Anthony v. Kelsey-Hayes Co.Anthony v. Kelsey-Hayes Co.
Lead Opinion
Opinion
Plaintiffs G. W. Anthony and Herbert T. Lockerbie appeal from a judgment (order) of dismissal entered in favor of defendant Kelsey-Hayes Company, a corporation (Kelsey-Hayes), after its general demurrers (no cause of action stated) to the three counts of plaintiffs’ first amended and supplemental complaint directed against it were sustained without leave to amend. (Code Civ. Proc., § 581, subd. 3.)
Plaintiffs are owners of Chevrolet three-quarter ton trucks. They instituted this action against defendants General Motors Corporation (General Motors) and Kelsey-Hayes, purportedly suing on behalf of themselves and all other owners of similar trucks sold by General Motors between 1960 and 1965, for damages allegedly suffered from defective wheels mounted on and sold as component parts of their trucks by General Motors. Kelsey-Hayes manufactured and sold these wheels to General Motors. The peculiarity of this suit is that plaintiffs do not aver for themselves any damages arising out of any personal injury or any physical damage to their vehicles attributable to the wheels claimed to have been defective. This appeal concerns only defendant Kelsey-Hayes.
General Motors sent out a letter dated May 28, 1969, (Exhibit “A”)
Thereafter, General Motors sent out a letter dated October 7, 1969, (Exhibit “B”) referring 1965 (¿7c) Chevrolet three-quarter ton truck owners to the May 28, 1969, letter. It offered to replace all three-piece 15-inch wheels on three-quarter ton trucks with campers or special bodies at Chevrolet’s expense. It advised those who had their wheels replaced subsequent to the May 28, 1969, letter to contact their Chevrolet dealer for adjustments on costs paid for such replacements. It offered to replace wheels, at Chevrolet’s expense, in the event the owner or any subsequent owner of the truck should elect to attach a camper body or special body to such a truck.
In plaintiffs’ amended and supplemental complaint, filed May 13, 1970, there is an averment that they had availed themselves of the offer in Exhibit “B” and that they now possess new wheels.
The three counts (causes of action) directed against Kelsey-Hayes consist of the third count based on negligence, the fourth upon strict liability, and the sixth on breach of implied warranty of fitness for use.
The compensatory damages sought are: (1) general depreciation in the value of the vehicles caused by General Motors’ letter of May 28, 1969; (2) cost of inspections, repairs, and replacements; and (3) loss of use prior to and during inspections and repairs. Since plaintiffs have had new wheels installed at Chevrolet’s cost, item (2) is no longer applicable to them.
The type of depreciation for which compensation is asked is one that has been characterized as within the category of loss of bargain. (See Prosser, Torts (4th ed. 1971) p. 666.) Because this type of loss differs with the terms of each purchase (or exchange in part payment of another vehicle) with the particular dealer, it is one more properly relegated to remedies available only to the immediate parties to the transaction (retailer and purchaser) in the absence of any express warranty running directly to the purchaser. (See Gumming, Manufacturer’s Responsibility for Defective Products (1966) 54 Cal.L.Rev. 1681 et seq.; Uniform Com. Code, §§ 2313-2317.)
Loss of use is an item of incidental damage. It appears appropriate, therefore, to characterize it according to the nature of the damage of which it is an incident. Unless incidental to physical property damage, it would appear that it may be properly classified as a type of economic loss.
Negligence: In California, the only kinds of damages caused by
Strict liability: In Seely v. White Motor Co., supra,
Implied warranty: 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 for the buyer’s use, with exceptions not applicable here. (Burr v. Sherwin Williams Co. (1954)
Plaintiffs contend that a class action exists and that the allegations of personal injury and property damage of other class members give rise to a cause of action for negligence, strict liability, and breach of implied warranty. As previously noted, however, plaintiffs do not allege that they themselves sustained any personal injuries or physical property damages. They cannot confer upon themselves standing to sue by purporting to represent a class of which they are not members. (Cal. Gas Retailers v. Regal Petroleum Corp. (1958)
The judgment (order) of dismissal is affirmed.
Kaus, P. J., concurred.
Notes
Exhibits mentioned are those attached to the amended and supplemental complaint.
The theory has been further elucidated in Traynor, The Ways ymd Meanings of Defective Products and Strict Liability (1965) 32 Tenn.L.Rev. 363, 373.
Dissenting Opinion
I dissent.
