Luzadder v. Despatch Oven Co.Luzadder v. Despatch Oven Co.
Lead Opinion
OPINION OF THE COURT
The present appeal calls upon this court to interpret a Pennsylvania statute of repose, 42 Pa.Cons.Stat.Ann. § 5536 (Purdon 1981), which extinguishes certain actions arising out of defects in improvements made to real property not commenced within twelve years of the making of such improvements. The district court below granted summary judgment in favor of ap-pellees Despatch Oven Company, Eclipse, Inc., and Honeywell, Inc., determining that plaintiff’s claim was barred by § 5536. Because we conclude that these defendant manufacturers do not fall within the class of persons sought to be protected by Pennsylvania’s repose statute, we reverse the district court’s grant of summary judgment.
I.
This action arises out of an accident which occurred on December 2, 1980 at the Brockway Plant, owned by Brockway Glass Company (“Brockway”), in Washington, Pennsylvania. Appellant’s husband, David Luzadder, was injured when a natural gas fired furnace (“the oven”) exploded. This oven was manufactured by Despatch Oven Company (“Despatch”) and contained component parts manufactured by co-defendant Eclipse, Inc. (“Eclipse”) and third-party defendant Honeywell, Inc. (“Honeywell”). The oven was sold to Brockway in March, 1965 and Brockway installed it for use in its glass molding operation.
As a result of the December, 1980 accident, appellant’s husband suffered severe injuries. Appellant and her husband filed suit against Despatch and Eclipse in December, 1981. In May, 1982, appellant’s husband committed suicide. Appellant amended her complaint to include a wrongful death claim, alleging that her husband’s suicide was the result of a post-traumatic syndrome.
Eclipse filed a third-party complaint against Honeywell in June, 1983. Honeywell filed a crossclaim against Eclipse. Plaintiff asserted no claim against Honeywell.
II.
(A) Whether Pa.Cons.Stat.Ann. § 5536 is a Statute of Limitations or a Statute of Repose?
Appellant argues that § 5536
Section 5536, which went into effect in 1978, is a substantial reenactment of Pa. Stat.Ann. tit. 12, § 65.1 (repealed).
The limiting language of § 65.1 reads “no action ... shall be brought ... more than twelve years after completion of such an improvement” while the parallel language of § 5536 is “a civil action ... must be commenced within twelve years after completion of construction of such improvement.” Appellant concedes that the predecessor statute, § 65.1, was a non-waivable statute of repose. Appellant, however, points to the changes in statutory language in arguing that § 5536 is a waivable statute of limitations.
Above and beyond the weight of this authority, we find plaintiff’s argument unpersuasive. That the Pennsylvania Legislature would make such a substantial change in the nature and effect of this statute through a seemingly inconsequential alteration of its language, and in the absence of any legislative debate,
Additionally, § 5536, which bars actions not brought within twelve years of the making of the improvement to real property, is drafted not as a statute of limitations but as a statute of repose. Statutes of repose, unlike most statutes of limitations, start to run, as does § 5536, at the completion of certain conduct by the defendant. Whereas a claim under a statute of limitations accrues when a plaintiff either suffers or discovers the harm complained of, “[statutes of repose by their nature [ ]impose on some plaintiffs the hardship of having a claim extinguished before it is discovered, or perhaps before it even exists _” W. Keeton, Prosser and Keeton on Torts § 30, p. 168 (5th Edition 1984). Such is the function of § 5536.
Therefore, § 5536 being a statute of repose, plaintiff’s claim against Despatch, if the statute applied to that claim, was extinguished in 1977 — twelve years after the Despatch oven was installed at the Brock-way plant and four years before this suit was filed. Despatch’s failure to raise the § 5536 defense in its answer would not revive this claim.
The court must next determine whether § 5536 applies to the claims asserted by plaintiff. In order for § 5536 to be applicable, it must be found (1) that appellees are within the class of persons protected by statute; and (2) that the products manufactured by appellees are improvements to real property within the meaning of § 5536.
(B) Whether Defendants Are Within the Class of Persons Protected by Section ■ 5536.
