                    NUMBER 13-17-00349-CV

                       COURT OF APPEALS

              THIRTEENTH DISTRICT OF TEXAS

                 CORPUS CHRISTI - EDINBURG


INTERNATIONAL INSURANCE
COMPANY OF HANNOVER SE
AS SUBROGEE TO ASSOCIATION
OF UNITED STATES POSTAL
LESSORS,                                                      Appellant,

                                      v.

WAL-MART STORES, INC.,
WAL-MART STORES TEXAS, L.P.,
AND WAL-MART ASSOCIATES, INC.,                                 Appellees.


               On appeal from the 105th District Court
                     of Nueces County, Texas.


                    MEMORANDUM OPINION

         Before Justices Contreras, Longoria and Hinojosa
            Memorandum Opinion by Justice Hinojosa

    Appellant International Insurance Company of Hannover SE as subrogee to
Association of United States Postal Lessors (Hannover) appeals a summary judgment

dismissing its products liability claims against Wal-Mart Stores, Inc., Wal-Mart Stores

Texas, LP, and Wal-Mart Associates, Inc. (Wal-Mart). By one issue, Hannover argues

that the trial court erred in granting Wal-Mart’s no-evidence motion for summary judgment

because it presented more than a scintilla of evidence that: (1) Wal-Mart sold a defective

space heater; and (2) established an exception to Wal-Mart’s statutory protection as an

innocent seller. We affirm.

                                        I.      BACKGROUND

        A fire caused damage to a United States Post Office located in Corpus Christi,

Texas. Hannover, the insurer for the property, paid $1,675,388.31 for damages to the

post office. After an investigation revealed that a malfunctioning space heater might

have started the fire, Hannover filed a subrogation suit against Wal-Mart, 1 alleging

causes of action for products liability and negligence.

        Wal-Mart filed a no-evidence motion for summary judgment, asserting that there

was no evidence it sold the heater. In the alternative, Wal-Mart maintained that it was

shielded from liability as an innocent seller pursuant to Texas Civil Practices and

Remedies Code section 82.003. See TEX. CIV. PRAC. & REM. CODE ANN. § 82.003 (West,

Westlaw through 2017 1st C.S.). Wal-Mart also argued that there was no evidence that

the heater was the proximate cause of the fire.

        Hannover filed a response supported by the following evidence: the affidavit of

its expert Dennis Rasco; the deposition of postal employee Thelma Medina who


        1 Hannover also sued Aloha Housewares, Inc., Forta Electronics Co., Staples Inc., and Staples the
Office Superstore, LLC. They are not parties to this appeal.
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purchased the heater; a research report prepared by Diversified Product Inspections, LLC

(DPI); recall notices from the United States Consumer Product Safety Commission

(CPSC); a Texas Secretary of State website print-out pertaining to Aloha Housewares,

Inc. (Aloha); and the affidavit of Katy Ohlsson.

       In his affidavit, Rasco, an electrical engineer, opined that the heater caused the

post office fire. Rasco examined the heater and discovered that a contact arm of the

electrical component was bent and distorted. He concluded that the design of the heater

presented an unreasonable danger due to “[t]he failure of the electrical component” and

“[t]he CPSC recall instructing consumers to immediately stop using the recalled heater[.]”

Rasco did not offer any opinion concerning the identity of the heater, instead referencing

the conclusions of the DPI report.

       DPI prepared a report comparing the damaged heater to an exemplar, which was

branded as a “FlowPro” heater. DPI “determined that each heater was manufactured

and/or distributed by the same company.” DPI, however, was unable to determine the

damaged heater’s model number, serial number, or date of manufacture “[d]ue to the lack

of product markings[.]” DPI stated that there was a CPSC product recall for heaters “with

an identical or nearly identical design as [the damaged heater.]” The DPI report labels

Aloha as a “manufacturer and/or distributor.” Attached to the report was a CPSC product

recall notice for FlowPro heaters. The recall notice referenced an unidentified Chinese

manufacturer. Also attached to the report was a document identifying Aloha as the

registrant of the trademark FlowPro. Hannover attached additional CPSC recall notices

identifying Aloha as the “Importer/Distributor” of heaters manufactured by an unidentified


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Chinese company and sold at Wal-Mart stores.

