Lloyd v. Cessna Aircraft Co.

• Decision Date: 02 February 1977
• Docket Number: No. CIV-4-75-40.,CIV-4-75-40.
• Citation: 429 F. Supp. 181
• Parties: Marilyn LLOYD, etc., Plaintiff, v. CESSNA AIRCRAFT COMPANY, Defendant and Third-party Plaintiff, v. UNITED STATES of America et al., Third-party Defendants. UNITED STATES of America, Fourth-party Plaintiff, v. SERV-AERO ENGINEERING, INC., Fourth-party Defendant.
• Court: U.S. District Court — Eastern District of Tennessee

429 F. Supp. 181

Marilyn LLOYD, etc., Plaintiff, v. CESSNA AIRCRAFT COMPANY, Defendant and Third-party Plaintiff, v. UNITED STATES of America et al., Third-party Defendants.

UNITED STATES of America, Fourth-party Plaintiff, v. SERV-AERO ENGINEERING, INC., Fourth-party Defendant.

No. CIV-4-75-40.

United States District Court, E. D. Tennessee, Winchester Division.

February 2, 1977.

John C. Curtis and Charles P. Dupree, Chattanooga, Tenn., for plaintiff Marilyn Lloyd.

W. Ferber Tracy, Chattanooga, Tenn., for Santa Monica Propeller Service.

Samuel R. Anderson, Chattanooga, Tenn., for Serv-Aero Engineering, Inc.

Paul R. Leitner and R. Vann Owens, Chattanooga, Tenn., for Cessna.

John L. Bowers, Jr., U. S. Atty., Knoxville, Tenn., Hugh Moore, Chattanooga, Tenn., Andrew J. Dilk, Jr., and Jonathan M. Hoffman, Dept. of Justice, Washington, D. C., for the United States.

MEMORANDUM OPINION AND ORDERS

NEESE, District Judge.

This is a civil action for the recovery of compensatory and punitive damages for the wrongful death of the plaintiff's decedent in the crash of his privately-owned and operated aircraft. 28 U.S.C. § 1332(a)(1), (c). The defendant Cessna Aircraft Company (Cessna) commenced a third-party action, Rule 14(a), Federal Rules of Civil Procedure, against the United States of America (the government) for contribution or indemnity under the Federal Tort Claims Act. 28 U.S.C. §§ 1346(b), 2671, et seq. The government moved for a dismissal thereof, contending, inter alia, that such claim is barred by the "misrepresentation exception" to the aforementioned act, 28 U.S.C. § 2680(h), and that accordingly, this Court lacks jurisdiction of the subject matter. Rule 12(b)(1), Federal Rules of Civil Procedure. The Court agrees such contention is correct.

The Federal Tort Claims Act, supra, is a broad waiver of the federal government's immunity from liability for the torts of its employees committed while acting in the scope of their employment. Fitch v. United States, C.A. 6th (1975), 513 F.2d 1013, 10151, certiorari denied (1976), 423 U.S. 866, 96 S.Ct. 127, 46 L.Ed.2d 95. Such act "* * * contains various exceptions, however, and in construing the Act the courts must `carry out the legislative purpose of allowing suits against the Government for negligence with due regard for the statutory exceptions to that policy.' * * *" Idem., quoting from Dalehite v. United States (1953), 346 U.S. 15, 31, 73 S.Ct. 956, 9655, 97 L.Ed. 1427. Where the conduct complained of falls within one of the statutory exceptions, the district court is without jurisdiction of the subject matter thereof. United States v. Taylor, C.A. 6th (1956), 236 F.2d 649, 6522, motion to remand denied (1957), 353 U.S. 956, 77 S.Ct. 862, 1 L.Ed.2d 907, certiorari dismissed (1958), 355 U.S. 801, 78 S.Ct. 6, 2 L.Ed.2d 19; Konecny v. United States, C.A. 8th (1967), 388 F.2d 59, 622-5; Gibson v. United States, C.A.3d (1972), 457 F.2d 1391, 1392 n. 1; Robinson v. United States, D.C.Tenn. (1976), 422 F.Supp. 121, 1221.

Inter alia, the Congress has provided that the aforementioned limited waiver of sovereign immunity "* * * shall not apply to * * * any claim arising out of * * * misrepresentation. * * *." 28 U.S.C. § 2680(h). This term must be construed according to the traditional and commonly understood legal definition of such tort. United States v. Neustadt (1961), 366 U.S. 696, 706, 81 S.Ct. 1294, 13004, 6 L.Ed.2d 614; Fitch v. United States, supra, 513 F.2d at 10152. "* * * It is settled that this exception includes claims arising out of negligent as well as intentional misrepresentation. * * *" Fitch v. United States, supra, citing Neustadt v. United States, supra.¹

