January 4, 2008
CHRISTOPHER WARRINGTON, EXECUTOR OF THE ESTATE OF CLINTON B. WARRINGTON, SR., DECEASED, PLAINTIFF-APPELLANT,
PAINT CREEK SUPPLY, INC., MEARS WELDING AND MANUFACTURING COMPANY (D/B/A VALLEY TRAILERS), UNION COAL COMPANY, A REGISTERED TRADE NAME FOR RICHARD ENDERLIN, JR., INDIVIDUALLY, DEFENDANTS-RESPONDENTS,
CHRISTOPHER WARRINGTON, EXECUTOR OF THE ESTATE OF CLINTON B. WARRINGTON, SR., DECEASED, PLAINTIFF-APPELLANT,
PAINT CREEK SUPPLY, INC., MEARS WELDING AND MANUFACTURING COMPANY (D/B/A VALLEY TRAILERS), UNION COAL COMPANY, A REGISTERED TRADE NAME FOR RICHARD ENDERLIN, JR., INDIVIDUALLY, DEFENDANTS-RESPONDENTS.
On appeal from the Superior Court of New Jersey, Law Division, Burlington County, Docket No. L-1698-01.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued November 7, 2007
Before Judges Skillman, Winkelstein and Yannotti.
Clinton B. Warrington, Sr. (Warrington), commenced this product liability action against defendants Paint Creek Supply, Inc. (Paint Creek), Mears Welding and Manufacturing Company d/b/a Valley Trailers (Mears), Union Coal Company (Union Coal), and Richard Enderlin, Jr. (Enderlin), alleging that he sustained personal injuries in an accident involving a horse trailer manufactured by Mears. Warrington died while the matter was pending, and the complaint was amended to substitute the executor of his estate as plaintiff.
In A-1284-06T1, plaintiff appeals from an order entered on August 8, 2006, which barred plaintiff's expert from testifying at trial, and an order entered on October 6, 2006, granting summary judgment in favor of all four defendants. In A-1525-06T1, Union Coal and Enderlin appeal from the order entered on August 8, 2006, which denied their motion for summary judgment. We consolidate the appeals.
For the reasons that follow, we conclude that the judges who considered the matter erred by barring plaintiff's expert from testifying at trial and finding that plaintiff's product liability claim failed as a matter of law. We further conclude that plaintiff presented insufficient evidence to impose liability upon Union Coal and Enderlin and their motion for summary judgment should have been granted.
In 1999, Warrington was employed as a farmhand/stable manager by Plumstead Farms in Cookstown, New Jersey. Warrington's job responsibilities included caring for the farm's thirty-two horses. Warrington was sixty-two years old at the time, and he had been working as a stable hand and trainer for about forty years. On October 2, 1999, Warrington was directed to transport one of the horses to a farm in Manalapan, New Jersey, using a trailer that was manufactured by Mears in 1991.
The trailer had a drop ramp at the rear, and two stalls for horses. Each stall was equipped with a hinged breastplate at the front of the stall, and bars at the rear. A horse would be loaded onto the trailer behind the breastplate and in front of the rear bar. The breastplates were secured by four gudgeons or cylindrical receiving devices on each breastplate, into which metal pins are dropped vertically. To allow the breastplate to open, one of the pins would be manually lifted from the gudgeon, thus permitting the plate to swing on the hinge.
Warrington testified that he lowered the rear ramp and led the horse onto the trailer and into one of the two stalls. He lifted the pin from the gudgeon and opened the breastplate. Warrington placed the pin on a horizontal platform in the stall. He held the horse by its halter with his right hand, closed the breastplate, and reached with his left hand for the pin. Before Warrington could insert the pin in the gudgeon, the horse bolted and the breastplate struck him in the chest. Shortly thereafter, Warrington suffered a heart attack.
Warrington died on March 7, 2005, and in the report of his post-mortem examination, Dr. Dante A. Ragasa, the Burlington County Medical Examiner, wrote that Warrington's death was: the culmination of the coronary artery disease that had developed into the dislodgement of plaque or plaques at the time of the chest trauma which led to the acute myocardial infarction shortly after the incident. The cardiac damage from the initial trauma progressed further compromising the cardiac function and ultimately led to [Warrington's] demise.
