Unpublished Disposition, 914 F.2d 262 (9th Cir. 1989)

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U.S. Court of Appeals for the Ninth Circuit - 914 F.2d 262 (9th Cir. 1989)

Sheri DENKENSOHN, Plaintiff-Appellant,v.AQUASLIDE 'N' DIVE CORPORATION, Defendant-Appellee.

No. 89-55315.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted May 11, 1990.Decided Sept. 6, 1990.

Before: REINHARDT and LEAVY, Circuit Judges, and THOMPSON, District Judge* 

MEMORANDUM** 

FACTS

On the night of August 19, 1983, Sheri Denkensohn (Denkensohn), then sixteen years old, and two other teenagers were invited by another youth, Richard Davenport (Davenport), to his home for a swim. When they arrived at the Davenport home, Davenport told his friends that his family had a ritual whereby everyone who swam in the pool for the first time had to enter it by diving off the top of the pool slide. The slide, which was manufactured by appellee Aquaslide, was located between the shallow end and the deep end of the swimming pool. Before Denkensohn reached the backyard pool area, the other three youths entered the pool. When Denkensohn arrived, she heard the others in the pool and then climbed to the top of the slide. While standing on the slide, Denkensohn asked Davenport if it was "o.k." to dive. Davenport replied that it was. Denkensohn then dived into the water on the shallow side and her head struck the bottom of the pool. As a result, Denkensohn was rendered a quadriplegic.

PROCEDURAL BACKGROUND

In November 1984 Denkensohn filed a complaint in the New York Supreme Court, Albany County, against Aquaslide, Pacific Pools (the swimming pool manufacturer), Archie Lawrence & Son (the installer of the pool and slide), and the Davenports (the homeowners). Seaboard Industries, the distributor of the slide, was later brought in as a third party defendant. The complaint alleged causes of action against Aquaslide for negligence, strict liability and breach of warranty.

In December of that year Aquaslide filed a petition for reorganization under Chapter 11 of the United States Bankruptcy Act in the United States Bankruptcy Court, Central District of California. The Federal Bankruptcy Court in Los Angeles, California assumed jurisdiction over Denkensohn's claims against Aquaslide and severed them from action in the New York Supreme Court. Thereafter, Denkensohn filed a proof of claim with the Bankruptcy Court in California claiming fifty million dollars ($50,000,000) in damages.

In the action in the New York Supreme Court, Pacific Pools, Seaboard Industries and Archie Lawrence & Sons moved for summary judgment on the ground that plaintiff had failed to prove a prima facie case by her failure to establish a proximate connection between defendants' alleged acts or omissions and plaintiff's injuries. The New York Supreme Court granted defendants' motions, and held that plaintiff's and David Davenport's recklessness and errors of judgment and not defects in manufacture, sale and installation of the pool and slide were the proximate causes of plaintiff's injuries.

Aquaslide subsequently filed a motion for summary judgment in the Bankruptcy Court action in California and, relying extensively on the collateral estoppel effect of the New York Supreme Court decision, the Federal Bankruptcy Court Judge recommended that Aquaslide's motion be granted. The Bankruptcy Court's proposed findings of fact and conclusions of law and Report and Recommendation were thereafter submitted to the United States District Court, Central District of California. On February 25, 1989, the district judge, relying on those submissions, granted Aquaslide's motion for summary judgment.

Thereafter, the New York Appellate Division reversed the New York Supreme Court's grant of summary judgment as to defendants Seaboard and Archie Lawrence. Denkensohn v. Davenport, 536 N.Y.S.2d 587, 144 A.D.2d 58 (N.Y.App.Div.1989). The appellate court concluded that, because there was evidence that Denkensohn was not aware of the depth of the water when she dove and that it was forseeable that people would dive off the top of the slide, a jury could find that Denkensohn's conduct was not the sole legal cause of her injuries. It also held that Denkensohn's conduct (even along with Davenport's) could not be said to be a superceding cause of her injury as a matter of law, and thus if defendants' alleged acts of negligence were found to be causative factors, Denkensohn's conduct would not necessarily absolve them of liability. The Appellate Division then granted Seaboard and Archie Lawrence leave to appeal and certified the following question to the New York Court of Appeals:

Did this Court err, as a matter of law, by reversing so much of the Supreme Court Order as dismissed the complaint, cross claims and counterclaims asserted against defendant Archie Lawrence & Son and third-party defendant, Seaboard Industries; denying the motions as to those claims; and, as so modified, affirming the order?

