Opinion
No. 3-949 / 03-0444
Filed February 27, 2004
Appeal from the Iowa District Court for Linn County, David S. Good, Judge.
The plaintiffs-appellants, Walter and Brenda Johnson, appeal from the district court's grant of summary judgment in favor of all defendants in their product liability claims. AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
David Dutton, James Hellman, and Carolyn Rafferty of Dutton, Braun, Staack Hellman, P.L.C., Waterloo, for appellants.
John Bickel of Shuttleworth Ingersoll, P.L.C., Cedar Rapids, for appellee B.C. Enterprises.
Mark Fonken of Jardine, Logan O'Brien, P.L.L.P., Lake Elmo, Minnesota, for appellee C B Manufacturing.
Timothy Hamann of Clark, Butler, Walsh Hamann, Waterloo, for appellee Harley Davidson/Buell Cycle Center.
Richard Stefani of Gray, Stefani Mitvalsky, P.L.C., Cedar Rapids, and Mark Kircher of Quarles Brady L.L.P., Milwaukee, Wisconsin, for appellee Harley-Davidson Motor.
Maureen Tobin and Jason Casini of Whitfield Eddy, P.L.C., Des Moines, for appellee C.M.T. Manufacturing.
Heard by Sackett, C.J., and Vaitheswaran and Eisenhauer, JJ.
The plaintiffs-appellants, Walter and Brenda Johnson, appeal from the district court's grant of summary judgment in favor of all defendants in their product liability claims. The plaintiffs claim none of the defendants proved the absence of genuine issues of material fact and that the defendants are not entitled to summary judgment as a matter of law. They contend the court made credibility determinations, fact findings, and misapplied the law. The plaintiffs also assert the district court erred in denying their motion to amend their petition to recharacterize the claims as those recognized by our supreme court in a decision filed eight days after the pleadings deadline had passed.
I. Background facts.
In 1997 Donald Hansen purchased a Harley-Davidson motorcycle from defendant B.C. Enterprises, Inc. ("BC"). He had a trailer hitch installed that was manufactured by defendant C B Manufacturing, Inc., d/b/a Hitch Doc ("Hitch Doc"). In the spring of 1999 Hansen decided to sell the motorcycle. Defendant Harley-Davidson/Buell Cycle Center, Inc. ("Cycle Center") allowed Hansen to display his motorcycle at the Cycle Center. The plaintiffs saw the motorcycle there and purchased it the next day. In June 1999 the Plaintiffs purchased a trailer manufactured by defendant C.M.T. Manufacturing, Inc. ("CMT"). In October 1999 the plaintiffs were riding their motorcycle with the trailer attached. While coming around a curve in the Arizona mountains, Walter attempted to stop quickly because of an accident ahead in the road. He lost control, the motorcycle flipped on its side, Brenda was thrown from the motorcycle, and both plaintiffs were injured.
II. Proceedings.
The plaintiffs filed suit on December 1, 2000. They brought claims against defendant Harley-Davidson Motor Company Group, Inc. ("Harley-Davidson"), Cycle Center, BC, Hitch Doc and CMT. Their claims against Harley-Davidson were for strict liability in tort, asserting the motorcycle was defective and unreasonably dangerous, and for negligence in failing to provide adequate warnings regarding the risk in towing a trailer behind a motorcycle. The plaintiffs' claim against Cycle Center alleged negligence in Cycle Center's failure to provide adequate warnings regarding the risk in towing a trailer behind a motorcycle. Their claims against BC alleged negligence regarding the dangers associated with installing a hitch on a motorcycle, and failure to provide adequate warnings regarding the risk in towing a trailer. The plaintiffs' claims against Hitch Doc alleged negligence in failing to provide adequate warnings regarding the risk in towing a trailer, and that the hitch became unreasonably dangerous when attached to the motorcycle. The plaintiffs' claims against CMT alleged negligence in failing to provide adequate warnings regarding the risk in towing a trailer, and that the trailer became unreasonably dangerous when attached to the motorcycle.
