Preview:

ATTORNEYS FOR APPELLANT Tracy D. Knox D. Michael Anderson South Bend, Indiana

ATTORNEY FOR APPELLEES Patrick F. O'Leary Goshen, Indiana

______________________________________________________________________________

In the

Indiana Supreme Court
_________________________________ No. 20S05-0506-CV-292 DUTCHMEN MANUFACTURING, INC., Appellant (Defendant below), v. CHAD REYNOLDS AND DON REYNOLDS, Appellees (Plaintiffs below). _________________________________ Appeal from the Elkhart Superior Court, No. 20D04-0011-CP-171 The Honorable Olga H. Stickel, Judge _________________________________ On Petition To Transfer from the Indiana Court of Appeals, No. 20A05-0404-CV-202 _________________________________ June 22, 2006 Boehm, Justice. We hold that tort liability of a tenant who leaves a dangerous item on the leased premises at the expiration of a lease is not extinguished by reason of the expiration of the lease. We also hold that a provision in a lease to a successor tenant that the item is acquired "as is" does not of itself bar a tort claim asserted by a non-contracting party. Facts and Procedural History Dutchmen Manufacturing, Inc., is a manufacturer of recreational vehicle travel trailers and fifth wheels. From April 1992 until February 1999 Dutchmen leased a facility in Goshen, Indiana, from Chapman Realty, Inc. At some point during its tenancy, Dutchmen employees in-

stalled scaffolding which was affixed to the ceiling beams without Chapman's knowledge or consent. The identities of the employees who performed the assembly and the time it was done are not known according to Dutchmen. Dutchmen's lease required that it remove all personal property and trade fixtures before vacating the premises. Any property not removed would become the property of Chapman, and the lease also gave Chapman the right to require removal at Dutchmen's expense. Chapman had initially told Dutchmen to remove the scaffolding or pay for its removal, which was estimated to cost $4,200. Shortly before the lease expired, Chapman began negotiating to lease the premises to Keystone RV, Inc., a manufacturer of travel trailers and Keystone expressed a desire that the scaffolding be left in the building. Dutchmen first offered to sell the scaffolding to Keystone, and when that proposal was rejected offered to give the scaffolding to Keystone if Chapman would not charge Dutchmen for its removal. Dutchmen vacated the premises on February 28, 1999 leaving the scaffolding in place. Two weeks later, Keystone signed a lease with Chapman and took possession of the premises on May 3. Under its lease, Keystone accepted the premises from Chapman "AS IS." Keystone's chairman supplied an affidavit that it was his understanding that Keystone "accepted and took possession of the scaffolding . . . at its own risk, regardless of whether the scaffolding contained defects or deficiencies." In December 1999, Chad Reynolds, a Keystone employee, was installing electric wiring in a trailer under assembly. Scaffolding broke loose from its mounting and struck Reynolds rendering him paralyzed below the neck. According to Keystone's employee injury report, a weld in the scaffolding had failed. Keystone's engineers determined that an inner steel tube had fractured due to lack of lubricant and "improper welding procedure." The inner tube was concealed from view by an outer tube and an end cap when the unit was assembled.

2

In November 2000, Reynolds 1 filed a complaint against Chapman and Dutchmen, alleging, among other things, that Dutchmen was liable for the injuries because it had constructed and installed defective scaffolding in the building that it had formerly leased from Chapman. Dutchmen moved for summary judgment, arguing that it did not owe Reynolds any duty and was not negligent per se. At the hearing on that motion, Reynolds filed a supplemental memorandum of law, alleging for the first time that Dutchmen was liable as a supplier of a defective chattel under section 388 of the Restatement (Second) of Torts. Dutchmen responded that the scaffolding was not a chattel, and that Keystone was aware of the dangers of the scaffolding and had accepted the premises and scaffolding "as is." The trial court granted Dutchmen's motion for summary judgment with respect to Reynolds' negligence per se claim and all theories of negligence except for the section 388 claim. On interlocutory appeal, the Court of Appeals reversed and remanded to the trial court with direction to enter summary judgment for Dutchmen on all theories, including the section 388 claim. Dutchmen Mfg., Inc. v. Reynolds, 819 N.E.2d 529, 533 (Ind. Ct. App. 2004). The Court of Appeals held that the scaffolding had merged into the real estate at the expiration of Dutchmen's lease, and Reynolds therefore could not recover on the theory that Dutchmen had supplied a defective chattel. Id. at 532. We granted transfer. Dutchmen Mfg., Inc. v. Reynolds, 831 N.E.2d 750 (Ind. 2005). Standard of Review Reynolds' section 388 claim is the only issue in this interlocutory appeal. Dutchmen argues that the trial court erred in denying its motion for summary judgment and the Court of Appeals agreed. On review of a trial court's decision to grant or deny summary judgment, we apply the same standard as the trial court: we must decide whether there is a genuine issue of material fact that precludes summary judgment and whether the moving party is entitled to judgment as a matter of law. Carie v. PSI Energy, Inc., 715 N.E.2d 853, 855 (Ind. 1999). We will construe the designated evidence in a light most favorable to the non-moving party. Id. I. Restatement (Second) Torts Section 388

Chad was nineteen years old when the complaint was filed, and Don Reynolds was a named plaintiff in his capacity as Chad's father. See Ind. Code

Download Dutchmen Manufacturing Inc. v. Chad and Don Reynolds.pdf

Indiana Law