In this action, plaintiff alleges that the horse trailer was defectively designed. In support of this claim, plaintiff furnished an expert report written by Gregory Lyon (Lyon), a professional engineer. Lyon concluded that the manual insertion of the pin in the hinge of the breastplate "necessitated a significant dwell time" during which the plate was not secure, thereby increasing the probability that an accident would occur. Lyon wrote:
A safer modification is proposed whereby a simple, spring-loaded latch mechanism would provide immediate closure of the breastplate, while simultaneously aligning the breastplate, for the insertion of the steel pin. Such a design would be practical, inexpensive and well within the state-ofthe-art considerations by trained safety engineers. Conversely, the absence of such
[a] positive safety device rendered the subject equipment unreasonably dangerous and critically defective.
Lyon stated that, to a reasonable degree of engineering probability, the absence of the "simple, spring-loaded latch mechanism" caused Warrington's injuries. He opined that Warrington was a "reasonably foreseeable user" of the trailer, and at the time of the accident, Warrington was using the trailer "in a reasonably foreseeable manner." Lyon added:
The latch mechanism would have been sufficient to temporarily contain the horse, and prevent the breastplate from being pushed open and striking Mr. Warrington in the chest, while giving Mr. Warrington the opportunity to insert the steel pin.
Lyon was deposed. Lyon said that the design of the trailer was "particularly unsafe" because a "simple latch" could be used to keep the breastplate closed until the pin is manually inserted into the gudgeon. Lyon conceded that he did not have any training in the design of horse trailers but he has had experience with other types of mechanical systems. Lyon stated that he did not obtain any information regarding the standards in the industry for the design of the breastplate and its attachment in the trailer.
Lyon was asked to explain the basis of his statement that "a simple swing-loaded mechanism would allow immediate closure of the breastplate while simultaneously [allowing] for insertion of the steel peg." He testified as follows:
A: The basis is that a very simple mechanical system can be envisioned that would, once the breast plate is closed, prohibit its opening again.
Q: What is that mechanical system you're talking about?
A: It is the same kind of mechanical system that you would have on the entry door to your house. That is actually a good analogy. When you open the entry door to your house, there is a latch available that you can close the door very, very easily. The door will latch and stay in a location [until] . . . you have a chance to drop the dead bolt in place.
In this case this latch could have been provided to secure the door into location and he could have dropped the pin at any time later than that.
Lyon presented documentation that he had obtained in an internet search shortly before the deposition which indicated that EquiSpirit, a manufacturer of horse trailers, presently uses a safety latch for the breastplates in its trailers. Lyon said that EquiSpirit's design was different from the one referenced in his report, but he stated that "there is more than one way to skin the cat."
Lyon did not design or develop the latch that he said would have made the trailer safer. Lyon also did not determine the cost of the device, but he maintained that "it's absolutely feasible." Lyon said that a "feasibility investigation" of the latch was not needed because "[i]t's a very simple mechanical mechanism that's been known for hundreds of years."
Paint Creek and Mears filed a motion to bar Lyon from testifying a trial. They argued that the conclusions stated by Lyon in his report were "net opinions." Paint Creek and Mears also sought summary judgment on the ground that plaintiff could not prevail on the product liability claim without expert testimony. Union Coal and Enderlin joined in the motion and additionally sought summary judgment on the ground that liability could not be imposed upon them for the injuries sustained by Warrington as a result of the alleged defect in the horse trailer.
The motion judge found that Lyon's conclusions were "net opinions." In her decision on the record on April 12, 2006, the judge stated that Lyon's opinions were lacking in factual support because he had not undertaken an appropriate "quantitative approach." The judge addressed the motion for summary judgment by Union Coal and Enderlin in a written opinion filed on July 14, 2006. The judge concluded that there was sufficient evidence to support an inference that Union Coal and Enderlin controlled Mears. The judge entered an order on August 8, 2006 barring Lyons from testifying at trial, and denying the motion for summary judgment by Union Coal and Enderlin without prejudice.
