Summary
The Fifth Circuit affirmed summary judgment against a products-liability claim involving an aerial basket financed through an agreement labeled a vehicle lease. Applying Texas law, the court held that the agreement was a financing arrangement rather than a conventional commercial lease and that Restatement (Second) of Torts § 402A strict liability did not extend to the finance lessor under the circumstances. The court also held that the classification of the agreement was a question of law and that no genuine issue of material fact precluded summary judgment.
Topics
Practice areas
Questions Presented
- Whether the district court improperly treated the classification of the agreement as a financing agreement rather than a commercial lease as a factual issue and therefore improperly granted summary judgment.
- Whether the record contained a genuine issue of material fact concerning the nature of the agreement.
- Whether Texas strict-products-liability law under Restatement (Second) of Torts § 402A applies to a financier that provides funds for the purchase of equipment but does not select, manufacture, possess, market, sell, or commercially lease the product.
Holdings
- Determining whether a document labeled a lease is actually a financing agreement is a question of law, not a question of fact.
- Summary judgment was proper because McCullagh established the undisputed facts concerning the transaction and Cole offered no facts contradicting them or showing a genuine issue of material fact.
- Restatement (Second) of Torts § 402A does not apply to a financier whose transaction is a financing agreement rather than a commercial lease and who did not market, supply, select, manufacture, possess, or hold the product for sale or lease.
Key quotations
“The classification of the document is a question of law and not one of fact.” (¶ 7)
“The Texas Supreme Court has held that § 402A applies to a lessor, if he is in the business of commercially leasing products of the type causing injury.” (¶ 10)
“We agree.” (¶ 13)
Factual background
Cole, a lineman employed by R. S. Goodman Company, was injured when a sixty-five-foot aerial basket manufactured by Elliott Equipment Corporation drew an arc from high-voltage transmission lines. Goodman selected the basket, negotiated its specifications and price, and accepted delivery; McCullagh supplied the purchase funds but did not participate in the design, manufacture, or selection of the equipment. McCullagh never possessed the basket, had no special expertise in the utility-contracting business, and did not acquire or hold such equipment for sale or lease. The parties' agreement was labeled a vehicle lease but operated as a financing arrangement, with title retained by McCullagh, monthly payments, lessee responsibility for maintenance, and a service fee based on an interest factor.
Procedural history
Cole was injured while occupying an aerial basket that drew an electrical arc from high-voltage transmission lines. He sued the manufacturer and McCullagh Leasing, the company that financed his employer's purchase of the basket, under a products-liability theory. The Northern District of Texas concluded that the agreement labeled a lease was actually a financing agreement and that Restatement (Second) of Torts § 402A did not apply to McCullagh, then granted summary judgment. The Fifth Circuit affirmed.