Tauber-Arons Auctioneers Co. v. Superior Court

Citations: 101 Cal. App. 3d 268; 161 Cal. Rptr. 789; 1980 Cal. App. LEXIS 1394Docket: Civ. 57639

Court: California Court of Appeal; January 22, 1980; California; State Appellate Court

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Tauber-Arons Auctioneers Company, Inc. seeks a peremptory writ of mandate to compel the Superior Court of Los Angeles County to vacate its order specifying an issue "without substantial controversy" under Code of Civil Procedure section 437c. The case involves Doroteo Perez, who is suing for personal injuries allegedly caused by a defect in a Forsberg Model 101 'V' Belt Drive Planer while operating it at his employer Crystal-Like Plastics. The planer was acquired at an auction conducted by Tauber-Arons in February 1969. 

Perez's motion asserts that Tauber-Arons is the seller of the planer and thus subject to strict liability claims. This claim is supported by the deposition of Bert Arons, the company's majority stockholder, indicating his extensive experience in auctioning used machinery. The auction included various equipment from a manufacturing company going out of business, with the planer being the only Forsberg product sold. 

Tauber-Arons argues against Perez's motion, stating that it acted merely as an agent for the seller, Henry Engineering, and did not take title to the planer. The company sold the equipment "as is," meaning it had not been modified or inspected by Tauber-Arons, and no representations regarding safety or quality were made. The title was transferred directly from Henry Engineering to the purchasers, following the standard practice in 99 percent of their auctions.

The respondent court ruled on Perez's motion by referencing the Supreme Court's decision in Vandermark v. Ford Motor Co., which established liability for car dealers as part of the marketing chain. The court concluded that the defendant auctioneer, Tauber-Arons Auctioneers, was a commercial marketer of the defective Forsberg Planer Machine, thus making it liable for product defects. The court identified the issue as "without substantial controversy," allowing the case to proceed regarding remaining issues.

Petitioner argued for a writ of mandate, claiming the trial court's order was not appealable, and that the evidence did not establish its status as a marketer subject to strict liability. Perez opposed this, asserting that undisputed facts confirmed the petitioner's liability. The court found that the trial court erred in its declaration of the petitioner as a marketer liable for defects and stated that a writ should issue to vacate that order. 

The court noted that the trial court's order effectively barred the petitioner from defending against Perez's strict liability claim except on the basis of the planer being non-defective, which justified a writ of mandate. It emphasized that, under the rules for reviewing summary judgments, the court must assume that any defect in the planer was created by the original manufacturer and that the planer was secondhand when sold by the petitioner.

The petitioner has operated for years as an auctioneer of used machinery, acting as an agent for owners without endorsing any specific manufacturer's products. There is no evidence of a special relationship between the petitioner and Forsberg, a manufacturer of machinery. The trial court's ruling suggests that auctioneers could be held strictly liable for defects in products from various manufacturers, which raises concerns about the implications of strict liability in this context. The case lacks direct California precedents, but the real party relies on cases where strict liability has extended to various distributors within the marketing chain, including retailers, lessors, and other entities involved in bringing defective products to market. Notable cases cited include Vandermark v. Ford Motor Co., which established strict liability for retailers, and Kasel v. Remington Arms Co., which emphasized that a defendant’s connection to the marketing of a product, rather than a formal legal relationship with the manufacturer, is critical for imposing strict liability. The court highlighted that strict liability can apply based on a defendant's participation in the marketing enterprise benefiting from the product, irrespective of direct ties to the manufacturer.

In Garcia v. Halsett, the court emphasized that the specific legal relationship between parties is not crucial in imposing strict liability. The defendant's connection to the marketing and distribution of a product is what matters. For instance, if a manufacturer uses an auctioneer to sell products, the auctioneer is considered part of the marketing system. A key requirement is that the defendant must have a participatory role in the enterprise that generates consumer demand for the specific injury-causing product. Examples cited include the defendant's involvement in distributing "Remington Express" shot shells and Ford automobiles, indicating an ongoing participation in the initial distribution to consumers. In contrast, if a party's role is merely incidental, such as transferring a product from one consumer to another without direct involvement in the distribution process, strict liability does not apply. This was illustrated in Balido v. Improved Machinery, where a seller was considered an occasional seller and not subject to strict liability for defects in machinery sold. The ruling clarifies that only those who actively participate in the marketing and distribution of a defective product can be held strictly liable.

