Indemnity Ins. Co. v. American Aviation, Inc., No. 02-14828.

• Decision Date: 04 September 2003
• Docket Number: No. 02-14830.,No. 02-14828.
• Citation: 344 F.3d 1136
• Parties: INDEMNITY INSURANCE COMPANY OF NORTH AMERICA, Plaintiff-Appellant, v. AMERICAN AVIATION, INC., Defendant-Appellee. Profile Aviation Services, Inc., Plaintiff-Appellant, v. American Aviation, Inc., Defendant-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

344 F.3d 1136

INDEMNITY INSURANCE COMPANY OF NORTH AMERICA, Plaintiff-Appellant, v. AMERICAN AVIATION, INC., Defendant-Appellee.

Profile Aviation Services, Inc., Plaintiff-Appellant, v. American Aviation, Inc., Defendant-Appellee.

No. 02-14828.

No. 02-14830.

United States Court of Appeals, Eleventh Circuit.

September 4, 2003.

Hugh C. Griffin, Lord, Bissell & Brook, Chicago, IL, Thomas J. Strueber, Lord, Bissell & Brook, Atlanta, GA, for Plaintiffs-Appellants.

John M. Murray, Jr., Tampa, FL, Carolyn A. Pickard, Murray, Marin & Herman, P.A., Miami, FL, for Defendant-Appellee.

Appeals from the United States District Court for the Middle District of Florida (Nos. 02-00850-CV-8-T-17TG, 02-00851-CV-8-T-17TB); Elizabeth A. Kovachevich, Judge.

Before ANDERSON and BIRCH, Circuit Judges, and PROPST^*, District Judge.

PER CURIAM:

CERTIFICATION FROM THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT TO THE SUPREME COURT OF FLORIDA PURSUANT TO SECTION 25.031 OF THE FLORIDA STATUTES AND RULE 9.150 OF THE FLORIDA RULES OF APPELLATE PROCEDURE.

TO THE SUPREME COURT OF FLORIDA AND ITS HONORABLE JUSTICES.

Indemnity Insurance Company of North America ("Indemnity") and Profile Aviation Services, Inc., ("Profile") appeal from the dismissal of their tort claims in their separate complaints against American Aviation, Inc. ("American") by the United States District Court for the Middle District of Florida. The tort claims were dismissed on the basis that Florida's economic loss rule bars the claims. In deciding this case, we must determine whether the district court properly interpreted and applied Florida law. Because of substantial questions concerning the appropriate Florida law to be applied in this case, we certify those questions of law to the Supreme Court of Florida and postpone any further consideration of the consolidated appeals in this case until we receive answers from that court.

Summary Of Alleged Facts¹ And Applicable Regulations

This action arises from the allegedly negligent maintenance and inspection of an aircraft's landing gear by American. All mechanics who work on aircraft must be FAA-certified. To become certified, a mechanic must graduate from a certified aviation maintenance technical school (or have equivalent practical experience) and must pass a written test on the construction and maintenance of aircraft, the federal regulations, and provisions governing mechanics. They must also pass an oral and a practical skills test. See 14 C.F.R. §§ 65.71, 65.75, 65.77, 65.79.

A FAA-certified mechanic who performs maintenance on an aircraft, airframe, engine, etc., must follow the methods, techniques, and practices prescribed in the aircraft's maintenance manual and perform the maintenance in such a manner that the condition of the aircraft will be at least equal to its original or properly altered condition. See 14 C.F.R. § 43.13. Moreover, when maintenance has been performed, a FAA-certified mechanic must give approval before the aircraft, airframe, etc. is returned to service. See 14 C.F.R. §§ 43.3, 43.7, 43.13. Before returning the aircraft to service, the certified mechanic must also make an entry into the aircraft's logbook regarding the inspection and maintenance performed. See 14 C.F.R. § 43.5. According to appellants, an aircraft owner relies on these records to determine, among other things, if the required maintenance has been performed, if the aircraft can be returned to service, and when the next maintenance is scheduled.

On or around November 22, 1996, American's FAA-certified mechanics, pursuant to a contract to which appellants are not parties,² performed the required 30-month end play maintenance and inspection on the landing gear of a Beechcraft KingAir 100 aircraft, registration N924RM ("Aircraft"). During the course of the inspection and repair, American's mechanics removed the Aircraft's right main landing gear actuator and lower thrust bearing. After completing the work, American's mechanics certified in the Aircraft's logbook that the work was done in accordance with the Aircraft's maintenance manual and FAA regulations.³

Profile purchased the Aircraft subsequent to American's November 1996 maintenance and inspection. Appellants contend that they reasonably relied upon American's representations in the logbook concerning the November 1996 work. On May 14, 1999, the Aircraft was severely damaged when the right main landing gear failed to extend during a landing. The alleged cause of the failed landing gear was that the lower thrust bearing of the right main landing gear actuator was installed backwards. Appellants contend that they could not have discovered American's alleged negligence prior to the accident.