On November 30, 1989, the New York Court of Appeals affirmed the order of the Appellate Division denying summary judgment to Seaboard and Archie Lawrence. Kriz v. Schum, 75 N.Y.2d 25, 549 N.E.2d 1155, 550 N.Y.S.2d 584 (1989).

Denkensohn appeals the district court's order adopting the Bankruptcy Court's recommendation to grant Aquaslide's motion for summary judgment.

STANDARD OF REVIEW

This court reviews de novo the grant of a motion for summary judgment. The review is governed by the same standard used by the district court, that is, this Court must determine whether, when viewing the evidence in the light most favorable to the nonmoving party, there are any genuine issues of material fact and whether the movant is entitled to judgment as a matter of law. Orozco v. United Air Lines, 887 F.2d 949, 951 (9th Cir. 1989). In addition, "(i)f the nonmoving party produces direct evidence of a material fact, the court may not assess the credibility of this evidence nor weigh against it any conflicting evidence presented by the moving party. The nonmoving party's evidence must be taken as true." T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass'n., 809 F.2d 626, 631 (9th Cir. 1987).

DISCUSSION

In moving for summary judgment in the Bankruptcy Court, Aquaslide argued that even if it had been negligent, the conduct of Denkensohn and Davenport constituted supervening causes of plaintiff's injury, therefore absolving Aquaslide of liability. The Bankruptcy Court agreed, holding that "it was plaintiff's error of judgment and her recklessness coupled with that of defendants Davenport, and not the defects in the manufacture, sale and installation of the pool and ladder which led to the accident." Along with its conclusion on the merits, the court also determined that the collateral estoppel effect of the earlier New York Supreme Court decision mandated summary judgment in favor of Aquaslide. Although it is difficult to tell from the district court's order, we assume that the district court agreed with both conclusions.

We reverse on both grounds. We find, as to the merits, that genuine issues of material fact exist, making summary judgment inappropriate. We also hold that, given the reversal of the New York Supreme Court's grant of summary judgment by the New York appellate courts, the Bankruptcy Court's (and implicitly the district court's) reliance on the supreme court decision can no longer be sustained.

I.

To prevail on her claim for negligence, Denkensohn must establish that Aquaslide breached a duty owed to appellant and that that breach proximately caused appellant's injury. Kimbar v. Estis, 1 N.Y.2d 399, 135 N.E.2d 708, 153 N.Y.S.2d 197 (1956). The New York courts have held that the question of proximate cause is generally one for the jury to resolve. Derdiarian v. Felix Constr. Corp., 51 N.Y.2d 308, 414 N.E.2d 666, 434 N.Y.S.2d 166 (1980).

To prevail on her claim for strict liability Denkensohn must prove that a defect in the slide, whether in design, manufacture, or as a result of a failure to warn, was the proximate cause of her injury. Belling v. Haugh's Pool, Ltd., 126 A.D.2d 958, 511 N.Y.S.2d 732 (4th Dept.App.Div.1987). Whether a failure to warn proximately caused an injury depends on whether there was a duty to warn and if so, what the nature of that warning should have been and to whom it should have been given. Both the determination of the existence of a duty and its nature turn on a number of factors which the New York courts have generally held to be questions of fact for the jury. Cover v. Cohen, 61 N.Y.2d 261, 473 N.Y.S.2d 378, 461 N.E.2d 864 (1984).1 

At summary judgment, Denkensohn need not prove that Aquaslide's conduct was the proximate cause of her injury, but rather she "must set forth specific facts showing that there is a genuine issue" as to the proximate cause of her injury. Fed. R. Civ. P. 56(e).

At the time of summary judgment, Denkensohn offered evidence that:

1. All other pool slides she had been on were located in the deep end of the pool.

2. Due to the poor lighting in the pool area, she could not determine which end of the pool was the deep end.

3. She did not knowingly dive into shallow water, she thought that she was diving into the deep end of the pool.

4. If she had seen a warning on the slide prohibiting diving she would not have dived from the top of the slide into the pool.