In Silverhart v. Mount Zion Hospital, the court reviews the application of strict liability in California for sellers of used machinery, noting the precedent set by Green v. City of Los Angeles, where a seller was deemed liable for a defective secondhand crane after extensive modifications were made, effectively treating the seller as a manufacturer. However, the current case lacks evidence that the defendant made modifications or repairs to the secondhand product, leading to uncertainty about imposing strict liability on sellers of unaltered used goods. The court recognizes the scarcity of California cases on this issue and looks to other jurisdictions for guidance, where rulings vary on the strict liability of secondhand dealers. The relevant New Jersey case, Turner v. International Harvester Company, upheld strict liability for a dealer selling a used truck, emphasizing that the "unreasonably dangerous" standard applies to both new and used products. The court underscores that the doctrine of strict liability should consider the reasonable expectations of buyers and the risks associated with used goods, suggesting a need for a consistent rule in California regarding strict liability for secondhand products.

An economic analysis of enterprise liability assigns responsibility for all harms from defective products to sellers, encompassing both physical and economic damages. Manufacturers typically factor in costs related to potential damages and insurance into their pricing, reflecting public expectations for safety, quality, and durability of new and used goods. The applicability of the Turner rule to the case at hand hinges on whether the used planer met these expectations. The record lacks evidence that the defect rendered the planer substandard; it may have been in the same condition as when new, complicating claims of unmet expectations.

In Tillman v. Vance Equipment Co., the Oregon Supreme Court examined the liability of a used equipment dealer for defects created by the manufacturer, affirming judgment for the defendant who sold a used crane "as is." The court referenced Turner to highlight that risk-spreading is a key factor in enterprise liability. It identified three justifications for strict liability: (1) compensation and risk spreading, (2) satisfying reasonable expectations of users, and (3) overall risk reduction incentivizing better product manufacturing. Although used goods dealers can allocate costs and provide compensation, the court found the latter two justifications insufficient for imposing strict liability generally on sellers of used goods.

The court’s prior decisions have addressed the "implied representational aspect" of strict product liability. In Heaton v. Ford Motor Co., it was suggested that juries could determine consumer safety expectations, while Markle v. Mulholland's Inc. indicated that safety expectations arise from the seller's intent in marketing the product, which implies a legal representation of safety upon placing the item in commerce.

The opinion emphasizes a limitation on the strict liability doctrine to prevent absolute liability for dealers in used goods. It asserts that the court's role includes defining when juries can expect safety representations from the sale of used products. Holding all used goods dealers liable for defects could disrupt used goods markets, which typically operate on the assumption that sellers do not guarantee quality merely by selling. Buyers usually seek quality assurances through negotiation or by choosing reputable dealers.

The court concludes that the sale of a used product alone does not create the same safety expectations as new products. Used goods dealers lack a direct connection to manufacturers, which diminishes any risk-reduction benefits that strict liability might offer. Although theoretically, a dealer could seek indemnity from a manufacturer, practical challenges like statutes of limitation and difficulties in locating manufacturers significantly reduce this incentive for risk prevention.

The opinion argues that while providing remedies for injuries from defective products is crucial, it cannot solely justify imposing strict liability on used goods dealers without additional representations of quality or a unique relationship with the original manufacturers. Consequently, the relevant policy considerations do not support imposing strict liability on this class of defendants, barring any special circumstances or quality assurances.

A Cadillac dealer may be held liable for design defects in vehicles he did not sell if he promotes sales of "near new trade-ins" as "specially selected," as this can create consumer expectations of safety linked to new products. In contrast, a typical used products dealer is not strictly liable for defects created by the original manufacturer. This principle aligns with California's strict liability doctrine, which aims to protect consumers from manufacturing defects by distributing the costs of compensation. The court emphasizes that imposing liability should not unjustly affect defendants, as businesses can manage costs through ongoing relationships. Retailers, like manufacturers, are part of the distribution chain, while used goods dealers typically are not, which precludes their liability for original design defects. Thus, the trial court's determination that the marketer of a Forsberg planer was strictly liable for a design defect was inappropriate, as the marketer had no significant relationship with the original manufacturer. The decision grants a writ of mandate to vacate the trial court's order regarding liability.