Vaughn v. Daniels Co.(West Virginia), Inc.

ATTORNEYS FOR APPELLANTS ATTORNEYS FOR APPELLEE, DANIELS COMPANY, INC

J. Kevin King Jeffrey W. Ahlers

Peter Campbell King Todd C. Barsumian

Columbus, Indiana Evansville, Indiana

ATTORNEY FOR APPELLEE, SOLAR SOURCES, INC.

R. Steven Johnson

Terre Haute, Indiana

ATTORNEYS FOR AMICUS CURIAE, DEFENSE

TRIAL COUNSEL OF INDIANA

Knight S. Anderson

Indianapolis, Indiana

James D. Johnson

Evansville, Indiana

______________________________________________________________________________

In the

Indiana Supreme Court

_________________________________

No. 14S01-0602-CV-37

STEPHEN L. VAUGHN AND

MELINDA VAUGHN,

Appellants (Plaintiffs below),

v.

DANIELS COMPANY (WEST VIRGINIA),

INC. AND SOLAR SOURCES, INC.,

Appellees (Defendants below).

_________________________________

Appeal from the Daviess Circuit Court, No. 14C01-9712-CT-404

The Honorable Robert L. Arthur, Judge

_________________________________

On Petition To Transfer from the Indiana Court of Appeals, No. 14A01-0111-CV-408

_________________________________

February 7, 2006

Boehm, Justice.

We hold that “use” of a product under the Indiana Products Liability Act does not include

assembly and installation where the seller retains an obligation or arrangement with the pur-

chaser to deliver a fully assembled and installed product. Because the plaintiff was injured in the

process of installing the product on behalf of its supplier, he is not a consumer or user of the

product that had not yet been assembled as required by the purchaser and has no claim under the

PLA. For this reason, his negligence claim is not governed by the PLA.

Factual and Procedural History

At some time before December 1995, Daniels Company, Inc. contracted with Solar

Sources, Inc. to design and build a coal preparation plant on Solar’s premises in Cannelburg,

Indiana. As part of its contract with Solar, Daniels was to design and install a heavy media coal

sump. Based on Daniels’s design, the West Virginia Steel Corporation manufactured the unas-

sembled coal sump and shipped it to Solar’s Cannelburg site. Daniels subcontracted with Trim-

ble Engineers and Constructors, Inc. to construct the coal plant, including assembly and installa-

tion of the sump.

On December 12, 1995, plaintiff Stephen Vaughn, an employee of Trimble, was injured

when he fell approximately fifteen feet from the top of the sump in the process of assembling it.

He had been standing on a metal grating approximately two feet below the upper rim of the

sump, attempting to assist others in affixing a large pipe at the top of the sump. When the pipe

was placed by a forklift, other Trimble employees attached a chain to it, and the forklift moved

away. As the forklift withdrew, the pipe fell off the sump, pulling Vaughn with it. Although he

was aware of the danger, Vaughn was not wearing a safety belt. He suffered multiple injuries in

the fall. 1

Vaughn sued both Daniels and Solar, alleging negligent design, manufacturing, and

maintenance of the sump and the processing plant. He also asserted a strict liability claim

1

Vaughn’s injuries included a fractured tibia and fibula, a facture of the radius and ulnar bones in his

wrists, fractures of bones in his hand and foot, and two broken ribs.

2

against Daniels under the Indiana Products Liability Act (“PLA”). Vaughn’s wife Melinda

claimed loss of consortium.

Both Daniels and Solar moved for summary judgment. The trial court granted both mo-

tions for summary judgment, concluding that neither Daniels nor Solar owed Vaughn a duty of

care, and that Vaughn was not a “user” or “consumer” of the coal sump within the meaning of

the PLA.

The Vaughns appealed, claiming that the trial court erred in determining that Vaughn was

not a “user” or “consumer” under the PLA and in finding no negligence in the design of the facil-

ity. They also contended that the trial court erred in striking a portion of an affidavit that the

Vaughns had designated in opposition to the motions for summary judgment. The Court of Ap-

peals affirmed summary judgment for both Solar and Daniels on the Vaughns’ negligence claims

and reversed the summary judgment for Daniels on Stephen Vaughn’s product liability claim.

Vaughn v. Daniels Co., Inc., 777 N.E.2d 1110, 1139 (Ind. Ct. App. 2002).

I. Solar’s Motion to Strike Expert’s Affidavit

At the outset we deal with Solar and Daniel’s motions to strike portions of the affidavit of

David MacCollum which the Vaughns designated in response to the defendants’ motions for

summary judgment. The trial court admitted all of the designated evidence except paragraph 17

of MacCollum’s affidavit.

Daniels and Solar assert that MacCollum’s affidavit relied on two documents that consti-

tute hearsay and are not self-authenticating. MacCollum states that he reviewed the documents

entitled “Design, Procurement, and Construction of the Cannelburg Preparation Plant for Solar

Sources, Inc.” 2 and “Defendant Daniels Health and Safety Policy” and that these documents are

“the type of information normally relied upon by me in the field of my experience in providing

opinions.” Indiana Trial Rule 56(E) provides:

Supporting and opposing affidavits shall be made on personal knowledge, shall

set forth such facts as would be admissible in evidence, and shall show affirma-

2

No formal contract was ever executed between Daniels and Solar. The arrangement was documented in

this proposal by Daniels.

