Allstate Insurance v. Fred's, Inc.

33 So. 3d 976, 2010 La. App. LEXIS 397, 2010 WL 936228
CourtLouisiana Court of Appeal
DecidedMarch 17, 2010
Docket44,508-CA
StatusPublished
Cited by8 cases

This text of 33 So. 3d 976 (Allstate Insurance v. Fred's, Inc.) is published on Counsel Stack Legal Research, covering Louisiana Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Allstate Insurance v. Fred's, Inc., 33 So. 3d 976, 2010 La. App. LEXIS 397, 2010 WL 936228 (La. Ct. App. 2010).

Opinions

CARAWAY, J.

11 This case involves an allegedly defective lamp sold by Fred’s Stores of Tennessee, Inc. (“Fred’s”), which purportedly caused a fire in a house insured by the plaintiff, Allstate Insurance Company (“Allstate”). In this court’s prior opinion concerning the trial court’s dismissal of the case on the exception of prescription, we ruled that the doctrine of contra non va-lentón applied because Allstate was prevented from determining the product’s manufacturer whose identity was not revealed on the product. Allstate Insurance [978]*978Co. v. Fred’s, Inc., 44,508 (La.App.2d Cir.8/19/09), 18 So.3d 172. The insurer of the alleged manufacturer, Colony Insurance Company (“Colony”), sought a writ of certiorari from the Louisiana Supreme Court. Upon supervisory review of the ruling, the court reversed this court’s decision, as follows:

Writ granted. We reverse the court of appeal decision finding the doctrine of contra non valentem applicable to the facts presented. The court of appeal erred in finding Allstate’s delay “cannot be attributable to its own neglect,” an essential element in a defense to prescription based on this doctrine. Allstate’s two-year delay between its discovery request and its motion to compel, plus an additional year before adding Colony to the suit, evidences a lack of due diligence on the part of Allstate, precluding application of the contra non valentem doctrine. Accordingly, we reverse the decision of the court of appeal and remand to the court of appeal for consideration of pretermitted issues not addressed in the original opinion.

Allstate Insurance Co. v. Fred’s, Inc., 09-2275 (La.1/29/10), 25 So.3d 821.

The pretermitted issue noted in our first opinion which might also serve to defeat the claim of prescription concerns the liability of Fred’s to the homeowner/claimant for the defective lamp under the Louisiana Products Liability Act, La. R.S. 9:2800.51, et seq. (hereinafter the “LPLA”). |2Fred’s was timely sued initially by Allstate, and the action against Fred’s would interrupt prescription if Fred’s is liable as a non-manufacturer seller addressed in La. R.S. 9:2800.53(l)(a) [hereinafter “Section 2800.53(l)(a)”].

The evidence in the trial court was that the allegedly defective lamp which caused the house fire was labeled by Fred’s. The question now presented under Section 2800.53(l)(a) is whether the designation of Fred’s on the product’s label may result in the non-manufacturer seller’s liability under the LPLA which is imposed upon one “who labels a product as his own or who otherwise holds himself out to be the manufacturer of the product.”

Facts

The evidence at the trial of the exception of prescription was introduced through the affidavit of an electrical engineer and fire investigator, Vernon Wade. Wade stated that he was retained by Allstate to investigate the subject fire. While investigating the fire scene, he found a red ceramic lamp which had been purchased at Fred’s shortly before the fire. He identified the cause of the fire as resulting from an electrical short in the power cord of the lamp. With the assistance of the homeowner and her daughter, Wade “secured a lamp from Fred’s Discount Store” and “was informed that the new lamp was an exact duplicate of the damaged lamp found in the area of origin of the fire.” The exemplar lamp was labeled, “Made in China. Distributed by Fred’s.” Wade noted that “there was no other company or brand displayed on the lamp or its tags.”

^Louisiana Products Liability Law

The history of Louisiana’s product liability law prior to the 1988 enactment of the LPLA reveals that the ruling in Penn v. Inferno Mfg. Corp., 199 So.2d 210 (La.App. 1st Cir.1967), writ denied, 251 La. 27, 202 So.2d 649 (1967), was the leading case before the LPLA which explained the rationale for the imposition of liability upon the non-manufacturer seller which labels the product as its own. As we noted in our initial opinion, Penn is a remarkably similar case which involved the manufacturer and seller of a defective sight glass for a testing device which exploded and injured an individual in an oil field accident. Also, in the context of a plea of [979]*979prescription, the court found a gauge distributor (Inferno) solidarily liable with the glass manufacturer (Corning) for a defect in the sight glass. The gauge distributor had labeled the gauge as its own. The plaintiff first sued the gauge distributor believing it to be the manufacturer of the defective glass. The gauge distributor answered the suit alleging that it did not manufacture the glass and named the manufacturer after the applicable prescriptive period had run. Plaintiff amended its petition some three years after the accident, to add as defendants the glass manufacturer, which was never served, and its insurer. After trial, the insurer raised the exception of prescription urging that the gauge distributor, Inferno, was not responsible under our redhibition law or products liability theory for the defective glass.

The Penn court affirmed the trial court’s rejection of the prescription exception finding that Inferno’s labeling of the product made it solidarily liable with the manufacturer. Therefore, the timely suit against Inferno ^served to interrupt prescription. The primary rationale for the determination of Inferno’s liability as a non-manufacturer seller was based upon rulings in other states and the Restatement of the Law of Torts cited in the opinion. Section 400 of the Restatement provides as follows:

400. Selling As Own Product Chattel Made By Another
One who puts out as his own product a chattel manufactured by another is subject to the same liability as though he were its manufacturer.

Rest.2d Torts § 400 (1965).

This “as his own” product test, or so-called “holding out” theory, for the imposition of a duty in tort upon the non-manufacturer seller is discussed in comment (d) of Section 400 of the Restatement, as follows:

d. The rule stated in this Section applies only where the actor puts out the chattel as his own product. The actor puts out a chattel as his own product in two types of cases. The first is where the actor appears to be the manufacturer of the chattel. The second is where the chattel appears to have been made particularly for the actor. In the first type of case the actor frequently causes the chattel to be used in reliance upon his care in making it; in the second, he frequently causes the chattel to be used in reliance upon a belief that he has required it to be made properly for him and that the actor’s reputation is an assurance to the user of the quality of the product. On the other hand, where it is clear that the actor’s only connection with the chattel is that of a distributor of it (for example, as a wholesale or retail seller), he does not put it out as his own product and the rule stated in this section is inapplicable. Thus, one puts out a chattel as his own product when he puts it out under his name or affixes to it his trade name or trademark. When such identification is referred to on the label as an indication of the quality or wholesomeness of the chattel, there is an added emphasis that the user can rely upon the reputation of the person so identified.

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33 So. 3d 976, 2010 La. App. LEXIS 397, 2010 WL 936228, Counsel Stack Legal Research, https://law.counselstack.com/opinion/allstate-insurance-v-freds-inc-lactapp-2010.