In December 1986, the owners of plaintiff-appellant Welch Sand & Gravel, Inc. (“Welch”) attended an auction to purchase a used Trojan 5500 front-end loader, manufactured by defendant-appellee O & K Trojan (“Trojan”). Prior to the auction, the auctioneer, Forke Brothers (“Forke”), sent an advertising circular to Welch. Forke’s ad listed defendant-appellee Brandéis Machinery and Supply Corp. (“Brandéis”) as consignee of certain equipment placed for sale at the auction, including the Trojan loader.
The ad listed the loader as a one-owner machine in very good condition. 1 Welch purchased this loader “in reliance” on the ad’s statement of its condition. However, Welch was aware that the auction sold all of the equipment “as is— where is.” 2 Welch bought the loader and used it for seventeen months without incident.
On May 9, 1988, the loader was idle for routine maintenance. The bucket had been removed and a tire repaired. Welch’s employees left at 5:00 p.m. Just before 9:00 p.m., a neighbor saw the loader on fire. The fire destroyed the loader, a maintenance shed, and the vehicles and equipment inside the maintenance shed. Plaintiff-appellant Aetna Life & Casualty Insurance Company (“Aetna”) insured the building, the vehicles and much of the equipment inside the building. The remaining equipment was uninsured. Plaintiff-appellant Ohio Casualty Insurance Company (“Ohio Casualty”) insured the loader. Both insurers paid indemnification according to their obligations for the losses and are now subrogees in this lawsuit. Welch is suing for its uninsured losses.
Welch, Aetna and Ohio Casualty (“appellants”) initially filed suit against Trojan, Brandeis, Forke and Switzer to recover damages pursuant to the Ohio Product Liability Act, R.C. 2307.71 et seq. The appellants dismissed Forke with prejudice. The trial court dismissed Switzer for lack of personal jurisdiction. Brandeis and Trojan moved for summary judgment against all appellants. The appellants moved for summary judgment against Brandéis. The trial court granted summary judgment to Trojan. The court held first that the modification occurred after the loader left Trojan’s control, and therefore that no manufacturing defect existed. Second, the court held that the appellants brought forward no evidence that the modification was foreseeable to Trojan, and therefore that no design defect existed. Third, the court held that Trojan’s evidence showed that it provided a warning regarding modifications, that the appellants presented no evidence to show that the warning provided was inadequate, and therefore that the warning provided was adequate. The trial court also granted summary judgment to Brandéis, concluding that there was no evidence that Brandeis’s representations were a proximate cause of the fire, that Brandéis had no duty to maintain the loader during the short time it possessed the loader, and that Brandéis could not be substituted for the manufacturer under R.C. 2307.78 because the only entity meeting the definition of manufacturer was Trojan, which was already present in this case. The appellants have appealed the summary judgment granted to Trojan and Brandéis.
The appellants raise three assignments of error. First, they argue that the trial court improperly granted summary judgment to Trojan. Second, they argue that the trial court improperly granted summary judgment to Brandeis. Third, they argue that they are entitled to summary judgment against Brandeis as a matter of law.
In their first assignment of error, appellants argue that the trial court erred by granting summary judgment to Trojan because the evidence raises questions of
Turning first to the issue of a design defect, all parties agree that someone altered the loader in such a way as to constitute misuse of the product. While a manufacturer is not responsible for all product misuses, failure to design a product to prevent a foreseeable misuse can be a design defect.
Menifee v. Ohio Welding Products, Inc.
(1984),
The appellants correctly state that a product is considered defective in design if either the foreseeable risks associated with the design exceed the benefits associated with that design, or the product is more dangerous than an ordinary consumer would expect when used in a reasonably foreseeable manner. See R.C. 2307.75(A) and 2307.75(B).
A product is not defective in design if an inherent characteristic of the product caused the harm and cannot be eliminated without substantially compromising the usefulness of the product in the eyes of an ordinary person. R.C. 2307.75(E). A product is not defective in design if no technically feasible alternative design existed at the time the product left the manufacturer’s control that would have prevented the harm, unless the product is unreasonably unsafe. R.C. 2307.75(F).