Harley-Davidson moved for summary judgment, claiming plaintiffs' strict liability claims should be dismissed because the motorcycle was not unreasonably dangerous or defective; that the plaintiffs' claims Harley-Davidson was negligent in failing to warn non-users of the motorcycle must be dismissed because Harley-Davidson had no duty to warn non-users; and that the plaintiffs' failure to warn claims should be dismissed because the plaintiffs received repeated warnings not to tow a trailer and because they could not demonstrate that any additional or different warning would have prevented them from towing the trailer. The plaintiffs resisted the motion, claiming Harley-Davidson had a duty to warn; that Harley-Davidson had actual knowledge its motorcycles were being altered, and knew of the danger of towing a trailer behind the motorcycle; that the warnings were clearly inadequate; that Harley-Davidson must prove plaintiffs understood the probability and gravity of the potential hazards of towing a trailer behind the Harley-Davidson motorcycle; and that proximate causation is ordinarily an issue for the fact finder. The plaintiffs further claimed their amended and substituted petition was not limited to design defects, and that Harley-Davidson was liable for foreseeable alterations to its product which render the product unsafe.
The district court granted Harley-Davidson's motion for summary judgment on all claims. It concluded the plaintiffs lacked expert testimony to support their strict liability claim, that no liability can result from modifications beyond the manufacturer's control, and that Harley-Davidson could not be held responsible for the plaintiffs' failure to heed the warnings not to tow a trailer. The court concluded Harley-Davidson had no special relationship with any of the other defendants such as would give rise to a duty to warn. Concerning the adequacy of the warnings, the court found as a matter of law that the written and verbal warnings were adequate. It also found the plaintiffs had not given any indication that any warning would have stopped them from towing the trailer and that towing the trailer was a superseding cause of the accident, relieving Harley-Davidson from any liability.
Cycle Center moved for summary judgment, claiming it had no duty to warn plaintiffs because it did not act as a seller nor did the transaction at issue constitute the functional equivalent of a consignment sale; that its alleged failure to warn did not act as the proximate cause of plaintiffs' injuries; that plaintiff Walter Johnson's failure to properly brake was the sole cause of plaintiffs' injuries; and that it owes no duty to plaintiffs based on public policy considerations. The plaintiffs resisted the motion, claiming Cycle Center had a legal duty to warn them; that summary judgment was inappropriate because questions of fact exist as to whether Cycle Center's failure to warn was a proximate cause of plaintiffs' injuries; and that summary judgment was inappropriate because questions of fact exist as to whether plaintiff Walter Johnson's braking of the motorcycle was the sole cause of his injuries.
The district court granted Cycle Center's motion for summary judgment on all claims. It found there was no evidence of any oral or written consignment agreement between Hansen and Cycle Center or any evidence of an exchange of money that would support a finding of a consignment sale. It concluded there was no special relationship between the plaintiffs and Cycle Center that would give rise to a duty to warn. Concerning proximate causation, the court concluded the plaintiffs' act of towing the trailer was a superseding cause, the warnings given were adequate, and no factor attributable to Cycle Center was a cause of the accident.
CMT moved for summary judgment, claiming no duty to warn exits where the plaintiffs had actual knowledge of the hazard, and that plaintiffs cannot demonstrate a causal link between any additional warning by CMT and plaintiffs' decision to pull a trailer with the motorcycle; and that plaintiffs cannot satisfy the required elements of a design defect claim under principles of strict liability under Iowa law. Plaintiffs resisted the motion, claiming that CMT had a duty to warn of hazards associated with towing a trailer behind a Harley-Davidson motorcycle; that CMT is held to have the knowledge of experts, since it is a manufacturer, giving CMT superior knowledge warranting a duty to warn of the reasonably foreseeable danger of injuries; that the warnings were clearly inadequate; that CMT must prove plaintiffs understood the probability and gravity of the potential hazards of towing a trailer behind the Harley-Davidson motorcycle; and that proximate causation is ordinarily an issue for the fact finder. Plaintiffs further claim their amended and substituted petition is not limited to design defects, and that CMT remains liable for its altered product when it was attached to the motorcycle because it was reasonably foreseeable that the alteration would be made and the alteration did not unforeseeably render the product unsafe.
