Products Liability Law Reporter

The South Carolina Supreme Court held that a retailer that sold a Blitz U.S.A. gas can involved in an incident that resulted in a child’s severe burn injuries may be liable under negligence and products liability theories despite a court order and injunction entered in the bankruptcy proceedings of Blitz U.S.A., Inc.

James Nix poured kerosene from a Blitz U.S.A. gasoline can onto a burning pile in his yard. The kerosene ignited and flames entered the gas can through its unguarded pour spout. The gas can exploded and sprayed kerosene and fire onto Nix’s 5-year-old son. The child suffered severe burn injuries to over half of his skin, necessitating skin grafts and surgeries and resulting in permanent scarring and pain.

The boy’s aunt, as his guardian, and his mother brought identical lawsuits in South Carolina state court, alleging that Blitz U.S.A., Inc., was liable under strict liability, breach of warranty, and negligence theories. The plaintiffs also alleged that Fred’s Stores of Tennessee, Inc.—the chain store through which Blitz had distributed the gas can—was liable under a negligence theory and for strict liability and breach of warranty based on its sale of the allegedly defective gas can.

Fred’s Stores moved to permanently enjoin or alternatively stay the lawsuits. It argued that a bankruptcy order, including its attachment, and injunction obtained by Blitz in 2014 foreclosed any claims against third-party sellers like Fred’s. The trial court rejected Fred’s motion to enjoin the proceedings, and an intermediate appellate court affirmed.

Affirming, the state high court noted that the Confirmation Order and Plan the bankruptcy court issued in the Blitz bankruptcy proceedings enjoin civil actions alleging bodily injury and property damage from a Blitz product against certain parties who were not named as debtors, including Wal-Mart Stores and some insurance companies that agreed to fund the Blitz Personal Injury Trust. Noting that the Confirmation Order and Plan are inconsistent as to whether the bankruptcy court had intended to enjoin third-party sellers such as Fred’s, the court nevertheless concluded that the bankruptcy court did not intend to define protected parties so broadly as to prohibit claims like the plaintiffs’ against a seller like Fred’s, which did not participate in the bankruptcy proceedings or make a contribution to the bankruptcy estate.

The court also rejected Fred’s contention that the plaintiffs’ claims must be enjoined because they are grounded in products liability. Citing case law, the court said that a retail seller owes a duty of care to its customers and may be liable under a seller’s negligence theory for knowingly selling a dangerous product and failing to act with reasonable care. Such a potential claim, the court added, is separate from any claim alleging negligence against a product’s manufacturer.

Moreover, the court said the fact that the gas can here was allegedly defective did not protect Fred’s from liability for its own negligence. Such protection would have applied only where the terms of the Confirmation Order and Plan provided for this, the court found.

Consequently, the court remanded the case to the circuit court for discovery and trial.

Citation: Hazel v. Blitz U.S.A., Inc., 2021 WL 1016866 (S.C. Mar. 17, 2021).

Plaintiff counsel: AAJ member Mark D. Ball and Kathleen Chewning Barnes, both of Hampton, S.C.