Plaintiff filed a motion for reconsideration of the August 8, 2006 order barring Lyon from testifying at trial. In support of the motion, plaintiff submitted a supplemental report from Lyon dated April 18, 2006, which included a design integrating the latch system with the existing breastplate frame assembly, as well as an estimate of costs for the device. Defendants opposed plaintiff's motion and filed cross motions for reconsideration of the August 8, 2006 order, seeking dismissal with prejudice of all claims and cross-claims against them.
Because the judge who entered the August 8, 2006 order had retired, another judge heard the motions. The judge denied plaintiff's motion for reconsideration, but granted defendants' motions and entered summary judgment for defendants, holding that the motion judge did not err in finding that Lyon's conclusions were "net opinions" and plaintiff could not prevail on his claims without expert testimony. These appeals followed.
Plaintiff argues that the judges erred by barring Lyon from testifying at trial and by granting summary judgment in favor of defendants. We agree.
The New Jersey Product Liability Act provides in pertinent part that a manufacturer or seller of a product may be liable to a person harmed by a product if the product that caused the harm "was not reasonably fit, suitable or safe for its intended purpose because" the product "was designed in a defective manner." N.J.S.A. 2A:58C-2. To establish a product liability claim based on a design defect, the plaintiff "must prove either that the product's risks outweighed its utility or that the product could have been designed in an alternative manner so as to minimize or eliminate the risk of harm." Lewis v. Am. Cyanamid Co., 155 N.J. 544, 570 (1998). When the plaintiff advances an alternative design theory, the plaintiff must show that the alternative design is "both practical and feasible." Id. at 571 (citing Macri v. Ames McDonough Co., 211 N.J. Super. 636, 641 (App. Div. 1986)).
In this matter, plaintiff presented Lyon as an expert to offer an opinion that the subject horse trailer had a design defect. Lyon proposed what he asserted was a safer, alternative design, using a spring-loaded latch mechanism to keep the breastplate closed and aligned so that the pin can readily be inserted into the gudgeon. In his initial report and in his deposition testimony, Lyon stated that the alternative design was both practical and feasible. The motion judge found that these conclusions were "net opinions." The trial judge refused to reconsider that determination.
"An expert's conclusion is considered to be a 'net opinion,' and thereby inadmissible, when it is a bare conclusion unsupported by factual evidence." Creanga v. Jardal, 185 N.J. 345, 360 (2005) (citing Buckelew v. Grossbard, 87 N.J. 512, 524 (1981)). The "net opinion rule" requires that an expert give the "why and wherefore" of his opinion, "not just a mere conclusion." Jiminez v. GNOC, 286 N.J. Super. 533, 540, (App. Div.), certif. denied, 145 N.J. 374 (1996).
We are convinced that the conclusions stated by Lyon in its initial report are not "net opinions." In our view, Lyon provided sufficient factual support for his conclusion that the spring-loaded latch mechanism was a feasible, practical alternative design for the trailer at issue. Lyon based his conclusion on a personal examination of the trailer. He considered as well the manner in which horses are typically loaded into trailers. Lyon asserted that the spring-loaded latch was a simple, inexpensive device that had been used for decades and could be readily applied to a breastplate in a horse trailer. Lyon opined that the horsetrailer would be safer with the latch than without the device.
We recognize that in his initial report, Lyon did not provide a design of the spring-loaded latch that he proposed, nor did he create a prototype of the device. Lyon also did not perform any tests to determine whether the latch design was practical and feasible. However, as Lyon explained, the latch is a common device found on doors and many moving vehicles. We are satisfied that, because the device was a simple mechanism and its use in the horse trailer was merely an application of an existing technology in a similar context, research, testing or other analysis was not required to support an opinion that use of the latch on the breastplate would be practical and feasible.
