Gene M. Jones
Douglas K. Dieterly
Larry G. Evans
Tracy C. Beggs
Mark A. Lienhoop
LaPorte, Indiana ATTORNEYS FOR APPELLEE
David R. Kibbe
Stanley C. Fickle
Anne N. DePrez
South Bend, Indiana
Gene M. Jones
Douglas K. Dieterly
Larry G. Evans
Tracy C. Beggs
controller of the lathe, Yaskawa Electric America, (Yaskawa).See footnote
The lathe involved in the accident was sold by its manufacturer, Mori, to Yamazen Company, a trading company in Japan which in turn sold it to Yamazen, USA, Inc., (Yamazen) its American subsidiary. The lathe was delivered to Yamazen on March 5, 1981. Yamazen purchased the lathe for the purpose of using it in demonstrations at trade shows, and in fact the lathe was used to make parts at three trade shows over the course of the next year. In January, 1982, the lathe was sold to Hasbach Company as a used demo machine, but was returned in December of that year. Aegis Sales and Engineering Incorporated then purchased the lathe as a used machine at a discount from Yamazen and took delivery in January, 1983. The computer on the lathe indicated that the machine had been used for hundreds and possibly thousands of hours when it was delivered to Aegis. After another intermediate owner, Kaufman purchased the lathe in early 1990.
Mori and Yaskawa moved for summary judgment, arguing that the Estate's action was barred by the statute of repose and alternatively that several other defenses required summary judgment in their favor. The trial court held that, as a matter of law, Yamazen was a user or consumer of the lathe, and that uncontroverted facts established that Shebel's injury occurred more than ten years after the lathe was delivered to Yamazen. Accordingly,
summary judgment was entered for both defendants based on the statue of repose.
The Estate appealed, arguing that the initial user or consumer of the lathe could not be determined as a matter of law where conflicting inferences could be drawn from the facts. The Estate also argued that genuine issues of material fact bore on the definition of user or consumer, and that other issues precluded summary judgment.
The Court of Appeals, with Judge Garrard dissenting, reversed the trial court, holding that, as a matter of law on these undisputed facts, Yamazen as a distributor was a seller and not a user or consumer. Estate of Shebel v. Yaskawa Elec. America, Inc., 676 N.E.2d 1091 (Ind. Ct. App. 1997). We granted the defendants' petition for transfer and now affirm the trial court's grant of summary judgment.
failure is due to reasons not fairly laid at the manufacturer's door. In any event, the
legislature has determined that a product in use for ten years is no longer to be the source of
its manufacturer's liability. The wisdom of this policy is for the legislature. Dague v. Piper
Aircraft Corp., 275 Ind. 520, 528, 418 N.E.2d 207, 212 (Ind. 1981). The starting point for
this ten year period is the delivery to the initial user or consumer. The term user or
consumer was defined at the time relevant to this case as:
a purchaser, any individual who uses or consumes the product, or 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 any bystander injured by the product who would reasonably be expected to be in the vicinity of the product during its reasonably expected use.
Ind. Code § 33-1-1.5-2 (1993). As a matter of syntax, this language is susceptible to the
reading that any purchaser, including a distributor or retailer, is a user or consumer.
However, it was early held, and we agree, that user or consumer does not include one who
merely acquires and resells. Thiele v. Faygo Beverage, Inc., 489 N.E.2d 562 (Ind. Ct. App.
1986); Whittaker v. Federal Cartridge Corp., 466 N.E.2d 480 (Ind. Ct. App. 1984).See footnote
The Estate cites Whittaker for the proposition that the identity of the initial user or consumer is a question of fact that cannot be resolved on summary judgment. Whittaker
closes with the statement that the timeliness of the complaint presented a question of fact.
Id. at 484. However, on the facts before it, Whittaker held that delivery to an intermediary
retailer did not trigger the statute of repose because the retailer as a matter of law was not a
user or consumer. There remained only a failure of the moving party to establish when the
first user or consumer took delivery, not a dispute over any factual proposition.
We agree with the Court of Appeals in this case that [w]ho is a 'user or consumer' is a purely legal question. Estate of Shebel v. Yaskawa Elec. America, Inc., 676 N.E.2d 1091, 1092 (Ind. Ct. App. 1997); see also State ex rel. Paynter v. Marion County Superior Court, 264 Ind. 345, 350, 344 N.E.2d 846, 849 (1976) (whether entity falls within statutory term is a question of law).
