ATTORNEYS FOR APPELLANTS
Fred M. Stults, III
Fred M. Stults, Jr.
Gary, Indiana
ATTORNEY FOR APPELLEE
Michael E. Simmons
Indianapolis, Indiana
__________________________________________________________________
IN THE
SUPREME COURT OF INDIANA
__________________________________________________________________
FLEETWOOD ENTERPRISES, INC., )
and FLEETWOOD MOTOR HOMES )
OF INDIANA, INC., )
)
Appellants (Defendants Below), ) Indiana Supreme Court
) Cause No.45S03-0106-CV-265
v. )
) Indiana Court of Appeals
PROGRESSIVE NORTHERN ) Cause No. 45A03-9909-CV-366
INSURANCE COMPANY, as Subrogee )
of Jack Bostic, )
)
Appellee (Plaintiff Below). )
__________________________________________________________________
APPEAL FROM THE LAKE SUPERIOR COURT
The Honorable Jeffery J. Dywan, Judge
Cause No. 45D01-9611-CP-1133
__________________________________________________________________
ON PETITION FOR TRANSFER
__________________________________________________________________
June 6, 2001
BOEHM, Justice.
In Progressive Insurance Co. v. Ford Motor Co., ___ N.E.2d ___, ___
(Ind. 2001), we held that the Products Liability Act does not support an
action based on a defect in a product where the only damage is to the
product itself. In this case a defect in the product is alleged to have
damaged both the product itself and also other property. We hold that
personal injury and damage to other property from a defective product are
actionable under the Act, but their presence does not create a claim under
the Act for damage to the product itself.
On January 6, 1996, the three occupants of a motor home smelled
something “hot” and fled. The home had been manufactured by Fleetwood. It
was quickly engulfed in flames and was completely destroyed. Progressive
Insurance had issued a homeowner’s policy and paid the owner $162,500 for
damages to the motor home and $6,587.89 for damages to other personal
property in the home. As subrogee, Progressive then sought to recover its
losses from Fleetwood under a products liability theory. The trial court
refused to give the defendant’s proposed jury instruction that, “under the
Indiana Strict Product Liability Law, Plaintiff . . . is NOT entitled to
recover for any sums it paid . . . for the Fleetwood Motor Home only.
Instead, the only amount of damages you may consider is the amount
Progressive . . . paid . . . for [] loss of personal property contents
contained within the motor home.” Instead, the trial court gave Indiana
Pattern Jury Instruction No. 11.40: “When personal property is completely
destroyed, the measure of damages is the fair market value of the property
at the time of its destruction.” The jury awarded Progressive the full
$169,087.89 Progressive had paid its insured, and the trial court added
prejudgment interest of $46,881.35, for a total judgment of $215,969.24.
In Progressive, we reaffirmed the rule that no damages are
recoverable under the Products Liability Act where the only damage is to
the defective product itself. ___ N.E.2d at ___. However, cases from this
Court and others have discussed that doctrine in language suggesting that
damage to the product might be recoverable under a products liability
theory if the defective product also causes personal injury or damage to
other property. For example, in Reed v. Central Soya Co., 621 N.E.2d 1069,
1074-75 (Ind. 1993), this Court held that, “where the loss is solely
economic in nature, as where the only claim of loss relates to the
product’s failure to live up to expectations, and in the absence of damage
to other property or person, then such losses are more appropriately
recovered by contract remedies.” (Emphasis added.). In Reed, this Court
was presented with a case in which the only claim was for damage to other
property. In the other leading Indiana precedent, Martin Rispens & Son v.
Hall Farms, Inc., 621 N.E.2d 1078 (Ind. 1993), the product—watermelon
seeds—was viewed as the same thing as the resulting bacteria-infected
watermelon crop. Accordingly, Rispens addressed only harm to the product
itself. Thus, this Court has never faced a products liability claim for
damage to the product where there was also damage to persons or other
property. This dispute between Progressive and Fleetwood directly presents
us with that question.
Some decisions from other states, like Reed, note the absence of
damage to other property in rejecting claims for damage to the defective
product, which is sometimes viewed as a subcategory of “economic loss.”
