Palmer v. Borg-Warner Corp., BORG-WARNER

• Decision Date: 25 September 1992
• Docket Number: BORG-WARNER,No. S-4101,S-4101
• Citation: 838 P.2d 1243
• Parties: Lorraine F. PALMER and Edward E. Dillon, Jr., Personal Representatives of the Estate of Merrett P. Palmer, Appellants, v.CORPORATION and its Division Marvel-Schebler/Tillotson, Facet Aerospace Products Company, Facet Enterprises, Inc.; and Edward DePriest, Appellees.
• Court: Alaska Supreme Court

Page 1243

838 P.2d 1243

Lorraine F. PALMER and Edward E. Dillon, Jr., Personal Representatives of the Estate of Merrett P Palmer, Appellants, v. BORG-WARNER CORPORATION and its Division Marvel-Schebler/Tillotson, Facet Aerospace Products Company, Facet Enterprises Inc.; and Edward DePriest, Appellees.

No. S-4101.

Supreme Court of Alaska.

Sept. 25, 1992.

Sanford M. Gibbs, Hagans, Brown, Gibbs and Moran, Anchorage, Steven D. Smith, Anchorage, and H. Van Z. Lawrence, Fairbanks, for appellants.

David T. Hunter and Michael K. Nave, Lane Powell Spears Lubersky, Anchorage, for appellees.

Before RABINOWITZ, C.J., and BURKE, MATTHEWS, COMPTON and MOORE, JJ.

OPINION

COMPTON, Justice.

This appeal is from the trial court's denial of an Alaska Civil Rule 60(b) motion for relief from a Judgment of Dismissal. We reverse and direct the court to reconsider the motion.

I. FACTUAL AND PROCEDURAL BACKGROUND

On September 8, 1986, a Piper PA-18 aircraft crashed in the Brooks Range, roughly thirty miles south of Umiat. Kenneth Swanson, the pilot, and Merrett P. Palmer, his sole passenger, died in the accident. Palmer's widow was informed of her husband's death at least by September 11, 1986. ¹ On October 1, 1986, the aircraft's engine was removed by helicopter from the scene of the crash and later transported to Fairbanks. The National Transportation Safety Board (NTSB) then began an investigation into the cause of the crash, issuing its findings in July 1987. ² The NTSB's report concluded that there was probable cause to believe that the crash was caused by pilot error. The report noted that the "engine teardown revealed only impact and fire damage."

The report also noted that the "carburetor was intact and showed no signs of external damage other than heat damage" and that the "carburetor was equipped with a fibre composite float which was heavily damaged by the fire."

On July 30, 1987, the personal representatives of the Palmer estate filed a wrongful death action against the estate of Kenneth Swanson and his employer, Dennis Reiner, alleging negligent operation of the aircraft. In November the Swanson estate answered, asserting inter alia, that (a) third parties were responsible for the accident; and (b) the Palmer estate had failed to join indispensable third parties. Neither the basis for the third parties' liability nor the third parties were identified. On September 7, 1988, one day before the second anniversary of the crash, Swanson's estate filed a wrongful death action against the Borg-Warner Corporation (Borg-Warner), the carburetor manufacturer, ³ specifically alleging that a defective carburetor caused the crash.

On September 19, 1988, the Palmer estate, after learning that the cause of the crash was more likely a defective carburetor float than pilot error, agreed to the dismissal of its suit against the Swanson estate and Reiner. The Palmer estate filed suit against Borg-Warner the next day, two years and nine days after Palmer's widow first learned of the accident.

Borg-Warner moved for summary judgment against the Palmer estate, arguing that the estate's suit for wrongful death was barred by the two-year statute of limitations provided in AS 09.10.070. The Palmer estate filed a cross-motion for partial summary judgment arguing that "[a]s of September 20, 1986, Plaintiffs did not know, nor could they have reasonably been expected to know, that the carburetor of the aircraft ... may have been defective." The estate claimed that its suit against the manufacturer was timely.

On March 14, 1989, the superior court granted summary judgment for Borg-Warner, ruling the claim time-barred as a matter of law. ⁴ An Order of Dismissal was entered against the Palmer estate, and the estate appealed. We affirmed the superior court's dismissal, ruling that the estate's suit against Borg-Warner was untimely filed. Palmer v. Borg-Warner Corp., 818 P.2d 632, 636-37 (Alaska 1990) (Palmer I ). Alleged fraudulent concealment of the cause of the crash was not then an issue at either the trial or appellate level. ⁵

In February 1990, after a two-week bench trial in the Swanson estate's suit, Judge Hodges issued a memorandum decision and findings of fact and conclusions of law. He found that:

[T]he float in the carburetor of the Swanson aircraft absorbed fuel becoming heavy and sinking causing a sudden unexpected engine failure; the absorption of the fuel by the float was a result of a defect in the manufacturing process or a change in the structure of the float over time; the product was defective at the time it was manufactured or did not perform as a reasonable consumer would expect under normal use.

