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Fleck v. KDI Sylvan Pools

filed: December 4, 1992.

RICHARD FLECK; DIANE FLECK;
v.
KDI SYLVAN POOLS, INC., A/K/A SYLVAN POOLS; MUSKIN, INC.; NICHOLS SWIM POOLS, INC.; JAMES HUBERT V. S.K. PLASTICS, INC.; DOUGHBOY RECREATIONAL, INC., A DIVISION OF HOFFINGER INDUSTRIES, INC. V. ATREO MANUFACTURING CO., INC.; POSEIDON POOLS, INC.; POSEIDON POOLS OF AMERICA, INC.; GIBRALTAR FACTORS CORP.; THE GIBRALTAR CORPORATION; S & V POOLS, INC.; ESTHER WILLIAMS SWIMMING POOL COMPANY; ESTHER WILLIAMS POOLS, INC.; AND ESTHER WILLIAMS ALL ALUMINUM SWIMMING POOL COMPANY RICHARD FLECK AND DIANE FLECK, APPELLANTS RICHARD FLECK; DIANE FLECK; V. KDI SYLVAN POOLS, INC., A/K/A SYLVAN POOLS; MUSKIN, INC.; NICHOLS SWIM POOLS, INC.; JAMES HUBERT V. S.K. PLASTICS, INC.; DOUGHBOY RECREATIONAL, INC., A DIVISION OF HOFFINGER INDUSTRIES, INC. V. ATREO MANUFACTURING CO., INC.; POSEIDON POOLS, INC.; POSEIDON POOLS OF AMERICA, INC.; GIBRALTAR FACTORS CORP.; THE GIBRALTAR CORPORATION; S & V POOLS, INC.; ESTHER WILLIAMS SWIMMING POOL COMPANY; ESTHER WILLIAMS POOLS, INC.; AND ESTHER WILLIAMS ALL ALUMINUM SWIMMING POOL COMPANY HOFFINGER INDUSTRIES, INC., (INCORRECTLY DESIGNATED AS DOUGHBOY RECREATIONAL, INC., A DIVISION OF HOFFINGER INDUSTRIES, INC.), APPELLANT; RICHARD FLECK; DIANE FLECK; V. KDI SYLVAN POOLS, INC., A/K/A SYLVAN POOLS; MUSKIN, INC.; NICHOLS SWIM POOLS, INC.; JAMES HUBERT V. S.K. PLASTICS, INC.; DOUGHBOY RECREATIONAL, INC., A DIVISION OF HOFFINGER INDUSTRIES, INC. V. ATREO MANUFACTURING CO., INC.; POSEIDON POOLS, INC.; POSEIDON POOLS OF AMERICA, INC.; GIBRALTAR FACTORS CORP.; THE GIBRALTAR CORPORATION; S & V POOLS, INC.; ESTHER WILLIAMS SWIMMING POOL COMPANY; ESTHER WILLIAMS POOLS, INC.; AND ESTHER WILLIAMS ALL ALUMINUM SWIMMING POOL COMPANY NICHOLS SWIM POOLS, INC., APPELLANTS RICHARD FLECK; DIANE FLECK; V. KDI SYLVAN POOLS, INC., A/K/A SYLVAN POOLS; MUSKIN, INC.; NICHOLS SWIM POOLS, INC.; JAMES HUBERT V. S.K. PLASTICS, INC.; DOUGHBOY RECREATIONAL, INC., A DIVISION OF HOFFINGER INDUSTRIES, INC. V. ATREO MANUFACTURING CO., INC.; POSEIDON POOLS, INC.; POSEIDON POOLS OF AMERICA, INC.; GIBRALTAR FACTORS CORP.; THE GIBRALTAR CORPORATION; S & V POOLS, INC.; ESTHER WILLIAMS SWIMMING POOL COMPANY; ESTHER WILLIAMS POOLS, INC.; AND ESTHER WILLIAMS ALL ALUMINUM SWIMMING POOL COMPANY GIBRALTAR CORPORATION, APPELLANT; RICHARD FLECK; DIANE