Rotorcraft Leasing, LLC v. H.E.R.O.S., Inc.

• Decision Date: 19 April 2017
• Docket Number: 16–690
• Parties: ROTORCRAFT LEASING, LLC and Catlin Insurance Company, Inc. v. H.E.R.O.S., INC. et. al.
• Court: Court of Appeal of Louisiana — District of US

217 So.3d 525

ROTORCRAFT LEASING, LLC and Catlin Insurance Company, Inc.
v.
H.E.R.O.S., INC. et. al.

16–690

Court of Appeal of Louisiana, Third Circuit.

April 19, 2017
Rehearing Denied May 24, 2017

John R. Walker, Jones Fussell, L.L.P., P.O. Box 1810, Covington, LA 70434, Tel. (985) 892–4801, Fax: (985) 892–4925, ATTORNEY FOR PLAINTIFFS/APPELLANTS Rotorcraft Leasing, LLC and Catlin Insurance Company, Inc.

Kenneth H. Laborde, Brendan P. Doherty, Bradley J. Schwab, Gieger, Laborde & Laperouse, LLC, One Shell Square, 701 Poydras Street, Suite 4800, New Orleans, LA 70139, Tel: (504) 561–0400 Fax: (504) 561–1011 ATTORNEY FOR DEFENDANT/APPELLEE Delavan, Inc.

Court composed of Sylvia R. Cooks, Shannon J. Gremillion and Phyllis Montgomery Keaty, Judges.

COOKS, Judge.

FACTS AND PROCEDURAL HISTORY

The trial court granted summary judgment dismissing Rotorcraft Leasing, LLC (Rotorcraft) and Catlin Insurance Company, Inc.'s (Catlin) suit against H.E.R.O.S., Inc. (HEROS) and Delavan, Inc. (Delavan) for the loss of a 2008 Bell Helicopter, Model 206 L–4, owned by Rotorcraft. The helicopter was forced to make an emergency landing in the Gulf of Mexico on September 14, 2010, after it lost power. The pilot escaped uninjured, but the helicopter sank to the bottom of the gulf. Catlin paid its insured's claim for the loss valued at $2,000,000, less Rotorcraft's deductible of $300,000.

Rotorcraft first sued HEROS on September 9, 2011, alleging its claims present an admiralty and maritime matter under the "savings to suitors" clause of the Judiciary Act of 1789, and asserting it is entitled to relief under the Louisiana Products Liability Act and/or Louisiana's redhibition law. Rotorcraft later amended its suit adding Delavan as a defendant, maintaining Delavan manufactured the fuel nozzle alleged to be defective and alleged to be the cause of the crash. Rotorcraft settled its claims with HEROS and it is no longer a party to the litigation.

Delavan filed a motion for partial summary judgment, motion for summary judgment, and a peremptory exception of prescription asserting: (1) Rotorcraft's products liability claim is barred by the East River¹ doctrine under federal maritime law; (2) Rotorcraft does not have a cause of action for redhibition because its purchase of the allegedly defective fuel nozzle was not a contract of sale but was, instead, a contract for repair services; and (3) any redhibition claim which Rotorcraft might have for the allegedly defective part is barred by La.Civ.Code art. 3499, ten-year liberative prescriptive period. The trial court granted partial summary

217 So.3d 528

judgment dismissing Rotorcraft's products liability claim applying the East River doctrine, and granted the motion for summary judgment dismissing Rotorcraft's contract-based redhibition claim. The trial court found it unnecessary to rule on the exception of prescription rendered moot by its summary judgment ruling.

Rotorcraft appeals asserting the trial court erred as a matter of law in granting the motions. It asserts that Louisiana law on redhibition offers an available remedy to Rotorcraft if the fuel nozzle was defective and the cause of the crash. It also asserts the East River doctrine does not bar recovery of Rotorcraft's products liability claim because the allegedly defective nozzle did not result only in an economic loss of the defective nozzle itself but of the separate and distinct helicopter. Rotorcraft also asserts it timely filed suit and its claims are not barred by prescription.

ANALYSIS

We find the trial court erred as a matter of law in granting the motions for summary judgment. Louisiana Code of Civil Procedure Article 966(A)(3) (emphasis added) provides:

After an opportunity for adequate discovery, a motion for summary judgment shall be granted if the motion, memorandum, and supporting documents show that there is no genuine issue as to material fact and that the mover is entitled to judgment as a matter of law.

