617 F.2d 936 (2nd Cir. 1980), 17, Tokio Marine and Fire Ins. Co., Ltd. v. McDonnell Douglas Corp.

Docket Nº:17, 22, Dockets 79-7045, 79-7065.
Citation:617 F.2d 936
Party Name:The TOKIO MARINE AND FIRE INSURANCE COMPANY, LIMITED, et al., Plaintiffs- Appellants-Cross-Appellees, v. McDONNELL DOUGLAS CORPORATION, Defendant-Appellee-Cross-Appellant. McDONNELL DOUGLAS CORPORATION, Defendant and Third-Party Plaintiff- Appellee-Cross-Appellant, v. JAPAN AIR LINES CO., LTD., Third-Party Defendant-Cross-Appellee.
Case Date:March 06, 1980
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit
 
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617 F.2d 936 (2nd Cir. 1980)

The TOKIO MARINE AND FIRE INSURANCE COMPANY, LIMITED, et

al., Plaintiffs- Appellants-Cross-Appellees,

v.

McDONNELL DOUGLAS CORPORATION, Defendant-Appellee-Cross-Appellant.

McDONNELL DOUGLAS CORPORATION, Defendant and Third-Party

Plaintiff- Appellee-Cross-Appellant,

v.

JAPAN AIR LINES CO., LTD., Third-Party Defendant-Cross-Appellee.

Nos. 17, 22, Dockets 79-7045, 79-7065.

United States Court of Appeals, Second Circuit

March 6, 1980

Argued Oct. 26, 1979.

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George N. Tompkins, Jr., (Condon & Forsyth, Lawrence Mentz and Desmond T. Barry, Jr., New York City, on the brief), for plaintiffs-appellants-cross-appellees Tokio Marine and Fire Insurance Co., Ltd., et al., and third-party defendant-cross-appellee Japan Air Lines Co., Ltd.

Harold U. McCoy, Mineola, N. Y. (Scott Fairgrieve and Crowe, McCoy, Agoglia, Fogarty & Zweibel, Mineola, N. Y., on the brief) for defendant and third-party plaintiff-appellee-cross-appellant McDonnell Douglas Corp.

Before MOORE, TIMBERS, and VAN GRAAFEILAND, Circuit Judges.

VAN GRAAFEILAND, Circuit Judge:

On November 28, 1972, a DC-8 plane, manufactured by McDonnell Douglas Corporation (McDonnell) and owned and operated by Japan Air Lines (JAL), crashed during take-off in Moscow, U.S.S.R., killing fifty-two passengers and seriously injuring ten others. Numerous lawsuits were brought against McDonnell and JAL on behalf of injured and deceased passengers, and all were settled. McDonnell, JAL, and JAL's subrogated insurance carriers, (hereinafter collectively referred to as Tokio Marine) are now litigating their own differences. Tokio Marine seeks recovery from McDonnell for loss of JAL's plane and contribution or indemnity for payments made in settlement of the passenger claims. McDonnell, in turn, seeks contribution or indemnity from Tokio Marine and JAL for payments it made on passenger claims.

The district court, Motley, J., granted summary judgment in favor of McDonnell on Tokio Marine's claims and in favor of Tokio Marine and JAL on McDonnell's counterclaim and crossclaim. We affirm.

The Property Damage Claim

Between 1956 and 1970, JAL, one of the largest airlines in the world, purchased forty-one DC-8 planes from McDonnell. The plane that crashed was the twenty-seventh in this series and was delivered to JAL on July 18, 1969. The contracts of purchase were lengthy and detailed, with hundreds of specifications, terms, and conditions, all of which were reviewed and approved by JAL's technical and legal departments. In addition, representatives of JAL were permitted to be present at the McDonnell plant throughout the manufacturing process.