5. At the time of Denkensohn's injury, Carl Meyer, the President of Aquaslide, was aware of several other incidents where people were injured as a result of diving off the top of slides.

When the above evidence is taken as true, as it must be, reasonable persons could differ as to the proximate cause of Denkensohn's injury on her negligence claim and as to whether Aquaslide proximately caused her injury by breaching a duty to warn. Therefore, genuine issues of material fact exist and summary judgment is inappropriate.

II.

The district court was not in error when it relied on the collateral estoppel effect of the New York decision at the time it granted summary judgment to Aquaslide. However, to the extent that its ruling was based on the New York decision, that ruling cannot stand in light of the subsequent reversal of that decision on appeal.

Under the doctrine of collateral estoppel, once an issue is actually litigated and necessarily determined by a court of competent jurisdiction, that determination is conclusive in subsequent suits which are based on a different cause of action but involve the same parties (or their privies) as the prior litigation. Montana v. U.S., 440 U.S. 147, 153 (1979) citing Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326 n. 5 (1979). See, e.g., U.S. v. ITT Rayonier, Inc., 627 F.2d 996 (9th Cir. 1980), Lowell Staats Mining Co. v. Philadelphia Electric Co., 878 F.2d 1271 (10th Cir. 1989). In addition, the federal full faith and credit statute, 28 U.S.C. § 1738, dictates that "a federal court must give to a state-court judgment the same preclusive effect as would be given that judgment under the law of the State in which the judgment was rendered." Migra v. Warren City School Dist. Bd. of Educ., 465 U.S. 75, 80 (1984).

In this case, Aquaslide was dismissed as a defendant in the New York case when the Bankruptcy Court assumed jurisdiction over Denkensohn's claims against Aquaslide. As a result, Aquaslide did not have a "full and fair" opportunity to litigate the issues presented in the New York action. Bernhard v. Bank of America, 19 Cal. 2d 807, 122 P.2d 892 (1942). In such a case, the requirements of due process prohibit the offensive use by Denkensohn of the New York Appellate Division decision against Aquaslide. Blonder-Tongue Lab., Inc. v. Univ. of Illinois Found., 402 U.S. 313, 329 (1971).

The use of collateral estoppel against Denkensohn in the Bankruptcy Court however, offended none of the fundamental fairness considerations inherent in due process. Denkensohn had a full and fair opportunity to contest the issue of liability and "where it can be fairly said that a party has had a full opportunity to litigate a particular issue, he cannot reasonably demand a second one." Schwartz v. Public Admin. 24 N.Y.2d 65, 298 N.Y.S.2d 955, 246 N.E.2d 725 (1969). Thus, the district court was correct at the time in its reliance on the collateral estoppel effect of the New York Supreme Court decision. However, because that decision was reversed by the New York appellate courts, reliance on the Supreme Court's decision can no longer be sustained. Because we conclude that the Bankruptcy Court (and thus the district court) erred in holding on the merits that Aquaslide was entitled to judgment as a matter of law and that in light of subsequent developments their reliance on the collateral estoppel effect of the New York Supreme Court decision was misplaced, we reverse the district court's grant of summary judgment.

REVERSED AND REMANDED


 **

This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by 9th Cir.R. 36-3

 *

Honorable Bruce R. Thompson, Senior United States District Judge, District of Nevada, sitting by designation

 1

In any case, it is difficult conceptually to separate the issues of fault from the issues of proximate cause. The New York Court of Appeals in its Kriz opinion (supra at p. 4) identified rare circumstances where it was possible to do so. On the record before us there is no discussion of the possible actionable fault of Aquaslide, i.e. defective design, defective manufacture or inadequate warnings of known dangers. After the slide in question was sold, the evidence shows that the manufacturer became aware of the propensity of risk-loving users to dive from the top of the slide and suffer injuries. Also, the Federal Consumer Product Safety Commission issued regulations respecting this product and Aquaslide then produced warning decals to be affixed to slides already sold and supplied them to its distributors, including Seaboard Industries. One of such decals read: "No Standing Up On Top Platform Of This Slide. Careless Misuse Can Cause Serious Injury". No such warning signs reached the Davenports. Whether Aquaslide exercised due care under the circumstances and was thus immunized from liability for negligence cannot be resolved on the undeveloped record