The district court granted CMT's motion for summary judgment on all claims. It reiterated its findings and conclusions concerning duty to warn: that the verbal and written warnings were adequate to make the danger open and obvious, that the plaintiffs' actions were a superseding cause, and there was no indication any warning would have stopped the plaintiffs from towing the trailer. The court concluded the product liability claim failed because the plaintiffs offered no evidence of a reasonable alternative design for the trailer. It also concluded negligent marketing was not a cause of action recognized in products liability cases in Iowa.
Hitch Doc moved for summary judgment, claiming it had no duty to warn of the potential hazards of towing a trailer behind a motorcycle, and that the hitch was neither defective nor unreasonably dangerous. Plaintiffs resisted the motion, claiming that Hitch Doc had a duty to warn of hazards associated with towing a trailer behind a Harley-Davidson motorcycle; that Hitch Doc is held to have the knowledge of experts, since it is a manufacturer, giving Hitch Doc superior knowledge warranting a duty to warn of the reasonably foreseeable danger of injuries; that the warnings were clearly inadequate; and that Hitch Doc must prove plaintiffs understood the probability and gravity of the potential causation is ordinarily an issue for the fact finder. Plaintiffs further claimed their amended and substituted petition is not limited to design defects, and that Hitch Doc had actual knowledge that installing a hitch on Harley-Davidson motorcycles was not recommended and could pose potential hazards to consumers if used to tow a trailer.
The district court granted Hitch Doc's motion for summary judgment on all claims. The court incorporated its conclusions concerning duty to warn and failure to warn from the portion of its ruling concerning CMT. It concluded the rationale for granting CMT's motion for summary judgment concerning the claim of a defective or unreasonably dangerous product applied to the identical claims against Hitch Doc.
BC filed a motion regarding discovery, seeking to take a further deposition of plaintiff Walter Johnson because he intended to add injuries to his hand from an accident with a power saw to his claim for damages. The plaintiffs resisted this motion, claiming there is no change in circumstances warranting an additional deposition. BC also filed a motion to extend discovery deadlines in order to name a new expert witness, and the plaintiffs did not resist this motion. The district court granted the motion for additional deposition, but denied the request it be videotaped.
The plaintiffs filed a motion to amend their petition, seeking to add claims of fraud against Hitch Doc and CMT based on the supreme court's decision in Wright v. Brooke Group, Ltd., 652 N.W.2d 159 (Iowa 2002). Hitch Doc and CMT resisted the motion, contending the time for amending pleadings had passed. The district court denied the motion to amend as prejudicial and because it did not believe the amended claims would survive under Wright. III. Scope of review.
We review a district court's grant or denial of summary judgment for correction of error at law. Iowa R. App. P. 6.4; Crippen v. City of Cedar Rapids, 618 N.W.2d 562, 565 (Iowa 2000). Summary judgment is appropriate when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Iowa R. Civ. P. 1.981(3). A genuine issue of material fact exists if a reasonable fact finder could return a verdict for the nonmoving party. Baratta v. Polk County Health Servs., Inc., 588 N.W.2d 107, 109 (Iowa 1999). The facts are viewed in the light most favorable to the party opposing the motion for summary judgment. Gerst v. Marshall, 549 N.W.2d 810, 811 (Iowa 1996). The moving party has the burden to establish there are no material facts in dispute. Schlueter v. Grinnell Mut. Reins. Co., 553 N.W.2d 614, 615 (Iowa Ct.App. 1996). The moving party also may demonstrate a right to summary judgment by establishing the limits of the other parties' proof. If the moving party can show the nonmoving party has no evidence to support an outcome determinative element of that party's claim, the moving party will prevail on summary judgment. Wilson v. Darr, 553 N.W.2d 579, 582 (Iowa 1996) (citing Griglione v. Martin, 525 N.W.2d 810, 813 (Iowa 1994)).
