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Hahn v. Atlantic Richfield Co.

decided: July 3, 1980.

TERRANCE P. HAHN AND BARBARA HAHN
v.
ATLANTIC RICHFIELD CO., A PENNSYLVANIA CORPORATION AND JOHN DOE #1, EATON CORPORATION, MANUFACTURER AND/OR SUPPLIER OF THE CRANE, AND/OR SAFETY HOOK, AND/OR RIGGING AND JOHN DOE #2, CRANE RENTAL COMPANY AND FLUOR ENGINEERS & CONSTRUCTORS, THIRD AND PRICE STREETS, MARCUS HOOK, PENNSYLVANIA EATON CORPORATION, APPELLANT



APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA (D.C. Civil No. 74-2932)

Before Aldisert, Weis and Garth, Circuit Judges.

Author: Aldisert

Opinion OF THE COURT

The appeal in this diversity case tried under Pennsylvania law requires us to decide whether the district court erred by refusing to enter judgment notwithstanding the verdict in favor of a manufacturer of a defective chain hoist that the jury found to have caused appellee's injuries. On December 14, 1972, appellee Terrance P. Hahn, an employee of Fluor Engineers and Contractors, was severely injured while working as a pipefitter at the Atlantic Richfield Company refinery in Philadelphia, Pennsylvania, when a 600-pound pipe suspended overhead by a Yale One Ton chain hoist fell on him. A jury found Eaton Corporation, the manufacturer of Yale hoists, liable for breach of warranty under the Pennsylvania Uniform Commercial Code for selling the defective hoist to Fluor, and awarded $1,050,000 to Hahn and his wife as damages for the breach. Because we conclude that the evidence at trial was insufficient as a matter of law to prove a sale of the hoist, a predicate of any warranty action under Article 2 of the Code, we reverse the judgment of the district court.

I.

Approximately two years after the accident, on November 30, 1974, Hahn and his wife filed a complaint in the Eastern District of Pennsylvania alleging negligence against several defendants: Atlantic Richfield, on whose property the accident occurred, Fluor Engineers, Hahn's employer, and, as a John Doe defendant, the manufacturer of the chain hoist. Because the hoist could not be located after the accident, Hahn asserted that he was unable to identify the manufacturer.*fn1 On June 30, 1976, the complaint was amended to substitute Eaton Corporation, the manufacturer of Yale hoists, as defendant. Eaton's answer to the complaint raised the defense that the action was barred by the Pennsylvania statute of limitations for personal injuries because Eaton had not been named as a defendant until more than two years had expired since the date of the injury.*fn2 Thereafter, on March 17, 1977, Hahn again amended his complaint to proceed against Eaton under Article 2 of the Uniform Commercial Code on the theory of breach of warranty of merchantability and fitness for a particular purpose. The amended complaint alleged that at the time Eaton sold the hoist to Fluor it contained a latent defect. No date of sale was averred, however. The district court ruled that the March 17 amendment related back to the June 30, 1976 amendment and concluded that the Code's four year limitations period of Article 2 would not bar Hahn's claim unless Eaton could show that it sold the hoist to Fluor more than four years before June 30, 1976, the date Eaton was joined as a party.*fn3

At trial, Hahn introduced opinion testimony of several eye witnesses to show how the accident had happened. In addition, testimony of two other pipefitters who were working with Hahn on the day of the accident was introduced to show that the hoist in question was a Yale One Ton hoist and that it was "new." See Appendix at 413a, 427a-28a. The hoist itself, however, was never introduced into evidence because it could not be located after the accident.*fn4 Hahn introduced no direct proof of sale. Instead, counsel read to the jury answers to certain interrogatories and requests for admissions by Eaton and Fluor showing that Eaton had manufactured a Yale One Ton chain hoist in 1971 or 1972 and that Fluor had supplied to the worksite the hoist involved in the accident.*fn5 Counsel for Eaton offered into evidence Exhibit DE-1, which was an agreement dated December 15, 1971 between Atlantic Richfield and Fluor that governed the work Fluor was performing at the refinery. Among the listed equipment that Fluor was responsible for supplying pursuant to the agreement was a single one ton hoist.

At the close of trial, Eaton moved for directed verdict on the ground that Hahn had not established proof of sale of the hoist from Eaton to Fluor. The motion was denied. The jury returned a verdict in favor of Hahn and against Eaton on the issue of liability. Thereafter, in an unpublished opinion of June 20, 1979, the district court denied Eaton's post trial motion for judgment notwithstanding the verdict. This appeal by Eaton followed.

II.