Proceedings In District Court

On May 10, 2002, Indemnity, which was the Aircraft's insurer, and Profile filed separate four count complaints in the district court. Appellants sought to recover for negligence (Count I), negligence per se (Count II), negligent misrepresentation (Count III), and breach of warranty (Count IV). American moved to dismiss the complaints, arguing that Florida's economic loss rule barred the tort claims and that no breach of warranty action could be maintained because of a lack of privity between appellants and American. In a series of orders, the district court agreed with American and dismissed both complaints. The cases were consolidated for appeal.⁴

Issues

The issues are as follows:

(1) Whether the "economic loss" doctrine of Florida applies to alleged torts if the defendant has provided services to a product rather than has sold a product.

(2) Whether the "economic loss" doctrine of Florida applies if there is no contractual relationship between the plaintiffs and the defendant.

(3) Whether the "economic loss" doctrine of Florida applies to the facts of this case with regard to damage to the total aircraft as opposed to mere damage to the landing gear under the "other property" exception.

(4) Whether the providing of certified mechanical services falls under the category of the "professional services" exception to the "economic loss" doctrine of Florida or under some related services exception.

(5) Whether the negligent misrepresentation claim in this case provides an exception to the "economic loss" doctrine of Florida.

This court will recount the respective positions of the parties without approval or rejection of those positions.

Appellants' Positions

A. In General

Appellants start with a history of Florida's economic loss rule. "The `economic loss' rule is a court-created doctrine which prohibits the extension of tort recovery for cases in which only a purchased product has been damaged and there is no personal injury or damage to `other property,' and the losses or damage are economic in nature." Moransais v. Heathman, 744 So.2d 973, 979 (Fla.1999) (citation omitted). Appellants contend that a review of the economic loss rule in the Florida courts over the last fifteen years shows an expansion and then contraction of the rule. See Charles R. Walker, Note, Moransais v. Heathman and the Florida Economic Loss Rule: Attempting to Leash The Tort-Eating Monster, 52 Fla. L.Rev. 769 (2000).

A case relied upon by the district court, which appellants contend is an example of the "expansive" period of Florida's economic loss rule, is Casa Clara Condo. Assoc., Inc. v. Charley Toppino & Sons, Inc., 620 So.2d 1244 (Fla.1993). The factual and procedural posture of that case was as follows:

Apparently, some of the concrete supplied by Toppino contained a high content of salt that caused the reinforcing steel inserted in the concrete to rust, which, in turn, caused the concrete to crack and break off. The petitioners own condominium units and single-family homes built with, and now allegedly damaged by, Toppino's concrete. In separate actions the homeowners sued numerous defendants and included claims against Toppino for breach of common law implied warranty, products liability, negligence, and violation of the building code. The circuit court dismissed all counts against Toppino in each case. On appeal the district court applied the economic loss rule and held that, because no person was injured and no other property damaged, the homeowners had no cause of action against Toppino in tort. The district court also held that Toppino, a supplier, had no duty to comply with the building code.

Id. at 1245 (footnote omitted). The homeowners argued that limiting them to a contractual remedy against the concrete supplier was unfair because they lacked privity of contract with the supplier. The Florida Supreme Court, by a 4-3 vote, held that the economic loss rule applied and barred all the owners' tort claims. Id. at 1247. The court also rejected the argument that the "other property" exception to the rule applied, holding that "[t]hese homeowners bought finished products — dwellings — not the individual components of those dwellings. They bargained for the finished products, not their various components. The concrete became an integral part of the finished product and, thus, did not injure `other' property." Id. at 1247.

Appellants point to the dissent in Casa Clara, in which three justices reasoned that the economic loss rule

works well when the loss is suffered by one who is privy to the contract and involves loss that was the subject matter of the contract. It works a mischief, however, where as in this instance the injured party is not privy to the contract but injury to third parties is reasonably foreseeable. The condominium owners here suffered more than the loss of concrete; they suffered the loss of their homes, a foreseeable consequence of faulty concrete....

While I agree with the majority opinion that parties who have freely bargained and entered a contract relative to a particular subject matter should be bound by the terms of that contract including the distribution of loss, I feel that the theory is stretched when it is...