This conclusion is supported by our decision in Green v. Gen. Motors Corp., 310 N.J. Super. 507 (App. Div. 1998). In that case, the plaintiff alleged that he was injured due to a design defect in the roof of a General Motors vehicle. Id. at 523-25. The plaintiff presented evidence of two alternative designs for the roof. Id. at 523. The defendant argued that the plaintiff's designs were "theoretical at best in that they had never been tested." Id. at 524. The defendant also argued that the plaintiff had not shown that the alternatives were safer. Ibid.
We concluded, however, that a plaintiff asserting a design defect claim was not required to produce a prototype to establish a prima facie case, and expert testimony would suffice it if it reasonably supports the conclusion that the alternative design would have been practical. Ibid. (citing Restatement (Third) of Torts: Products Liability § 2 (1998)). We added that if there were other products on the market that performed the same or similar functions, those products could be considered practical and feasible alternatives to the product at issue. Ibid.
Therefore, Lyon was not required to design or prepare a prototype of his latch in order to establish that his alternative was practical and feasible. Moreover, Lyon was not required to test the proposed alternative design. We emphasize that the proposed alternative design involves the use of a latch that is not a complex instrumentality. As Lyon explained, a latch is a simple device. Furthermore, according to Lyon, the use of the latch on the breastplate is merely the application of a commonly used device in a different context.
As stated previously, although not included in his initial report, Lyon ascertained that another manufacturer of horse trailers uses a similar mechanism for its breastplates. In addition, Charles Chrisman, Vice President of Mears, testified at his deposition that he was aware that another manufacturer of horse trailers used a spring-loaded mechanism for the breastplates. This evidence provides additional support for Lyon's assertion that use of the latch on the breastplate would be practical and feasible.
We add that our decision in this matter is based on our review of Lyon's initial report and his deposition testimony, and not on Lyon's supplemental report dated April 18, 2006. The supplemental report was furnished after the discovery end date of January 31, 2006, and after the matter had been scheduled for trial. The judge who decided the motion for reconsideration correctly chose not to consider the supplemental report when considering the motion. R. 4:17-7.
However, our decision does not preclude plaintiff from making a motion to extend the time for discovery and allow Lyon to testify as to the conclusions in the supplemental report. We assume that, if discovery is extended, defendants will be permitted to submit a response to the supplemental report and depose Lyon again if they wish to do so.
As stated previously, Union Coal and Enderlin filed a separate motion for summary judgment in this case, arguing that they are immune from liability. Union Coal and Enderlin appeal from the order of August 8, 2006, which denied that motion. We note that respondents were not required to file an appeal in order to raise any arguments in support of affirmance of the judgment entered on October 6, 2006, which dismissed all claims against them. See Chimes v. Oritani Motor Hotel, Inc., 195 N.J. Super. 435, 443 (App. Div. 1984).
The facts pertinent to this appeal are as follows. Union Coal was an Ohio corporation owned by Enderlin's mother. It was a beer wholesaler and Enderlin was the company's general manager. In 1988, Union Coal purchased all of the stock of Mears, which was engaged primarily in the business of fabricating trailers for the transportation of horses or other animals.
After Union Coal purchased Mears, Enderlin became president of Mears. Mears was doing business as Valley Trailers in 1991 when the trailer involved in this case was built. In 1992 or 1993, Enderlin purchased all of the stock of Union Coal from his mother and he became president of the company. In January 1996, Mears sold the "Valley Trailers" line of products to Paint Creek. Union Coal and Mears were dissolved on December 15, 2000.
In the motion for summary judgment, Union Coal argued that although Mears was its wholly-owned subsidiary in 1991 when the trailer was manufactured, Mears was a separate entity and it is immune from liability for any of Mears' acts or omissions. Enderlin argued that he did not have an ownership interest in Mears and his involvement with Union Coal and Mears is not sufficient to impose liability upon him in this matter.
