Icelandic Airlines, Inc. (Loftleidir) v. Canadair, Ltd.

• Citation: 104 Misc.2d 239,428 N.Y.S.2d 393
• Parties: ICELANDIC AIRLINES, INC. (LOFTLEIDIR) and Rederi Ab. Salenia, Plaintiffs, v. CANADAIR, LTD., Hucktrol, Inc., and Central Aviation and Marine Corp., Defendants.
• Decision Date: 01 May 1980
• Court: United States State Supreme Court (New York)

Page 393

428 N.Y.S.2d 393

104 Misc.2d 239

ICELANDIC AIRLINES, INC. (LOFTLEIDIR) and Rederi Ab Salenia, Plaintiffs, v. CANADAIR, LTD., Hucktrol, Inc., and Central Aviation and Marine Corp., Defendants.

Supreme Court, Special Term, New York County, Part I.

May 1, 1980.

Healey & Farrell, Washington, D. C., by Timothy J. Healey, George E. Farrell, Norwood, Mass., for plaintiffs.

Haight, Gardner, Poor & Havens by William J. Junkerman, William F. Martin, Jr., New York City, for defendant Canadair, Ltd. ALLEN MURRAY MYERS, Justice.

Chadbourne, Parke, Whiteside & Wolff by Charles K. O'Neill, New York City, for defendant Hucktrol, Inc.

The decision signed on April 17, 1980 is recalled, vacated and replaced by the decision herein.

The defendant Hucktrol has moved for summary judgment dismissing the complaint against it. The complaint alleges three causes of action against Hucktrol, i. e., a fourth cause of action in negligence, a fifth based on strict products liability, and a sixth for breach of warranty (paragraphs "Twentieth" through "Thirty-fourth" of the complaint). The other causes of action do not concern Hucktrol.

This motion is based upon three grounds: (1) the causes of action are barred by the statutes of limitations of the Province of Quebec, Canada and of the State of New York; (2) the causes of action are barred by the substantive civil law of Quebec; and (3) in the alternative, under New York law, (a) granting partial summary judgment as to the cause of action based on strict products liability and (b) disallowing a demand for consequential damages on all of the causes of action.

The applicable statute of limitations is a question of law of which a court must take judicial notice. CPLR 4511(a).

FACTS

This lawsuit is based upon a claim by plaintiffs that a crash of a CL-44 aircraft at Dacca, Bangladesh on December 2, 1970 was caused by the in-flight application of a gust lock hydraulic system which it is alleged had the effect of locking the flight controls. It is further alleged that a hydraulic selector valve manufactured by Hucktrol (under its former name, Electrol), which was a component part of this system, had malfunctioned.

The hydraulic selector valve was defendant Canadair's part number 28-75014, serial number 116. It was manufactured and sold by Hucktrol to a firm called Railway and Power Engineering Corporation, Ltd. in Montreal, Canada (pursuant to the latter's purchase order) and shipped directly to defendant Canadair, Ltd. in Canada on November 14, 1961. The price of the valve was $298.71.

The valve was manufactured by Hucktrol pursuant to specifications supplied by defendant Canadair, initially, in December 1954; and pursuant to Canadair requirements, a model valve made by Hucktrol underwent a qualification test in June 1956, the results of which were accepted and approved by Canadair on July 5, 1956.

The valve was manufactured by Hucktrol in accordance with Canadair specification control drawing 28-75014, revision E and was one of hundreds of components in a control surface lock hydraulic system designed by Canadair. Hucktrol was not involved in the design, manufacture, assembly or testing of the control system.

The valve was manufactured and delivered in 1961 and installed in another of plaintiffs' aircraft in 1968.

The valve was removed from that aircraft by plaintiffs in January 1969, overhauled by defendant Central Aviation and Marine Corporation in February 1969, and installed in November 1970 in the aircraft which crashed on December 2, 1970.

No privity between the plaintiffs and Hucktrol is alleged.

The valve which was manufactured by Hucktrol pursuant to a written purchase order of Railway and Power Engineering Corporation, Limited of Montreal, Canada, dated July 13, 1961, contained the following express warranty clause:

"The vendor warrants the goods against defects in materials and workmanship to the extent that such design has not been supplied by the purchaser. This warranty shall apply to Canadair Limited and to its customers."

Canadair, the manufacturer of the aircraft, sold it pursuant to a written agreement to plaintiff Icelandic (Loftleidir) on February 15, 1964 for $5,572,323.00 and delivered it in Canada on February 25, 1964.

At the time of the sale, the aircraft had been certified as airworthy by the Canadian Department of Transport. The sales agreement, in Article 27, provided that the rights and liabilities of the parties were to be governed by the laws of Quebec, Canada; and by Article 10(c) and (e), Canadair's Warranty liabilities were limited to claims made within six months after delivery.