Herein, the third-party plaintiff Cessna seeks indemnification or contribution from the national sovereign for the alleged negligence of its agents and employees in the Federal Aviation Administration in their inspection and testing of the aircraft involved prior to such agency's issuance of a supplemental-type certificate and an airworthiness certificate therefor. Specifically, Cessna claims that:

* * * * * * * * * the agents and employees of the third-party defendant the United States of America, through its agency the FAA, while acting within the scope of their employment and office, authorized the issuance of an airworthiness certificate for the aircraft involved herein; that such agents and employees were negligent in so doing, in that such certificate was issued without adequate inspection and testing of the safety and suitability of the airframe, engine, enginemount and propeller-combination of such aircraft; that the negligence of the FAA, in failing to properly enforce the applicable existing regulations and policies related thereto in the issuance of the supplemental type certificate and airworthiness certificate, was a proximate cause of this crash; that the negligence of the FAA, in certifying the use of the engine-mount involved, when it knew or should have known that the mount was inadequate for such use, was a proximate cause of this crash; that such accident was the sole and proximate result of such active and primary negligence on behalf of such agents of the third-party defendants, including Mr. Ray Fulton of Santa Monica Propeller Service, who is authorized to sign on behalf of the FAA, and who on May 1, 1968 certified that the propeller hub which the plaintiff claims was the cause of her decedent's death was repaired and inspected in accordance with current Civil Air Regulations and was found airworthy for return and service; and that, under the Federal Tort Claims Act, 28 U.S.C. § 2671, et seq., it is entitled to indemnification and contribution from the United States for any judgment rendered against it herein.

* * * * * *

Revised pretrial order herein of September 22, 1976, § II(c)(1).²

Although Cessna has cast its third-party claims against the government "* * * in the guise of a negligence action, this does not automatically take the case outside the misrepresentation exception. * * *" Fitch v. United States, supra, 513 F.2d at 10153, 4. The Court must look beyond the literal meaning of such claims, to ascertain the real nature of Cessna's allegations against the government. Idem. In determining whether the conduct complained of falls within an exception to the aforecited act, the substance of the claim, and not the language used in stating it, is controlling. Gaudet v. United States, C.A.5th (1975), 517 F.2d 1034, 10355.

The critical issue is, not whether Cessna has asserted its claim in terms of negligence, but whether the Congress intended to bar this type of suit, under whatever legal theory it is brought, by expressly limiting its waiver of governmental immunity in the Federal Tort Claims Act, supra. See 35 Am.Jur. (2d) 306-307, Federal Tort Claims Act § 14. In several cases arising under the Federal Tort Claims Act, supra, the courts have held that negligent inspections and testing by government officials, which conduct results in incorrect information being reported and relied upon, in reality amount to a claim arising out of misrepresentation so as to be precluded by the aforementioned exception to the aforecited act.

The starting point in such a consideration is clearly the decision of the Tenth Circuit in Hall v. United States, C.A.10th (1959), 274 F.2d 69. Therein, the plaintiff, a cattleman, sought to recover money damages from the national sovereign for harm sustained from the negligent testing of his cattle by employees of the U.S. Department of Agriculture. Such test-results, which were revealed to the plaintiff, indicated that his cattle were diseased. As a proximate consequence, the plaintiff's herd was subject to quarantine, so that the sale thereof was necessarily made at a reduced price. Although the plaintiff argued that his suit was predicated upon the negligence of the government's employees, and not upon any misrepresentation, the Tenth Circuit rejected such contention. In so doing, the Court stated:

* * * * * *

* * * The plaintiff's real claim is that because of the negligent manner in which these tests were made, the result showed that the plaintiff's cattle were diseased; whereas, in fact, they were free from disease and that the Government misrepresented the true condition of these cattle. The plaintiff's loss came about when the Government agents misrepresented the condition of the cattle, telling him they were diseased when, in fact, they were free from disease. The claim is that this misrepresentation caused the plaintiff to sell his cattle at a loss. This stated a cause of action predicated on a misrepresentation. * * *

* * * * * *

Ibid., 274 F.2d at 711. The Court pointed out, however, that there was "* * * no claim that because of such negligent testing these cattle suffered physical damages which made them less valuable, such as may come from the use of a noxious or poisonous substance. * * *" Ibid., 274 F.2d at 71. Implicit in such statement is a recognition that, if the government had actually physically damaged these cattle during their inspection and testing, then such conduct would not have been barred by the misrepresentation exception.

The Hall rationale was followed two years later by the Supreme Court in United States v. Neustadt, supra. Therein, the Court held that this misrepresentation exception likewise barred a claim by a purchaser of a home who, in reliance upon a negligent inspection and appraisal by personnel of the Federal Housing Administration, had been induced to pay more for property than it was actually worth, and accordingly, who had sustained monetary damages. The plaintiffs' contention therein, that their action was predicated upon the negligence of the federal government and not upon misrepresentation, was rejected by the Court. Neither was the Court persuaded by the plaintiffs' further argument that their lawsuit was based upon the breach of a specific duty owed to them by the government. It...