The terms of McDonnell's sales warranties were negotiable and depended to some extent upon what its purchasers were willing to pay; the broader warranties commanded a higher price. See, e. g., Delta Air Lines, Inc. v. Douglas Aircraft Co., 238 Cal.App.2d 95, 103 & n.5, 47 Cal.Rptr. 518, 523 & n.5 (1965). In the warranty article of the contract for the plane that crashed, McDonnell agreed to repair or replace any defective equipment that became apparent to

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JAL within one year or 2,500 flying hours, whichever expired first after delivery of the aircraft, provided that the defect was reported to McDonnell in writing within sixty days after it became apparent. The article also provided:

"THE WARRANTY PROVIDED IN THIS ARTICLE AND THE OBLIGATIONS AND LIABILITIES OF SELLER THEREUNDER ARE EXCLUSIVE AND IN LIEU OF AND BUYER HEREBY WAIVES ALL OTHER REMEDIES, WARRANTIES, GUARANTIES OR LIABILITIES, EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE (INCLUDING WITHOUT LIMITATION ANY OBLIGATIONS OF THE SELLER WITH RESPECT TO FITNESS, MERCHANTABILITY AND CONSEQUENTIAL DAMAGES) OR WHETHER OR NOT OCCASIONED BY SELLER'S NEGLIGENCE. THIS WARRANTY SHALL NOT BE EXTENDED, ALTERED OR VARIED EXCEPT BY A WRITTEN INSTRUMENT SIGNED BY SELLER AND BUYER."

Among the equipment covered by the one year or 2,500 hour repair or replacement warranty was the plane's spoiler system, which consisted of five rectangular panels on each wing that could be raised when the plane was landing to assist in bringing it to a halt. Because the spoilers interfered with the air flow over the wings, they were not to be used when the plane was in flight. To guard against this pilot error, the contract specifications called for a "heavy spring load" in the spoiler activating mechanism. Inadvertent extension of the spoilers was also to be prevented by some form of interlocking device. For purposes of the summary judgment motion, McDonnell conceded that neither the spring load nor the interlock was installed. It is undisputed, however, that, although JAL operated the plane for almost three and one-half years, it made no written complaint to McDonnell about the absence of these devices.

Tokio Marine contended below that the absence of the spring load and interlock was one of the producing causes of the crash and that therefore it was entitled to recover from McDonnell the full value of the plane. It gave several reasons why that recovery was not precluded by the warranty provisions above quoted. The district judge was not convinced, and we are similarly unpersuaded.

Tokio Marine asserted that its first cause of action was based upon strict liability in tort rather than breach of warranty and that California law, which the parties agree is applicable here, prohibits a manufacturer from disclaiming strict tort liability. We agree with the district judge that this argument is based upon a misconception of California law. Despite the absence of a definitive holding by the California Supreme Court, the United States Court of Appeals for the Ninth Circuit has concluded that the doctrine of strict tort liability would not be applied in California in a case where the sales contract was between two large corporations who had negotiated from positions of relatively equal strength and the plaintiff's claim was for damage to the property sold. Scandinavian Airlines System v. United Aircraft Corp., 601 F.2d 425, 429 (9th Cir. 1979). The court found support for its position in Kaiser Steel Corp. v. Westinghouse Electric Corp., 55 Cal.App.3d 737, 746-48, 127 Cal.Rptr. 838, 844-45 (1976), a decision of the California Court of Appeal.

It is difficult to fault the Ninth Circuit's holding. The court thoroughly analyzed California law, and its conclusion is supported by reasoning that has found acceptance in a number of jurisdictions. See, e. g., Fredonia Broadcasting Corp. v. RCA Corp., 481 F.2d 781, 797 (5th Cir. 1973); Southwest Forest Industries, Inc. v. Westinghouse Electric Corp., 422 F.2d 1013, 1020-21 (9th Cir.), cert. denied, 400 U.S. 902, 91 S.Ct. 138, 27 L.Ed.2d 138 (1970); Sioux City Community School Dist. v. International Tel. & Tel. Corp., 461 F.Supp. 662, 664-65 (N.D.Iowa 1978); Ebasco Services, Inc. v. Pennsylvania Power & Light Co., 460 F.Supp. 163, 222-26 (E.D.Pa.1978). Similar reasoning has prompted several courts to hold that the parties to a contract entered

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into in a commercial setting such as existed herein may disclaim or waive strict tort liability, see, e. g.,...

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