The Texas Supreme Court has overturned a Dallas Court of Appeals reversing a trial court summary judgment order that dismissed a products liability action based on the 15-year statute of repose.
Ford Motor Company v. Jennifer Parks, Individually and as Guardian of the Person and Estate of Samuel Rivera Gama, and Nicolasa Gama Dale (No. 23-0048; June 7, 2024) arose from a rollover accident involving a 2001 Ford explorer. Plaintiffs brought suit against Ford, alleging the vehicle’s defective design made it susceptible to rollovers and that the vehicle lacked sufficient roof strength to withstand rollover accidents. Ford moved for summary judgment on grounds that plaintiffs’ claim was time-barred by the 15-year statute of repose in a products liability action against a manufacturer or seller. § 16.012(b), CPRC. Here the accident occurred on May 23, 2014, and plaintiffs filed the lawsuit on May 17, 2016. Ford argued that the vehicle was sold to the dealer on May 9, 2000, so plaintiffs should have filed suit within 15 years of that date. The trial court granted Ford’s summary judgment motion and ordered that plaintiffs take nothing. Plaintiffs appealed. The court of appeals reversed, holding that a fact issue existed as to the specific date of sale of the vehicle. Ford sought review, which SCOTX granted.
In an opinion by Chief Justice Hecht, SCOTX reversed and rendered judgment for Ford. The Court approved of the Fifth Circuit’s definition of the term “sale” as it is used in § 16.012(b), which that court established in a similar long-tail rollover case involving Ford, Camacho v. Ford Motor Co., 993 F.3d 308 (5th Cir. 2021) [“sale” means the transfer of title or property for a price]. But this definition does not mean, as the court of appeals assumed, that “money must actually change hands before a sale is completed.” Section 16.012(b), as the Chief pointed out, does not require that, and, further, the court of appeals’ interpretation “is incompatible with other Texas law.” For example, Chapter 2 of the UCC, which governs the sale of a goods, provides that “title passes to the buyer at the time and place at which the seller completes his performance with reference to the physical delivery of the goods, despite any reservation of a security interest.” The Chief also pointed to “blackletter contract law,” which adopts the same “transfer of title to property for a price” formulation in the common law context. Consequently, Ford did not have to prove the specific date of payment, just the date of delivery of the vehicle to the dealer “for a price.” Additionally, because “a defendant will not always have such evidence [of the exact date of payment],” the defendant need only prove that the sale occurred outside the relevant statutory period.
This opinion appears very problematic to us. Based on the excerpts from the record quoted by the court, there is no question that Ford records a vehicle as sold on the date of release to the dealer. It might be noted that 43 TAC § 215.144 requires the dealer to maintain records that verify its ownership of vehicles it buys and sells to third parties. In other words, once the dealer has a vehicle in its possession, it must record title before it can offer the vehicle for sale. The payment processing part of the equation does not alter the reality of the transfer of title, that is, the “sale.” This evidence satisfied the Fifth Circuit, but not the Fifth Court of Appeals. Though it is technically true that a federal decision on the same issue does not bind a state court, the court’s attempt to distinguish Camacho is unconvincing and itself produces an inconsistency in Texas law. In this case, Ford conclusively established that.
This is an important decision for the effectiveness of the 15-year statute of repose. If the Dallas Court of Appeals had been right and dealers really don’t “own” the vehicles a manufacturer releases to them until some unspecified date when payments are trued up, the statute of repose would have become a dead letter as applied to motor vehicle manufacturers (and who knows what else). Fortunately, SCOTX averted what could have become a very big problem.