FLECK; V. KDI SYLVAN POOLS, INC., A/K/A SYLVAN POOLS; MUSKIN, INC.; NICHOLS SWIM POOLS, INC.; JAMES HUBERT V. S.K. PLASTICS, INC.; DOUGHBOY RECREATIONAL, INC., A DIVISION OF HOFFINGER INDUSTRIES, INC. V. ATREO MANUFACTURING CO., INC.; POSEIDON POOLS, INC.; POSEIDON POOLS OF AMERICA, INC.; GIBRALTAR FACTORS CORP.; THE GIBRALTAR CORPORATION; S & V POOLS, INC.; ESTHER WILLIAMS SWIMMING POOL COMPANY; ESTHER WILLIAMS POOLS, INC.; AND ESTHER WILLIAMS ALL ALUMINUM SWIMMING POOL COMPANY S & V POOLS, INC. AND POSEIDON POOLS OF AMERICA, INC., APPELLANT RICHARD FLECK; DIANE FLECK; V. KDI SYLVAN POOLS, INC., A/K/A SYLVAN POOLS; MUSKIN, INC.; NICHOLS SWIM POOLS, INC.; JAMES HUBERT V. S.K. PLASTICS, INC.; DOUGHBOY RECREATIONAL, INC., A DIVISION OF HOFFINGER INDUSTRIES, INC. V. ATREO MANUFACTURING CO., INC.; POSEIDON POOLS, INC.; POSEIDON POOLS OF AMERICA, INC.; GIBRALTAR FACTORS CORP.; THE GIBRALTAR CORPORATION; S & V POOLS, INC.; ESTHER WILLIAMS SWIMMING POOL COMPANY; ESTHER WILLIAMS POOLS, INC.; AND ESTHER WILLIAMS ALL ALUMINUM SWIMMING POOL COMPANY RICHARD FLECK AND DIANE FLECK, APPELLANTS RICHARD FLECK; DIANE FLECK; V. KDI SYLVAN POOLS, INC., A/K/A SYLVAN POOLS; MUSKIN, INC.; NICHOLS SWIM POOLS, INC.; JAMES HUBERT V. S.K. PLASTICS, INC.; DOUGHBOY RECREATIONAL, INC., A DIVISION OF HOFFINGER INDUSTRIES, INC. V. ATREO MANUFACTURING CO., INC.; POSEIDON POOLS, INC.; POSEIDON POOLS OF AMERICA, INC.; GIBRALTAR FACTORS CORP.; THE GIBRALTAR CORPORATION; S & V POOLS, INC.; ESTHER WILLIAMS SWIMMING POOL COMPANY; ESTHER WILLIAMS POOLS, INC.; AND ESTHER WILLIAMS ALL ALUMINUM SWIMMING POOL COMPANY HOFFINGER INDUSTRIES, INC., (INCORRECTLY DESIGNATED AS DOUGHBOY RECREATIONAL, INC., A DIVISION OF HOFFINGER INDUSTRIES, INC.), APPELLANT RICHARD FLECK; DIANE FLECK; V. KDI SYLVAN POOLS, INC., A/K/A SYLVAN POOLS; MUSKIN, INC.; NICHOLS SWIM POOLS, INC.; JAMES HUBERT V. S.K. PLASTICS, INC.; DOUGHBOY RECREATIONAL, INC., A DIVISION OF HOFFINGER INDUSTRIES, INC. V. ATREO MANUFACTURING CO., INC.; POSEIDON POOLS, INC.; POSEIDON POOLS OF AMERICA, INC.; GIBRALTAR FACTORS CORP.; THE GIBRALTAR CORPORATION; S & V POOLS, INC.; ESTHER WILLIAMS SWIMMING POOL COMPANY; ESTHER WILLIAMS POOLS, INC.; AND ESTHER WILLIAMS ALL ALUMINUM SWIMMING POOL COMPANY S & V POOLS, INC. AND POSEIDON POOLS OF AMERICA, INC., APPELLANT



ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA. (D.C. Civil Action No. 89-01348).