A manufacturer must neither anticipate all product uses nor guarantee that the product is incapable of causing injury in all of its possible uses.
Menifee v. Ohio Welding Products, Inc.
(1984),
The foreseeable risks associated with the design of a product are determined by considering, among other factors, “the likelihood that the design would
If a design defect exists, it must also be shown that the manufacturer sold the defectively designed product and that the defect was the proximate cause of the harm.
State Farm Fire & Cas. Co. v. Chrysler Corp.
(1988),
Summary judgment is appropriate only where a product is used in a capacity which is clearly unforeseeable by the manufacturer and completely incompatible with the product’s design.
Cox v. Oliver Mach. Co.
(1987),
In this case, Trojan argues that the modification was not foreseeable. However, Richard Besser, Trojan’s own engineer and expert witness, admitted that Trojan could have anticipated that a user might install a twelve-volt radio or other appliance on the loader. Both experts in this case testified that it is common knowledge in the industry that users of heavy equipment sometimes equip their machines with twelve-volt accessories, which the appellants have identified as a potential cause of the fire. Besser also testified that there was no circuit-breaker protection for the circuitry between the batteries and the starter motor in the event that someone installed a twelve-volt wiring harness instead of the proper twenty-four-volt wiring harness.
Trojan further argues that it followed applicable Society of Automotive Engineers (“SAE”) standards when installing the circuitry. While following SAE standards can be evidence in support of the safety of a design to withstand liability under a negligence theory, but not a strict-liability theory, it is not conclusive to defeat a design-defect claim. See R.C. 2307.75(B)(4);
Kelley v. Cairns & Bros.
(1993),
Finally, Trojan argues that a manufacturer cannot be held liable for alterations that constitute a substantial change to the machine. See
Stombaugh v. Natl. Lime & Stone Co.
(Jan. 15, 1991), Wyandot App. No. 16-89-18, unreported,
Appellants’ evidence has raised a question of fact about whether the twelve-volt circuitry was foreseeable by the manufacturer, or whether it was completely incompatible with the product’s design. Cox, supra. Appellants have further presented evidence raising a question of fact about whether some other feasible design could have prevented the fire through the use of a fuse, a circuit-breaker or some other design. For these reasons, summary judgment was improperly granted in favor of Trojan on the design-defect claim.
Appellants also argue that Trojan failed to provide an adequate warning against the addition of twelve-volt circuitry to operate twelve-volt appliances when connected to a twenty-four-volt power source.
Trojan provided inadequate warnings if it knew or reasonably should have known of the risk in the exercise of ordinary care and failed to take precautions that a reasonable person would take in presenting the product to the public. R.C. 2307.76(A)(1);
Crislip v. TCH Liquidating Co.
(1990),
We note at the outset that the appellants allege only a failure to warn against the installation of a twelve-volt appliance. Therefore, in order to find an inadequate warning, the factfinder must find that a twelve-volt appliance caused the fire, because the appellants do not allege an inadequate warning for the replacement of the circuitry between the starter motor and the batteries.
As indicated above, both experts in this case testified that it is common knowledge in the industry that users of heavy equipment sometimes equip their machines with twelve-volt accessories. The delivery inspection report for the loader contained a provision that warned the customer and operator “against modification to the machine or installation of attachments or subassemblies which may make [the] machine unsafe due to changing or exceeding design specifications.” However, there is a genuine issue of fact whether that warning, which was part of the delivery of the loader to its first owner on November 8,1981, was reasonably calculated to reach end users such as Welch. If this same warning had been in the operator’s manual, it would have been more likely to reach an end user than a warning in a delivery inspection report, and Trojan would have a stronger argument in support of summary judgment on the appellants’ inadequate-warning claim. However, the operator’s manual for the loader is inexplicably absent from the record.
Because we hold that the existence of a foreseeable product alteration, the existence of a design defect relating to the foreseeable alteration, and the lack of an adequate warning are genuine issues of material fact, we sustain the first assignment of error.
In the second assignment of error, appellants argue that the trial court erred by granting summary judgment to Brandéis because the evidence demonstrates the existence of factual issues on supplier liability.
