South Carolina Federal Court Denies Statute of Repose Defense

Recently, the U.S. District Court for the District Court of South Carolina issued a products liability opinion, Ervin v. Continental Conveyor & Equip. Co., Inc., — F. Supp. 2d —, No. 4:07-CV-3010-TLWTER, 2009 WL 4895559 (D.S.C. July 23, 2009), in which it denied two motions for summary judgment filed by the defendant-manufacturer. The issue in the case was the application of the statute of repose for actions involving real estate improvements to cases involving alleged defects in production equipment. Although the opinion was apparently issued seven months ago, it was only made accessible through Westlaw this week.

In that case, Plaintiff Marcus Ervin sued Continental Conveyor and Equipment Company, Inc. (“Continental Conveyor”) following a 2005 accident at a U.S. Department of Agriculture facility which caused him to lose an arm above the elbow. At issue was Continental Conveyor’s incline conveyor system. Due to the incline conveyor system’s “propensity to collect cotton around the lower belt pulley,” an unknown third party cut an access hole into the system’s casing to facilitate the removal of accumulated cotton. Immediately prior to the accident, the Plaintiff reached through the access hole to remove cotton “without turning off or locking out the power to the machine.” The system had originally been sold to the USDA in 1985 but was later disassembled and moved to its current location in Florence, South Carolina in 1994.

Continental Conveyor filed two separate motions for summary judgment, one based on South Carolina’s Statute of Repose for Improvements to Real Estate, and the other regarding substantive product liability issues. After a lengthy analysis, the court denied both motions.

In addressing the statute of repose issue, the Court construed S.C. Code 15-3-640, which established the period of repose after substantial completion of improvements to real property. The question for the Court was whether the incline conveyor system constituted an “improvement to real property” under South Carolina law. Finding no controlling state authority in South Carolina, the Court thoroughly surveyed a number of cases from other jurisdictions interpreting whether industrial equipment fell within the scope of similar statutes of repose.

The Court also noted that South Carolina authority suggested that the determination of whether an addition to real property constitutes an improvement required a case by case determination. Analyzing the factors set forth in South Carolina Pipeline Corp. v. Lone Star Steel, 345 S.C. 151, 546 S.E.2d 654 (2001), the Court easily concluded that the equipment at issue made the property more valuable and involved the investment of labor and money. However, the Court was “not prepared to reach the conclusion that the incline conveyor system [was] a permanent improvement to real property.” It reached that determination primarily because the system at issue was “relatively small scale” and the fact that not only was it mobile, but that it had been previously been moved, a fact the court found to be “important.”

With respect to Continental Conveyor’s second motion for summary judgment, the Court denied it on all its stated grounds, those being comparative fault (because the Court could not “conclude that the evidence support[ed] a finding that the plaintiff’s negligence exceeded that of the defendant as a matter of law”), assumption of risk (because the Plaintiff testified he “did not understand the nature and extent of the risk posed by the conveyor system,” despite his acknowledgment that he knew he could be injured by placing his arm into the machine), unforeseeable modification (because the defendant had preexisting knowledge of the accumulation of cotton problems which led to the unknown third party’s creation of the access hole), and the failure of Plaintiff’s experts to establish the equipment was defective (because there remained a question of fact whether the equipment was defective due to the accumulation problem).

The opinion does not necessarily signal the defeat of the statute of repose defense in South Carolina products liability litigation. As fact intensive as the opinion is, it may be difficult to rely upon this case in the future, simply because future disputes can be readily distinguished from the set of facts presented in Ervin.