3

tively that the affiant is competent to testify to the matters stated therein. Sworn

or certified copies not previously self-authenticated of all papers or parts thereof

referred to in an affidavit shall be attached thereto or served therewith.

Indiana Evidence Rule 703 provides that: “Experts may testify to opinions based on inadmissible

evidence, provided that it is of the type reasonably relied upon by experts in the field.” The de-

fendants do not challenge MacCollum’s professional credentials and do not claim that these

documents are not of the type reasonably relied upon by experts in the field. Accordingly, under

Rule 703, the contested documents may be used by MacCollum in forming his opinions whether

or not the documents are themselves admissible evidence.

Solar and Daniels also challenge MacCollum’s affidavit on the ground that it contains

inadmissible legal conclusions. Indiana Evidence Rule 704 permits opinions to embrace ultimate

issues to be decided by the trier of fact, but prohibits opinions as to legal conclusions. Mac-

Collum’s opinions concerning engineering standards, procedures, and the design of the coal

sump and facility are based on his expertise and are permitted by Evidence Rule 704. His opin-

ions concerning reasonable care or proximate cause in paragraph 17 embrace ultimate issues to

be decided by the trier of fact and therefore are admissible. 3 See Rhodes v. Wright, 805 N.E.2d

382, 388 (Ind. 2004) (the issue of proximate cause “is one usually left to the jury”); Stephenson

v. Ledbetter, 596 N.E.2d 1369, 1372 (Ind. 1992) (“Whether a particular act or omission is a

breach of a duty is generally a question of fact.”).

Solar and Daniels also contend that the opinions expressed by MacCollum lack founda-

tion because he did not view the plant and reviewed only the documents setting forth Daniels’s

proposal. Hands-on experience, formal education, specialized training, study of textbooks, per-

forming experiments and observation can provide the foundation for an expert’s opinion. See

Summit Bank v. Panos, 570 N.E.2d 960, 965 (Ind. Ct. App. 1991), trans. denied (citing 13 W.

Miller, Indiana Practice § 702.103, at 35-37 (1984)). Moreover, although Trial Rule 56(E) man-

3

Paragraph 17 provides:

17. Based upon my engineering and construction management expertise and review of

the documents listed above, it is my opinion Defendant Solar as owner of the property in

question failed to use reasonable care by not requiring and/or participating in a construc-

tion management plan and/or a process of plant assembly plan for the design of the Can-

nelburg Project. Failure to use such reasonable care proximately resulted in injury to Mr.

Vaughn.

4

dates that affidavits be made on personal knowledge, this does not mean that an expert must ob-

tain his knowledge based solely on first-hand experience. See Bunch v. Tiwari, 711 N.E.2d 844,

849 (Ind. Ct. App. 1999). MacCollum stated that his opinions were based on his engineering and

construction management expertise and review of the documents setting forth Daniels’s pro-

posal. We conclude that MacCollum’s prior experience and review of these documents provided

a sufficient foundation and that it was not necessary for MacCollum to have seen the sump in

person for him to render an expert opinion. We therefore conclude that the trial court erred in

striking paragraph 17 of MacCollum’s affidavit but correctly admitted the remaining portions of

it.

II. Standard of Review

Summary judgment is appropriate when the designated evidence shows that there is no

genuine issue of material fact and that the moving party is entitled to judgment as a matter of

law. Ind. Trial Rule 56(C); see also Meridian Mut. Ins. Co. v. Auto-Owners Ins. Co., 698 N.E.2d

770, 773 (Ind. 1998). Although the Vaughns have the burden of persuading us that the grant of

summary judgment was erroneous, we carefully assess the trial court’s decision to ensure that the

Vaughns were not improperly denied their day in court. Erie Ins. Co. v. George, 681 N.E.2d

183, 186 (Ind. 1997). All facts and reasonable inferences drawn from those facts are construed

in favor of the Vaughns. Foster v. Auto-Owners Ins. Co., 703 N.E.2d 657, 659 (Ind. 1998);

Wright v. Carter, 622 N.E.2d 170, 171 (Ind. 1993).

III. The Strict Liability Claim

The complaint asserts a strict liability claim against Daniels under the Indiana Products

Liability Act, Indiana Code sections 34-20-1-1 through 34-20-9-1. The trial court determined

that Vaughn was neither a “user” nor a “consumer” as those terms are defined in the Act, and

therefore had no claim under the PLA. We agree. Section 34-20-1-1 4 provides:

This article governs all actions that are:

(1) brought by a user or consumer;

4

At the time this cause of action arose, the relevant provisions of the PLA were codified at Indiana Code

sections 33-1-1.5-1 to 33-1-1.5-10. In 1998 the PLA was recodified at Indiana Code sections 34-20-1-1

to 9-1. See Pub. L. No. 1-1998, § 15, 1998 Ind. ALS 1, *15.

5

(2) against a manufacturer or seller; and

(3) for physical harm caused by a product;

regardless of the substantive legal theory or theories upon which the action is

brought.