However, these decisions, like Reed, typically were not faced with a claim
for damages to the product and also to other property. For example, E.I.
Du Pont de Nemours & Co. v. Finks Farms, Inc., 656 So. 2d 171, 173 (Fla.
Ct. App. 1995), addressed a claim for damage to a tomato crop from an
allegedly defective fungicide: “Where, however, as in the instant case, the
finished product causes property damage to other property, the economic
loss doctrine does not apply.”
In addition to the absence of direct authority in this state, it
appears that the question whether damage to the product is recoverable in
products liability where it is accompanied by damage to other property or
personal injury has rarely been addressed elsewhere. However, at least one
court has permitted that recovery in a jurisdiction that does not permit
recovery for damage to the product alone. In Dutsch v. Sea Ray Boats,
Inc., 845 P.2d 187, 189, 193 (Okla. 1992), the court affirmed a judgment
under Oklahoma products liability law awarding $181,500 for personal injury
damages and $115,000 for damages to a boat that exploded. As support for
allowing damages for harm to the product itself, the court reasoned that
the policy of preserving remedies under the Uniform Commercial Code “would
not be furthered by requiring a plaintiff to proceed under two different
theories to recover two different types of damage if one type of damage
claimed is recoverable in manufacturer’s products liability.” Id. at 193-
94. The Court cited four precedents for its view, but a reading of those
cases suggests that there was either no damage at all to the product[1] or
extremely minor damage in comparison to the personal injury or other
property loss from the defective product.[2] In any event, none of these
four cases suggested that any part of the damages was for loss of the
defective product and none mentioned the issue discussed here.
Here there was damage, although relatively small in amount, to other
property. Plainly that amount is recoverable under the Products Liability
Act. However, we find no persuasive reason to sustain a products liability
claim for damage to the product if it is accompanied by personal injury or
damage to other property when there is no products liability claim if that
other damage is absent. The reason given in Dutsch to find such a
claim—avoidance of dual theory trials—does not seem very forceful. Many of
these cases, like this one, present situations where either the loss to the
product or the damage to other property is by far the largest component of
the total claim. Here the motor home itself is ninety-six percent of the
claim. In contrast, some fact patterns, like those described in footnote
two, do not expressly address the issue presented here, but involved severe
personal injury or damage to other property and very minor or no damage to
the product. If either claim is sufficiently large to warrant litigation,
it is not too much to demand proof of the elements of recovery under a
products liability or contract theory, whichever is appropriate. And under
Indiana procedure, a plaintiff may readily pursue both a contract claim for
damage to the product itself and a tort claim for personal injury or damage
to other property under the Products Liability Act.
More importantly, unlike Oklahoma, in Indiana a products claim is
governed by statute. There is no support in Indiana’s Products Liability
Act for the result reached in Dutsch. Precedent from this Court has not
regarded the “product” whose defect gives rise to liability as “property”
whose damage gives rise to a claim under the Act. Rispens, 621 N.E.2d at
1089. That result, apparently accepted by the legislature, dictates
disallowance of the claim for damage to the defective product, whether or
not accompanied by other damage. Thus, for the same reasons given in
Progressive, we hold that damage caused to other property by a defective
product does not create a claim for damage to the product itself. We also
think there are other persuasive reasons to reject the Dutsch rule. If
recovery hinges on the presence of other damage, many cases will be
launched into quests for some collateral damage. An oil stain on a garage
floor from a failed engine or a burnt blade of grass from a fire should not
create a claim where none existed.
We conclude that it was error for the trial court to refuse to
instruct the jury that damage to the product itself, i.e., the motor home,
was not recoverable under the Products Liability Act. In reviewing a trial
court’s decision to give or refuse tendered instructions, the Court
considers: (1) whether the instruction correctly states the law; (2)
whether there was evidence in the record to support the giving of the
instruction; and (3) whether the substance of the tendered instruction is
covered by other instructions which are given. Wooley v. State, 716 N.E.2d
919, 926 (Ind. 1999). An erroneous instruction merits reversal if it could
have formed the basis for the jury’s verdict. Canfield v. Sandock, 563
N.E.2d 1279, 1282 (Ind. 1990).
