Duncan v. Cessna Aircraft Co.

• Decision Date: 22 April 1982
• Docket Number: Nos. 13308,13355,s. 13308
• Citation: 632 S.W.2d 375
• Parties: Carolyn Parker DUNCAN, Individually and As the Duly Appointed, Qualified and Acting Administratrix of the Estate of James E. Parker, Deceased, and As Next Friend of Carl Glenn Parker, Sandra Deane Parker and Thomas Lane Parker, Appellants, v. CESSNA AIRCRAFT COMPANY, Appellee. CESSNA AIRCRAFT COMPANY, Appellant, v. Darla SMITHSON, et al., Appellees.
• Court: Texas Court of Appeals

Page 375

632 S.W.2d 375

Carolyn Parker DUNCAN, Individually and As the Duly

Appointed, Qualified and Acting Administratrix of the Estate

of James E. Parker, Deceased, and As Next Friend of Carl

Glenn Parker, Sandra Deane Parker and Thomas Lane Parker, Appellants, v. CESSNA AIRCRAFT COMPANY, Appellee.

CESSNA AIRCRAFT COMPANY, Appellant, v. Darla SMITHSON, et al., Appellees.

Nos. 13308, 13355.

Court of Appeals of Texas, Austin.

April 22, 1982.

Rehearing Denied May 12, 1982.

Law Offices of Pat Maloney, Pat Maloney, Sr., Pat Maloney, Jr., George LeGrand and Jack Pasqual, by Jack Pasqual, San Antonio, for appellants in No. 13308 and appellees in No. 13355.

Graves, Dougherty, Hearon & Moody, John T. Anderson, Robert M. Roller, Stephen

Jody Helman, and Robert J. Hearon, Jr., by John T. Anderson, Austin, Rodey, Dickason, Sloan, Akin & Robb, Albuquerque, N. M., for Cessna Aircraft Co.

ON MOTION FOR REHEARING

SHANNON, Justice.

The opinion of this Court handed down on March 17, 1982, is withdrawn, and the following opinion replaces it.

James Parker and Benjamin Smithson perished in the crash of a Cessna 150 airplane in New Mexico in 1976. The plane was piloted by Smithson and owned by Air Plains West, Inc.

Darla Smithson and Carolyn Parker Duncan, widows of Smithson and Parker, filed wrongful death suits in the district court of Travis County against Cessna Aircraft Company to recover individually, as administratices of their husbands' estates, and as next friends for their minor children. After trial to a jury, the district court rendered judgment that Mrs. Duncan and the children take nothing, and that Mrs. Smithson and the children recover $1,200,000. Mrs. Duncan and the children have perfected an appeal from the take nothing judgment and Cessna has appealed from the judgment rendered for Mrs. Smithson. The respective appeals, although separately treated in a great welter of briefs, were consolidated for purposes of oral argument and both will be considered in this opinion.

The plaintiffs alleged, and endeavored to prove, that the seats in the Cessna aircraft occupied by plaintiffs' decedents were defectively designed or manufactured by Cessna, and failed in the crash of the plane causing the fatal injuries to the passengers. The plaintiffs attempted to show further that since the crash occurred at a speed of less than sixty miles per hour, Smithson and Parker would have survived had the seats remained secure during the crash.

In addition to denying that the airplane seats were defective in design or manufacture, Cessna alleged that Mrs. Duncan and the children were barred from asserting any claim against it by reason of a previously executed settlement agreement and release of all parties. By counterclaim, Cessna asserted, among other things, that Smithson's negligence caused the crash and that it would be entitled to contribution from Smithson's estate for any damages it might be required to pay Mrs. Duncan.

Upon motion by Cessna, the district court determined that New Mexico law governed the trial of the cause to the extent that it differed from Texas law.

The case was submitted to the jury by eight special issues. The jury answered that the seats of the airplane were defectively designed and manufactured and that such defects in design and manufacture proximately caused the fatal injuries to Parker and Smithson. The jury fixed damages of $1,000,000 for Mrs. Duncan and her children and $1,200,000 for Mrs. Smithson and her children.

Cessna moved for judgment non obstante veredicto on Mrs. Duncan's cause of action, arguing her previously executed settlement agreement and release absolved Cessna from liability. The district court granted the motion and rendered judgment that Mrs. Duncan take nothing, and rendered judgment upon the jury's verdict for Mrs. Smithson.