IV. Discussion.
A. Harley-Davidson. 1. Negligent Failure to Warn the Plaintiffs.
To prevail on a claim against a manufacturer for negligent failure to warn, unless the danger is open and obvious, a plaintiff must establish (1) the manufacturer knew or should have known of the danger, (2) any warnings given were inadequate, and (3) an adequate warning would have altered the plaintiff's conduct and avoided the injury. Lovick v. Wil-Rich, 588 N.W.2d 688, 700 (Iowa 1999); Olson v. Prosoco, Inc., 522 N.W.2d 284, 289-90 (Iowa 1994). The undisputed evidence shows Harley-Davidson knew pulling a trailer was dangerous. The court concluded the warnings were adequate and the plaintiffs had given no indication any warning would have prevented them from pulling a trailer. The plaintiffs contend the evidence relating to the adequacy of the warnings was disputed and the court erred in invading the province of the jury by deciding disputed questions of fact in ruling on the motions for summary judgment. They point to their expert's opinion Harley-Davidson's warnings on the air cleaner on the motorcycle and in the owner's manual were inadequate in content and presentation.
They assert using the term "may" in the warning means they "could be interpreted as a general caution to exercise extra care rather than a strict prohibition." However, both warnings in the owner's manual include the strict prohibition, "do not tow a trailer" and link that prohibition to unstable handling and other dangers. We agree with the statement of the district court:
The Court finds that, while Plaintiffs have attempted to create a factual dispute as to the adequacy of the warnings received by Plaintiffs, there are not genuine issues of material fact, and reasonable minds could not differ as to a resulted finding that the warnings were adequate; . . . and the Court finds as a matter of law that the warnings given were adequate.
(Emphasis in original). The motorcycle in question did not come equipped with a trailer hitch nor was there information included with the motor cycle that would indicated it was equipped to safely pull a trailer. In fact the exact opposite was true and Harley-Davidson provided three warnings directed to non use of a trailer. First, a label on the air cleaner provided a warning. The air cleaner is located in the middle of the motorcycle above the engine on the right side. The warning label was affixed to the outside of the air cleaner. It would be visible to someone sitting on or looking at the motorcycle. The label provided unstable handling and/or loss of control may result from among other things trailer towing. In addition it provided for personal safety one should read the owner's manual before riding and that adding accessories to the motorcycle and failure to heed warning and caution notes in the owner's manual may result in personal injury and or damage to the cycle. Then in the owner's manual it said, "Do not tow a trailer. Trailers may contribute to motorcycle instability and/or tire overload." In addition in the manual was a warning that provided the addition of accessories can affect the motorcycle's stability.
The plaintiffs note when a manufacturer has a duty to warn, it must exercise reasonable care to inform users of the danger. See West v. Broderick Bascom Rope Co., 197 N.W.2d 202, 209 (Iowa 1972) (citing Restatement (Second) of Torts § 388, at 300-01 (1965)). Because the warnings Harley-Davidson provided were adequate and reasonable, Harley-Davidson did not breach its duty to warn and the plaintiffs' negligence claim must fail. See Griglione v. Martin, 525 N.W.2d 810, 813 (Iowa 1994).
The district court also determined the plaintiffs would not have changed their decision to tow the trailer if the warnings they received had been different. They argue this is a disputed material fact for a jury because they submitted an affidavit stating they would not have towed a trailer on the trip if there had been proper warnings on the motorcycle, hitch, and trailer. The district court does not appear to have considered the affidavit in its ruling. The affidavit accompanied an "application for leave of court to file affidavit." We find nothing in the record to indicate leave was granted and the plaintiffs have not indicated where such leave was granted. From the evidence before it the district court correctly noted there was "no indication that any warning of any type would have stopped [the plaintiffs] from towing a trailer behind their motorcycle on their trip." Even if the court were incorrect, this evidence goes to the causation element of negligence. Having concluded earlier there was no breach of duty, negligence cannot be proved, regardless of the causation element. We find it unnecessary to address the arguments concerning superseding cause.