In her written opinion dated July 14, 2006, the motion judge stated the following:
Having analyzed the submissions provided to this Court, the Court concedes that there is insufficient information regarding the corporate configuration of the parent corporation and its relationship with its subsidiary. There is a lack of information provided to this Court regarding the corporate configuration of the parent corporations, i.e. shares owned, capitalization, shares owned or issued by either Union Coal in connection with [Mears]. There is no question that Richard Enderlin, Jr. was the president of [Mears] from 1988 through January 1996 and had sufficient control of at least the distribution and perhaps the [manufacture] of the trailer in issue. The question remains as to whether or not he was considered an employee/manager/owner of the business and the control, if any, over the function, operation and manufacturing of the corporation. The corporations in this matter are so inextricably intertwined they could conceivably constitute a single business enterprise. The corporate interconnection in this matter may support an inference of control by both Richard Enderlin, Jr. and Union Coal Co.
We are convinced that the motion judge erred by denying the motion.
The "mere ownership of a subsidiary does not justify the imposition of liability on the parent." Verni v. Harry M. Stevens, Inc., 387 N.J. Super. 160, 198 (App. Div. 2006) (quoting Pearson v. Component Tech. Corp., 247 F.3d 471, 484 (3d Cir.), cert. denied, 534 U.S. 950, 122 S.Ct. 345, 151 L.Ed. 2d 261 (2001)). Nevertheless, there are circumstances when the "corporate veil" may be pierced. To do so, there must be proof that: 1) the subsidiary was dominated by the parent, and 2) recognition of the corporate structure would perpetrate a fraud or injustice or circumvent the law. Id. at 199-200.
The party seeking to impose liability must present evidence showing that "the parent so dominated the subsidiary that it had no separate existence but was merely a conduit for the parent." Id. at 200 (citing N.J. Dep't. of Envtl. Prot. v. Ventron, 94 N.J. 473, 501 (1983)). The court must undertake a fact-specific analysis and consider "whether the subsidiary was grossly undercapitalized, the day-to-day involvement of the parent's directors, officers and personnel, and whether the subsidiary fails to observe corporate formalities, pays no dividends, is insolvent, lacks corporate records, or is merely a façade." Ibid.
Here, the motion judge found that plaintiff had presented sufficient evidence to raise an inference that Union Coal controlled Mears. However, plaintiff only established that Union Coal owned Mears, and Enderlin was at one time an officer of both companies. Standing alone, those facts do not raise an inference of "corporate dominance." Furthermore, there was no evidence to show that recognition of Union Coal and Mears as separate corporate entities would perpetrate a fraud or injustice, or circumvent the law. Id. at 199-200.
Plaintiff argues that Union Coal may be liable to plaintiff "as a manufacturer in a line of successors." In support of this contention, plaintiff relies upon Ramirez v. Amsted Indus., Inc., 86 N.J. 332 (1981), where the Court held that liability may be imposed upon a successor corporation for damages caused by defects in products manufactured and distributed by its predecessor when the successor acquires all or substantially all of the assets of the predecessor corporation, and essentially continues its manufacturing operations. Id. at 335.
This principle does not apply in this case. Although Union Coal purchased all of Mears' stock, there is no evidence that Union Coal acquired substantially all of Mears' assets, nor is there any evidence that Union Coal continued Mears' manufacturing operations. Thus, plaintiff failed to present sufficient evidence to support a claim against Union Coal.
We reach a similar conclusion with regard to Enderlin. As we pointed out previously, Union Coal was owned by Enderlin's mother and he was general manager of the company. Enderlin purchased all of the shares of Union Coal from his mother in 1992 or 1993, and thereafter served as its president. Enderlin was president of Mears from 1988 to 1996. However, those facts do not provide a basis for imposing liability upon Enderlin in this matter. It is well established that the "corporate veil" will not be pierced to impose liability upon corporate stockholders or principals in the absence of fraud or injustice. Lyon v. Barret, 89 N.J. 294, 300 (1982). Plaintiff failed to present any evidence to show that the imposition of liability upon Enderlin was justified on the grounds of fraud or injustice.
Accordingly, we reverse the order barring Lyon from testifying at trial and the provision of the October 6, 2006 order granting summary judgment in favor of Paint Creek and Mears. We affirm the provision of the October 6, 2006 order dismissing with prejudice all claims and cross claims against Union Coal and Enderlin. We remand the matter to the trial court for further proceedings in conformity with this opinion.
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