MRS. DUNCAN'S RELEASE

In 1976, prior to filing suit against Cessna in district court in Travis County, Mrs. Duncan and her minor children filed a wrongful death suit against Air Plains West, Inc., in the United States District Court for the Northern District of Texas, alleging that the negligence of Smithson and his employer, Air Plains West, Inc., proximately caused the death of Parker. Thereafter, Mrs. Duncan and the children settled this suit for $90,000. As a part of that agreement, she and the children released Air Plains West, Inc., Smithson's estate, and purported to release as well:

any other corporations or persons whomsoever responsible therefor, whether named herein or not, from any and all claims of every kind and character whatsoever and from any cause of action, claims, demands, costs, loss of services, compensation, medical, hospital and doctor expenses, funeral and burial expenses, and damages, both actual and exemplary, on account of the fatal injuries sustained by the said James E. Parker, which resulted in his death, as the result of an airplane crash occurring on or about October 19, 1976, wherein a Cessna 150 Aircraft, Serial Number 15075844, and Registration Number N-66113, owned by Air Plains West, Inc., and being piloted by Benjamin A. Smithson, Jr., crashed three miles southwest of Texico, New Mexico.

This settlement agreement, signed by Mrs. Duncan and the guardian ad litem for the children, formed the basis for entry of judgment non obstante veredicto in favor of Cessna in the present lawsuit.

Mrs. Duncan argues that the district court erroneously rendered judgment non obstante veredicto. She asserts the court mistakenly applied New Mexico law, rather than Texas law, in construing the release. Under Texas law, Mrs. Duncan argues, Cessna may not benefit from the release. The initial issue is whether Texas law or New Mexico law controls the construction of the release.

A. Application of Texas or New Mexico Law to the Release

A release of tort liability is a contract, and the effect of provisions in a release will be determined according to rules of contract construction. Berry v. Guyer, 482 S.W.2d 719 (Tex.Civ.App.1972, writ ref'd n. r. e.); Garcia v. Villarreal, 478 S.W.2d 830 (Tex.Civ.App.1971, no writ); Loy v. Kuykendall, 347 S.W.2d 726 (Tex.Civ.App.1961, writ ref'd n. r. e.); Mutual Fire & Auto Insurance Co. v. Green, 235 S.W.2d 739 (Tex.Civ.App.1950, no writ); see 15 S. Williston, A Treatise on the Law of Contracts § 1820, at 462-63 (3rd ed. 1972). Ordinarily, contractual provisions will be construed under the law of the state intended by the parties to control, and in the absence of any express manifestation by the parties, the presumption is that the parties contract with reference to the law of the state where the contract is made. Austin Building Co. v. National Union Fire Insurance Co., 432 S.W.2d 697, 701 (Tex.1968); Foundation Reserve Insurance Company v. Cody, 458 S.W.2d 214 (Tex.Civ.App.1970, no writ).

Mrs. Duncan signed the settlement agreement in Potter County, Texas. The agreement is silent as to which state's law controls the construction of the agreement's terms. Under the rule announced in Austin Building Co., this Court must presume that the parties contracted with reference to Texas law.

Both Mrs. Duncan and Cessna assume that rules announced in the Restatement (Second) of Conflict of Laws (1971) are applicable in selecting whether Texas or New Mexico law controls the effect of the release. Section 145(1) of the Restatement provides that the rights and liabilities of the parties with respect to an "issue in tort" are determined by the local law of the state which, with respect to that issue, has the most significant relationship to the occurrence and the parties.

In two recent opinions, the Supreme Court of Texas has applied § 145 of the Restatement. In Gutierrez v. Collins, 583 S.W.2d 312 (Tex.1979), the Supreme Court adopted the "most significant relationship" test of § 145 to replace the lex loci delicti rule that had previously obtained in Texas. The case arose from an automobile accident in Chihuahua, Mexico between the parties, who were both Texas residents. The district court, under the lex loci rule, determined that the laws of Mexico concerning damages should govern the lawsuit, and the Court of Civil Appeals affirmed the judgment of the district court. The Supreme Court reversed the judgments and ordered the district court to employ the Restatement's "most significant relationship" test to determine whether the Texas or Mexico law of damages applied to the controversy. Although the court stated that all conflicts cases "sounding in tort" would thereafter be governed by § 145 of the Restatement, Gutierrez, upon its facts, holds only that the "most significant relationship" test controls the selection of law in the damage element in a tort case.

Robertson v. McKnight, 609 S.W.2d 534 (Tex.1980), involved a lawsuit between the estates of a New Mexico husband and wife based on the husband's alleged negligent piloting of an airplane which resulted in the death of the couple in a crash in Texas. New Mexico law allows interspousal suits based on negligence while Texas retains interspousal tort immunity for negligence. The Supreme Court held that § 169 of the Restatement concerning the tort-related issue of intra-family immunity commanded that the correct law be chosen according to the § 145 "most significant relationship" test. The Court's application of this test resulted in the choice of New Mexico law which permitted the interspousal negligence suit.

Neither Gutierrez nor Robertson hold that contractual releases of tort liability are governed by the "most significant relationship" test of § 145 of the Restatement, and we find of no Texas case which holds that such contractual releases from tort liability are governed by the test. ¹ Until the Supreme Court expressly decides that conflicts cases involving tort releases are to be governed by the § 145 test, this Court will continue to apply the lex loci contractus rule of Austin Building Co. v. National Union Fire Insurance Co....