Products Liability Law Daily ‘Occurrence rule’ time-barred negligence claim against intermediary dealership
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Thursday, April 16, 2020

‘Occurrence rule’ time-barred negligence claim against intermediary dealership

By Sandra J. Stoll, JD

A negligence claim was time-barred because Arkansas firmly adheres to the "occurrence rule," or the date of the negligent act, according to the state appellate court which refused to adopt the "date of injury" rule.

In a negligence and strict product liability action arising out of a single-vehicle roll over accident, the Arkansas Court of Appeals held firm to the long-time application of the "occurrence rule" under Arkansas law governing the statute of limitations period and affirmed summary judgment in favor of the intermediary dealership that had accepted as a trade in and sold to another dealer the accident vehicle. The court rejected the argument that the date of injury starts the statutory clock. Here, the negligence claim was time-barred because the alleged negligence would have had to have been committed on or before the intermediary sold the vehicle, not on the date of the accident. The appellate court also concluded that the plaintiffs’ strict product liability claim was properly barred because the evidence and arguments focused causation on the later-added wheels and tires, not the inherent design of the vehicle (Bank of the Ozarks, Inc. v. Ford Motor Co., April 15, 2020, Klappenbach, N.).

Background. A 2002 Ford Explorer was involved in a single-vehicle roll over accident. The driver was killed and her boyfriend—the vehicle owner—and their infant son, who were passengers in the vehicle during the accident, were injured. At the time of the accident, which occurred on September 10, 2014, the vehicle had 22" wheels and tires instead of the factory-recommended 16" wheels and tires. In August 2017, within three years of the accident, the administrator of the decedent’s estate, the vehicle owner, and the son, by and through legal guardians, filed an action which included negligence and strict products liability claims against the intermediary dealership. In February 2013, the intermediary dealership had accepted the vehicle as a trade in from the original owner. It was the original owner who had the non-factory wheels and tires installed on the vehicle. Shortly after accepting the trade, the intermediary sold the vehicle wholesale "as is" to the dealership that ultimately sold it to the owner involved in the accident.

The intermediary dealership filed a motion for summary judgment arguing, in part, that the three-year statute of limitations had expired because any alleged negligence on its part had to have occurred on or before it sold the vehicle to the dealership that sold it to the owner in February 2013. The intermediary asserted that this meant that the statute of limitations expired no later than February 2016, approximately eighteen months before the complaint was filed. The plaintiffs countered that it was the roll over accident that triggered the running of the statute because they had no cause of action to pursue until they sustained damages caused by the intermediary’s negligence. The trial court found that the date of the negligent act, or the "occurrence rule," controlled and that there was no question of fact remaining on that issue. Thus, the lower court granted summary judgment to the intermediary dealership because the statute of limitations had run, barring the complaint against the intermediary for negligence. On appeal, the appellants argued that this was error because the proper accrual date was the date of the accident and that the occurrence rule applied only in cases in which professional malpractice was alleged. The court of appeals disagreed with the appellants.

Negligence—statute of limitations. The negligence claim alleged that the intermediary dealership was negligent in allowing the vehicle to be sold "with improper tires and wheels " The trial court found, and the appellate court affirmed, that the date of the negligent act controlled. The appellate court explained that under Arkansas law, the statutory-limitations period begins to run when there is a complete and full cause of action and, in the absence of concealment of the wrong, when the alleged wrongful act occurs, not when it is discovered. Observing that the state supreme court had repeatedly rejected the contention that a plaintiff must actually suffer a loss or damages arising out of the negligent act before a cause of action arose, the appellate court held that the commonly known "occurrence rule," or the date of the negligent act, was correctly applied by the trial court. Any purported negligent failure on the intermediary’s part would have had to have occurred in February 2013 when the intermediary accepted the prior owner’s trade and made the subsequent sale to the ultimate seller. Moreover, even if the alleged negligence had extended to when the owner had purchased the vehicle from the other dealer (the seller), that also fell well outside the three-year-statute of limitations.

Strict product liability. Addressing the strict liability claim, the appellate court noted that (1) the wheels and tires on the vehicle were not the same ones that were on it when it left the factory, (2) the owner had purchased the vehicle approximately eleven years after its manufacture, (3) the owner had maintenance and repair work done on the vehicle, and (4) the owner replaced at least two of the tires. The "defect" alleged in the product was its being equipped with inappropriate wheels and tires when it left the intermediary’s possession. In contrast, the strict products liability cause of action in the complaint asserted that the intermediary knew that the original design of the 2002 Ford Explorer was unreasonably dangerous. The evidence and arguments by the appellants focused causation on the later-added wheels and tires, not the inherent design of the vehicle. Therefore, there was no reversible error in granting summary judgment to the intermediary as the owner failed to meet the necessary threshold to survive summary judgment on the statutory causation element in the strict-liability claim.

The case is No. CV-19-665.

Attorneys: Tab Turner (Turner & Associates, P.A.) for Bank of the Ozarks, Inc. Michael McCarty Harrison (Friday, Eldredge & Clark, LLP) for Ford Motor Co., Kenneth Scott Stoll d/b/a Wheel World, Inc., Lewis Ford Sales, Inc., Everett Buick GMC of Northwest Arkansas, LLC., Atkins Auto Repair, LLC d/b/a The Grease Pig Lube & Tune., Atkins Oil, LLC d/b/a The Grease Pig Lube & Tune., Little Rock CDJ, Inc., C & C. Motors, LLC., Michael Battie and Sean Battie.

Companies: Bank of the Ozarks, Inc.; Ford Motor Co.; Kenneth Scott Stoll d/b/a Wheel World, Inc.; Lewis Ford Sales, Inc.; Everett Buick GMC of Northwest Arkansas, LLC; Atkins Auto Repair, LLC d/b/a The Grease Pig Lube & Tune; Atkins Oil, LLC d/b/a The Grease Pig Lube & Tune; Little Rock CDJ, Inc.; C & C. Motors, LLC

MainStory: TopStory SofLReposeNews SCLIssuesNews DesignManufacturingNews WarningsNews MotorVehiclesNews ArkansasNews GCNNews

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