Petroleum Helicopters, Inc. v. Rolls-Royce Corp.
| Decision Date | 09 December 2016 |
| Docket Number | Case No. 1:15-cv-00840-TWP-DML |
| Parties | PETROLEUM HELICOPTERS, INC., Plaintiff, v. ROLLS-ROYCE CORP., Defendant. |
| Court | U.S. District Court — Southern District of Indiana |
This matter is before the Court on a Motion for Summary Judgment filed pursuant to Federal Rule of Civil Procedure 56 by Defendant Rolls-Royce Corp., ("Rolls-Royce"). (Filing No. 192.) Plaintiff Petroleum Helicopters, Inc. ("PHI") filed this action to recover damages for the loss of a helicopter which was forced to make an emergency landing onto the Gulf of Mexico after an engine, manufactured by Rolls-Royce, malfunctioned. On January 30, 2013, PHI filed an Amended Complaint in the Western District of Louisiana (Filing No. 15). PHI asserts that redhibitory defects1 in Rolls-Royce's engine caused its helicopter to land onto the Gulf of Mexico, resulting in the destruction of the helicopter. On May 29, 2015, PHI's claims against Rolls-Royce were severed and transferred to this Court. (Filing No. 160.) Rolls-Royce now moves for summary judgment, asserting that PHI's damages are limited by a Limited Warranty, PHI's claims are barred by the "economic loss" doctrine, and the destruction of PHI's helicopter was due to a superseding cause. (Filing No. 192.) For the following reasons, Rolls-Royce's Motion for Summary Judgment is granted in part and denied in part.
Rolls-Royce manufactures turbine aircraft engines and parts used in helicopters. (Filing No. 193 at 1.) PHI, one of Rolls-Royce's long standing customers, operates one of the largest fleet of rotary aircraft in the world, and also offers helicopter transport services. Id. In 1999, Rolls-Royce designed, manufactured, and sold an engine to Bell Helicopter Canada. (Filing No. 15 at 3; Filing No. 193 at 2.) In 2009, Bell Helicopter Canada installed Rolls-Royce's engine into the helicopter at issue. (Filing No. 193 at 2.) Thereafter, in 2011, PHI purchased a replacement engine component known as a No. 2 bearing from Rolls-Royce and independently installed it into the helicopter's engine. Id. at 3. The replacement No. 2 bearing included a Limited Warranty for spare modules and parts. Id. at 7.
On December 1, 2011, the No. 2 bearing failed, causing the entire engine to lose power. (Filing No. 197 at 3.) This malfunction forced the pilot to perform an emergency landing onto the Gulf of Mexico. (Filing No. 15 at 3.) During the emergency landing, the pilot inflated skid mounted floats which were designed to keep the helicopter from sinking. Id. The pilot and his passenger then entered inflated life rafts and were rescued within ten minutes. (Filing No. 193 at 2.) The rescuers returned to the floating helicopter and attempted to tow the helicopter to a platform for recovery. Id. at 8. After towing the helicopter for approximately an hour, the float deflated. Id. The helicopter inverted into the salt water, resulting in the helicopter's destruction. Id. at 2.
APICAL Industries, Inc. ("APICAL") designed, manufactured, and sold the helicopter's float system to PHI. (Filing No. 15 at 3.) Thereafter, in 2006, APICAL incorporated "doubler" float systems to prevent floats from rupturing and deflating. (Filing No. 193 at 6.) On November11, 2006, APICAL advised Offshore Helicopter Support Services, Inc., ("OHS") and other service agents to retrofit existing floats with a "doubler." Id. In November 2011, less than one month before the emergency landing, OHS repaired and reworked the float system on PHI's helicopter. (Filing No. 15 at 11.) While servicing the helicopter, OHS neither retrofitted a "doubler" onto the helicopter's float, nor did OHS advise PHI of the need for a retrofit. (Filing No. 193 at 6.)
On January 30, 2013, PHI filed an Amended Complaint in the Western District of Louisiana against Rolls-Royce, APICAL, and OHS, requesting compensatory damages and attorney's fees. (Filing No. 15.) PHI asserted redhibition claims against Rolls-Royce, and APICAL, as well as, a strict products liability claim against APICAL, and a breach of contract claim against OHS. Id. PHI specifically contends that Rolls-Royce is liable because the "engine contained defects in its manufacture or design that rendered it useless, or its use so inconvenient that it must be presumed that PHI would not have bought the Engine had it known of the defects." Id. at 4. Rolls-Royce then moved the United States District Court for the Western District of Louisiana to dismiss or transfer PHI's claims against it to the Southern District of Indiana, pursuant to a forum selection clause contained in the Limited Warranty. On May 29, 2015, PHI's redhibition claims2 against Rolls-Royce were severed and transferred to this Court. (Filing No. 160.)
