Terry Perzy and his son Doug are two very relieved tire dealers.
Since late 2001, the owners of Tee Pee Tire Inc. in Ocala have been embroiled in a lawsuit over a fatal tire-related accident in 1999 that they feared could be the end of their now 15-year-old dealership. The tire's manufacturer argued that a repair in the tire caused the accident, and the complicated legal case turned into a tug of war involving the manufacturer, the dealer and the plaintiff.
In late September, a jury in Ocala exonerated Tee Pee Tire from any fault in the accident, instead returning a $3.1 million judgment against Dunlop Tire Corp., now owned by Goodyear. Dunlop is appealing.
In October 1999, the right rear tire of Katherine and Richard Vaughan's 1996 Mazda MPV minivan blew out, causing the vehicle to overturn, killing Mr. Vaughan, according to the plaintiff's attorney, Bruce Kaster, and the plaintiff's original complaint. The P215/65R15 Dunlop D65H Touring tire-built in Huntsville, Ala., according to the DOT code listed in the lawsuit-was original equipment on the van.
Tee Pee Tire and Terry Perzy were named in the suit for allegedly doing a patch-only repair in the tire that blew, contributing to the accident. Terry Perzy said his dealership didn't have a record of that specific transaction and, in fact, they found a patch in the right front tire that more likely was done at his shop. That patch had markings specific to Tee Pee Tire and an employee at the time who had a penchant for drawing bull's eyes around his repairs. That tire was still holding air years after the accident, Terry Perzy said, but he couldn't prove Tee Pee Tire didn't do the other repair, either.
Feeling they didn't have a role in the accident, the Perzys thought things would work out. ``We just thought this would kinda go away,'' Terry Perzy told Tire Business.
It didn't. The complicated case dragged on.
At the time the tire was built, Dunlop Tire Corp. was owned by Japan's Sumitomo Rubber Industries Ltd. Months before the accident, however, Goodyear acquired majority control of Dunlop tire operations in North America and Europe. Dunlop Tire Corp., technically the tire's manufacturer, was dissolved and succeeded by Goodyear-Dunlop Tire North America L.L.C.
For all intents and purposes of the trial, Dunlop-as the tire's manufacturer-was the main defendant, said Sergio Medina, a Miami attorney who represented Dunlop. Though Dunlop doesn't technically exist as a stand-alone company, Mr. Medina said the court recognized it as the manufacturer, and Dunlop's insurance coverage would be responsible for the verdict. The jury's final judgment in the case listed Dunlop Tire Corp. in Amherst, N.Y., as the responsible party. Sumitomo and Goodyear as parent companies were not served with lawsuits, he said.
``That usually gets ironed out very early on in the litigation so that all of the successor and sister or parent corporations, they have nothing to do with the actual tire or in some cases really have no liability for it,'' Mr. Medina explained. ``Although they may have shared ownership in some degrees, (they) do not get brought into the mix.''
Pursuing the case and defending Dunlop, however, was Goodyear-Dunlop North America, Mr. Sergio said.
Goodyear spokespeople told Tire Business that the Akron-based tire maker was not involved in the suit. ``It really has no connection to Goodyear,'' one spokesman said.
Terry Perzy said the most bitter pill in the whole situation was a cross-claim filed by Dunlop against him, claiming that Tee Pee Tire was ``liable in whole or in part'' for causing or contributing to the accident. That claim was dropped before the trial. ``When a rubber company sues an independent, I don't think the big boys are looking out for the independents anymore,'' he said.
His insurance company's attorney, Matt Miles, said he's seen the scenario played out before. Defendants try to bring in other parties that could shoulder some of the blame-and some of the verdict, he said, which in Florida is paid according to the percentage of responsibility determined by the jury. The result, Mr. Miles argued, is bickering among defendants and an easier job for plaintiffs' attorneys.
``If there's a patch, well, the manufacturer's going to try to dump it on the guy that patched it,'' he said.