       In her deposition testimony, Medina testified that she could not remember where

or when she purchased the heater. In her affidavit, Ohlsson detailed her efforts on behalf

of Hannover to access records from the United States Postal Service under the Freedom

of Information Act.

       Following a hearing, the trial court granted Wal-Mart’s no-evidence motion for

summary judgment. This appeal followed.

                                    II.    DISCUSSION

       By its sole issue, Hannover argues that “more than a scintilla of evidence exists

that Wal-Mart is liable[.]”

A.     Standard of Review

       After adequate time for discovery, a party without presenting summary judgment

evidence may move for summary judgment on the ground that there is no evidence of

one or more essential elements of a claim or defense on which an adverse party would

have the burden of proof at trial. TEX. R. CIV. P. 166a(i). A motion for no-evidence

summary judgment is equivalent to a motion for pretrial directed verdict, and we apply the

same legal sufficiency standard on review. Nalle Plastics Fam. Ltd. P’ship v. Porter,

Rogers, Dahlman & Gordon, P.C., 406 S.W.3d 186, 199 (Tex. App.—Corpus Christi 2013,

pet. denied). Such a motion should be granted if there is no evidence of at least one

essential element of the claimant’s cause of action. Hamilton v. Wilson, 249 S.W.3d 425,

426 (Tex. 2008).

       All that is required of the non-movant is to produce a scintilla of probative evidence


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to raise a genuine issue of material fact on the challenged element. Forbes Inc. v.

Granada Biosciences, Inc., 124 S.W.3d 167, 172 (Tex. 2003). Less than a scintilla of

evidence exists when the evidence is so weak as to do no more than create a mere

surmise or suspicion of a fact. Id. More than a scintilla of evidence exists if it would

allow reasonable and fair-minded people to differ in their conclusions.           Id.   In

determining whether the non-movant has produced more than a scintilla of evidence, we

review the evidence in the light most favorable to the non-movant, crediting such evidence

if reasonable jurors could and disregarding contrary evidence unless reasonable jurors

could not. Nalle Plastics, 406 S.W.3d at 199.

B.    Applicable Law

      Chapter 82 of the Texas Civil Practice and Remedies Code was added by the

legislature to protect sellers from products liability suits unless they significantly and

intentionally participated in the design or production of the product. Manchester Tank &

Equip. Co. v. Engineered Controls Int’l, Inc., 311 S.W.3d 573, 575 (Tex. App.—Waco

2009, pet. denied). The purpose of the statute is to protect innocent sellers by assigning

responsibility for the burden of products-liability litigation to product manufacturers.

Petrol. Sols., Inc. v. Head, 454 S.W.3d 482, 494 (Tex. 2014). Section 82.001(3) defines

“seller” as an entity that distributes or places a product into the stream of commerce for

commercial purposes. TEX. CIV. PRAC. & REM. CODE ANN. § 82.001(3) (West, Westlaw

through 2017 1st C.S.). A “manufacturer” is defined as “any person who is a designer,

formulator, constructor, rebuilder, fabricator, producer, compounder, processor, or

assembler of any product or any component part thereof and who places the product or


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any component part thereof in the stream of commerce.”                       See id. § 82.001(4).         A

products liability action includes:

        any action against a manufacturer or seller for recovery of damages arising
        out of personal injury, death, or property damage allegedly caused by a
        defective product whether the action is based in strict tort liability, strict
        products liability, negligence, misrepresentation, breach of express or
        implied warranty, or any other theory or combination of theories.

Id. § 82.001(2).

        Under chapter 82, a non-manufacturing seller is not liable for harm caused by a

product unless one of seven exceptions is established.                   Id. § 82.003(a).       The only

exception relied on by Hannover in its summary judgment response states that “[a] seller

that did not manufacture a product is not liable for harm caused to the claimant by that

product unless the claimant proves . . . that the manufacturer of the product is . . .

insolvent.” Id. § 82.003(a)(7)(A). 2 A plaintiff bringing a products liability claim against a

non-manufacturing seller has the burden to establish an exception to the seller’s statutory

protection. See id. § 82.003(a); In re Atlas Tubular, LP, 296 S.W.3d 363, 365 (Tex.