Indiana Code section 34-20-2-1 sets forth the requirements of a strict liability claim governed by

the PLA. It provides:

[A] person who sells, leases, or otherwise puts into the stream of commerce any

product in a defective condition unreasonably dangerous to any user or consumer

or to the user’s or consumer’s property is subject to liability for physical harm

caused by that product to the user or consumer or to the user’s or consumer’s

property if:

(1) that user or consumer is in the class of persons that the seller should

reasonably foresee as being subject to the harm caused by the defec-

tive condition;

(2) the seller is engaged in the business of selling the product; and

(3) the product is expected to and does reach the user or consumer with-

out substantial alteration in the condition in which the product is sold

by the person sought to be held liable under this article.

I.C. § 34-20-2-1. The Act defines a “consumer” as:

(1) a purchaser;

(2) any individual who uses or consumes the product;

(3) any other person who, while acting for or on behalf of the injured party, was

in possession and control of the product in question; or

(4) any bystander injured by the product who would reasonably be expected to be

in the vicinity of the product during its reasonably expected use.

I.C. § 34-6-2-29. Indiana Code section 34-6-2-147 provides that “user” has the same meaning as

“consumer” for purposes of the PLA. Vaughn was plainly not the “purchaser” of the coal sump

and he was the injured party, not someone “acting for or on behalf of the injured party.” Thus,

Vaughn must be either an “individual who uses or consumes the product” under subsection (2) or

a bystander reasonably “expected to be in the vicinity of the product during its reasonably ex-

pected use” under subsection (4).

Daniels argues that Vaughn cannot be considered a “user” of the coal sump because

Daniels had a contractual obligation to assemble and install the sump before delivery to Solar.

Accordingly, Daniels argues that at the time of Vaughn’s injury, the pump could not and did not

6

“reach the user or consumer [Solar] without substantial alteration in the condition in which the

product is sold by the person sought to be held liable.” See I.C. § 34-20-2-1(3). Daniels argues

that Solar is the statutory “purchaser,” and can become a “user” of the sump only when assembly

and installation was complete. We agree that the critical fact here is that Solar had ordered an

assembled and constructed plant, and had expressly contracted to have Daniels perform the tasks

necessary to provide the assembled and installed product.

Vaughn contends that “use” of a product can encompass installation or assembly. We

agree that this is true of a product that is to be delivered to the ultimate purchaser in an unassem-

bled state. But here the arrangement called for the manufacturer (Daniels) to install and assem-

ble the product on the purchaser’s (Solar’s) premises. Trimble, as the entity employed by

Daniels to accomplish that, and Vaughn, as Trimble’s employee, were not yet dealing with the

product that Solar had agreed to purchase. For that reason, neither Vaughn nor anyone else was

a user of the product at the time it was still in the process of assembly and installation. As ex-

plained below, we think this conclusion is consistent with case law in this and other jurisdictions

and with the structure of the PLA.

We do not agree with Daniels that assembly and installation can never constitute use.

Daniels cites Wingett v. Teledyne Indus., Inc., 479 N.E.2d 51 (Ind. 1985), to support the proposi-

tion that assembly and installation are not “use” of a product. In Wingett the owner of a foundry

hired an independent contractor to remove the foundry’s existing ductwork. Id. at 53. An em-

ployee of the independent contractor, who was injured in the course of the removal effort,

brought a products liability action against the manufacturer and installer of the ductwork. Id. at

54. This Court affirmed the trial court’s grant of summary judgment to the installer and manu-

facturer on the ground that a person who dismantles or demolishes a product is not a “user” or

“consumer” under the PLA. Id. at 55-56. Since Wingett was decided, however, we have held

that the intended use of a product includes foreseeable maintenance and clean-up activities. But-

ler v. City of Peru, 733 N.E.2d 912 (Ind. 2000) addressed a claim by a school maintenance

worker electrocuted while attempting to fix the school’s electrical transmission system. We held

that the maintenance worker, as an employee of the final purchaser of the transmission system

was a “user” or “consumer.” Id. at 919. We recently made explicit that “the assumption that

7

maintenance may be a part of a product’s reasonably expected use” was “implicit” in the Butler

holding. Stegemoller v. ACandS, Inc., 767 N.E.2d 974, 976 (Ind. 2002).

We believe that assembly or installation, like maintenance, can also constitute “use” for

these purposes. The Restatement (Second) of Torts first adopted strict liability in tort for defec-

tive products in section 402A in 1965. 5 In the twenty years following the publishing of the Re-

statement, a majority of jurisdictions, including Indiana, adopted section 402A, as a common law

rule. When the Indiana legislature first addressed the issue in legislation in 1978, the Strict

Products Liability Act, Indiana Code sections 33-1-1.5-1 through 33-1-1.5-8, incorporated sec-

tion 402A of the Restatement Second nearly verbatim. 6 Comment l to section 402A states that

“users” of products include “those who are passively enjoying the benefit of the product, as in

the case of passengers in automobiles or airplanes, as well as those who are utilizing it for the

purpose of doing work upon it, as in the case of an employee of the ultimate buyer who is mak-

ing repairs upon the automobile which he has purchased.” Comment l also states that “consum-

ers” include “not only those who in fact consume the product, but also those who prepare it for

consumption” and that “consumption includes all ultimate uses for which the product is in-

tended.” Comment d is consistent with this view, stating that the rule of strict liability in section

5

Section 402A provides as follows:

Special Liability of Seller of Product for Physical Harm to User or Consumer

(1) One who sells any product in defective condition unreasonably dangerous to the

user or consumer or to his property is subject to liability for physical harm thereby

caused to the ultimate user or consumer, or to his property, if

(a) the seller is engaged in the business of selling such a product, and

(b) it is expected to and does reach the user or consumer without substantial

change in the condition in which it is sold.