Before: Becker, Mansmann and Nygaard, Circuit Judges.

Author: Nygaard

Opinion OF THE COURT

NYGAARD, Circuit Judge.

Richard Fleck dove into a three-and-half foot deep above-ground swimming pool, broke his neck, and was rendered a quadriplegic. The pool and its replacement pool liner did not have depth markers or "No Diving" warnings. The Flecks contended that the homeowner was negligent and that the sellers of the pool and replacement liner were stric tly liable for failing to warn under Pennsylvania law.

I.

FACTS AND PROCEDURE

In 1971, Sylvan sold an above-ground pool for $875 to a homeowner. The pool was damaged in a hurricane, and in 1972 Sylvan replaced it with another. The replacement was a four foot high above-ground pool with neither depth markers nor diving warnings. It has never been removed or disassembled. The pool liner developed a leak; so, it was replaced with a liner sold by Nichols and manufactured by Doughboy Recreation Inc., a division of Hoffinger Industries, Inc. Like the pool itself, the replacement liner did not have warnings affixed, although it did come with decals (which were never used). When James Hubert bought the house in 1984, he built an elaborate, three-tiered deck system around the pool, which completely obstructed the view of the pool's side walls.

Hubert decided to throw a large party, referred to as the "Fourth Annual Hawaiian Blitz." The invitation stated, "Plenty of beer, wine and frozen drinks on hand." It indicated that Hubert was going to have athletic events including swimming. Six kegs of beer and three 5-liter boxes of wine were available.

Richard Fleck and his wife Diane arrived at Hubert's home in the early evening. In a two hour period Fleck consumed four or five 12-ounce cups of beer, smoked marijuana, and decided to go swimming. He climbed to the top of the deck system surrounding the pool, dove in head first, hit his head on the bottom of the pool, and broke his neck. Fleck, who had never used this pool, testified that the pool looked six feet deep. This was corroborated by Hubert, who testified that sometimes the pool looked twelve feet deep. Fleck further testified that had there been depth markers or warnings he would have seen them and would have known not to dive into a four foot deep pool.

The Flecks sued Hubert, alleging negligence. They also brought strict product liability claims against Sylvan, the pool seller, and Nichols, the seller of replacement liner. Sylvan joined Poseidon Pools of America, S & V Pools Inc., and The Gibraltar Corporation, the alleged corporate successors of the defunct pool manufacturer Atreo Manufacturing Company (which is not a party to this action) as third-party defendants. Nichols filed a third-party complaint for indemnification against Hoffinger, the manufacturer of the liner. Hoffinger did not file cross-claims against the three third-party defendants.

Before trial, the Flecks released Hubert from any liability for $300,000. They further agreed that in any action in which Hubert is found to be a tortfeasor, the amount of the verdict would be reduced by the pro rata or comparative share of Hubert's fault.

Also before trial, Nichols filed a petition for bankruptcy under Chapter 11. Its assets were protected by the automatic stay provision of 11 U.S.C. § 362. To lift the stay, the Flecks petitioned the bankruptcy court and agreed that any recovery in their action against Nichols "will be limited solely to the proceeds of the applicable insurance of the Debtor Defendant Nichols Swim Pools, Inc." With this understanding, the bankruptcy court lifted the stay.

At trial, the district court directed verdicts for Sylvan and the three third-party defendants, reasoning that the action was time barred by the statute of repose, 42 Pa. C.S. § 5536. The court also directed a verdict for Nichols on its third-party indemnification action against Hoffinger. This was done with Hoffinger's tacit, if not express, consent. The court, however, denied Nichols' request for attorney's fees and costs incurred in the defense of the liability indemnified against.

