Stanton v. Bayliner Marine Corp.
| Citation | 123 Wn.2d 64,866 P.2d 15 |
| Decision Date | 30 December 1993 |
| Docket Number | No. 60031-7,60031-7 |
| Parties | , 1994 A.M.C. 640 James H. STANTON, Winnifred Stanton, and their marital community; and Stanton Investment Company, Inc., a Washington corporation, Respondents, v. BAYLINER MARINE CORPORATION, a Delaware corporation, Petitioner, Olympic Sales, Inc., d/b/a Olympic Boat Centers, a Washington corporation, Defendant. ALBANY INSURANCE COMPANY, a Washington corporation, Respondent, v. BAYLINER MARINE CORPORATION, a Delaware corporation, Petitioner, Olympic Sales, Inc., d/b/a Olympic Boat Centers, a Washington corporation, Defendant. En Banc |
| Court | United States State Supreme Court of Washington |
Schwabe, Williamson, Ferguson & Burdell by Dennis A. Ostgard and Jerome C. Scowcroft, Seattle, for respondents.
In consolidated actions against Bayliner Marine Corporation and Olympic Sales, Inc. (hereafter collectively Bayliner), plaintiffs seek recovery of the cost of replacing or repairing damaged yachts. Bayliner seeks review of a Court of Appeals decision reversing the trial court's order of partial summary judgment in its favor. We reverse the Court of Appeals.
In December 1985, plaintiffs James Stanton, Winnifred Stanton, and Stanton Investment Company, purchased the M/Y MOONRAKER, a 45-foot model 4550 Bayliner motor yacht, from Olympic Sales, Inc., doing business as Olympic Boat Centers, in Seattle, Washington, for $225,342. In April 1988, plaintiff Wiley Dean Henry purchased the M/Y CONTESSA, also a Bayliner model 4550 motor yacht, from Olympic Sales, Inc. for $251,548.70. Albany Insurance Company insured both yachts.
On separate occasions, while the Stantons and Henry were pleasure boating, their yachts struck underwater objects. The MOONRAKER struck a submerged rock in Puget Sound in 1987, while the CONTESSA struck a reef off of Vancouver Island, Canada, in 1988. Both yachts sustained severe hull damage which caused mass flooding. The Stantons' boat rapidly sank, but the Stantons were rescued by The Stantons and Albany, under its subrogated interest from Henry, brought suits against Bayliner and Olympic Sales for products liability, negligence, breach of warranty, and violation of the Consumer Protection Act. The plaintiffs primarily seek to recover their "economic losses", or the cost of replacing and repairing the yachts. In addition, the Stantons claim loss of various items of personal property having an alleged combined value of approximately $25,000. The plaintiffs submitted the declaration of Mr. Ted Drake, a naval architect/marine engineer, who stated that the keel design of the Bayliner model 4550 was defective and created an unreasonable risk of mass flooding should penetration occur due to accidental grounding or stranding. Mr. Drake also stated that certain design techniques could have prevented the mass flooding.
nearby boaters. Henry's boat remained lodged on the rocks; Henry and his passengers were rescued by a Canadian maritime helicopter. No one suffered personal injury in either incident. Each boat was determined to be a constructive total loss. Salvage values for each boat ranged between $42,000 and $46,000
Citing East River S.S. Corp. v. Transamerica Delaval Inc., 476 U.S. 858, 106 S.Ct. 2295, 90 L.Ed.2d 865 (1986), Bayliner moved for summary judgment, claiming that admiralty law applies and precludes recovery for economic losses under either tort theory of products liability or negligence. Bayliner also argued that plaintiffs' warranty claim, governed by state law, did not allow recovery against Bayliner under a breach of warranty theory since the plaintiffs and Bayliner did not have privity of contract. Plaintiffs cross moved for partial summary judgment, claiming that the Washington products liability act governed the facts of this case thereby permitting the recovery sought. The trial court granted Bayliner's motion, dismissing substantially all of plaintiffs' claims, 1 and entered an order of finality. The The Court of Appeals reversed and remanded, holding that while admiralty jurisdiction applied, substantive admiralty law permits the application of state tort law to determine whether economic loss is compensable. Stanton v. Bayliner Marine Corp., 68 Wash.App. 125, 130-33, 844 P.2d 1019 (1992). In view of Graybar's explicit and unequivocal rejection of East River 's approach to "economic loss", the Court of Appeals concluded that Washington has a significant interest in a divergent interpretation of economic loss, and that the plaintiffs' claims may properly be heard under the WPLA. Bayliner, 68 Wash.App. at 133, 844 P.2d 1019.
plaintiffs appealed, claiming that the Washington product liability act (WPLA) applies and provides a remedy for the economic losses sustained in this case. See Washington Water Power Co. v. Graybar Elec. Co., 112 Wash.2d 847, 774 P.2d 1199, 779 P.2d 697 (1989) (economic loss within context of WPLA determined by "risk of harm" analysis)
We granted Bayliner's petition for review. We reverse the Court of Appeals.