(2) The rule stated in Subsection (1) applies although

(a) the seller has exercised all possible care in the preparation and sale of his

product, and

(b) the user or consumer has not bought the product from or entered into any

contractual relation with the seller.

Restatement (Second) of Torts § 402A (1965).

6

In 1998 the ALI published the Restatement (Third) of Torts with new provisions governing products

liability. The Restatement Third does away with the “user” and “consumer” language and would allow

any “person” harmed by a defective product to be a proper plaintiff. It provides:

Liability of Commercial Seller or Distributor for Harm Caused by Defective Products

One engaged in the business of selling or otherwise distributing products who sells or dis-

tributes a defective product is subject to liability for harm to persons or property caused

by the defect.

Restatement (Third) of Torts: Products Liability § 1 (1998). Indiana has not adopted this provision of the

Restatement Third.

8

402A “extends to any product sold in the condition, or substantially the same condition, in which

it is expected to reach the ultimate user or consumer.” As these comments show, the Restate-

ment Second was understood to include ordinary maintenance and repair as “use” of a product, 7

and also supported the conclusion that the intended use of a product includes installation and as-

sembly where a manufacturer expects a product to reach the ultimate user or consumer in an un-

assembled or uninstalled form.

We therefore agree with Vaughn that use and consumption may include assembly and in-

stallation of a product, but only if the product is “expected to reach the ultimate user or con-

sumer” in an unassembled or uninstalled form. 8 The product in this case was not to be delivered

uninstalled or unassembled. Rather, Daniels contracted to provide the plant, including the sump,

in completed status. Vaughn was injured in the course of preparing the product for transfer to

7

Jurisdictions that have adopted the Restatement Second approach have also concluded that “use” in-

cludes repair and maintenance. See, e.g., Skarski v. Ace-Chicago Great Dane Corp., 485 N.E.2d 1312,

1317 (Ill. App. Ct. 1985) (A dealer and distributor of trailers bought a trailer equipped with a refrigeration

unit for the purpose of resale. The plaintiff, a repairman employed by the retailer who sold the refrigera-

tion unit contained in the trailer, was injured while repairing the refrigeration unit which was under a

manufacturer’s warranty. The plaintiff sued the trailer dealer and the court rejected the trailer dealer’s

argument that a repairman was categorically not a user of the trailer.); Curcio v. Caterpillar Inc., 543

S.E.2d 264, 267 n.5 (S.C. Ct. App. 2001), rev’d on other grounds, 585 S.E.2d 272 (S.C. 2003) (Repair-

man killed while repairing heavy machinery for the purchaser sued the manufacturer under a theory of

strict liability in tort. The court held the repairman was a “user” of the machinery “in the sense that he

was ‘utilizing it for the purpose of doing work upon it’” (quoting Restatement (Second) of Torts § 402A

cmt. l)); Hamilton v. Motor Coach Indus., Inc., 569 S.W.2d 575, 576 (Tex. App. 1978) (The plaintiff, a

mechanic who was injured while repairing an air cylinder on behalf of the air cylinder purchaser, brought

a products liability action against the manufacturer-seller of the cylinder. The court found that the manu-

facturer “expected the air cylinder to undergo change from its use; that the cylinder would need servicing

. . . and that it could be expected that the cylinder might be serviced by untrained or uninformed work-

men.” Accordingly, the court concluded that a “user” of the air cylinder, under the definition set forth in

section 402A comment l, included a mechanic utilizing the cylinder for the purpose of doing work upon it

for the ultimate buyer.).

8

Accord Kaneko v. Hilo Coast Processing, 654 P.2d 343, 350 (Haw. 1982) (Purchaser seeking to erect

new buildings at its mill site hired an architectural firm to design the buildings. After the designs were

drafted, a welding company manufactured the mill building. The plaintiff’s employer was hired to as-

semble the prefabricated building. The plaintiff, an ironworker, was injured in the course of assembling

the prefabricated building and sued the manufacturer. The manufacturer argued that a prefabricated

building is not a “product.” The court held that “a prefabricated building that must be assembled is a

product where the seller-manufacturer may be found strictly liable for injuries caused by a defective com-

ponent part.”); Anunziato v. Kar Grabber Mfg. Co., Inc., 748 N.Y.S.2d 404, 405 (N.Y. App. Div. 2002)

(A plaintiff injured when an automobile straightening machine fell and struck his foot while it was being

installed in the plaintiff’s auto body shop sued the machine’s manufacturer for strict liability in tort. The

court stated that the manufacturer’s contention that the claim does not lie as a matter of law “because the

alleged injuries occurred during the installation process is without merit.”).

9

Solar. He was an employee of an entity to whom Daniels had delegated the task of assembling

the product. As such, he is in the same position as an employee of Daniels itself, and has no

PLA claim as the user or consumer of a product not yet in the hands of its buyer.