Thereafter, on July 18, 2016, Rolls-Royce moved for summary judgment, asserting that PHI is bound by the Limited Warranty, PHI's claims are barred by the "economic loss" doctrine, and a superseding cause caused the destruction of PHI's helicopter. (Filing No. 192.) In response,PHI argues that genuine issues of material fact remain and summary judgment should be denied. (Filing No. 197.)
The "purpose of summary judgment is to pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial." Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). Under Federal Rule of Civil Procedure 56, summary judgment is appropriate only where there exists "no genuine issue as to any material facts and . . . the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56. In ruling on a motion for summary judgment, the court reviews "the record in the light most favorable to the non-moving party and draw[s] all reasonable inferences in that party's favor." Zerante v. DeLuca, 555 F.3d 582, 584 (7th Cir. 2009) (citation omitted). "However, inferences that are supported by only speculation or conjecture will not defeat a summary judgment motion." Dorsey v. Morgan Stanley, 507 F.3d 624, 627 (7th Cir. 2007) (citation and quotation marks omitted). Additionally, "[a] party who bears the burden of proof on a particular issue may not rest on its pleadings, but must affirmatively demonstrate, by specific factual allegations, that there is a genuine issue of material fact that requires trial." Hemsworth v. Quotesmith.com, Inc., 476 F.3d 487, 489-90 (7th Cir. 2007) (citation omitted). "The opposing party cannot meet this burden with conclusory statements or speculation but only with appropriate citations to relevant admissible evidence." Sink v. Knox County Hosp., 900 F. Supp. 1065, 1072 (S.D. Ind. 1995) (citations omitted). "[N]either the mere existence of some alleged factual dispute between the parties nor the existence of some metaphysical doubt as to the material facts is sufficient to defeat a motion for summary judgment." Chiaramonte v. Fashion Bed Grp., Inc., 129 F.3d 391, 395 (7th Cir. 1997) (citations and quotation marks omitted).
Rolls-Royce asserts that it is entitled to summary judgment for three reasons. It first argues that the No. 2 bearing supplied to PHI included a Limited Warranty that excludes Rolls-Royce from liability regarding the loss of PHI's helicopter. Rolls-Royce next asserts that PHI's breach of warranty claim is barred by the "economic loss" doctrine. Rolls-Royce further contends that it is not liable to PHI because a superseding cause—the failure of the Apical floats—proximately caused the loss of PHI's helicopter. In response, PHI contends that material issues of fact exist and summary judgment is not warranted. The Court will address each contention in turn.
PHI is pursuing a breach of warranty claim against Rolls-Royce under Indiana law. PHI specifically asserts that Rolls-Royce breached the implied warranty of merchantability. (Filing No. 197 at 6-7.) The implied warranty of merchantability requires goods to be "fit for ordinary purposes for which such goods are used." Irmscher Suppliers, Inc. v. Schuler, 909 S.E.2d 1040, 1048 (Ind. App. 2009); See also Easyrest, Inc. v. Future Foam, Inc., No. 4:06-CV-2-SEB-WGH, 2007 WL 2705582, at *2 (S.D. Ind. Sept. 12, 2007) . Rolls-Royce argues that it is not liable to PHI because its Limited Warranty packaged with the replacement No. 2 bearing disclaimed any implied warranties for merchantability. Rolls-Royce additionally contends that the Limited Warranty provides PHI with its exclusive remedies. The Limited Warranty specifically states:
The obligations of Rolls-Royce under this Limited Warranty are limited to the repair of the spare module/part as provided herein. In no event, whether as a result of breach of contract or warranty, alleged negligence, or otherwise, shall Rolls-Royce be subject to liability for incidental, consequential, indirect, special or punitive damages of any kind, including without limitation to damage to the engine, airframe or other property, commercial losses, lost profits, loss of use, grounding of engines or aircrafts, inconvenience, loss of time, cost of capital, cost of substitute equipment, downtime, claims of customers, or changes in retirement lives and overhaul periods.
(Filing No. 193-4 at 2.) Rolls-Royce argues that the format and language of its Limited Warranty is sufficient to exclude or modify any implied warranty...
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