Judge Hodges held Facet Enterprises, Inc. (Facet) legally responsible for the death of Kenneth Swanson due to Facet's failure "to manufacture a carburetor and carburetor float that would perform in a manner that a reasonable consumer would expect." He also found by clear and convincing evidence that:

Facet knew that some 30-628 and 30-759 Rogers composite floats contained an open cell structure as a result of the manufacturing process; that they knew these floats would absorb fuel and become "heavy"; that they knew a heavy carburetor float would adversely affect the performance of the aircraft engine in which it was installed; that they knew this could cause an unexpected loss of power while in flight; that although they suspected the use of auto gas adversely affected the properties of a Rogers' composite float, none of the tests conducted by them substantiated this; that in spite of the lack of evidence, they published to the FAA, the engine manufacturer and the public, as fact, that auto gas had an adverse affect on the Rogers' composite float; that the estimated cost of changing the existing composite floats to metal floats was approximately 23 million dollars; that if Facet could convince the FAA to issue an AD requiring replacement of the composite floats with metal floats, this cost would be borne by the consumers; that if a manufacturing defect was acknowledged, it is probable that the cost would have been borne by Facet and/or Rogers; that Facet concealed from the consumers (the engine manufacturer, the airplane manufacturer, and the ultimate user) the fact that some floats in use had open-cell structures which were formed during the manufacturing process; that this failure to disclose is outrageous conduct and a reckless disregard of the rights of others entitling Swanson to an award of punitive damages.

Borg-Warner settled with the Swanson estate prior to entry of final judgment, and the suit was dismissed with prejudice pursuant to stipulation.

On April 23, 1990, the Palmer estate filed a Civil Rule 60(b) motion for relief from judgment. The Palmer estate argued that the finding in the Swanson estate's case that Borg-Warner had engaged in misconduct by concealing from the public the cause of carburetor failure, required that the earlier judgment dismissing the Palmer estate's case be vacated. Judge Hodges denied this motion without comment, findings or conclusions. The Palmer estate appeals.

II. ELEMENTS REQUIRED TO SET ASIDE A JUDGMENT UNDER RULE 60(b)(2)

Civil Rule 60(b)(2) provides that a court may relieve a party from a final judgment because of "newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b)." Motions for relief from judgment under Rule 60(b) are left to the sound discretion of the trial court and will be reversed on appeal only for an abuse of discretion. Babinec v. Yabuki, 799 P.2d 1325, 1332 (Alaska 1990); Nordin Const. Co. v. City of Nome, 489 P.2d 455, 472 (Alaska 1971). Abuse of discretion exists "only where the appellate court is left with a definite and firm conviction on the whole record that the trial judge has made a mistake." Babinec, 799 P.2d at 1332.

We articulated the elements required to set aside a judgment under Rule 60(b)(2) in Montgomery Ward v. Thomas, 394 P.2d 774, 776 (Alaska 1964).

[T]he evidence: (1) must be such as would probably change the result on a new trial; (2) must have been discovered since the trial; (3) must be of such a nature that it could not have been discovered before trial by due diligence; (4) must be material; (5) must not be merely cumulative or impeaching.

Id.

The parties disagree whether evidence of Borg-Warner's allegedly fraudulent concealment of the cause of the crash would change the result in a new proceeding. ⁶ The Palmer estate argues that Borg-Warner's allegedly fraudulent concealment would change the result "since counsel could have argued that equitable estoppel prevented Borg-Warner from asserting the statute of limitations defense upon which the case was dismissed." ⁷

This case is complicated because that evidence of fraudulent concealment is presented in the context of a motion for relief from a final judgment under Rule 60(b)(2). ⁸ Typically, a plaintiff would raise evidence of fraudulent concealment in response to a defendant's argument that the statute of limitations was a defense to the plaintiff's claims. In this case, to determine whether the court abused its discretion when it denied the Palmer estate's Rule 60(b)(2) motion, we must determine whether evidence of fraudulent concealment and the doctrine of equitable estoppel would probably change the result in a new proceeding. We will later return to a discussion of the other Rule 60(b)(2) requirements.

A. FRAUDULENT CONCEALMENT AND EQUITABLE ESTOPPEL.

"[A] party who fraudulently conceals from a plaintiff the existence of a cause of action may be estopped to plead the statute of limitation if the plaintiff's delay in bringing suit was occasioned by reliance on the false or fraudulent representation." Sharrow v. Archer, 658 P.2d 1331, 1333 (Alaska 1983) (quoting Chiei v. Stern, 561 P.2d 1216, 1217 (Alaska 1977)). See also Pedersen v. Zielski, 822 P.2d 903, 908-09 (Alaska 1991); Russell v....