Because the proffered affidavit is the plaintiffs' opinion of what they would have done if a hypothetical set of facts existed, we question whether it would have been admissible. See Hegtvedt v. Prybil, 223 N.W.2d 186, 189 (Iowa 1974) ("If the factual foundation for an opinion is insufficient it is nothing more than conjecture."); Porter v. Iowa Power Light Co., 217 N.W.2d 221, 231 (Iowa 1974) (excluding opinion testimony based on assuming hypothetical facts).
2. Failure to warn dealers and manufacturers of accessories.
The existence of a duty is a legal question for a court to decide. See Hansen v. Anderson, Wilmarth Van Der Maaten, 630 N.W.2d 818, 823 (Iowa 2001). The district court found Harley-Davidson had no duty to warn Cycle Center, BC, Hitch Doc, or CMT. The plaintiffs contend that, in the exercise of reasonable care, Harley-Davidson should have done more to advise them about its policy against towing a trailer and the rationale behind that prohibition so that they would pass along the warning to consumers. The plaintiffs neither cite nor argue any authority for such an expansion of a manufacturer's duty to warn. We conclude the district court did not err in determining there was no duty.
3. Strict liability.
The plaintiffs claim the district court misinterpreted their strict liability claim as a defective design claim instead of a defective product claim. They cite language from Leaf v. Goodyear Tire Rubber Co. that "a manufacturer will remain liable for an altered product if it is reasonably foreseeable that the alteration would be made and the alteration does not unforeseeably render the product unsafe." Leaf v. Goodyear Tire Rubber Co., 590 N.W.2d 525, 530 (Iowa 1999). Leaf is distinguishable because the claim in Leaf was a design defect in the placement of reinforcing wire in a tire. The plaintiff in Leaf offered evidence another tire manufacturer used a better alternative design. Here the plaintiffs allege the motorcycle was a defective product because of inadequate warnings about the dangers of modifying the motorcycle and towing a trailer. A product
(c) is defective because of inadequate instructions or warnings when the foreseeable risk of harm posed by the product could have been reduced or avoided by the provision of reasonable instructions or warnings . . . and the omission of the instructions or warnings renders the product not reasonably safe.
Restatement (Third) of Torts: Products Liability § 2(c), at 14 (1998) ("Products Restatement"). This subsection adopts a reasonableness test for the adequacy of a warning or instruction. Id. § 2 cmt. i, at 29-30.
Under the Restatement and under Iowa law, a court should not submit failure to warn claims under both negligence and strict liability theories. Id. § 2 cmt. n, at 35-36; see Olson v. Prosoco, Inc., 522 N.W.2d 284, 289 (Iowa 1994) (holding it error to instruct on negligence and strict liability); Wright v. Brooke Group, Ltd., 652 N.W.2d 159, 169 (Iowa 2002) (preferring "to label a claim based on a defective product design as a design defect claim without reference to strict liability or negligence"). In the case before us, it would not matter which theory the plaintiffs would choose because both fail if the warnings or instructions are adequate and reasonable. The district court determined the warnings were adequate as a matter of law. We agree that no reasonable fact finder could find otherwise, so the district court was correct in making that determination. Regardless of whether the district court applied a design-defect, reasonable-alternative-design analysis or an adequacy-of-the-warnings analysis, the strict liability claim fails and summary judgment was proper.
The district court correctly determined the warnings Harley-Davidson provided were adequate as a matter of law, so the plaintiffs cannot prove Harley-Davidson breached its duty to warn. It also correctly determined Harley-Davidson had no duty to warn third-party non-users such as the Cycle Center, Hitch Doc, and CMT. We therefore affirm the grant of summary judgment in favor of Harley-Davidson on all of the plaintiffs' claims.