To address this assignment of error, we must first determine whether Brandéis is definitionally a supplier, and if so, whether there are any bases for the imposition of supplier liability.
Brandéis is a limited agent for used machines under consignment agreements. The parties in this case apparently agree that the issue of whether a dealer in used goods is subject to strict liability as a supplier is a question of first impression in Ohio. R.C. 2307.71(O)(l)(a) makes no distinction between new and used goods.
We turn first to the issue of whether, as appellants allege, Brandéis fits the definition of a supplier under the Ohio products liability statute. Suppliers are defined in R.C. 2307.71(O)(1) subject to the restrictions of R.C. 2307.71(O)(2). R.C. 2307.71(O)(1)(a) defines a supplier as a person that, in the course of business conducted for the purpose, sells, distributes, leases, prepares, blends, packages, labels, or otherwise participates in the placing of a product in the stream of commerce. None of the exceptions to the definition of supplier in R.C. 2307.71(O)(2) applies to Brandeis. Brandéis did not sell, distribute, lease, prepare, blend, package, or label the loader. To hold that Brandeis is a supplier under R.C. 2307.71(O)(1), we must determine that Brandeis “otherwise participated” in placing the loader in the stream of commerce. To answer this question, we look to prestatutory precedent and to the public policy underlying the products liability statute.
The Supreme Court of Ohio followed 2 Restatement of the Law 2d, Torts (1965), Section 402A in developing the Ohio’s product liability law.
Temple v. Wean United, Inc.
(1977),
In
Anderson,
the court declined to limit supplier liability to an actual sale in the traditional sense, and expressly cited with approval several decisions extending strict liability to nonsale situations, including free loans of equipment, demonstrations, commercial leases and free samples.
Id.,
In each of the situations cited by the
Anderson
court, the “seller” derived a benefit from the “sale,” and the “seller” was in a better financial and technical position than the user to ensure against risk from defects.
Id.,
In its very limited capacity as consignee, Brandéis facilitated the sale of the loader to Welch. While it is a long reach to include a consignee of used goods in the definition of “supplier,” the clear public policy behind the products liability statute is to shift the risk of product-related injury away from the product consumer.
Queen City Terminals, Inc. v. Gen. Am. Transp. Corp.
(1995),
We next turn to the theories by which appellants seek to hold Brandéis liable as a supplier under R.C. 2307.78. Under Ohio’s statutory products liability law:
“[T]he independent liability of a supplier is limited to two situations, both of which involve active supplier conduct causing or contributing to the claimant’s injury. The first of these situations is supplier misrepresentation * * *. Theother independent products liability exposure assigned by statute is for the supplier’s own negligence.” O’Reilly and Cody, Ohio Products Liability Manual (1992), Sections 13.03,13.04.
In addition to these two independent bases for liability, the Ohio statute assigns liability to a supplier as if it were the manufacturer where the manufacturer is unavailable, meaning insolvent or not amenable to service of process in Ohio, or where the supplier fails, upon request, to assist in locating the product manufacturer.
We will first examine the two independent bases of liability alleged against Brandéis, misrepresentation and negligence.
Appellants argue that the product did not conform to the supplier’s representations, and that Brandéis should be held liable under R.C. 2307.78(A)(2). R.C. 2307.78(A)(2) holds suppliers liable when a material misrepresentation proximately causes harm. A bidder attending an auction has a right to rely on the representations of the auctioneer.
Pugh v. Chesseldine
(1841),
Brandéis incorrectly represented that the loader was a one-owner machine. However, this misrepresentation was in no way connected to, much less the cause of, the defect. Brandéis also represented that the loader was in “very good condition.” The record demonstrates, however, that Welch knew that the loader was being sold “as is — where is.” James Welch stated that he understood the term meant that he would have no recourse as to mechanical defects. Thus, Welch did not detrimentally rely on the “very good condition” representation.
Even if Welch did rely on the “very good condition” representation by Brandéis, the trial court correctly held that any representation by Brandéis could not have been the proximate cause of the fire. “Very good condition” did not mean “never modified.” The definition in the brochure stated that “very good condition” meant “in exceptionally good mechanical condition, may have been overhauled or may never have been used enough to require overhaul.” Contrary to the thrust of Welch's argument on this point, “may have been overhauled” suggests that the loader may have been modified.