The district court, after determining that the oven was an improvement to real property, concluded that § 5536 applied to Des-patch as the manufacturer of the oven and to Eclipse and Honeywell as manufacturers of component parts of the oven. A conflicting result, however, has been reached by two other district courts in opinions issued after the district court rendered its decision in this case. These later cases held that § 5536 does not bar actions against a manufacturer who plays no role in the installation of a product. Vasquez v.
On the other hand, recent Pennsylvania Superior Court decisions have given a more expansive interpretation to § 5536. See, e.g., Catanzaro,
In first looking at the language of § 5536, it is evident that manufacturers are not covered under the plain meaning of the statute. Section 5536 speaks in terms of “any person lawfully performing or furnishing the design, planning, supervision or observation of construction, or construction of any improvement to real property....” Nowhere does the statute speak of the manufacture of an improvement.
Judge Muir noted in Springman that “[t]he history of [§ 5536] reveals that the statute was passed as a result of the lobbying efforts of the American Institute of Architects, the National Society of Professional Engineers, and the Associated General Contractors of America and meant to protect these groups of people — not manufacturers.”
We believe that manufacturers have, for good reason, been excluded from the protection of Pennsylvania’s statute of repose. Application of § 5536 to manufacturers would cut the heart out of Pennsylvania’s product liability law, by immunizing any manufacturing company fortunate enough to have its product turned into an improvement to real property. As Judge Cahn explained in Vasquez,
The policy underlying § 402A of the Restatement (Second) of Torts (1965), which has been adopted as the law of Pennsylvania, ..., is to protect and compensate victims of defective products while forcing suppliers of such products to bear the risk of loss.... These policies would be undermined if manufacturers of products were able to claim that the statute of repose relieves them of liability merely because their products have somehow become “improvements to real property.”
Id. at 689.
To expand the scope of the repose statute to cover manufacturers would also work to draw an artificial distinction between manufacturers of different products, creating a situation where the maker of a furnace would be protected by the provisions of § 5536, while the maker of an automobile would not be. No policy or reason can be cited to justify such incongruity. In fact, the arbitrariness of such a distinction has been recognized by the Pennsylvania Supreme Court, albeit in a different context than the one presented.
In Foley v. Pittsburgh-Des Moines Co.,
In Foley, the Pennsylvania Supreme Court applied this principle of tort law to improvements to real property, rejecting the argument that MacPherson should only be applied to chattels.
There is no logical basis for such a distinction, and it would obviously be absurd to hold that a manufacturer would be liable if negligent in building a small, readily movable tank which would undoubtedly be a chattel, but not in building an enormously large and correspondingly more potentially dangerous a one that legalistically was classified as realty. The principle inherent in the MacPherson v. Buick Motor Co. case and those that have followed it is that one who manufactures and delivers any article or structure with the knowledge that it will be subject to use by others, must, for the protection of human life and property, use proper care to make it reasonably safe for such users and for those who may come into its vicinity; certainly the application of that principle cannot be made to depend upon the merely technical distinction between a chattel and a structure built upon the land.
As this court has previously noted, changes in a state’s “basic tort law should emanate from the Pennsylvania Supreme Court and not the Superior Court.” Vargus v. Pitman Manufacturing Co.,
III.
Appellant seeks sanctions against Des-patch and Eclipse for their failure to raise the § 5536 defense sooner. Eclipse raised the defense in its answer. Despatch did not. The district court found no violation of Fed.R.Civ.P. 11 by either appellee.
Review of the denial of a motion for sanctions is subject to the abuse of discretion standard. Eavenson, Auchmuty & Greenwald v. Holtzman,
Notes
. Third-party defendant Honeywell argues that Eclipse, the only party to assert a claim against Honeywell, did not file a cross-appeal in this action and therefore Honeywell must be dismissed from this lawsuit regardless of how this appeal is resolved. The court must reject this argument.
