Canada v. Blain's Helicopters, Inc.

• Decision Date: 05 November 1987
• Docket Number: No. 87-3535,87-3535
• Parties: Jacalyn B. CANADA, as Personal Representative of the Estate of Bobby L. Canada, and Jacalyn B. Canada, on behalf of Christopher C. Canada, Lisa M. Canada, Candace C. Canada, and Jacalyn B. Canada, individually Under the Wrongful Death Act, Plaintiff-Appellant, v. BLAIN'S HELICOPTERS, INC.; Blain's Helicopter Sales & Service, Inc.; Blain's Mobile Home Court, Inc.; Gebhart Blain; Lee G. Bernier; Don L. Cook; Bell Helicopters, a division of Textron, Inc.; Avco Lycoming, a division of Avco Corporation, Avco Corporation; Gary Corporation; Gary Capps, Defendants- Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 920

831 F.2d 920

9 Fed.R.Serv.3d 727

Jacalyn B. CANADA, as Personal Representative of the Estate

of Bobby L. Canada, and Jacalyn B. Canada, on behalf of

Christopher C. Canada, Lisa M. Canada, Candace C. Canada,

and Jacalyn B. Canada, individually Under the Wrongful Death

Act, Plaintiff-Appellant, v. BLAIN'S HELICOPTERS, INC.; Blain's Helicopter Sales &

Service, Inc.; Blain's Mobile Home Court, Inc.; Gebhart

Blain; Lee G. Bernier; Don L. Cook; Bell Helicopters, a

division of Textron, Inc.; Avco Lycoming, a division of

Avco Corporation, Avco Corporation; Gary Corporation; Gary

Capps, Defendants- Appellees.

No. 87-3535.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Oct. 7, 1987.

Decided Nov. 5, 1987.

James A. Patten, Billings, Mont., for plaintiff-appellant.

William L. Crowley, Missoula, Mont., for defendants-appellees.

Appeal from the United States District Court for the District of Montana.

Before GOODWIN, ALARCON and LEAVY, Circuit Judges.

GOODWIN, Circuit Judge:

Canada appeals a summary judgment in favor of the defendant Blain's Helicopter Sales and Service (BHS & S) in this diversity wrongful death case. Because genuine issues of material fact exist which preclude summary judgment, we reverse and remand.

On May 1, 1981, a helicopter owned by defendant BHS & S crashed near Williston, North Dakota. The pilot of the aircraft, Bobby L. Canada, and all seven passengers on board were fatally injured. Bobby Canada was an employee of Blain's Helicopters, Inc. (BHI). The cause of the crash appears to have been engine failure due to the use of improper fuel. BHI was owned by the owners of BHS & S, but was operating as a separate corporation. Its employees were covered by state workers' compensation.

Jacalyn Canada, the wife of Bobby Canada, filed a wrongful death action in federal district court in the District of Montana, on behalf of herself and the children of Bobby Canada, seeking "third-party" damages for the death of her husband.

Gerhart Blain, president of both BHS & S and BHI, testified at a deposition that at the time of the crash, the helicopter was leased from BHS & S to BHI, and that BHI had the exclusive obligation to maintain and repair the helicopter. The lease, however, was never produced, and Blain could not recall the specifics of its terms. The National Transportation and Safety Board (NTSB) report of the accident included a receipt showing that still a third corporate entity, Blain Sales, Inc., had paid for a recent engine overhaul on the helicopter. Further, the report contained fuel invoices which showed "Blain's Helo. Service" as purchasers. Canada, however, did not verify or authenticate these copies.

Gerhart Blain, through either BHI or BHS & S, used a mixture of diesel fuel and unleaded automobile gasoline to fuel his helicopters. Blain received warnings from Exxon and Conoco--the producers of the fuel--that this fuel mixture was improper. The Federal Aviation Administration (FAA) also warned Blain that the mixture failed to meet regulations. Blain testified at his deposition that he consulted Dick Meyer, the man in charge of the day-to-day operations of BHI about the fuel. According to Blain, Meyer assured him that Meyer had tested the fuel and, further, that this fuel was always used in the type of helicopter BHI was flying. Blain said he relied on this advice. He did not know whether Meyer changed the fuel; but Blain did not direct Meyer to do so. Meyer died in the crash.

Blain did not make further efforts to warn other pilots of the letters on file, and he did not instruct Meyer to do so. To the contrary, another BHI pilot, Doug Miller, testified by deposition that Blain had represented to Miller and all the other pilots that there was a letter on file from a major oil company which stated that the blend of fuel being used by BHI met all the required specifications.