B. Hitch Doc and CMT. 1. Negligent failure to warn.
The district court determined Hitch Doc and CMT had a duty to warn, but the written warnings from Harley-Davidson, in addition to the verbal warnings, were adequate to make the risks known and obvious, thus relieving Hitch Doc and CMT of their duty. The court also reiterated its conclusions the plaintiffs gave no indication any warning would have stopped them from towing the trailer, and that action was a superseding cause of the accident, breaking the alleged causal link between the defendants' failure to warn and the injuries suffered by the plaintiffs.
The plaintiffs contend Hitch Doc and CMT had an independent duty to warn them of the risks involved in towing a trailer behind a motorcycle, regardless of the adequacy of any warnings provided by Harley-Davidson or others. They argue the court was inconsistent in determining Hitch Doc and CMT had a duty to warn, yet had no duty to warn because the risks were open and obvious. Hitch Doc and CMT argue the warnings provided by Harley-Davidson and others made the risks open and obvious, relieving them of a duty to warn. See Olson, 522 N.W.2d at 291 (finding "no duty to warn where risks are known and obvious").
While we agree the warnings Harley-Davidson provided were reasonable and adequate to fulfill its duty to warn the plaintiffs, it does not necessarily follow that the warnings had the effect of making the risks of towing a trailer open and obvious, so as to relieve Hitch Doc and CMT of their duty to warn. It was not necessary to the resolution of the question whether or not Harley-Davidson breached its duty to warn to determine the plaintiffs had actual knowledge of the risks of towing a trailer. The basis for the no-duty rule, as the court applied it to Hitch Doc and CMT, however, "is that actual knowledge of a danger is equivalent, and perhaps even superior, to a warning." Carr v. San-Tan, Inc., 543 N.W.2d 303, 306 (Iowa Ct. App. 1995). With no warnings on the hitch or the trailer, it is necessary to determine whether or not Hitch Doc and CMT were relieved of their duty to warn because risk was open and obvious and the plaintiffs had actual knowledge of the danger. We conclude from the record before us that reasonable minds could differ and a genuine issue of material fact exists so as to preclude summary judgment on the plaintiffs' negligent-failure-to-warn claim against Hitch Doc and CMT. Our conclusion also necessitates a conclusion the court erred in finding no proximate cause as a matter of law. If a jury were to find the risk of towing a trailer was not open and obvious and the plaintiffs did not know of the risk, it would not be unreasonable for the jury to find a causal link between that lack of knowledge and the damages suffered by the plaintiffs. Accordingly, we reverse the district court's grant of summary judgment on the failure-to-warn claim as to Hitch Doc and CMT and remand the case for further proceedings.
2. Strict liability.
The district court treated the plaintiffs' strict liability claims against Hitch Doc and CMT as design defect claims and found they offered no practical alternative design, so summary judgment was appropriate. The plaintiffs argue the court misinterpreted their claim, which, on appeal, they argue was a defective-warning claim. Hitch Doc and CMT argue the plaintiffs did not plead the claim as a defective warning, but as a design defect. From a review of the pleadings, it looks to us like either a manufacturing defect or design defect claim. The material common language of the claims against Hitch Doc and CMT is as follows:
At all material times [defendant] was engaged in the business of designing, manufacturing, and delivering [the product] . . .
The [product] was defective, in that it did not perform reasonably, adequately, and safely . . .
The defective condition of [the product] was unreasonably dangerous . . .
This language tracks closely with the civil jury instructions for a manufacturing or design defect in effect at the time. It bears no relationship to the defective warning jury instruction language.
See Iowa Civ. Jury Instruction 1000.1 (2000). The September 2003 version of the instructions on products liability track the approach of the Products Restatement.
Id. at 1000.7.