The plaintiff Salenia purchased an interest in the aircraft by agreement dated August 15, 1970 for $1,000,000.00. By the terms of that agreement (Article 22) and the letter agreement of August 15, 1970, Salenia accepted the aircraft in an 'as is' condition without any warranties and subject to the limitations in the agreement between Loftleidir and Canadair.

At the time of the crash on December 2, 1970, the aircraft was registered in the names of Canadair and plaintiff Salenia with the Civil Aviation Administration of Iceland.

The complaint in this action seeks damages of $4,600,000.00 for the destruction of the plane, loss of profits, loss of use, loss of equipment on the plane, and the cost of the investigation of the crash.

THE SUBSTANTIVE LAW

The substantive law to be applied in this case is that of the Province of Quebec, Canada. Under the "grouping of interests" test enunciated by the Court of Appeals in Martin v. Julius Dierck Equipment Co., 52 A.D.2d 463, 384 N.Y.S.2d 479 (Second Dept., 1976), aff'd 43 N.Y.2d 583, 403 N.Y.S.2d 185, 374 N.E.2d 97 (1978), all directional signals point to Canada. The specifications for the valve were made in Canada and upon manufacture, was shipped to that locality where it was placed into the aircraft and delivered to plaintiff Loftleidir. Also, Article 27 of the purchase agreement between Canadair and Loftleidir states that the agreement will be governed by the laws of Quebec. The only contact which New York had to the valve was that it was manufactured in and shipped from the State of New York. As stated in Martin, "the nonresident's 'contact' with New York and its law, limited to the fact that the vehicle was manufactured in the State, is at best fortuitous and tangential." (52 A.D.2d 463, 467, 384 N.Y.S.2d 479, 483 (1978)). The law of Bangladesh, the site of the plane crash, is not applicable since "In airplane crash cases, the places of the wrong . . . is most often fortuitous." Cousins v. Instrument Flyers, Inc., 44 N.Y.2d 698, 699, 405 N.Y.S.2d 441, 442, 376 N.E.2d 914, 915 (1978). In addition, Bangladesh has very little interest in the present litigation since the plane was manufactured and purchased in Canada and owned by an Icelandic and a Swedish corporation. The plane was principally hangared and serviced in Luxembourg.

Having determined the substantive law to be applied in this case to be that of Quebec, Canada, it will be shown that plaintiffs' causes of action in negligence, strict products liability and breach of warranty must be dismissed and summary judgment granted to defendant on all of these actions.

THE LAW REGARDING THE STATUTE OF LIMITATIONS

I. NEGLIGENCE

In New York, Section 214(4) of the CPLR provides that an action to recover damages for an injury to property must be commenced within three years. This period of limitation, in a negligence action without fraud, ordinarily runs from the time of the commission of the wrong or injury. Hillel v. Motor Haulage Co., Sup., 102 N.Y.S.2d 578, citing Schmidt v. Merchants Despatch Trans. Co., 270 N.Y. 287, 300, 200 N.E. 824. Plaintiffs originally commenced suit against the defendants in the U.S. District Court for the Southern District of New York on November 30, 1973. That action was dismissed for lack of subject matter jurisdiction. Plaintiffs then instituted the instant action in the New York Supreme Court on March 10, 1975, within the six-month period provided for in CPLR § 205(a), which provides for a new action to be commenced upon the same cause of action. Thus, for statute of limitation purposes, plaintiff's action in the State Supreme Court is deemed to have been commenced on November 30, 1973. Since the crash occurred on December 2, 1970, the New York State action is within the three-year Statute of Limitations.

But Section 202 of the Civil Practice Law and Rules (CPLR) of the State of New York provides that when an action is based upon a cause of action accruing without the state, the foreign statute of limitations shall apply, if it bars the action. Therefore, this Court will apply the statute of limitations of Quebec.

Under the Civil Code of Quebec (C.C.), Article 2261, an action "for damages resulting from offenses or quasi-offenses," (intentional or unintentional negligence) must be commenced within two years. Also, Section 1053 C.C. provides that "Every person capable of discerning right from wrong is responsible for the damage caused by his fault to another, whether by positive act, imprudence, neglect or want of skill." The prescription period of two years is part of the substantive law of Quebec. After those two years, which commence to run from the date the negligence occurred, from the date that the damage occurred, or at the latest, from the date that the damage and its cause were known to plaintiffs, the cause of action is absolutely extinguished and no action may be maintained (Art. 2267 C.C.). Since it has been more than two years since the date that the damage and its cause were known to plaintiffs, the two-year prescription period of Quebec has elapsed. Accordingly, plaintiffs' negligence cause of action is extinguished.

II. STRICT PRODUCTS LIABILITY

In New York, in order to maintain an action under the theory of strict products liability, one must show that there was a defect in the product at the time that it...