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Hazel v. Blitz U.S.A., Inc.

Court of Appeals of South Carolina

November 7, 2018

Alice Hazel, as GAL for Jacob N., Respondent,
v.
Blitz U.S.A., Inc., Fred's, Inc., Tiger Express Varnville LLC, and James Nix, Defendants, Of Whom Fred's, Inc. is the Appellant. And Melinda Cook, Respondent,
v.
Blitz U.S.A., Inc., Fred's, Inc., Tiger Express Varnville LLC, and James Nix, Defendants, Of Whom Fred's, Inc. is the Appellant. Appellate Case No. 2015-001947

          Heard October 4, 2018

          Appeal From Hampton County Perry M. Buckner, III, Circuit Court Judge

          Matthew Clark LaFave, of Crowe LaFave, LLC, of Columbia, for Appellant.

          Mark David Ball, of Peters Murdaugh Parker Eltzroth & Detrick, PA, and Kathleen Chewning Barnes, of Barnes Law Firm, LLC, both of Hampton, for Respondent.

          LOCKEMY, C. JUDGE

         Melinda Cook, as the mother of Jacob N., and Alice Hazel, as guardian ad litem (collectively, Respondents), brought separate actions against Fred's, Inc. to recover for injuries Jacob N. sustained when a portable gasoline container exploded. Fred's moved to permanently enjoin or stay the claims, arguing they were subject to an injunction established during bankruptcy proceedings. The circuit court denied the motion. We affirm.

         FACTS

         For over two decades, Blitz USA, Inc. manufactured and distributed plastic gasoline containers, at one point becoming the largest producer in the country. Fred's is a Tennessee-based chain store operating in South Carolina and throughout the southeast. In 2005, as part of an agreement to sell Blitz gas cans, Blitz and Fred's entered into a Vendors Hold Harmless and Indemnity Agreement (Indemnity Agreement). The Indemnity Agreement stated that in exchange for the purchase and retail of its merchandise, Blitz would

protect, defend, hold harmless, and indemnify [Fred's] from and against any and all claims . . . arising out of any actual or alleged . . . death of or injury to any person . . . resulting or claimed to result in whole or in part from any actual or alleged defect in [Blitz's] Products.

         Additionally, Fred's was a certificate holder on several of Blitz's insurance policies-a commercial general liability (CGL) policy, a products liability policy, and an excess liability policy.

         In November 2010, Cook's five-year-old son, Jacob N., was severely burned when a plastic gas container exploded and sprayed him with fuel. The gas can in question was manufactured by Blitz and reportedly purchased from Fred's. In November 2013, Respondents commenced separate lawsuits in Hampton County, both naming Blitz and Fred's as defendants.[1] The complaints asserted claims against Blitz for products liability, strict liability, and breach of warranty, as well as against Fred's for breach of warranty, strict liability, and negligence. As to Blitz, it was alleged the gas can suffered from a defect that allowed gasoline vapors outside the spout to ignite and mix with the contents of the fuel container, causing a "flashback" explosion. As to Fred's, Respondents claimed Fred's knew of the containers' propensity to explode but continued to sell them in its stores anyway.

         Prior to Respondents filing suit, however, Blitz was already facing an onslaught of potential liability from numerous incidents involving its gas cans. Consequently, in November 2011, Blitz filed for Chapter 11 Bankruptcy in the United States Bankruptcy Court for the District of Delaware (the Bankruptcy court). Through its subsequent liquidation and reorganization, Blitz and its insurers sought to settle numerous pending, and possible future, products liability and personal injury claims.

         In January 2014, the Bankruptcy court issued an order (the Bankruptcy order) approving Blitz's First Amended Joint Plan of Liquidation (the Plan). The Plan established the Blitz Personal Injury Trust (the Trust), a single pool of assets from which to provide compensation for "Blitz Personal Injury Claims." The Trust ultimately yielded over one hundred-fifty million dollars paid by Wal-Mart-the largest retailer of Blitz cans-and "Participating Insurers" of Blitz. Among the Participating Insurers were ...


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