We base our conclusion largely on the statutory framework of Indiana’s PLA and the leg-

islative and judicial history explained above. We note, however, that a majority of other courts,

including the Seventh Circuit applying Indiana law, have concluded that a products liability

claim does not lie where the manufacturer has not completed its obligation to install or assemble

the product 9 but is available where the purchaser is required to install or assemble it. 10 Our con-

clusion is also consistent with the Court of Appeals’s view of the requirement that the product

must have been “sold” to “a first consuming entity” at the time of the plaintiff’s injury. See

Thiele v. Faygo Beverage, Inc., 489 N.E.2d 562, 588 (Ind. Ct. App. 1986), trans. denied. Thiele

held that “users” or “consumers” under the PLA are limited to those “who might forseeably be

harmed by a product at or after the point of its retail sale or equivalent transaction” to “a member

of the consuming public.” Id. at 586. (emphasis in original). Under this analysis, the contract

between Daniels and Solar for Daniels to design, install and construct a coal preparation plant,

including a heavy media coal sump, was a transaction “equivalent” to a “retail sale” because it

9

In Ettinger v. Triangle-Pac. Corp., 799 A.2d 95, 98-100 (Pa. Super. Ct. 2000), a kitchen cabinet manu-

facturer contracted for the purchase of a furniture finishing system to be assembled on the purchaser’s site

by the seller’s subcontractor. The court granted summary judgment for the seller against an employee of

the subcontractor who was injured in the installation process on the ground that the oven had not left the

seller’s control: “Although the component parts of the oven had left [the seller’s] manufacturing plant and

were being assembled on [the purchaser’s] property, they had not left the seller’s possession, as [the

seller] indisputably retained the obligation to assemble the component parts and deliver a fully-assembled

oven.” Id. at 104-05.

10

In Lantis v. Astec Indus., Inc., 648 F.2d 1118, 1121-22 (7th Cir. 1981), the Seventh Circuit concluded

that an employee of the purchaser injured during the course of assembly of an unassembled product had

stated a claim under Indiana law where the manufacturer supplied an unassembled product for assembly

by the purchaser. See also Kaneko, 654 P.2d at 350 (holding that “a prefabricated building that must be

assembled is a product where the seller-manufacturer may be found strictly liable for injuries caused by a

defective component part.”); but see Hergeth, Inc. v. Green, 733 S.W.2d 409, 412 (Ark. 1987) (Manufac-

turer of flock feeder machine contracted to sell a flock feeder to a final purchaser. As a condition of the

purchase contract, the manufacturer was to supply the manufacturer’s employees to oversee installation

and start-up of the feeder. The plaintiff was employed by the manufacturer and was injured during the

course of installation. The plaintiff sued the manufacturer under Arkansas’ Products Liability Act. The

court held that the plaintiff had stated a cognizable claim, holding that Arkansas’ “products liability stat-

ute clearly contemplates that a manufacturer may be responsible for injuries resulting from defective

manufacture as well as injuries arising out of the erection and assembly of the product.”).

10

lodged the product with the buyer. A PLA claim thus requires that the product be in the final

state called for by the arrangement between the buyer and the seller.

In sum, at the time of Vaughn’s injury, Daniels remained obligated to assemble and in-

stall the sump. Daniels engaged Trimble to install and assemble the product, and therefore

Vaughn was acting on Daniel’s behalf rather than on behalf of Solar at the time of the injury. As

a result, Vaughn could not be a “user” or a “consumer” of the yet undelivered product. More-

over, Vaughn was also not a “bystander,” because a bystander is one who is injured “in the vicin-

ity of the product during its reasonably expected use.” We think “use” of the product occurs

only after it is delivered in the state contemplated by the arrangement between the seller and

buyer. We thus affirm the trial court’s finding that Vaughn was not a “user” or “consumer” un-

der Indiana Code section 34-6-2-29.

IV. The Vaughns’ Negligence Claims

In order to recover on a common law negligence claim, the plaintiff must establish a

duty on the part of the defendant to conform his conduct to a standard of care arising out of his

relationship with the plaintiff, a failure on the part of the defendant to conform his conduct to the

requisite standard of care, and an injury to the plaintiff that is proximately caused by the breach.

See Franklin v. Benock, 722 N.E.2d 874, 878 (Ind. Ct. App. 2000), trans. denied. Absent a duty,

there can be no breach, and therefore, no recovery for the plaintiff in negligence. Hopper v. Co-

lonial Motel Prop., Inc., 762 N.E.2d 181, 188 (Ind. Ct. App. 2002), trans. denied. The issue is

whether either Daniels or Solar owed a duty to Vaughn, and if so, what that duty entailed.

A. Negligence Claim Against Solar

Solar was the purchaser of the facility to be designed and furnished by Daniels and in-

stalled by Trimble. It is undisputed that Solar contracted with Daniels for the design and con-

struction of the coal plant and Solar’s only obligation was to fund the project. 11 The acts of neg-

ligence alleged are in the design and manufacture by Daniels, which was admittedly an inde-

pendent contractor of Solar. The Vaughns assert that Solar is liable for Daniels’s negligence un-

11

The Vaughns assert that Solar had contractual duties to oversee safety operations at the worksite. The

designated evidence does not support this assertion.