Here, it is clear that Indiana Pattern Instruction No. 11.40 left the
jury with the mistaken impression that it should award full damages for the
motor home to Fleetwood if it determined that Fleetwood was liable to
Progressive in Progressive’s products liability claim, and that the trial
court erred in refusing to give Fleetwood’s instruction. Ordinarily, a new
trial would be required. However, where, as here, liability was determined
by the jury and the basis of the jury’s damages award is apparent, it is
appropriate to vacate the portion of the damages award not recoverable as a
matter of Indiana law. See Ind.Appellate Rule 15(N)(5) (now App. R.
66(C)(4)) (“The court, with respect to all or some of the parties or upon
all or some of the issues, may order: . . . (6) In the case of excessive or
inadequate damages, entry of final judgment on the evidence for the amount
of the proper damages . . . .”).
No challenge is raised to the award of prejudgment interest beyond a
challenge to the underlying judgment. Accordingly, prejudgment interest
should be awarded in proportion to the amount of the judgment that is
affirmed.
Conclusion
We affirm the jury’s award of damages in the amount of $6,587.89,
reverse the damages award in the amount of $162,500, and remand with
direction that judgment be entered for the plaintiff in the amount of
$6,587.89 plus prejudgment interest of $1,826.56.
SHEPARD, C.J., and SULLIVAN, J., concur.
RUCKER, J., concurs in result with separate opinion in which DICKSON,
J., concurs.
ATTORNEYS FOR APPELLANTS: ATTORNEY FOR APPELLEE:
FRED M. STULTS, III MICHAEL E. SIMMONS
FRED M. STULTS, JR. Hume Smith Geddes Green &
The Stults Law Offices Simmons, LLP
Gary, Indiana Indianapolis, Indiana
IN THE
SUPREME COURT OF INDIANA
FLEETWOOD ENTERPRISES, INC. )
and FLEETWOOD MOTOR HOMES OF )
INDIANA, INC., ) Indiana Supreme Court
) Cause No.: 45S03-0106-CV-265
Appellants-Defendants, )
)
v. )
)
PROGRESSIVE NORTHERN INSURANCE ) Indiana Court of Appeals
COMPANY, as Subrogee of Jack Bostic, ) Cause No.: 45A03-9909-
CV-366
)
Appellee-Plaintiff. )
APPEAL FROM THE LAKE SUPERIOR COURT
HAMMOND DIVISION
The Honorable Jeffery J. Dywan, Judge
Cause No.: 45D01-9611-CP-1133
ON PETITION TO TRANSFER
June 6, 2001
RUCKER, Justice, concurring in result
Because of the doctrine of stare decisis, I concur in the result
reached by the majority. Both Martin Rispens & Son v. Hall Farms, Inc., 621
N.E.2d 1078 (Ind. 1993), and Reed v. Central Soya Co., Inc., 621 N.E.2d
1069 (Ind. 1993), compel the outcome in this case.
DICKSON, J., concurs.
-----------------------
[1] In Lee v. Volkswagen of America, Inc., 688 P.2d 1283, 1285 (Okla.
1984), the plaintiff was rendered quadriplegic by an accident in which a
defective Volkswagen door latch caused his ejectment from the car. He was
awarded 1.8 million dollars for personal injury. There is no suggestion
that the defect in the door caused any damage to the car. Dewberry v.
LaFollette, 598 P.2d 241, 242 (Okla. 1979), involved a claim of personal
injury from collapsing steps. There was no claim for the steps themselves.
[2] In Smith v. United States Gypsum, Co., 612 P.2d 251, 252-53 (Okla.
1980), the plaintiff was awarded $600,000 for personal injuries from the
explosion of solvent-based adhesive for installing wall paneling. The
court does not identify the components of damage, but it is clear that
virtually all, if not all, were for personal injury. In Kimbrell v. Zenith
Radio Corp., 555 P.2d 590 (Okla. 1976), a television was claimed to have
caused a fire that destroyed a home. If compensation for damage to the
television itself was sought, it is not mentioned by the court. In any
event, it was trivial compared to the loss of the home.