. 1963). Defendant also cites Courtois v. General Motors Corp., 37 N.J. 525, 182 A.2d 545 (1962), in support of its contention that the Goldberg rule is accepted by New Jersey courts. Although there is dicta in Courtois that might be construed to lend some support to the Goldberg thesis, the New Jersey Supreme Court merely decided, in accordance with the great weight of authority, that General Motors, the assembler, cannot escape liability on an implied warranty by claiming that component parts supplied by others were defective.
Even if it is assumed that Texas, California and New Jersey followed the New York rule, several factual questions still remain unanswered. Are the Superston ingots "component parts" within the Goldberg rule? Inquiry into this matter is especially relevant here where defendant alleges that the propellers were designed by an agent of plaintiff and that plaintiff and his designer, in fact, selected the Superston material. If such facts are proved true, plaintiffs claim could well be allowed under the exception to Goldberg, applied in cases where the intermediate manufacturer (here Avondale) could not be held liable for the defect. Sevits v. McKiernan-Terry Corp., 264 F. Supp. 810 (S.D.N.Y. 1966). See also Sylvestri v. Warner & Swasey Co., 398 F.2d 598, 603 (2d Cir. 1968).
Asarco would also have this court dismiss States' claim of express warranty. Although Asarco admits that such a warranty could be extended to plaintiff, notwithstanding lack of privity, by way of advertising relied upon by plaintiff, it denies that plaintiff ever saw its brochures prior to the decision to use Superston. As has already been stated herein, although there is doubt as to whether the decision to use Superston had been made before or after the viewing, if any, of brochures, or whether States relied on any representations therein, or whether plaintiff even took any part in the decision whatsoever, there is, in any event, a dispute sufficient to avoid summary dismissal of the claim. Every favorable inference that can be drawn from plaintiff's affidavits and other documents must be drawn for purposes of this motion.
Finally, defendant would have this court follow Iowa Electric Light and Power Co. v. Allis-Chalmers Mfg. Co., 360 F. Supp. 25 (S.D. Iowa 1973), rejecting strict liability in cases of equal bargaining power. This decision, however, does not appear to reflect California, Texas or New Jersey law, see Fashion Novelty Co. v. Cocker Machine and Foundry Co., 331 F. Supp. 960 (D.N.J. 1971), Seely v. White Motor Co., supra (dissenting opinion), and to that extent does not control here. Defendant Asarco's motion for dismissal of the complaint and crossclaims against it is, therefore, denied.
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