Erickson Air-Crane Co. v. United Technologies Corp.

• Decision Date: 27 May 1987
• Docket Number: AIR-CRANE
• Citation: 735 P.2d 614,303 Or. 281
• Parties: , Prod.Liab.Rep. (CCH) P 11,421 ERICKSONCOMPANY, Petitioner on Review, v. UNITED TECHNOLOGIES CORPORATION, Respondent on Review. UNITED TECHNOLOGIES CORPORATION, Third-Party Plaintiff/Appellant, v. SILVER GRIZZLY TIMBER COMPANY, LTD., Third-Party Defendant/Respondent. A8305-03355; A34839; S33021.
• Court: Oregon Supreme Court

Page 614

735 P.2d 614

303 Or. 281, Prod.Liab.Rep. (CCH) P 11,421

ERICKSON AIR-CRANE COMPANY, Petitioner on Review, v. UNITED TECHNOLOGIES CORPORATION, Respondent on Review.

UNITED TECHNOLOGIES CORPORATION, Third-Party Plaintiff/Appellant, v. SILVER GRIZZLY TIMBER COMPANY, LTD., Third-Party Defendant/Respondent.

A8305-03355; A34839; S33021.

Supreme Court of Oregon.

Argued and Submitted Sept. 2, 1986.

Decided April 21, 1987.

On Reconsideration May 27, 1987. See 736 P.2d 1023.

Arden E. Shenker, of Tooze, Marshall, Shenker, Holloway & Duden, Portland, and Thomas J. Whalen, of Condon & Forsyth, New York, argued the cause for petitioner on review. With Arden E. Shenker on the petition was Stephen J. Fearon, of Condon & Forsyth, New York.

Jonathan M. Hoffman, of Martin, Bischoff, Templeton, Biggs & Ericsson, Portland argued the cause for respondent on review. With him on the response were Joan L. Volpert and Stephanie L. Striffler, of Martin, Bischoff, Templeton, Biggs & Ericsson, Portland.

E. Richard Bodyfelt, Robert K. Stroup and Peter R. Chamberlain, of Bodyfelt, Mount, Stroup & Chamberlain, Portland, filed a brief amicus curiae on behalf of Oregon Association of Defense Counsel.

Arthur C. Johnson and Mike Ellickson, of Johnson, Quinn, Clifton & Larson, P.C., Eugene, filed a brief amicus curiae on behalf of Oregon Trial Lawyers Association.

Before LENT, P.J., and LINDE, CAMPBELL, CARSON, JONES and GILLETTE, JJ.

GILLETTE, Justice.

This is a negligence action resulting from a 1981 accident allegedly caused by a manufacturer's advice given in 1977 involving a product purchased in 1971. The issue is whether this action is governed (and, consequently, barred) by the eight-year limitation period provided by ORS 30.905(1) for product liability civil actions or, instead, is governed by the ten-year statute of ultimate repose for negligence actions, ORS 12.115, and is, therefore, timely filed. ¹ We hold that ORS 12.115 is the statute applicable to the facts of this case.

Plaintiff Erickson Air-Crane Co. brought this action alleging that defendant United Technologies Corp. (defendant) was negligent in instructing plaintiff as to the useful safe life of a helicopter compressor disk. Plaintiff purchased a helicopter from defendant, the manufacturer, in 1971. The helicopter crashed on June 5, 1981, while being operated by plaintiff's lessee, Silver Grizzly Timber Co., Ltd. One person was killed in the accident and another was injured. The helicopter was destroyed. Plaintiff commenced this action in May, 1983. Defendant filed a third-party complaint against the lessee, seeking contribution.

The evidence showed that the cause of the crash was the failure of the sixth compressor disk in the number one engine. The parties agree that the disk had a useful safe life of 4,000 hours and that, at the time of the accident, it had been used for over 4,300 hours. In 1977, defendant provided plaintiff with a chart to aid in maintenance of the engine that indicated that the disk had a useful safe life of 6,000 hours. In 1978, defendant's technical representative, assigned by defendant to give plaintiff continuing assistance on helicopter operation, confirmed to plaintiff that the compressor disk could be operated for 6,000 hours. Plaintiff claimed that defendant was negligent in providing erroneous information, in failing to warn plaintiff that the 6,000-hour figure was erroneous and in failing to warn that the use of the helicopter beyond the 4,000-hour limit was dangerous.

The case was submitted to the jury only on plaintiff's negligence claim. The jury found all parties negligent and returned a verdict against defendant for $7,404,775 and against the lessee, as third party defendant, for $555,358.

