Delta Air Lines, Inc. v. McDonnell Douglas Corporation, Civ. A. No. 13768.

• Decision Date: 30 October 1972
• Docket Number: Civ. A. No. 13768.
• Parties: DELTA AIR LINES, INC., Plaintiff, v. McDONNELL DOUGLAS CORPORATION, Defendant.
• Court: U.S. District Court — Northern District of Georgia

350 F. Supp. 738

DELTA AIR LINES, INC., Plaintiff, v. McDONNELL DOUGLAS CORPORATION, Defendant.

Civ. A. No. 13768.

United States District Court, N. D. Georgia, Atlanta Division.

October 30, 1972.

R. S. Maurer and Frank Rox, Atlanta Legal Division, Delta Air Lines, Inc., Atlanta, Ga., for plaintiff.

Smith, Cohen, Ringel, Kohler, Martin & Lowe, Atlanta, Ga., for defendant.

ORDER

MOYE, District Judge.

Findings of Fact

1. This case involves the collapse of the nose landing gear assembly of a "stretched" or "super" DC-8 aircraft manufactured by defendant McDonnell Douglas Corporation ("MDC") and operated by plaintiff Delta Air Lines, Inc. ("Delta"). Federal court jurisdiction is founded upon diversity of citizenship and an amount in controversy in excess of $10,000, exclusive of interest and costs. 28 U.S.C. § 1332.

2. At the July 10, 1972, nonjury trial the parties advised the Court that the evidence and discovery developed to date indicates that the cause of the nose gear collapse during the landing roll of the aircraft was an incorrectly installed component part of the nose landing gear assembly. Delta contends that the component part was installed incorrectly by MDC when MDC assembled the aircraft. MDC on the other hand contends that the component part was correctly installed during assembly and that the component part was removed and re-installed incorrectly during post-delivery servicing of the aircraft by Delta. In the alternative, MDC contends that if there was a "defect in workmanship" (i. e., incorrect installation of a component part), Delta should and could have in the exercise of ordinary care detected such defect in workmanship, and that the alleged damages therefore arise from Delta's own negligence.

3. Delta's amended complaint seeks to impose liability on four theories: Count One alleges negligence; Count Two alleges breach of implied warranties of merchantability and fitness for a particular purpose; Count Three alleges breach of the express warranty; and Count Four alleges strict liability in tort.

4. As an additional and affirmative defense MDC asserts:

(a) the limitations of liability and exculpatory clause contained in the Warranty Article of the Purchase Agreement negotiated and agreed to by the parties bar Delta's claims based on negligence, breach of implied warranties and strict liability;

(b) MDC is not liable for breach of express warranty because the Warranty Article specifically provides that liability for breach of the express "workmanship" warranty is limited, among other things, to the replacement of the improperly installed part;

(c) Delta failed to follow the warranty claim procedures spelled out in the Warranty Article, which relieved MDC of liability with respect to the claim based on breach of express warranty; and

(d) in any event MDC is not liable for the type of damages sought by Delta because such damages are specifically excluded by the limitations of liability and exculpatory clause contained in the Purchase Agreement Warranty Article.

5. MDC filed a motion for summary judgment (supported by evidence) based on the defenses outlined in the preceding paragraph. Delta submitted opposing affidavits and contended, among other things:

(a) as a matter of economic necessity Delta was required to purchase MDC's "stretched" DC-8 aircraft;

(b) the limitations of liability and exculpatory clause in the Purchase Agreement Warranty Article were forced upon Delta by MDC;

(c) Delta did not voluntarily agree to such provisions;

(d) Delta was unable to negotiate a deletion of such provisions from the Purchase Agreement;

(e) the Purchase Agreement is a contract of adhesion in this respect;

(f) the limitations of liability and exculpatory clause are unconscionable, violate public policy and are unenforceable; and

(g) the provisions of the Warranty Article therefore do not bar Delta's claims for relief.

6. The Court denied MDC's motion for summary judgment because there appeared to be material issues of fact in dispute. At the request of the parties, based upon a limited waiver of jury trial, the Court held a nonjury trial on July 10, 1972, to decide the validity of the "defense based upon the Warranty Article and exculpatory clause contained in the contract documents" (Limited Waiver of Jury Trial, filed June 15, 1972).

7. The Purchase Agreement in question was signed at Long Beach, California, on November 18, 1964, and originally related only to the so-called "short" DC-8 aircraft, or Series 51 DC-8 aircraft. On August 13, 1966, at Long Beach, California, the parties executed Amendment No. 5 to the Purchase Agreement. The amendment provided that additional DC-8 aircraft, of the Series 61 or "stretched" variety, would be delivered to Delta under the terms and provisions of the November 18, 1964, Purchase Agreement. The accident aircraft was one of the aircraft covered in Amendment No. 5.

8. Article 4 of the Purchase Agreement stated the aircraft would be manufactured and delivered in California, and Article 17 provided: "This agreement shall be construed and performance thereof shall be determined according to the laws of the State of California, U.S. A." The Purchase Agreement also contained clauses which limited the agreements between the parties to the exact written terms of the contract.

9. At the time of the accident in question, Delta was operating the aircraft under a lease agreement with McDonnell Douglas Finance Corporation, but the lease was contemplated by the parties and they agreed that the lease agreement would not abrogate or modify the provision of the Purchase Agreement.

10. The Warranty Article in the Purchase Agreement provided:

"12. WARRANTY.

"(A) Subject to the limitations and conditions hereinafter set forth, seller warrants that the aircraft, accessories, equipment and parts supplied hereunder which have been manufactured by seller, and by other manufacturers if made to detailed design and detailed specifications originated by seller, shall at the time of delivery by seller be free from:

(1) Defects in material and workmanship furnished by seller and used in the fabrication thereof;

(2) Defects arising from the selection of material or process of manufacture;

(3) Defects inherent in the design thereof in view of the state of the art as of the date of such design;

(4) Defects arising from failure to conform to the detailed specifications of this purchase agreement except as to such portions thereof, if any, as are expressly stated to be not guaranteed.

"(B) Defects in material and workmanship, defects arising from the selection of material or process of manufacture and defects arising from failure to conform to the detailed specifications, must become apparent in the aircraft, accessory, equipment or part within one (1) year or two thousand (2,000) flying hours, whichever shall first expire, but not less than eight (8) months after delivery of said aircraft.

"The extent of seller's liability under this warranty as to defects in material or workmanship, defects arising from the selection of material or the process of manufacture, and defects arising from failure to conform to the detailed specifications, is limited to the repair at its expense of such defects in the aircraft or to the repair or replacement at its expense (with a similar item free from the defect in question) of any accessory, equipment or part which is defective in any of such respects.

"(C) The extent of seller's liability under this warranty as to defects inherent in design is limited to the correction at its expense of all such defects becoming apparent in the aircraft, accessory, equipment or part purchased hereunder within one (1) year or two thousand (2,000) flying hours, whichever shall first expire, but not less than eight (8) months after delivery of said aircraft.

"(D)...