The size and financial stability of one of the codefendants in this action, General Motors, may lead to an unwarranted approach to the applicable
In brief, plaintiffs have complained that, as the result of Kelsey-Hayes’ wheels having been installed on their trucks, plaintiffs have suffered damages in an amount equivalent to the cost of replacing the defective wheels (hereinafter “replacement damages”), in an amount equivalent to the value of the loss of the use of their trucks prior to and during the time of replacement (hereinafter “loss of use damages”), and in an amount equivalent to the value of the depreciation caused by the publicized necessity for the replacement (hereinafter “depreciation damages”).
In order to recover these alleged damages, plaintiffs rely upon the theories of implied warranty, negligence, and products liability.
The majority has held that plaintiffs have failed to state a cause of action in implied warranty, and I agree. “The general rule is that privity of contract is required in an action for breach of . . . implied warranty and that there is no privity between the original seller and a subsequent purchaser who is in no way a party to the original sale.” (Burr v. Sherwin Williams Co.,
The majority has also held, however, that plaintiffs’ alleged damages are mere economic losses, and, as a consequence, plaintiffs have failed to state a cause of action either in products liability, or, for want of privity, in
Much of the early development of the law of products liability was based upon the warranty theory. (Henningsen v. Bloomfield Motors, Inc., 32 N. J. 358 [
The rule thus announced in Seely may best be expressed in two statements of Chief Justice Traynor: “[T]he manufacturer’s strict liability in tort is limited to physical injury caused by a defective product” (Traynor, supra, 32 Tenn.L.Rev. 363, 373), and the “rules [of warranty] determine the quality of the product the manufacturer promises and thereby determine the quality [economic expectations] he must deliver” (Seely, supra, at p. 16). Although the distinction between physical injury and economic loss has been the subject of many California legal commentators (Prosser, Handbook of The Law of Torts (4th ed.) pp. 665-667; Prosser, supra, 50 Minn.L.Rev. 791, 820-823; Gumming, Manufacturer's Responsibility for Defective Products: Continuing Controversy Over the Law to be Applied, 54 Cal.L.Rev. 1681; Franklin, When Worlds Collide: Liability Theories and Disclaimers in Defective Product Cases, 18 Stan.L.Rev. 974, 980-983; Davis, Products Liability: What Type of Loss Will the Doctrine of Strict Liability in Tort Cover?, 17 Hastings L.J. 385; Traynor, supra, 32 Tenn.L.Rev. 363, 373), the best explanation of these "concepts lies in an examination of the facts of the Seely case itself.
In Seely, the purchaser had entered into a conditional sales contract with a retail truck dealer for the purchase of a truck to be used “in his business of heavy-duty hauling.” (Id., at p. 12.) After taking possession of the truck, the purchaser discovered that the truck “bounced violently, an action known as ‘galloping.’ ” (Id., at p. 12.) The retailer, with guidance from the manufacturer’s representatives, was unable to correct the galloping. Thereafter, the truck overturned, and the purchaser brought an action against the retailer and the manufacturer for “(1) damages, related to the accident, for the repair of the truck, and (2) damages, unrelated to the accident, for the money he had paid on the purchase price and for the profits lost in his business because he was unable to make normal use of the truck.” (Id., at p. 13.) During the trial, the plaintiff dismissed his action as against the retailer. Subsequently, the trial court found that “plaintiff had not proved that the galloping caused the accident
The California Supreme Court, in the majority opinion, concurred with the trial court holding that the purchaser had not proved that the galloping caused “the physical damage to the truck” (Id., at p. 19), and that, as a consequence, the trial court was correct in denying the purchaser his damages for repairs. The majority also agreed that the manufacturer had breached its express warranty to the purchaser, and that the warranty provided for the return of money paid on the purchase price as well as the lost profits; the majority added, however, that in the absence of warranty, these disappointments in economic expectations would not otherwise have been compensable in either products liability, or in the absence of privity, in negligence.
Nowhere in Seely, however, was it suggested that the truck was other than in the condition that the manufacturer had intended. The purchaser’s losses were the result of the truck’s failure to meet the purchaser’s specific “business needs” (Id., at p. 16) of “heavy-duty hauling” (Id., at p. 12). “[T]he truck plaintiff purchased did not function properly in his business.” (Id., at p. 16.) The truck did function properly though when it was subsequently sold to “an experienced trucker” (Id., at p. 16) who thereafter drove the truck “82,000 miles [without] unusual difficulty with it” (id., at pp. 16-17). “Thus, it is more likely that the truck functioned normally when put to use in [the subsequent purchaser’s] business because his use made demands upon it different from those made by plaintiff’s use.” (Id., at p. 17.) Plaintiff’s losses were not the result of the truck’s failure to function properly, but were the result of the truck’s failure to function properly under the demands of his business, and the manufacturer “cannot be held for the level of performance of his products in the consumer’s business [economic expectations] unless he agrees that the product was designed to meet the consumer’s demands.” (Id., at p. 18.) “If under these circumstances [the manufacturer were] strictly liable in tort for the commercial loss suffered by plaintiff, then it would be liable for business losses of other truckers caused by the failure of its trucks to meet the specific needs of their business, even though those needs were communicated only to the dealer.” (Id., at p. 17.) “The manufacturer would be liable for damages of unknown and unlimited scope.” (Id., at p. 17.)