If we view the claim as a manufacturing defect, we will affirm the grant of summary judgment because there was no evidence of a defect in the product as manufactured. It reached the consumer in its intended condition.
If we, as the district court did, view the claim as a design defect, we affirm the grant of summary judgment on the same grounds set forth in the court's analysis.
In Olson v. Prosoco, our supreme court held it was error for a district court to submit failure-to-warn claims to a jury under both negligence and strict liability theories. Olson, 522 N.W.2d at 289. The court determined the claim should be submitted under a negligence rubric only. Id. The supreme court revisited the issue of negligence versus strict liability as it relates to design defect claims recently in Wright v. Brooke Group, Ltd. The court adopted sections one and two of the Product Restatement for product defect cases. Wright, 652 N.W.2d at 169. The court noted the Products Restatement has moved away from the strict liability analysis of product defect claims related to design or warning defects in favor of the "risk-utility analysis traditionally found in the negligence standard." Id. (quoting Lovick, 588 N.W.2d at 698)). The Restatement specifically links design defect cases and warning defect cases to the risk-utility analysis of negligence. Products Restatement § 2 cmt. n, at 36. If we view the claims as defective-warning claims, they merge with the negligent failure-to-warn claims on which we have granted relief from the summary judgment.
No matter how we view the strict liability claims against Hitch Doc and CMT, they cannot survive. Summary judgment was appropriate and the strict liability claims are dismissed.
C. Cycle Center. 1. Failure to warn.
The plaintiffs alleged Cycle Center had a duty to warn them of the risks in towing a trailer with a motorcycle because Cycle Center "acted in the capacity of a seller" by taking the motorcycle on consignment for sale from Hansen. The district court noted it found no Iowa cases defining "consignment sale" or discussing the relationship created between the parties. It looked to the statutory definition of "consignment" applicable to secured transactions in Iowa Code section 554.9102 as instructive. It also noted the recurring theme in consignment sale cases is payment to the consignee. Finding no evidence in the record of payment by Hansen to Cycle Center for selling his motorcycle, or any oral or written agreement, the court determined Cycle Center was not a "seller" and had no duty to warn.
554.9102. Definitions and index of definitions
1. Article 9 definitions. In this Article:
. . . .
t. "Consignment" means a transaction, regardless of its form, in which a person delivers goods to a merchant for the purpose of sale and:
(1) the merchant:
(a) deals in goods of that kind under a name other than the name of the person making delivery;
(b) is not an auctioneer; and
(c) is not generally known by its creditors to be substantially engaged in selling the goods of others;
(2) with respect to each delivery, the aggregate value of the goods is one thousand dollars or more at the time of delivery;
(3) the goods are not consumer goods immediately before delivery; and
(4) the transaction does not create a security interest that secures an obligation.
Iowa Code § 554.9102(1)(t) (2001).
We note one Iowa case calls the consignee a "commission house" or "commission merchant" Alley, Greene Pipe Co. v. Thornton Creamery Co., 201 Iowa 621, 621-22, 207 N.W. 767, 767-68 (1926).
On appeal, the plaintiffs contend the circumstances of the sale fit the statutory definition and that there was some evidence a commission was to be paid to Cummings or Cycle Center. They argue the disputed evidence is a material fact precluding summary judgment. Cycle Center responds that payment "is not only recurrent in the cases cited by the district court, but is more in accord with the realities of business practice." Cycle Center also argues the transaction fails to meet the consignment definitions the plaintiffs use in their brief of one "who is given the power to sell goods to its customers or return the goods if a sale cannot be consummated."
We agree with the district court that some commission or payment to the consignee is a recurrent theme in consignment sale cases and the plaintiffs' "impression" Cycle Center was to receive some payment is insufficient to be a genuine issue of material fact for a jury. We also find no evidence of any oral or written consignment or agency agreement between Cycle Center and Hansen. Although the accounts of the sale differ as to where it took place and who was present, taking the account of the sale in the light most favorable to the plaintiffs, we do not see that Cycle Center had the power or authority to sell the motorcycle; that remained with Hansen. We conclude the district court correctly determined Cycle Center was not a seller for purposes of a duty to warn the plaintiffs.