Defendant appealed. ² The Court of Appeals reversed, holding that the trial court erred in denying defendant's motion for summary judgment based upon the argument that plaintiff's claim was barred by ORS 30.905(1), which the Court of Appeals characterized as "the statute of ultimate repose for product liability actions." ³ Erickson Air Crane Co. v. United Technologies, 79 Or.App. 659, 662, 720 P.2d 389 (1986). The Court of Appeals reasoned that, because plaintiff brought this action against a manufacturer for failure to warn regarding a product and failure properly to instruct in the use of a product, this action was a "product liability civil action" as defined in ORS 30.900(2) and (3) and, therefore, was governed by ORS 30.900 to 30.925. Id. at 662, 720 P.2d 389. ORS 30.905(1) requires that such actions be commenced "not later than eight years after the date on which the product was first purchased for use or consumption." Thus, the Court of Appeals concluded that plaintiff's action was barred by ORS 30.905(1). The Court of Appeals necessarily assumed that ORS 30.905(1) applies regardless of whether the alleged failure to warn or instruct occurs at the time of purchase or at some later time.

We reverse the decision of the Court of Appeals. We hold that ORS 30.905 applies only to acts, omissions or conditions existing or occurring before or at the "date on which the product was first purchased for use or consumption." Acts or omissions occurring after that date are governed by the statute of ultimate repose of ORS 12.115.

ORS 30.905 was the result of a major 1977 lobbying effort by business and insurance organizations for reform of the common law of products liability. Vetri, Legislative Codification of Strict Products Liability Law in Oregon, 59 Or.L.Rev. 363, 373-74 (1981); see also Minutes, House Committee on the Judiciary (April 18, 1977; May 5, 1977). The perceived problem was the high cost of liability insurance. Minutes, House Committee on the Judiciary (April 18, 1977; May 5, 1977). One of the legislative solutions was to fix a limited and predictable time period in which a manufacturer, distributor, seller or lessor would be exposed to a product liability civil action.

ORS 30.905 was introduced as section 7 of HB 3039. Section 7 originally provided that a consumer would have ten years from the date of manufacture to bring an action. Minutes, House Committee on the Judiciary 2 (May 5, 1977). Section 7 was described by one witness as an attempt "to change the effect of ORS 12.115 so that the statute would run ten years from the date of manufacture" rather than ten years from the alleged act or omission as provided by ORS 12.115. Minutes, House Committee on the Judiciary 2 (May 5, 1977) (testimony of Roland Banks, representing wholesalers and distributors, outlining proposed amendments).

The products liability actions with which section 7 dealt resulted from acts or omissions occurring at the manufacturing stage; distributor and retailer liability resulted solely from being in the chain of commerce that resulted in the ultimate sale to the consumer. Minutes, House Committee on the Judiciary 2 (May 5, 1977); Tape recording, Joint Committee on Trade and Economic Development, June 21, 1977, Side I at 402. This had the undesirable effect of leaving those later in the distribution process potentially liable after the manufacturer had completed its ten-year exposure to liability. Id.; see Johnson v. Star Machinery, 270 Or. 694, 530 P.2d 53 (1974) (statute of ultimate repose for negligence actions applied to strict liability action). The legislature sought to fix a time period that would begin to run at the same time for all potential defendants and that would not leave parties later in the chain of commerce than the manufacturer exposed to liability longer than the manufacturer. Minutes, House Committee on the Judiciary 2 (May 5, 1977); Tape recording, Joint Committee on Trade and Economic Development, June 21, 1977, Side I at 402. The "date of manufacture" was to replace the date of the "acts or omissions complained of"--which assumedly had occurred at or before a party placed a product in the stream of commerce--for purposes of initiating the running of the time limitation.

However, various problems also existed with respect to the statute beginning to run from the date of manufacture, e.g., the difficulty in determining this date for some products and the possibility that some products may be warehoused for a number of years. Minutes, House Committee on the Judiciary 5 (May 5, 1977) (testimony of Representative Gardner); Minutes, House Committee on the Judiciary 6 (May 16, 1977) (testimony of Representative Bugas). As a result, section 7 was later amended in the House Judiciary Committee to provide that the statute would begin to run from the date of the first purchase for use or consumption. Minutes, House Committee on the Judiciary 5, 12 (May 16, 1977). Thus the approach was that, although the acts or omissions of parties in the stream of commerce occurred at different times before the first consumer purchase, the limitations period for each such party would begin at the same time. Tape recording, Joint Committee on Trade and Economic Development, June 21, 1977, Side I at 402.

At the same time, section 7 was amended to reduce the time required for ultimate repose from ten to eight years for at least two reasons. Minutes, House Committee on the Judiciary 12 (May 16, 1977). First, a witness representing manufacturing interests argued that a ten-year period would extend the period of potential liability for manufacturers because, under ORS 12.115, the period begins to run at the time of the act or omission, i.e., the date of manufacture, while under the proposed bill the statute would not begin to run until the product was further along in the stream of commerce. Id. at 9. Secondly, various members of the House committee apparently believed that, if a ten-year period of repose were passed, the period to bring an action would be extended to as much as twelve years for defects existing at the time of the first consumer purchase if the general two-year tort statute of limitations were added. Id. at 8-10. The...