Canada filed this wrongful death action on April 22, 1983, and initially named eighteen defendants, including BHS & S and BHI. During the next three and one-half years, most of the defendants were dismissed from the action by court order entered on motion or on stipulation. On February 20, 1985, the district court granted summary judgment in favor of BHI, Gerhart Blain, Lee Bernier, Don Cook and BHMC. These summary judgments were based on the exclusive remedy provisions of Montana's Workers' Compensation Act. Mont.Code Ann. Sec. 39-71-101 to 2909 (1983). Citing Fed.R.Civ.P. 56(f), the court denied the motion for summary judgment in favor of BHS & S because invoices taken from the NTSB report indicated that facts might exist concerning the engine overhaul and the fuel supplier which might be brought out through further discovery and which might indicate that BHS & S was responsible for the improper fueling of the aircraft. BHS & S renewed its motion for summary judgment, and on May 22, 1986, finding that BHS & S had evidence entitling it to a verdict if uncontroverted, the court held that additional discovery by Canada had not produced a material question of fact. Canada had failed to verify the fuel invoices, and the district court could not consider them in ruling on the summary judgment. Without these invoices, Canada had no evidence that BHS & S was responsible for the fueling of the aircraft. The district court also found that Canada had failed to produce evidence that would support her theory that BHS & S was liable as lessor of the aircraft for failure to warn Bobby Canada, a foreseeable user, of a known danger. Canada's motion to reconsider was denied.

Summary judgment is appropriate here only if no reasonable juror, viewing the evidence in the light most favorable to Canada, could find for Canada by a preponderance of the evidence. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 2512-13, 91 L.Ed.2d 202 (1986). The party moving for summary judgment must persuade the court through "pleadings depositions, answers to interrogatories, and admissions on file, together with the affidavits, ... that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law...." Fed.R.Civ.P. 56(c). Once a motion for summary judgment is made and supported as provided for in Rule 56(c), the burden shifts to the opposing party to show that a genuine issue of material fact remains. See Fed.R.Civ.P. 56(e). Rule 56(e) states that "an adverse party may not rest upon the mere allegations or denials of h[er] pleading, but h[er] response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial." Id.

Canada argues that two genuine issues of disputed material fact require reversal. First, Canada contends that a genuine issue of fact exists concerning BHS & S' duty as lessor of the helicopter to warn Bobby Canada of a known danger. Second, Canada argues that the unverified fuel invoices along with questions about Gerhart Blain's credibility establish a genuine issue of material fact concerning the responsibility for and control over the fueling of the helicopter involved in the crash.

BHS & S'S LIABILITY AS LESSOR OF THE HELICOPTER

Because jurisdiction in this case is based on diversity of citizenship, we must look to the substantive law of the forum state. Canada bases her claim on sections 407 and 388 through 390 of the Restatement (Second) of Torts (1965), which hold lessors and suppliers of chattels liable for failure to warn foreseeable users of known dangers. Although the Montana Supreme Court has not explicitly adopted these sections of the Restatement, two cases suggest that the court would do so. See Streich v. Hilton-Davis, 692 P.2d 440, 449 (Mont.1984) (holding in a products liability case that a manufacturer has a duty to warn foreseeable users of its goods of any hidden dangers posed by its use); Knowlton v. Sandaker, 150 Mont. 438, 436 P.2d 98, 102 (1968) (analyzing Restatement Sec. 392 without adopting it, concluding it was of no use to the plaintiff given the facts of the case). In any event, this court has held that in the absence of a ruling from the Montana Supreme Court, this court will adopt the Restatement (Second) of Torts in cases arising in Montana. Jackson v. Coast Paint and Lacquer Co., 499 F.2d 809, 811 (9th Cir.1974).

Restatement Sec. 407 provides that "[a] lessor who leases a chattel for the use of others, knowing or having reason to know that it is or is likely to be dangerous for the purpose for which it is to be used, is subject to liability as a supplier of the chattel." Restatement (Second) of Torts Sec. 407 (1965). The liabilities of suppliers are delineated in sections 388 through 390; the comments to those sections apply to Sec. 407 as well. See Restatement (Second) of Torts Sec. 407 comment (a). Restatement Sec. 388 provides:

One who supplies directly or through a third person a chattel for another to use is subject to liability to those whom the supplier should expect to use the chattel with the consent of the other or to be endangered by its probable use, for physical harm caused by the use of the chattel in the manner for which and by a person for whose use it is supplied, if the supplier

(a) knows or has reason to know that the chattel is or is likely to be dangerous for the use for which it is supplied, and

(b) has no reason to believe that those for whose use the chattel is supplied will realize its dangerous condition, and

(c) fails to exercise reasonable care to inform them of its dangerous condition or of the facts which make it likely to be dangerous.

Restatement (Second) of Torts Sec. 388. The comments make clear that the supplier owes a duty to the entire class of persons whom the supplier should expect to use the product--not simply the person to whom the supplier initially turned over the product. Id. comment a. This group of "suppliers" includes lessors. Id. comments b and c. These comments...