The district court also concluded Cycle Center had no duty to the plaintiffs under general tort principles, citing Garofalo v. Lambda Chi Alpha Fraternity, 616 N.W.2d 647, 652 (Iowa 2000). The plaintiffs argue Garofalo is not controlling because it is not a products liability case. We disagree. The principles relating to a failure to take action to protect from harm apply to the plaintiffs' claim Cycle Center failed to warn them. See Garofalo, 616 N.W.2d at 652. Absent some special relationship with the plaintiffs, Cycle Center had no duty to take action to protect them from harm.
The district court analyzed whether any failure to warn by Cycle Center was a proximate cause of the plaintiffs' injuries and concluded the plaintiffs' act of towing the trailer was an intervening or superseding cause of their injuries. See Rieger v. Jacque, 584 N.W.2d 247, 251 (Iowa 1998). We need not address this analysis to affirm the district court's grant of summary judgment. Because the court found no basis for Cycle Center owing the plaintiffs a duty, either under general tort principles or under section 388 of the Restatement (Second) of Torts, there can be no breach of duty. We conclude summary judgment was proper and affirm the district court.
D. Leave to Amend.
Shortly after the pleadings deadline passed, the supreme court issued the Wright decision. The plaintiffs moved to amend the pleadings to add claims of fraud, claiming the same facts and circumstances supporting their negligence and strict liability also support fraud claims. See Wright, 652 N.W.2d at 174-77. The district court denied the motion as untimely and prejudicial to the defendants and added it did not think such fraud claims would survive Wright.
We review a court's ruling on a motion for leave to amend for an abuse of discretion and will reverse only on a clear showing it abused that discretion. Wooridge v. Central United Life Ins. Co., 568 N.W.2d 44, 47-48 (Iowa 1997). Leave to amend is to be freely given when justice requires it. Medco Behavioral Care Corp. v. Iowa Dep't of Human Servs., 553 N.W.2d 2d 556, 563 (Iowa 1996). However, leave to amend should be denied when it substantially changes the issues. See Wooridge, 568 N.W.2d at 47.
The Wright decision held:
[A] manufacturer's failure to warn or to disclose material information does not give rise to a fraud claim when the relationship between a plaintiff and a defendant is solely that of a customer/buyer and manufacturer with two exceptions. Those exceptions are limited to instances where the manufacturer (1) has made misleading statements of fact intended to influence consumers, or (2) has made true statements of fact designed to influence consumers and subsequently acquires information rendering the prior statements untrue or misleading.
Wright, 652 N.W.2d at 177. We conclude adding claims based on Hitch Doc's and CMT's advertising would substantially change the issues. We also believe, as did the district court, such claims as the plaintiffs sought to allege, would not survive the narrow exceptions in Wright. At a minimum, the plaintiffs cannot prove detrimental reliance on the statements in the advertisements because (1) there is no evidence they saw the advertisements before purchasing the trailer, and (2) the hitch already was installed on the motorcycle when they bought the motorcycle, so no advertisements could have influenced their decision. See Hall v. Wright, 156 N.W.2d 661, 666 (Iowa 1968) (setting forth the elements of fraud). We find no abuse of discretion in denying the plaintiffs' motion for leave to amend.
V. Conclusion.
We affirm the district court's grant of summary judgment in favor of Harley-Davidson on all claims. We reverse the grant of summary judgment in favor of Hitch Doc and CMT on the negligence claim and remand for further proceedings. We affirm the grant of summary judgment in favor of Hitch Doc and CMT on the strict liability claims. We affirm the grant of summary judgment in favor of Cycle Center. The district court did not abuse its discretion in denying the plaintiffs' motion for leave to amend the pleadings.