App.—Corpus Christi 2009, orig. proceeding); see also Howard v. Wal-Mart, No. 10-09-

00246-CV, 2010 WL 3784918, at *3–4 (Tex. App.—Waco Sept. 29, 2010, no pet.) (mem.

op.) (holding that the trial court properly granted seller’s no-evidence summary judgment

motion where plaintiff presented no evidence regarding the application of a statutory

exception); Dennis v. Giles Grp., Inc., No. 04-07-00280-CV, 2008 WL 183062, at *6 (Tex.

App.—San Antonio Jan. 23, 2008, no pet.) (mem. op.) (reviewing whether plaintiff



        2 Section 82.003 provides for six other exceptions to a seller’s statutory protection, which are not

relevant to this appeal. See TEX. CIV. PRAC. & REM. CODE ANN. § 82.003(a) (West, Westlaw through 2017
1st C.S.).
                                                     6
presented evidence of an exception to seller’s statutory protection in response to no-

evidence summary judgment motion).

C.     Analysis

       The parties do not dispute, and we agree, that Hannover’s claims constitute a

products liability action subject to chapter 82 the civil practice and remedies code. See

TEX. CIV. PRAC. & REM. CODE ANN. § 82.001(2). Therefore, to overcome Wal-Mart’s no-

evidence summary judgment motion, Hannover was required to present evidence that

Wal-Mart sold the allegedly defective heater and establish an exception to chapter 82’s

seller protection.   See id. § 82.003(a); In re Atlas Tubular, LP, 296 S.W.3d at 365.

Assuming that there is more than a scintilla of evidence that Wal-Mart sold the heater, we

conclude that Hannover failed to present evidence that would obviate Wal-Mart’s status

as an innocent seller.

       In its response to Wal-Mart’s no-evidence summary judgment motion, Hannover

presented evidence which it contended established that the manufacturer was insolvent.

See TEX. CIV. PRAC. & REM. CODE ANN. § 82.003(a)(7)(A).            However, Hannover’s

summary judgment evidence identifies only the distributor of the heater. DPI concluded

in its report that the damaged heater was nearly identical to FlowPro heaters sold

exclusively at Wal-Mart. Hannover relies on the CPSC recall notices and trademark

registration attached to the DPI report to establish that Aloha, a Texas corporation, was

the owner of the FlowPro trademark. Hannover also relies on the forfeiture of Aloha’s

corporate charter as evidence that it is insolvent. This evidence fails to establish that

Aloha was also the manufacturer of the heater.       To the contrary, the recall notices


                                            7
establish only that Aloha imported and distributed the FlowPro heaters, which were

manufactured by an unidentified Chinese company. Hannover appears to confuse the

statutory definition of “seller,” which includes a distributor such as Aloha, and

“manufacturer,” which includes those entities that participate in the design, formulation,

construction, rebuilding, fabrication, compounding, processing, or assembling of a

product. See id. § 82.001(3)–(4); see also Gen. Motors Corp. v. Hudiburg Chevrolet,

Inc., 199 S.W.3d 249, 256 (Tex. 2006) (explaining that “all manufacturers are also sellers,

but not all sellers are manufacturers”). There is no evidence that Aloha engaged in any

manufacturing activity concerning the FlowPro heaters.

      Because there is no evidence identifying the manufacturer of the heater or

indicating whether that manufacturer is insolvent, Hannover has failed to overcome Wal-

Mart’s statutory protection as an innocent seller. See TEX. CIV. PRAC. & REM. CODE ANN.

§ 82.003. We conclude that the trial court did not err in granting Wal-Mart’s no-evidence

summary judgment motion on this basis. We overrule Hannover’s sole issue.

                                   III.   CONCLUSION

      We affirm the trial court’s judgment.

                                                              LETICIA HINOJOSA
                                                              Justice
Delivered and filed the
2nd day of August, 2018.




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