The allegations in the case before us, however, do not present the situa
The Seely rationale of distinguishing economic loss from property damage is that the manufacturer should not be held “for the level of performance of his products . . . unless he agrees that the product was designed to meet the consumer’s demands” (id., at p. 18), for, otherwise, the “manufacturer would be liable for damages of unknown and unlimited scope” (id., at p. 17). An application of this rationale to the case before us forces the conclusion that plaintiffs are not alleging solely economic losses, but, instead are alleging actual property damage as the result of the constructive destruction of their wheels; imposing liability for wheels that fail to meet legitimate truck needs does not hold the manufacturer “for a level of performance of his products [that it has not agreed] that the product was designed to meet” (id., at p. 18), nor does it expose the manufacturer to liability “for damages of unknown and unlimited scope” (id., at p. 17).
In addition, I believe that the majority has overlooked the fact that plaintiffs have alleged physical damage to property other than to the wheels themselves. In their complaint, plaintiffs “contend that they are entitled to complete repairs including the cost of tires of sufficient size and capacity to fit replacement wheels. . . In addition, I believe that
As a consequence, I disagree with the majority’s determination that plaintiffs have not alleged “physical damage.” I believe that the rule of Seely compels a finding that plaintiffs have alleged physical damage to their wheels, to their tires, and to their springs. I therefore believe that plaintiffs have stated causes of action in both negligence (Connor v. Great Western,
In regard to plaintiffs’ demand for depreciation damages, however, in the event that plaintiffs ultimately recover their replacement and loss of use damages, plaintiffs’ trucks will have been restored to the same utility value that the trucks would have had had the wheels not been defective, and, as a matter of law, there could be no recoverable depreciation damages.
I would reverse the judgment (order).
A petition for a rehearing was denied June 7, 1972. Stephens, J., was of the opinion that the petition should be granted. Appellants’ petition for a hearing by the Supreme Court was denied July 5, 1972. Peters, J., and Tobriner, J., were of the opinion that the petition should be granted.
Plaintiffs’ alleged damages for replacements and loss of use are distinct from the alleged depreciation damages, and the two are treated separately herein.
Emphasis has been added in certain quotations throughout this opinion and will not be separately noted.
Although the original recall letter warned only of the use of campers and other “overloading,” plaintiffs rely upon the following public statement of General Motors for support of their allegation that the wheels cannot be considered to be safe for any legitimate truck purpose: “[W]heel failure is a fatigue matter [and] the entire load/time history is essential to an analysis of fatigue failures. . . .”
We recognize that General Motors’ decision to “recall” the tracks was not entirely voluntary. Under compulsion of the National Traffic and Motor Vehicle Safety Act of 1966 (15 U.S.C. §§ 1381 et seq., 1402 (e)), “[e]very manufacturer of motor vehicles or tires shall furnish notification of any defect in any motor vehicle or motor vehicle equipment produced by such manufacturer which he determines, in good faith, relates to motor vehicle safety, to the purchaser ... of such motor vehicle or motor vehicle equipment, within a reasonable time after such manufacturer has discovered such defect.” (15 U.S.C. § 1402 (a); see also General Motors Corporation v. Volpe,
The rule announced in Connor, supra, was later abrogated by the enactment of Civil Code section 3434.
At least some of the plaintiffs to this action have already had their wheels replaced at General Motors’ expense; this, of course, does not prevent these plaintiffs from stating an action for the loss of use and any of the other damages suffered as the proximate result of the physical injuries.
In addition, the fact that the representative plaintiffs have already received cost free replacement does not prevent their asserting the replacement damage of those plaintiffs who have not yet been partially recompensed. In LaSala v. American Savings & Loan Assn.,
“ ‘The value of an article to its owner, as Sedgwick [on Damages (9th ed.) § 243a] points out, lies in his right to use, enjoy, and dispose of it. These are the rights of property which ownership vests in him. . . .’ [Cook v. Packard Motor Car Co.,