The granting by the district court of summary judgment in favor of Eclipse a fortiori required the granting of summary judgment on the third-party complaint against Honeywell. Firstly, § 5536, when applicable, applies with equal force to third-party claims for contributions and indemnification. 42 Pa.Cons.Stat.Ann. § 5536(a)(4). Secondly, in the absence of liability on Eclipse’s part to the plaintiff, Honeywell owes no duty of contribution or indemnification to Eclipse. Therefore, to require Eclipse to preserve its contingent rights against Honeywell by filing a cross-appeal, the only possible grounds for which would be that the district court erred in finding Eclipse not liable to the plaintiff, would elevate form over substance and lead to an unjust result.
. Section 5536 in pertinent part states:
(a) General rule. — Except as provided in subsection (b), a civil action or proceeding brought against any person lawfully performing or furnishing the design, planning, supervision or observation of construction, or construction of any improvement to real property must be commenced within 12 years after completion of construction of such improvement to recover damages for:
(1) Any deficiency in the design, planning, supervision or observation of construction or construction of the improvement.
(2) Injury to property, real or personal, arising out of any such deficiency.
(3) Injury to the person or for wrongful death arising out of any such deficiency.
(4) Contribution or indemnity for damages sustained on account of any injury mentioned in paragraph (2) or (3).
.Section 65.1 (repealed) states:
No action (including proceedings) whether in contract, in tort or otherwise, to recover damages:
(1) For any deficiency in the design, planning, supervision or observation of construction or construction of an improvement to real property,
(2) For injury to property, real or personal, arising out of any such deficiency,
(3) For injury to the person or for wrongful death arising out of any such deficiency, or
(4) For contribution or indemnity for damages sustained on account of any injury mentioned in clauses (2) and (3) hereof shall be brought against any person lawfully performing or furnishing the design, planning, supervision or observation of construction, or construction of such improvement more than twelve years after completion of such an improvement.
. As noted in section II. (B) of this opinion, § 5536 was enacted without legislative debate.
. Because we hold that none of the defendant manufacturers are within the class of defendants § 5536 seeks to protect, we need not reach the question of whether the products manufactured by appellees constitute improvements to real property.
. Judge Muir had reached the same conclusion in an earlier case, Kovach v. The Crane Company, No. 82-0530, slip op. (M.D.Pa. May 18, 1983), where he held § 5536 inapplicable to the manufacturer of a boiler.
. In addition to these Superior Court decisions, Judge Cohill is not the only federal district judge sitting in Pennsylvania who has applied § 5536 to manufacturers. See Facenda v. Applied Powers, Inc., No. 87-0980, slip op. (E.D.Pa. July 17, 1987) (Newcomer, J.) (applying statute of repose to manufacturer of automobile body frame repair system); Gnall v. Illinois Water Treatment Co.,
.Furthermore, in Vasquez, Judge Cahn cites some legislative history of the predecessor statute to § 5536, (there is no such history for § 5536 itself), which supports Judge Muir’s interpretation. One Mr. Mebus, in speaking in support of the statute, stated that it would "provide[ ] for protection from accusations of professional failure long after his engagement is complete.”
. The Pennsylvania Supreme Court offered, in dicta, a persuasive rationale for distinguishing between professional builders and designers and manufacturing companies for purposes of products liability law. “Suppliers who typically produce items by the thousands, can easily maintain high quality control standards in the controlled environment of the factory. A builder, on the other hand, can pre-test his design and construction only in limited ways — actual use in the years following construction is their only real test — " Freezer Storage, Inc. v. Armstrong Cork Co., 476 Pa. 270,
Dissenting Opinion
dissenting.
Finding the Superior Court’s consistent reading of Section 5536 consistent both with its text and all cited precedent of the Supreme Court of Pennsylvania, I feel constrained by Erie and its progeny to hold that a manufacturer and designer of an oven intended for incorporation into the structure of a glass molding plant is protected by statute. Since I agree with my colleagues that Section 5536 is a statute of repose and that the district judge did not abuse his discretion in denying sanctions, I would affirm the district court with respect to the claims against Despatch.
Given the rationale of the Superior Court in Catanzaro v. Wasco Products, Inc.,