Doug Perzy said he felt like a pawn in the case. ``They (Dunlop) weren't trying to defend the tire, they were trying to push the blame onto me,'' he said. ``That's what I felt like the whole thing was.''
Mr. Medina said the opposite was true. He said Dunlop filed the cross-claim in 2002 to keep Tee Pee Tire involved in the case because Dunlop believed the tire failure was caused by an improper repair. ``We don't care who repaired the tire, it was an improper repair,'' he said.
Mr. Miles said he had worked out a ``high-low'' agreement with the plaintiff. Under that deal, if Tee Pee was found not responsible, the company's insurance still would pay $300,000. If Tee Pee was found liable up to $5 million, the dealer would have to pay only $1 million.
``We got something for it,'' Mr. Miles said. ``We got protection on the high end.''
Terry Perzy said that arrangement was worked out between the plaintiff and his insurance company, and he was pleased with it. ``Because I knew they couldn't take away Tee Pee Tire,'' he said.
Mr. Medina said that high-low agreement was a strategy to shift all of the blame onto Dunlop by effectively determining Tee Pee Tire's fate before the jury got the case. In fact, one of his appeal points is that this arrangement was not disclosed to the jury. He said the arrangement was geared toward making Dunlop face all of the blame. ``Which is ultimately what they went ahead and did anyway,'' he said.
Terry Perzy told Tire Business that he feels confident that the repair did not cause the accident. He said when he inspected the tire, the patch was still in place, and the tread had separated. He also believes a major omission from the trial was the plaintiff's care for the tire.
``I feel strongly that we should have never been involved...,'' he said. ``The repair, in my opinion, had nothing to do with the failure.''
Mr. Kaster, the plaintiff's attorney, said he felt the dealer's repair should not have caused the accident. ``But if the tire's not designed properly, that repair procedure can result in a failure,'' he said.
Marvin Bozarth, a longtime expert witness in tire failure cases, said the industry standard is to use both a plug and a patch. A plug-only repair theoretically could fail quicker if air leaked around the plug.
``It could have failed for any reason,'' said Mr. Bozarth, who was not involved in this case.
All of this legal wrangling meant little to Terry Perzy. He spent about $12,000 of his own money defending himself until the case against him as an individual was dropped. And at age 63, he was nervous about protecting his business and his personal assets.
Mr. Medina said it's unclear if Dunlop's appeal will bring the dealership back into the case at this point. Terry Perzy said his attorneys have filed motions asking the judge to keep the dealer out of the appeals.
``We saw our company of 14 years going down the tube,'' Terry Perzy said. Noting the jury's $3.1 million judgment, he added: ``If they'd awarded $3 million against us, here, come get the keys and start the store tomorrow.''
A judgment against Tee Pee could have been damaging beyond the dollars and cents. Terry Perzy said his dealership caters to older customers and has worked hard to establish a good reputation for service.
``Service is our business, word of mouth is our advertising...,'' he said. ``This could have been very, very damaging.''
As it turned out, many customers came into his shop after news of the jury's decision spread to congratulate him.
This concern over their image also was a major reason the Perzys decided not to settle.
``If they put in the press that we were figured in maybe 10-percent liable, I would still have felt like we were done unjustly because, again, I don't feel as though we were doing anything improper,'' Doug Perzy said.
Tee Pee Tire still does tire repairs, but they date them and put their initials by the patch. ``If it's even questionable...we just don't do it, we won't repair it,'' Terry Perzy said. The dealership stopped doing patch-only repairs in 2000 and now does repairs with both a patch and plug.
Another change in the business? No more Dunlop tires, but they still carry Goodyear.
Doug Perzy said they were ``ecstatic'' to hear they were exonerated by the jury, even if it took a stressful few years to get there.
``What you work hard for, you're putting your blood and sweat in this daily business and for someone to try to take that from you unjustly was just really disturbing to us all,'' he said. ``We wanted to fight it, we weren't going to just lie down and say, `OK, here, have the (insurance) policy limit and go away,' because it probably would've been pretty easy to do that.''