" ‘Appellate courts review summary judgments de novo under the same criteria that govern the district court's consideration of whether summary judgment is appropriate.’ Elliott v. Continental Cas. Co. , 06-1505, p. 10 (La. 2/22/07), 949 So.2d 1247, 1253 (quoting Reynolds v. Select Props., Ltd. , 93-1480 (La. 4/11/94), 634 So.2d 1180, 1183 )." Field v. Lafayette Par. Sch. Bd. , 16–495 p. 3 (La.App. 3 Cir. 11/9/16), 205 So.3d 986, 988, writ denied , 16-2141 (La. 1/13/17), 215 So.3d 256, 2017 WL 375728. We find the trial court erred as a matter of law in granting Delavan's motion for summary judgment based on its finding that Rotorcraft's potential products liability claim is barred under the East River doctrine. We also find it legally erred in finding Rotorcraft was barred from raising its claim under Louisiana's redhibition law.

Products liability claim.

The United States Supreme Court decision in East River would only bar Rotorcraft's potential products liability claim if the facts demonstrate that the allegedly defective product caused harm to itself and no other. Such is not the case. Rotorcraft purchased the allegedly defective fuel nozzle separate and distinct from the helicopter which it purchased many years prior. While it is true that the fuel nozzle is a component part of the engine, and the engine is part of the helicopter, it does not necessarily follow, as Delavan asserts, that in this instance we must treat the helicopter as the product rather than the fuel nozzle. The receipt for Rotorcraft's purchase of the fuel nozzle from HEROS dated March 25, 2010, indicates the item was "sold to " and delivered to Rotorcraft, for a purchase price of $1,750 plus a used part. It is elementary that Rotorcraft's purchase of this product is a sale under Louisiana law. See La.Civ.Code art. 2439. Rotorcraft alleges this product failed, and its failure caused the helicopter to make a forced landing in the Gulf of Mexico and sink to the bottom of the gulf. The allegedly faulty product caused much damage to "other property," not just damage to itself, and endangered the life of the pilot. The federal courts have clearly recognized that East River does not bar recovery in tort for such a loss.

217 So.3d 529

East River, however, did not completely exclude tort claims for economic harm caused by a defective product. See Thomas J. Schoenbaum, Admiralty and Maritime Law § 3–11 at 120 (2d ed. 1994) ("[T]he East River court did not completely exclude tort product liability claims for purely economic losses."). A plaintiff may maintain a tort cause of action in admiralty when a defective product causes damage to "other property." East River, 476 U.S. at 867 [106 S.Ct. 2295] ("In this case, there was no damage to ‘other’ property."); Saratoga Fishing, 117 S.Ct. at 1785 ("[A]n admiralty tort plaintiff cannot recover for the physical damage the defective product causes to the ‘product itself’; [sic] but the plaintiff can recover for physical damage the product causes to ‘other property. ’ "). In order to determine what constitutes "other property," the Court must first define what is the allegedly defective "product." See Sea–Land Service, Inc. v. General Electric Co., 134 F.3d 149, 152 (3d Cir.1998 ).

Transco Syndicate No. 1, Ltd. v. Bollinger Shipyards, Inc. , 1 F.Supp.2d 608, 610–11 (E.D. La.1998) (emphasis added).

In Transco the United States District Court for the Eastern District of Louisiana addressed the question of what constitutes "other property" and what defines the "product," relying on the U.S. Supreme Court's holdings in East River and Saratoga Fishing Co. v. J.M. Martinac & Co. , 520 U.S. 875, 117 S.Ct. 1783, 138 L.Ed.2d 76 (1997) :

Fortunately, the Supreme Court has somewhat clarified East River's product—other property dichotomy in Saratoga Fishing Co. v. J.M. Martinac & Co., supra. In Saratoga Fishing, the initial purchaser of a vessel added a skiff, fishing net, and other equipment to the M/V Saratoga before selling the vessel with this additional equipment to a subsequent purchaser. When a defective hydraulic system in the vessel's engine room failed, the vessel caught fire and the ship sank. The secondary owner then filed suit against the manufacturer of the hydraulic system and the company that built the vessel. The issue presented to the Supreme Court was whether the skiff, fishing net, and other equipment added by the initial purchaser constituted "other property" under East River. The Court determined that they did:

When a Manufacturer places an item in the stream of commerce by selling it to an Initial User, that item is the ‘product itself’ under East River. Items added to the product by the Initial User are therefore ‘other property,’ and the Initial User's sale of the product to a Subsequent User does not change these characterizations.

Saratoga Fishing, 117 S.Ct. at 1786.

Transco , 1 F.Supp.2d at 611.

In Transco , the owner of a tugboat, the MV Lacabi , contracted with Bollinger Shipyard (Bollinger) for repair and refurbishment of its vessel. That contract required that Bollinger install two "Good Runner" diesel engines on the vessel which were purchased by the owner from Diesel Engine & Parts Company (DEPCO). DEPCO bought one of the two engines from...