11

der an exception to the general rule that a principal is not liable for the negligence of an inde-

pendent contractor. We have previously held that:

[T]he long-standing general rule has been that a principal is not liable for the neg-

ligence of an independent contractor. However, five exceptions have been recog-

nized for more than half a century. The exceptions are: (1) where the contract

requires the performance of intrinsically dangerous work; (2) where the principal

is by law or contract charged with performing the specific duty; (3) where the act

will create a nuisance; (4) where the act to be performed will probably cause in-

jury to others unless due precaution is taken; and (5) where the act to be per-

formed is illegal.

Bagley v. Insight Commc’ns, Co., 658 N.E.2d 584, 586 (Ind. 1995) (internal citations omitted);

see also PSI Energy, Inc. v. Roberts, 829 N.E.2d 943, 950 (Ind. 2005). The Vaughns cite the

second exception, contending that specific duties are imposed by law under the Federal Mine

Safety and Health Act of 1977 (“FMSHA”), 30 U.S.C. §§ 801 et seq. (2002). Specifically, the

Vaughns maintain that under FMSHA regulations Solar and Daniels owed a duty to provide a

railing around the coal sump. 12

The Vaughns are correct that Solar as owner and Daniels as contractor are both subject to

FMSHA regulations. Bituminous Coal Operators’ Ass’n v. Sec’y of Interior, 547 F.2d 240, 246-

47 (4th Cir. 1977). The FMSHA authorizes the Secretary of Labor to inspect mining operations

and impose civil penalties for FMSHA violations. 30 U.S.C. §§ 802, 813-14, 819-20. Bitumi-

nous expressly left open the question of allocation of liability for fines as between the owner and

an independent contractor, but that case did not address civil tort liability. It does not support the

Vaughns’ contention that a FMSHA regulation imposes a state law duty for purposes of tort li-

ability of the owner for negligence of an independent contractor. For these purposes, FMSHA

regulations are analogous to OSHA regulations applicable to many workplaces. An OSHA vio-

lation does not in itself render a workplace owner liable in tort for the negligence of an inde-

pendent contractor. See Ellis v. Chase Commc’ns, Inc., 63 F.3d 473, 478 (6th Cir. 1995) (hold-

ing in a suit against the owner of premises where employee of independent contractor was killed

12

In support of this argument, the Vaughns cite a mandatory safety standard which requires “Openings . .

. through which men or material may fall shall be protected by railings, barriers, covers or other protective

devices.” 30 C.F.R. § 77.204 (2005). In view of our conclusion that FMSHA regulations do not impose a

state law duty, we need not resolve whether the regulation requiring protective devices around “openings”

applies to a fall over the side of the sump.

12

that even had there been a violation of OSHA safety regulations, the owner must owe a duty in-

dependent of OSHA in order to create liability). None of the remaining exceptions to the rule

that a principal is not liable for an independent contractor’s negligence are applicable. Accord-

ingly, the trial court properly granted summary judgment in favor of Solar on the negligence

claim.

B. Negligence Claims Against Daniels

The Vaughns’ remaining negligence claims are against Daniels, the designer of the coal

sump and coal preparation plant. Specifically, the Vaughns allege: (1) Daniels negligently de-

signed and manufactured the Cannelburg plant rendering the installation of the coal sump inher-

ently dangerous, (2) Daniels designed and manufactured a defective coal sump constituting a la-

tent danger in the use of the product, and (3) Daniels maintained the property in an unreasonably

safe condition. Until 1995, the Products Liability Act did not generally displace products liabil-

ity law except for strict liability claims. See former I.C. § 33-1-1.5-1 (the PLA “governs all ac-

tions in which the theory of liability is strict liability in tort.”). In 1995 that section of the PLA

was amended to provide that it applied to all claims of defective products against a “manufac-

turer” by a “user or consumer” regardless of the theory of liability. I.C. § 34-20-1-1. As a result,

the PLA now applies to all negligence claims brought against a “manufacturer” of a defective

product by a “user” or “consumer.” The PLA is explicit that it does not govern other claims:

“This article shall not be construed to limit any other action from being brought against a seller

of a product.” I.C. § 34-20-1-2. For the reasons given in Part III, Vaughn is not a “user” or

“consumer” and therefore the Vaughns’ negligence claims are governed by conventional com-

mon law negligence doctrines, not by the PLA.

The Vaughns first argue that Daniels assumed a duty for the design safety of the con-

struction site. Whether a party has assumed a duty and the extent of that duty, if any, are ques-

tions for the trier of fact. Perry v. N. Ind. Pub. Serv. Co., 433 N.E.2d 44, 50 (Ind. Ct. App.

1982), trans. denied. The Vaughns argue that Daniels’s “Health and Safety Policy” establishes

an issue of material fact relevant to assumption of duty because it states “Handrail, mid-rail, and

toe boards must be used” on any scaffolding and it requires Daniels’s employees to conduct

daily, weekly, and periodic inspections. The Vaughns do not designate any evidence establish-

13

ing that the Safety Policy applied to this project or that Daniels was operating under it in the con-

struction of this plant. 13 The Vaughns also designated a number of daily field reports completed

by Daniels’s supervisors. These reports reference weather conditions, the number of employees,

and issues pertaining to materials and progress on construction. There is no indication that

Daniels’s employees conducted safety inspections prior to completing the forms, and there are no

notations relating to safety concerns. Daniels points to its contract with Trimble that explicitly

imposes these duties on Trimble. In sum, the designated evidence failed to demonstrate that

Daniels assumed a duty to supervise safety at the job site.

