Salmonsen v. CGD, INC.

661 S.E.2d 81, 377 S.C. 442, 2008 S.C. LEXIS 129
CourtSupreme Court of South Carolina
DecidedApril 28, 2008
Docket26475
StatusPublished
Cited by15 cases

This text of 661 S.E.2d 81 (Salmonsen v. CGD, INC.) is published on Counsel Stack Legal Research, covering Supreme Court of South Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Salmonsen v. CGD, INC., 661 S.E.2d 81, 377 S.C. 442, 2008 S.C. LEXIS 129 (S.C. 2008).

Opinions

Justice BEATTY:

This is a direct appeal of a class action suit involving damages arising out of the application of allegedly defective synthetic stucco (Exterior Insulation and Finish System, “EIFS”) to Charles Salmonsen’s residential home and those homeowners similarly situated in the Charleston area. The Court granted Salmonsen’s motion for the appeal to be certified from the Court of Appeals to this Court. The appeal and cross-appeals raise multiple substantive and procedural issues regarding the certification of the class. We dismiss in part, reverse in part, and remand.

Factual/Procedural History

On October 19, 2000, Salmonsen filed his original Complaint against Parex, Inc. (the stucco manufacturer), Jeff Thomas d/b/a Thomas Construction (the general contractor for the residence), Mike Tenny d/b/a Synco Enterprise (the subcontractor responsible for applying EIFS), and Charleston Gypsum n/k/a CSR America (the distributor). In his Complaint, Salmonsen claimed his residential home sustained water intru[445]*445sion damage resulting from allegedly defective construction materials, particularly the Exterior Insulation and Finish System (“EIFS”). Based on these damages, Salmonsen asserted causes of action for breach of implied warranty, breach of express warranty, negligence, and strict liability. Prior to the scheduled trial date of October 14, 2002, Salmonsen settled and entered into a release with the defendants. In the settlement documents, Salmonsen specifically reserved his claims against CGD, Inc., f/k/a Charleston Gypsum Dealers & Supply Co., Inc.1

On October 23, 2002, Salmonsen filed an Amended Complaint on behalf of himself and other similarly situated homeowners, which named CGD, Inc., f/k/a Charleston Gypsum Dealers & Supply Co., Inc. (“CGD”), and each of its former shareholders as defendants. In the Amended Complaint, Salmonsen alleged products liability claims against CGD for breach of implied warranty, negligence, and strict liability. As to the former shareholders, Salmonsen alleged they were personally liable for misconduct associated with the distribution of the corporation’s assets.

On February 18, 2003, Salmonsen moved for class certification. In response, CGD filed a memorandum in opposition and a motion to amend its Answer to include third-party defendants who had contributed to the alleged damages of the class of homeowners. After a hearing, Circuit Court Judge Markley Dennis, Jr., issued an order on September 25, 2003, in which he granted Salmonsen’s motion to certify the class and denied CGD’s motion. In his order, Judge Dennis found that all of the prerequisites for class certification were satisfied pursuant to Rule 23(a) of the South Carolina Rules of Civil Procedure. In addition to these criteria, Judge Dennis also based his decision to certify the class on the ground that there was a limited fund to satisfy the class claims given the [446]*446corporation was dissolved and had only a limited amount of insurance coverage available. Judge Dennis certified the following class:

All persons and entities that own or have owned structures clad with Parex EIFS sold by the Defendant between January 1, 1991 and May 15, 1995. This class excludes:
a) Employees of the Defendant; and
b) Those persons who have released the Defendant or are currently in litigation with the Defendant.

Subsequently, CGD and the shareholders jointly filed two motions requesting Judge Dennis to reconsider his orders certifying the class and denying the addition of third-party defendants. By orders dated December 15, 2003, Judge Dennis amended the prior order by ruling that the class would be conditionally certified and permitting CGD additional time to conduct class discovery. Judge Dennis also granted CGD leave to amend its Answer to list Parex as a third-party defendant. Pursuant to this ruling, the defendants filed an Amended Answer and a Third-Party Complaint in which they asserted causes of action for indemnity, negligence, negligent misrepresentation, and breach of implied warranties.

On March 22, 2004, Judge Dennis signed a consent scheduling order in which he granted the defendants until May 1, 2004, to file motions to decertify the class. Additionally, he ordered the parties to: (1) complete discovery on or before July 20, 2004; (2) file all motions by August 20, 2004; and (3) complete mediation on or before August 20, 2004. Judge Dennis also informed the parties that the case was subject to being called for trial on or after September 20, 2004.

After conducting discovery, CGD filed a motion on April 30, 2004, to decertify the conditionally-certified class. In its motion and accompanying memorandum, CGD contended that the requirements of Rule 23, SCRCP, were not met and certification was inappropriate because trying the case would involve numerous separate “mini-trials.” CGD reasoned that the homeowners were distinct in their claims and, particularly, their damages.

On October 12, 2004, Judge Dennis held a hearing on the motion to decertify the class. Judge Dennis issued a form [447]*447order in which he deniéd the motion and indicated that a formal order would be forthcoming. Prior to the issuance of the formal order, CGD and Parex filed motions to bifurcate the claims of individual class members and, in the alternative, requested a litigation plan for the class action. On January-14, 2005, Circuit Court Judge Roger Young, the Chief Administrative Judge, held a pre-trial conference on these motions. Judge Young removed the case from the trial roster, requested the parties submit proposed trial plans, and assigned the case to himself for all further proceedings.

On February 24, 2005, Judge Dennis issued a formal order explaining his denial of the defendants’ motion for decertification. In his order, Judge Dennis reiterated that all of the criteria of Rule 23(a), SCRCP, were met to warrant certification of the class. He also emphasized that “the differences in the claims and damages of these homeowners are not so great that they would weigh against class certification.” Additionally, Judge Dennis recognized that “the court faces a continuing duty to ensure that the requirements of Rule 23 remain satisfied. The decision to certify a class is not set in stone; the trial court retains the power to decertify or modify the class at any time prior to final judgment.”

On February 25, 2005, Judge Young held a second pre-trial hearing to consider the parties’ proposed trial plans and to address the issue of class notification. By order dated May 31, 2005, Judge Young established an “opt-in” notification procedure. In reaching this conclusion, Judge Young found the “opt-in” procedure was “the preferred method of litigating the instant case by serving the interests of the parties and furthering judicial economy.” Judge Young further explained that “an opt-in provision is the most pragmatic procedure to facilitate the management of this case. The makeup of this Class should only contain, at most, a narrow group of members, namely the homeowners as identified by sales invoices provided by Defendants.” Judge Young declined to establish a trial management plan until after the class had been closed and the class members had been identified. Significantly, Judge Young specifically reserved the “authority to alter, amend, or modify its orders- as changes during the course of this case may warrant.”

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Salmonsen v. CGD, INC.
661 S.E.2d 81 (Supreme Court of South Carolina, 2008)

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Bluebook (online)
661 S.E.2d 81, 377 S.C. 442, 2008 S.C. LEXIS 129, Counsel Stack Legal Research, https://law.counselstack.com/opinion/salmonsen-v-cgd-inc-sc-2008.