Simpson v. Hatteras Island Gallery Restaurant Inc.3/16/1993
over indemnity from Etheridge Seafood, the supplier of the fish, Hatteras Restaurant, the retailer of the fish, must allege and prove (1) that the supplier is liable to the plaintiff, and (2) that the retailer's liability to the plaintiff is derivative, that is, based solely upon the breach of the supplier. See Kim v. Professional Business Brokers Ltd., 74 N.C. App. 48, 51, 328 S.E.2d 296, 299 (1985). A retailer's liability for breach of the implied warranty of merchantability is derivative if the retailer (1) acquires and sells a product in a sealed container, provided that the retailer does not damage or mishandle the product while it is in his possession, or (2) acquires and sells a product under circumstances in which he was afforded no reasonable opportunity to inspect the product in such a manner that would have or should have, in the exercise of reasonable care, revealed the existence of the condition complained of, again provided that the retailer does not damage or mishandle the product while in his possession. N.C.G.S. ยง 99B-2(a) (1989); see also Morrison v. Sears, Roebuck & Co., 319 N.C. 298, 303, 354 S.E.2d 495, 498-99 (1987). The retailer's liability is not derivative, and therefore is independent, if the retailer (1) acquires a product in a sealed container, but damages or mishandles the product before selling it, or (2) because of a failure to use reasonable care, fails to discover a defective condition in a product acquired from a supplier which a reasonable inspection would have revealed, or damages or mishandles the product while it is in his possession. Id.
In the instant case, the "sealed container" defense to breach of the implied warranty of merchantability, see Morrison, 319 N.C. at 303, 354 S.E.2d at 498-99, has no application. The restaurant after acquiring the fish from Etheridge froze it, thawed it, marinated it, put it on ice, then cooked and served it to Dr. Simpson. Rather, the restaurant's independent liability for breach of implied warranty depends on whether the restaurant was afforded a reasonable opportunity to inspect the fish in a manner that would have or should have, in the exercise of reasonable care, revealed the toxicity level of the fish, or, if not, whether the restaurant mishandled or damaged the fish while it was in its possession. Based upon my reading of the record, there is no evidence that the restaurant damaged or mishandled the fish such that it contributed to or increased its defective condition. In addition, the evidence indicates that no reasonable inspection would have revealed the deadly defect. There is no evidence that the elevated histamine level produced any unusual odor, color, or texture. Accordingly, there was no substantial evidence requiring submission to the jury of a separate issue of indemnity on the breach of warranty issues, as all of the evidence supports a Conclusion that the restaurant's liability was derivative. Because its liability is derivative, the restaurant is entitled to full indemnification from the supplier and the trial court correctly ordered Etheridge to pay the full amount of the $400,000.00 judgment.
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