At the end of the liability trial, the jury answered special interrogatories. It found both Hubert and Fleck negligent and that their combined negligence was a substantial factor in bringing about Fleck's injury. As between Hubert and Fleck, the jury apportioned causation 36% to Hubert and 64% to Fleck. Since no liability attaches to a defendant in a negligence action if his comparative fault is less than the plaintiff's, 42 Pa. C.S. § 7102(a), even without the settlement Hubert would not have been liable to the Flecks.

The jury also found that the liner lacked an element necessary to make it safe for reasonably foreseeable use, and that the defect was a substantial factor in bringing about the harm. As between Hubert and Nichols, it apportioned Hubert's 36% responsibility for causation, 60% to Hubert and 40% to Nichols.

The jury returned a verdict awarding $10 million to Fleck and $250,000 to his wife. The district court entered judgment in the amount of $11,750,000 and $293,750, representing the verdict and delay damages. Nichols and the Flecks settled for $2,092,513, which the Flecks contend partially satisfies the judgment.

Since Nichols' liability shifted to Hoffinger by way of indemnification, and since all other parties have been found not liable, the money trail ended with Hoffinger. Hoffinger and Nichols filed post-judgment motions for, among other things, judgment notwithstanding the verdict and for a new trial. Nichols withdrew its motions for JNOV and new trial, but not its motion requesting attorney's fees and costs for the indemnification action. The court denied all motions.

The Flecks, Nichols and Hoffinger appeal. The Flecks appeal the order directing verdict for Sylvan under the statute of repose. Nichols appeals the denial of attorney's fees and costs in its indemnification action against Hoffinger. The bulk of this appeal belongs to Hoffinger, which appears to contest all orders and decisions affecting its liability.

II.

ANALYSIS

We apply Pennsylvania product liability law. The Pennsylvania Supreme Court has adopted Section 402A of the Restatement (Second) of Torts. Webb v. Zern, 422 Pa. 424, 220 A.2d 853 (1966). That section imposes strict liability upon the seller of "any product in a defective condition unreasonably dangerous to the user or consumer."

Absent clear guidance from the Pennsylvania Supreme Court, we must predict how it would decide the issues and will, when persuasive, rely on decisions of the intermediate appellate court, unless we are convinced that the supreme court would decide otherwise. West v. American Telephone & Tel. Co., 311 U.S. 223, 237, 61 S. Ct. 179, 183, 85 L. Ed. 139 1 (1940); McKenna v. Ortho Pharmaceutical Corp., 622 F.2d 657, 662 (3d Cir. 1980).

We have examined the myriad of issues presented and conclude that only these merit Discussion:

1. Whether directed verdict for defendant Sylvan was proper under the Pennsylvania statute of repose;

2. Whether Hoffinger waived its right to appeal the directed verdict against it in Nichols' third-party indemnification action;

3. Whether Nichols is entitled to attorney's fees and costs in its indemnification action;

4. Whether, as a matter of law, a manufacturer of a replacement pool liner has a duty to warn of the pool depth or dangers of diving into a shallow above-ground pool;

5. Whether, as a matter of law, the dangers of diving into this pool of unknown depth was open and obvious, relieving Hoffinger of a duty to warn;

6. Whether Pennsylvania recognizes a contributory negligence defense or a comparative negligence scheme of apportioning damages in a strict liability action for failure to warn;

7. Whether the jury verdict should be reduced to an amount equal to the insurance proceeds available to Nichols.

A.

Directed Verdict For Sylvan

The district court directed a verdict for Sylvan, the pool seller, because it believed the Flecks' suit to be time-barred by the Pennsylvania statute of repose, which provides:

(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:

(3) Injury to the person or for wrongful death arising out of such deficiency.

42 Pa. C.S. ยง 5536. Whether the directed verdict is proper is a question of Pennsylvania law. We exercise plenary review. Compagnie des Bauxites de Guinee v. Insurance Co. of ...


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