The sole issue before us is whether the plaintiffs may recover damages for economic loss under Washington law in a tort claim arising under admiralty jurisdiction but filed in state court. Because the plaintiffs' claims arise under admiralty jurisdiction, we hold that substantive admiralty law precludes application of a state law remedy for the economic loss of the yachts; plaintiffs' claim for damages may properly be pursued in warranty against the seller under the UCC (RCW 62A).
These consolidated cases were brought by the plaintiffs to recover for the loss of two Bayliner boats and personal property on board at the time of the boats' grounding. The plaintiffs primarily seek to recover damages for "economic loss"--the cost of replacing and repairing the yachts. To better understand the economic loss rule in the context of this case, we first must discuss relevant portions of the Washington product liability act, the Supreme Court's decision in East River, and this court's decision in Graybar.
Under the Washington product liability act (WPLA) 2, a purchaser of a defective product may assert a product liability claim against a "product seller", which includes a manufacturer, wholesaler, distributor, or retailer of the product. RCW 7.72.010(1). A "product liability claim" includes, in relevant part, any claim or action brought for harm caused by the manufacture, construction, fabrication, production, design or marketing of the relevant product. RCW 7.72.010(4). The WPLA broadly defines "harm" as "any damages recognized by the courts of this state: PROVIDED, That the term 'harm' does not include direct or consequential economic loss under Title 62A RCW [UCC]." RCW 7.72.010(6). The WPLA therefore provides no recovery for direct or consequential economic loss. See Washington Water Power Co. v. Graybar Elec. Co., supra. See also Comment, Determining Recoverable Economic Harm Under the Washington Product Liability Act, 27 Gonz.L.Rev. 335, 337 (1991/92). The WPLA does not prevent the recovery of direct or consequential economic loss under Title 62A RCW (UCC). RCW 7.72.020(2).
In East River S.S. Corp., the Supreme Court held that no products-liability claim lies in admiralty when the only injury claimed is economic loss. East River, 476 U.S. at 871, 876, 106 S.Ct. at 2302, 2304. In East River, a group of ship charterers sued a shipbuilder who had contracted to design, manufacture, and install turbines which would be the main propulsion unit for four 225,000-ton, $125 million, supertankers. East River, 476 U.S. at 859, 106 S.Ct. at 2296. When the ships were put into service, the turbines on all four malfunctioned because of design and manufacturing defects. However, only the products themselves were damaged. The charterer sued in federal court, alleging tortious conduct based on the products liability doctrine, and asked for damages for the cost of repairing the ships and for income lost while they were out of service. East River, 476 U.S. at 861, 106 S.Ct. at 2297. The harm was pure economic loss, without physical injury to either a person or other property.
In East River, the Supreme Court incorporated products liability, including strict liability, into the general maritime law. East River, 476 U.S. at 865, 106 S.Ct. at 2299. The Court also resolved the issue of whether a plaintiff in a maritime products liability action could recover damages for economic loss. Exercising its discretion in admiralty, a unanimous Court held that a "manufacturer in a commercial relationship has no duty under either a negligence or strict products-liability theory to prevent a product from injuring itself." East River, 476 U.S. at 871, 106 S.Ct. at 2302. Therefore, when a product damages only itself, and not persons or other property, the proper remedy lies in contract, not in tort, no matter how the product injury occurred. East River, 476 U.S. at 871-72, 106 S.Ct. at 2302-03.
In Washington Water Power Co. v. Graybar Elec. Co., supra, a non-admiralty case, this court found East River 's approach to "economic loss" unsuited to what the Legislature intended under the WPLA. Graybar, 112 Wash.2d at 864, 774 P.2d 1199. In Graybar, Washington Water Power (WWP) sued the manufacturer and distributor of electric deadend insulators in federal district court to recover damages incident to the failure of thousands of insulators. WWP's complaint alleged, among other things, violation of the WPLA, as well as negligence and strict liability under the common law. Graybar, 112 Wash.2d at 849, 774 P.2d 1199. While WWP claimed that the defective insulators had caused some bodily injury and property damage, the bulk of WWP's claim involved the cost of replacing the insulators. Graybar, 112 Wash.2d at 849, 774 P.2d 1199.
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