The Vaughns next argue that Daniels owed a contractual duty to Vaughn. The parties

agree that there was no written contract between Solar and Daniels apart from the “Design, Pro-

curement, and Construction Specification,” which sets forth Daniels’s proposal for the Cannel-

burg project. The Vaughns cite this document and MacCollum’s opinion that Daniels failed to

use reasonable care by failing to provide a construction management plant and/or process of

plant assembly plan. The Vaughns argue that the terms and conditions of the arrangement be-

tween Solar and Daniels as they relate to the construction site and to Daniels’s responsibilities

are questions of fact for the jury to decide. We disagree. Any duties that Daniels had relating to

safety arising from its implied contract with Solar were effectively transferred to Trimble in the

written contract between Daniels and Trimble which provided that Trimble would comply with

Daniels’s safety policies and conduct weekly safety meetings, would follow all applicable public

safety laws and would indemnify Solar and Daniels for losses arising from a failure to follow

public safety laws. The Vaughns have designated nothing to raise an issue of fact to establish a

contractual duty on the part of Daniels.

The Vaughns also bring a negligent design claim against Daniels. Whether the law rec-

ognizes any obligation on the part of Daniels to conform its conduct to a certain standard for the

benefit of Vaughn is a question of law. Webb v. Jarvis, 575 N.E.2d 992, 995 (Ind. 1991). The

relationship between Daniels and Vaughn was that of designer-seller of a product and an em-

13

The document, dated 1989 and entitled “Daniels’ Health and Safety Policy,” states that its purpose is

“to provide safety information for the design, construction, operation, and maintenance of The Daniels

Co.’s preparation facilities.” Daniels produced the document in response to the Vaughns’ interrogatories

and the document does not specify if it is in effect on all of Daniels’s jobs and the extent to which it is to

be implemented when subcontractors are involved.

14

ployee of the designer-seller’s subcontractor who assembled and installed the product before de-

livery to the final purchaser. It was reasonably foreseeable that if Daniels did not use reasonable

care to design a safe unassembled and uninstalled facility, those who handled it in the process of

assembly and installation, including Vaughn, might be at risk of injury. There is no policy rea-

son to immunize Daniels from liability to those who are injured as a result of negligent design.

However, in addition to establishing the existence of a duty, in order to survive Daniels’s motion

for summary judgment, the Vaughns must also establish breach, causation and damages. The

parties dispute whether Daniels’s breached its duty and whether the alleged breach was the

proximate cause of Vaughn’s injuries. Because we find there are genuine issues of material fact

on these issues, we conclude that the trial court erred in granting Daniels’s motion for summary

judgment on the Vaughns’ negligent design claim. The trial court concluded that Vaughn mis-

used the sump and that misuse proximately caused Vaughn’s injuries. Daniels cites the affida-

vits of Trimble and Daniels’s presidents in which the presidents state that the sump was not in-

tended to be used as a construction platform. The Vaughns cite blueprints showing a ladder ac-

cess into the sump and argue that these blueprints show that it was foreseeable that workers

would be on the sump. Vaughn testified that he had worked on approximately twenty to twenty-

five sumps and that the Daniels design was different in that there was no steel overhead from

which supports could hold the pipe during installation. Vaughn also stated that the fine coal

sump on the site had a handrail around the top. We agree with the Vaughns that these facts cre-

ate an issue as to whether workers would be on the sump, whether Vaughn’s manner of installing

the pipe constituted misuse of the sump, and if so, whether that misuse was the proximate cause

of Vaughn’s injuries. Therefore, the trial court erred in granting summary judgment to Daniels

on the basis of misuse.

The trial court also found summary judgment appropriate on the ground that Vaughn vol-

untarily incurred the risk of falling that came with not being properly tied off while working at

heights. Incurred risk acts as a complete bar to liability with respect to negligence claims

brought under the PLA. See I.C. § 34-20-6-3. But, as explained above, the Vaughns’ negligence

claim is not governed by the PLA and is subject to Indiana’s Comparative Fault Act, Indiana

Code sections 34-51-2-1 through 34-51-2-19. The relative contribution of Vaughn’s fault, if any,

and Daniels’s negligent design, if any, are fact issues for trial. We therefore reverse the trial

court’s grant of summary judgment to Daniels on the Vaughns’ negligent design claim.

15

Conclusion

Transfer is granted. The trial court’s grant of summary judgment to Solar is affirmed.

The trial court’s grant of summary judgment to Daniels on the Vaughns’ negligent design claim

is reversed. Its grant of summary judgment to Daniels on the Vaughns’ other negligence claims

and on Stephen Vaughn’s strict liability claim is affirmed. This case is remanded to the trial

court.

Shepard, C.J., and Sullivan, J., concur.

Dickson, J., dissents with separate opinion, in which Rucker, J., concurs.

16

Dickson, Justice, dissenting.

