FALL 2010 NEWSLETTER PRODUCTS LIABILITY LAW UPDATE

by Rocky Little

Fresh Coat, Inc. v. K-2, Inc., 53 Tex. Supp. J. 1046, Supreme Court of Texas, August 20, 2010.

This indemnity case concerns product liability litigation in the residential construction industry. K-2, Inc. manufactures synthetic stucco components that are collectively referred to as “EIFS,” an acronym for exterior insulation and finishing system. Fresh Coat, Inc. is an EIFS installer that contracted with a home builder, Life Forms, Inc., to install EIFS on the exterior walls of many homes that Life Forms was building. The installer, Fresh Coat, purchased K-2’s EIFS and installed it with the help of K-2’s instructions and training. More than 90 homeowners sued the EIFS’ manufacturer, K-2, the installer, Fresh Coat, and the home builder, Life Forms, alleging that the EIFS allowed water penetration that in turn caused structural damage, termite problems, and mold. The Supreme Court examined whether a synthetic stucco manufacturer has a duty to indemnify a contractor under Chapter 82 of the Texas Civil Practice & Remedies Code. In order to make that assessment, the court had to determine whether synthetic stucco is a “product” pursuant to the statute, and whether the contractor that installs it on a house is a “seller.” Chapter 82’s text does not limit “product” to exclude items that may later become part of a house wall. Also, a “seller” under Chapter 82 may include those who sell both products and services, so that a person who contracts to both provide and install a single product may be considered a “seller” of that product. Therefore, the court held that Chapter 82 applies, and that the EIFS’ manufacturer owed a duty to indemnify the installer.

Cressman Tubular Prods. Corp. v. Kurt Wiseman Oil & Gas, Ltd., No. 14-08-01039-CV (Tex. App. – Houston, September 23, 2010).

This oil well case brought by Kurt Wiseman was based on multiple theories of liability asserted against four Defendants for damages caused by the sale of products for use in an oil well. The jury found one of the Defendants to be 99% liable for the Plaintiff’s damages, and that Defendant filed for bankruptcy protection. The trial court then severed those claims from this case and entered a judgment requiring that all of the Plaintiff’s damages and attorney’s fees be paid by the Defendant that the jury found to be 1% responsible. The court held that the breach of implied warranty is a tort claim and, therefore, proportionate responsibility applies. However, the breach of an express warranty is a contract claim to which proportionate responsibility does not apply. Therefore, the Defendant that breached an express warranty was liable for Plaintiff’s full amount of damages of $548,187 and attorney’s fees of $219,274, notwithstanding that its proportionate responsibility applicable to the tort/implied warranty claims was only 1%.

Georgia Pacific v. Bostic, No. 05-08-01390-CV, (Tex. App. – Dallas, August 26, 2010).

This wrongful death claim against Georgia Pacific was brought by the heirs and estate of Timothy Bostic, whose death was caused by exposure to asbestos. Georgia Pacific’s product upon which the claim was based is a joint compound, sometimes called “drywall mud.” The court found that Mr. Bostic was exposed to Georgia Pacific’s asbestos-containing joint compound. However, the court also found that there was no evidence of the quantitative exposure (dose) of asbestos fibers from Georgia Pacific’s joint compound, and that there was no evidence of the minimum exposure level necessary to lead to an increased risk of development of mesothelioma. Therefore, the Plaintiff failed to prove “substantial factor causation,” that Defendant’s product was a cause in fact of the harm. Moreover, the appellate court held that there was legally insufficient evidence of causation to support the jury’s verdict against Georgia Pacific.