Eaton raises two arguments that merit our consideration. First, it argues that because this case was tried under the warranty provisions of Article 2 of the UCC, the sales article of the Code, the district court erred by submitting to the jury the issue of whether the chain hoist was defective at the time of sale in the absence of any evidence that Eaton actually sold the hoist to Fluor.*fn6 Appellee Hahn, while conceding that to recover for breach of warranty under the Code he must first show that a sale of the hoist from Eaton to Fluor was consummated, see Brief for Appellees at 20-21; see also U.C.C. §§ 2-102, -106; DeMatteo v. White, 233 Pa.Super. 339, 336 A.2d 355 (1975), nonetheless contends that the record contains ample evidence from which the jury could properly have inferred that such a sale did in fact take place.

The standards that govern our review of this evidentiary issue are familiar. A jury verdict carries with it the benefit of all reasonable inferences capable of being drawn therefrom, and an appellate court is bound to interpret the evidence in the light most favorable to the verdict winner. Continental Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 696, 82 S. Ct. 1404, 1409, 8 L. Ed. 2d 777 (1962); Kademenos v. Equitable Life Assurance Society, 513 F.2d 1073, 1074 (3d Cir. 1975); Thomas v. E. J. Korvette, Inc., 476 F.2d 471, 474 (3d Cir. 1973). Any fact that the jury could have reasonably inferred from the evidence in favor of the verdict winner will be presumed to have been so inferred when the court reviews the record supporting the verdict. If, however, the record discloses that the evidence on which the verdict is based is so critically deficient of proof of an essential fact needed to support the verdict that the jury could only have ventured a guess about its occurrence, then a judgment notwithstanding the verdict is required. Denneny v. Siegel, 407 F.2d 433, 442 (3d Cir. 1969); see Neville Chemical Co. v. Union Carbide Corp., 422 F.2d 1205, 1210 n.5 (3d Cir. 1970).

Applying these precepts to the case at hand, we are left with the conclusion that Eaton is entitled to judgment notwithstanding the verdict. Proof of sale from Eaton to Fluor was an essential fact necessary to support the jury's verdict. The record evidence, however, even when interpreted most liberally in favor of Hahn, does not support the inference that a sale of the hoist from Eaton to Fluor was consummated. The jury could only have speculated about the occurrence of a sale. The evidence shows that Eaton manufactured and sold Yale One Ton hoists in 1971 or 1972; that the contract between Fluor and Atlantic Richfield called for a one ton hoist to be used by Fluor in performing work at the refinery; that Fluor supplied the hoist involved in the accident; and that the defective hoist was a Yale hoist and was "new" on the date of the accident. None of this evidence, however, tends to show, even remotely, how Fluor came to possess the hoist. It is possible that the hoist may have been obtained by lease, or by bailment; the rental of specialized equipment or machinery to contractors is commonplace.*fn7 The hoist may have been purchased as part of a bulk transfer. It may have been found by, or even given to Fluor. Or, as the jury inferred, it may have been purchased by Fluor from Eaton. Although all of these are conceivable possibilities, none of them can be properly inferred from the evidence presented at trial. There is simply no evidence, either direct or circumstantial, that would indicate how Fluor came to possess the hoist. We are left with no other determination but that the jury ventured a guess that the defective hoist was purchased by Fluor from Eaton. We conclude, therefore, that the record is legally insufficient to support a verdict in favor of Hahn because it lacks that "minimum quantum of evidence from which a jury might reasonably afford relief." Denneny v. Siegel, 407 F.2d at 439.

Appellees argue that they made all possible attempts to uncover information regarding a sale of the hoist. They contend that for this court to rule that they failed to sustain their burden of proof on this issue would be manifestly unjust because any information concerning a sale of the hoist should have been in the business records of either Eaton or Fluor. Appellees would have us conclude that liability for Mr. Hahn's injuries should not be avoided by Eaton simply because neither company's records satisfied their counsel's inquiries.

We will not accept this argument. That counsel could not uncover information of sale, presumably even though employing the liberal discovery procedures allowed by the Federal Rules of Civil Procedure, see Fed.R.Civ.P. 26, 34, indicates that documentary evidence of a sale to Fluor probably did not exist. We recognize that under certain circumstances a court may demand production of evidence from a party not having the ultimate burden of persuasion, and then draw a negative inference from that party's non-production. See generally 9 J. Wigmore, Evidence § 2486 (3rd ed. 1940). But absent evidence of a close relationship between Eaton and Fluor, we will not allow the verdict against Eaton to stand on an unfavorable inference drawn from Fluor's inability to document its possessory interest in the hoist. Nor will we draw such an inference from the unexplained disappearance of the defective hoist after the accident. While this amounted to an unfortunate development for appellees, we are not willing to penalize Eaton because of the loss, especially when Eaton had no knowledge of the accident until almost four years after its occurrence, and in light of the representation to this court by counsel for appellees that counsel for all parties to this litigation diligently, albeit unsuccessfully, attempted to locate the hoist. See note 4 supra.

We therefore conclude that the district court erred by not granting Eaton's motion for judgment ...


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