Appellants did not produce any evidence to suggest that Brandéis had misled Welch with regard to the condition of the loader, as they were obliged to do in order to demonstrate the existence of a factual dispute and to avoid summary judgment.
Wing v. Anchor Media, Ltd. of Texas
(1991),
Even if Brandeis were obliged to perform maintenance on the loader, any failure would not be a proximate cause of the defect. This is not a case of brake failure because of worn pads, or engine damage because of no oil. The defect was caused by the installation of a twelve-volt harness. The appellants presented no evidence to suggest that Brandeis installed the harness. Brandeis presented evidence that it did not install the harness. Therefore, Brandeis cannot be held liable under R.C. 2307.78(B)(6), and summary judgment was proper as to this theory.
Finally, we turn to appellants’ argument in which they seek to hold Brandeis liable as if it were a manufacturer under R.C. 2307.78(B). Unlike the independent bases for supplier liability, this theory is really a “substitution” theory, holding one party liable in the stead of a potentially culpable but absent party. Appellants argue that Brandeis should be held liable because it could not identify the manufacturer of the “modified product” or alternatively because it identified a manufacturer that was not subject to judicial process in Ohio. This argument is completely without merit.
The Ohio Supreme Court has held that a manufacturer includes “one who rebuilds a product or a component of a product,” but only in the context that the rebuilder is a person engaged in a business to rebuild products. See Anderson, supra. In the case at bar, the only manufacturer that meets this definition is Trojan. Trojan is subject to judicial process in Ohio, and is a party to this case. Thus, Brandéis cannot be held liable under R.C. 2307.78(B)(1) and (B)(2) and summary judgment was proper as to this theory.
For the foregoing reasons, summary judgment was appropriately granted to Brandeis, and we overrule the second assignment of error.
In their final assignment of error, appellants argue that the trial court erred by overruling appellants’ joint motion for summary judgment against Brandeis because Brandeis failed to raise a genuine issue of material fact regarding Brandeis’s liability as a supplier of a defective product, entitling appellants to judgment as a matter of law. For the reasons stated in response to the second
In summary, we hold that (1) summary judgment in favor of Trojan on the design-defect claim was improperly granted; (2) summary judgment in favor of Trojan on the inadequate-warning claim was improperly granted; (3) Brandéis is definitionally a supplier under R.C. 2307.71(0); (4) summary judgment in favor of Brandéis on the independent bases of misrepresentation and negligence was appropriately granted; (5) summary judgment in favor of Brandéis on the basis of R.C. 2307.78(B) was appropriately granted; and (6) summary judgment was properly denied to appellants on their claims against Brandéis.
Accordingly, we affirm the summary judgment entered by the trial court in favor of Brandéis; we reverse the summary judgment entered by the trial court in favor of Trojan and remand this cause for further proceedings consistent with this opinion on the claims of inadequate warning and design defect asserted against Trojan.
Judgment affirmed in part, reversed in part and cause remanded.
Notes
. The ad defined “very good condition” as follows: “In exceptional condition. May have been overhauled or may never have been used enough to require overhaul.”
. "As is — where is” disclaims any express or implied warranty or prior representation. James Welch, who represented Welch at the auction, stated that he understood that the term meant that he would have no recourse as to mechanical defects. By separate affidavit, however, he stated that he did not believe the disclaimer applied to dangerous defects.
. The owner that sold to Welch through Brandéis is John Switzer Excavating & Used Equipment ("Switzer”). In an affidavit, Switzer denied modifying the loader.
. Contrary to the trial court’s ruling, the appellants did not allege the existence of a manufacturing defect that caused the fire to occur. The appellants did not dispute the fact that Trojan did not sell the loader with a twelve-volt wiring harness or a twelve-volt appliance connected to the twenty-four-volt power source. Appellants' expert pointed out many manufacturing defects in his deposition, but none is related in any way to the twelve-volt wiring harness, which is the item that all parties agree caused the fire.