I dissent to express my strong disagreement with the Court's conclusion that a worker in-

stalling a defective and unreasonably dangerous product is deprived of the right to assert a strict

liability claim under the Indiana Product Liability Act, Indiana Code § 34-20-2. The plaintiff,

Stephen Vaughn, should be permitted to bring this strict liability action as a "user" or "con-

sumer" under the Act.

The majority's reasoning is based upon its belief that a person should not be considered a

"user" or "consumer" of a product under the Product Liability Act unless the product is "in the

final state called for by the arrangement between the buyer and the seller." Slip opin at 11. I

disagree. For purposes of the Act, the word "product" is defined to mean "any item or good that

is personalty at the time it is conveyed by the seller to another party." Ind. Code § 34-6-2-114.

And "convey" should be given its plain and ordinary meaning, "to take or carry from one place to

another; transport." THE AMERICAN HERITAGE DICTIONARY 320 (2d ed. 1985) .

In this case, the Daniels Company, Inc. arranged the shipment of the allegedly defective

sump to the premises of Solar Sources, Inc. for installation there by Trimble Engineers and Con-

structors, Inc. Applying these facts to the definition of "product," the uninstalled sump is an

"item or good," and it was "personalty" at the time it was "conveyed" by Daniels to the Solar

Sources site.

Using this application of the statutory definition of "product," I conclude that in shipping

the sump for installation, Daniels was "a person who sells, leases, or otherwise puts into the

stream of commerce any product," and that Vaughn was a "user or consumer," thus governed by

the Product Liability Act, which provides in relevant part as follows:

a person who . . . puts into the stream of commerce any product in a defective condition

unreasonably dangerous to any user or consumer . . . is subject to liability for physical

harm caused by that product to the user or consumer . . . if . . . that user or consumer is in

the class of persons that the seller should reasonably foresee as being subject to the harm

caused by the defective condition.

Ind. Code § 34-20-2-1 (formerly § 33-1-1.5-3) (emphasis added). On the date of Vaughn's

worksite injuries, December 12, 1995, the phrase "user or consumer" was defined, in relevant

part, to include "any individual who uses . . . the product . . . or any bystander injured by the

product who would reasonably be expected to be in the vicinity of the product during its rea-

sonably expected use." Ind. Code § 34-6-2-29 (formerly § 33-1-1.5-2(1)). 1 The Act also states

that Section 1, quoted above, "applies although . . . the user or consumer has not bought the

product from or entered into any contractual relation with the seller." Ind. Code § 34-20-2-2(2)

(formerly § 33-1-1.5-3). Giving fair and reasonable meaning to the plain language of these statu-

tory provisions, it seems clear that Vaughn is entitled to the protection of the Act, certainly as a

user and perhaps as a bystander.

In Stegemoller v. ACandS, Inc., 767 N.E.2d 974, 976 (Ind. 2002), we construed the Act

to apply to a worker's spouse who contracted a disease from asbestos fibers brought home on the

person and clothing of her husband. We emphasized consideration of the normal and reasonably

expected use of the product and rejected the defendant's arguments that the spouse was not cov-

ered by the Act as "too narrow a view" and "not consistent with the Act." Id. Similarly, in But-

ler v. City of Peru, 733 N.E.2d 912, 919 (Ind. 2000), we found the Act could apply to a mainte-

nance worker injured while attempting to repair a product, holding that he fell under the defini-

tion of "user or consumer."

After reviewing relevant Indiana appellate decisions, the Court of Appeals correctly con-

cluded that Vaughn was entitled to pursue an action against Daniels under the Act. Noting our

recent decisions, it held:

It is a logical extension of the [S]upreme [C]ourt's analysis to include in the definition

of user or consumer a person who is injured while installing a product. The installation

of a product is the preparation of a product for safe operation, just as maintenance is in

many cases. . . . The installation process was not only foreseeable but expected and rou-

tine . . . . If Vaughn was, in fact, injured by Daniels' defective product, it seems illogical

that he would be precluded from pursuing a suit against Daniels simply because the sump

was not completely installed when he was injured while trying to install it, particularly

1

When the Act was recodified in 1998, the language previously used to define "user or con-

sumer" was retained verbatim but rearranged, renumbered, and placed under the definition of "consumer,"

with a new separate definition of "user" as having "the same meaning as the term 'consumer,' which is set

forth in section 29 of this chapter." Ind. Code § 34-6-2-147.

2

when the alleged defect affected his ability to install it safely.

777 N.E.2d at 1127-28. In my view, the Court of Appeals is exactly right.

Just like the worker's spouse in Stegemoller and the maintenance worker in Butler,

Vaughn, as an installer of the product in this case, should be entitled to present a strict liability

claim under the Product Liability Act. The coal sump manufacturer, Daniels, obviously knew

that its product had to be installed and that the installation workers would be exposed to any

product defects creating dangers in the installation process. I cannot join the Court in adopting a

rule that protects manufacturers from full strict liability accountability under the Act for injuries

caused by their defective and unreasonably dangerous products and sustained by the workers

who install them.

I also disagree with the majority's conclusion finding Solar not liable despite the fact that

Solar was charged with specific duties to provide certain railings under the Federal Mine Safety

and Health Act of 1977.

For these reasons, I dissent and believe that this Court should reverse in all respects the

trial court's grant of summary judgment to Daniels and Solar.

Rucker, J., concurs.

3