South Carolina Court Says Seller in Product Liability Claim Was Not Protected by Manufacturer’s Bankruptcy

It is not unusual for one or more of the defendants in a South Carolina product liability lawsuit to seek federal bankruptcy protection. This is especially true if a particular product has been accused of causing numerous serious personal injuries or wrongful death.

The effects of the bankruptcy can vary, depending upon the particular situation at hand. In some cases, a bankruptcy can effectively terminate a pending state court lawsuit, forcing the litigant(s) to pursue their claim along with other creditors in the bankruptcy case.

Facts of the Case

In a recent South Carolina Court of Appeals case, the plaintiffs were the mother and guardian ad litem of a five-year-old child who allegedly suffered severe burn injuries during the November 2010 explosion of a portable gasoline container manufactured by one defendant and sold by the other. The plaintiffs’ filed respective lawsuits against the defendants, the maker and a retail seller of the container, in Hampton County Circuit Court in November 2013, asserting claims for product liability, strict liability, breach of warranty, and negligence. (The suits were later consolidated.)

Meanwhile, the manufacturer filed for Chapter 11 bankruptcy protection, and the bankruptcy court set up a trust intended to compensate personal injury victims. The defendant seller filed a motion to permanently enjoin or stay the plaintiffs’ claims on the basis of the maker’s bankruptcy proceedings. The circuit court denied the motion, and the defendant appealed.

The Decision of the Court of Appeals

The appellate court affirmed the circuit court’s decision, holding that the lower tribunal had been correct in ruling that the plaintiffs’ negligence claim fell outside of the bankruptcy court’s order and that the seller was not otherwise entitled indemnity from the manufacturer. While the defendant seller maintained that the bankruptcy court’s injunction and release included all injuries related to a defective product made by the defendant manufacturer, the court of appeals disagreed. According to the court, the bankruptcy order was clear that not all personal injuries claims were to be included. Because the seller’s commercial general liability provider was a non-participating insurer in terms of the bankruptcy proceedings, the release and injunction at issue did not protect the seller from the claims brought by the plaintiffs.

In so holding, the court of appeals pointed out that not all of the claims at issue sounded in product liability. The plaintiffs also asserted negligence claims pertaining to the knowledge and conduct of the seller in particular dealings rather than the defective nature of the can.

Contact an Experienced Personal Injury Attorney in South Carolina

The injuries caused by a dangerous or defective product can be extremely devastating, leaving those affected with staggering medical costs, loss of earning capacity, pain and suffering, and even disfigurement. All too often, the makers and sellers of faulty products try to avoid liability for their actions. If you or a loved one has been hurt by a bad product, the Patrick E. Knie Law Offices in Spartanburg and Greenville can help. Call us at 864-582-5118 to schedule an appointment to discuss your case with an experienced South Carolina product liability lawyer.

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