Also relying on Whittaker, the Estate argues that Yamazen, as a distributor, was a sellerSee footnote 7 and therefore cannot be a user or consumer. Whittaker did express the view that the terms seller and user or consumer are mutually exclusive. 466 N.E.2d at 482. However, the Court of Appeals has acknowledged more recently that a seller may become a user or consumer. In Wenger v. Weldy, 605 N.E.2d 796 (Ind. Ct. App. 1993), the court held that the statute of repose began to run when the defendant, a distributor, transferred a hay baler from his business inventory and used it in his farming operation. Whittaker may have been correct that the seller before it was not also a user or consumer, but Wenger demonstrates that the two terms are not mutually exclusive, at least in the sense that one who
acquires for resale may by subsequent use become a user or consumer.
It is uncontroverted that Yamazen sold lathes, and, as the trial court acknowledged, Yamazen is generally a distributor. However, the trial court went on to conclude that [i]n this instance however, they clearly became a user or consumer of this lathe. Isolated or incidental use may not be sufficient to render a distributor a user, but here the undisputed facts establish repeated and extensive use of the lathe. Yamazen purchased the lathe for use as a demonstration model. The lathe was first used within weeks of delivery at a March 1981 show to manufacture several hundred parts. The lathe was then shipped to Colorado in June 1981 for another trade conference and then to Oregon for a show in September of that year. It was next sold as used equipment to Aegis. Dorsey Roth, the owner of Aegis, stated that when he checked the computer on the lathe to determine how many hours the machine had been used before he acquired it, the computer revealed that the lathe had been run in the hundreds at least and possibly in the thousands of hours.
These designated facts demonstrate that Yamazen used the machine to manufacture parts at trade shows. This is not a case of possession of the lathe only for resale or for assembling its component parts. See Thiele, 489 N.E.2d at 562 (distributor was not a user or consumer); Whittaker, 466 N.E.2d at 480 (retailers who stored and sold gun and ammunition were not users or consumers); Wilson v. Studebaker-Worthington, Inc., 699 F. Supp. 711 (S.D. Ind. 1987) (assembler of turbine was not user or consumer); but see Ferguson v. Modern Farm Sys., Inc., 555 N.E.2d 1379, 1386 (Ind. Ct. App. 1990) (constructing grain bin with component parts was first use). In contrast, Yamazen used
the lathe for its intended end use -- the production of machined parts. If uncontroverted,
these facts establish Yamazen as a user as this term is employed in the Act. The statute
of repose is triggered by delivery to the initial user or consumer. In Wenger the defendant
initially purchased the product for inventory and delivery to the user did not occur until
the defendant transferred the product to his farm. 605 N.E.2d at 798. Here, because
Yamazen ordered the lathe for demonstration purposes and began using the lathe at a trade
show within the month of receipt, delivery to the initial user took place in March of 1981.
The Estate contends that genuine issues remain and points to the affidavit of its expert
William Wachs. Apart from expressing an opinion on the legal issue whether Yamazen was
a user, Wachs noted that the date Aegis accepted the lathe was January 12, 1983; before
delivery to Aegis, the machine had not previously been used to manufacture parts used in any
manufacturing process or commerce; and Aegis received a new machine warranty. Wachs
also noted that some documentation identified the lathe as a 1983 (not 1980) model.
Wachs's opinion that the first user/consumer of 'the lathe,' was Aegis is a legal conclusion inadmissible under Indiana Rule of Evidence 704(b). Trial Rule 56(E) requires that affidavits opposing summary judgment set forth such facts as would be admissible in evidence . . . . See Rubin v. Johnson, 550 N.E.2d 324, 327 (Ind. Ct. App. 1990) (assertions of legal conclusions in an affidavit are insufficient under Trial Rule 56(E)).
Wachs's other assertions do not establish a genuine issue of material fact. The date that Aegis accepted the lathe is not contested and is irrelevant to whether Yamazen first used or consumed the lathe in 1981. It is equally irrelevant whether the lathe was used to
manufacture parts used in any manufacturing process or commerce. The critical question is
whether the machine was used. Its wear and tear and useful life are the thrust of the
statutory provision, not what happens to the products it makes. Whether Yamazen was
willing to issue a warranty for the lathe as a new model also says nothing about the status of
a prior user. Frequently used products are warranted as new for various reasons including
the manufacturer's confidence in the product or willingness to accept the risk of a shorter
life. Finally, the identification of the lathe on an invoice as a 1983 model does not controvert
the undisputed fact that the lathe was manufactured in 1980.
In sum, Yamazen was the initial user or consumer when it used the lathe to produce parts at three trade shows in 1981. Because the accident in Kaufman's shop took place in 1992, more than ten years after delivery to Yamazen for that purpose, the Estate's action is barred by Indiana Code § 33-1-1.5-5 (1993). Accordingly, the defendants are entitled to summary judgment.
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