Torrington Co. v. Stutzman

• Decision Date: 08 March 2001
• Docket Number: No. 99-0261,99-0261
• Citation: 46 S.W.3d 829
• Parties: (Tex. 2000) The Torrington Company and Ingersoll-Rand Corporation, Petitioners v. Sharon Stutzman et al., Respondents
• Court: Texas Supreme Court

Page 829

46 S.W.3d 829 (Tex. 2000)

The Torrington Company and Ingersoll-Rand Corporation, Petitioners v. Sharon Stutzman et al., Respondents

No. 99-0261

Supreme Court of Texas.

Argued January 19, 2000

Decided December 21, 2000

Rehearing Overruled March 8, 2001.

On Petition for Review from the Court of Appeals for the Ninth District of Texas

[Copyrighted Material Omitted]

[Copyrighted Material Omitted]

[Copyrighted Material Omitted] Justice O'Neill delivered the opinion of the Court joined by Chief Justice Phillips, Justice Enoch, Justice Baker, Justice Abbott, Justice Hankinson, and Justice Gonzales.

This case arises out of a Navy helicopter crash that killed two Marines. A jury found that a defective bearing in the helicopter's tail rotor assembly caused the crash. The trial court rendered judgment for the plaintiffs against the bearing's manufacturer and the manufacturer's successor. We consider a number of issues, including (1) whether the plaintiffs' negligent undertaking claim against the successor corporation was properly submitted to the jury, (2) whether the successor is contractually obligated to indemnify the manufacturer, (3) whether legally sufficient evidence supports the judgment against the bearing's manufacturer, (4) whether the trial court erred in refusing to submit a jury question on the government-contractor defense, (5) whether the trial court applied the appropriate state's law governing damages, (6) whether the jury verdict may be vitiated based upon excessiveness, and (7) whether the successor waived its objection to the trial court's determining attorney ad litem fees without an evidentiary hearing.

We conclude that the broad-form negligence question the trial court submitted to the jury omitted elements necessary to impose liability upon the successor under a negligent undertaking theory. Accordingly, we reverse the judgment against the successor and remand the plaintiffs' claims against the successor to the trial court in the interest of justice. We further hold that the trial court did not err in enforcing the successor's contractual indemnity obligation, and that the successor has standing to challenge the judgment against the manufacturer. Additionally, we hold that legally sufficient evidence supports the judgment against the manufacturer. We also hold that the trial court did not err in refusing to submit the government-contractor defense to the jury, and that the trial court properly applied choice-of-law principles. Further, we hold that, on this record, we may not vitiate the jury verdict based upon excessiveness. Finally, we hold that the successor waived its claim that the trial court erred by determining ad litem fees without an evidentiary hearing. Accordingly, we affirm the judgment against the manufacturer. We also affirm that portion of the judgment against the successor based upon its contractual indemnity.

I Background

On July 31, 1992, a Navy helicopter crashed, killing two Marines, Phillip D. Stutzman and James Pulaski. It is undisputed that the crash was caused by the failure of a bearing, although the parties dispute what caused the bearing to fail. The bearing was manufactured in 1984 by Fafnir Bearings, a division of Textron, Inc. Textron is also the parent company of Bell Helicopter Textron, Inc. (Bell), the company that manufactured the helicopter. Fafnir was purchased in 1985 by Torrington's parent corporation, Ingersoll-Rand Co., and became a division of Torrington. The purchase agreement requires Ingersoll-Rand to indemnify Textron for products liability claims based upon the bearing.¹

Textron (and later Torrington) manufactured two types of bearings: (1) a nonregreasable --05 bearing used primarily in military helicopters designed and sold by Bell, and (2) a regreasable --03 bearing used in civilian helicopters. At the time the bearing involved in the crash was sold, both --03 and --05 bearings were manufactured at Textron's New Britain, Connecticut, plant. The bearing that failed was a --05 bearing. It was acquired by the Navy sometime in or before 1984, but was not placed in a helicopter until 1990. That helicopter flew for 444 hours. In 1992, the defective bearing was placed into the helicopter involved in this crash.

The --05 bearing is a sealed bearing; grease is injected into it when it is assembled, and the bearing is not designed to be greased again after that. Like other --05 bearings made by Textron at the time, the bearing that failed had no serial number.

The --05 bearing is part of the helicopter's hangar assembly, which is part of the drivetrain that turns the tail rotor. The bearing is composed of two rings, called the inner and outer races. Sealed in between the races are steel balls lubricated with grease.² The bearings support the shaft that drives the tail rotor; the shaft rests on the inner race, which turns with it.

After acquiring Textron's bearing manufacturing operation in 1985, Torrington sold --05 bearings directly to the military and to Bell. Bell installed some of the bearings in the helicopters it manufactured, and also resold some to the military. In 1988, Torrington moved its production of --03 and --05 bearings to a plant in Newington, Connecticut. Seeking Bell's approval for the move, Torrington represented that the Newington equipment, personnel, and processes were the same as or superior to those at its New Britain operation.

In 1991, a Bell civilian helicopter crashed. This incident is referred to in the record as "the Rood crash." An investigation of the Rood crash concluded that a --03 bearing in the helicopter's tail rotor had failed. After this accident, Bell, Torrington, and the FAA inspected the Newington plant. The inspection revealed a number of problems with the manufacturing process at the plant affecting both --03 and --05 bearings, including the lack of a shelf-life control policy for bearing grease and metal contamination of bearing components.

After the inspection, Bell pulled all of its --03 and --05 bearings from the shelves, and recalled those --03 and --05 bearings it had sold the military. Bell asked Torrington for the serial numbers of all --03 and --05 bearings to include in a warning bulletin to be issued to owners and operators of Bell helicopters. Torrington gave Bell the numbers for --03 and --05 bearings made at Newington and New Britain, but did not mention the unserialized bearings that Textron had made at New Britain. The Bell bulletin, referred to as an "Alert Service Bulletin," listed the serial numbers of some --03 and --05 bearings, but stated that bearings without serial numbers were not affected. The bulletin directed mechanics to inspect the listed bearings for signs of overheating, grease leakage, or roughness.

After Bell issued its bulletin, Torrington's president wrote Bell, taking issue with the bulletin's reference to bearing contamination and advising that Torrington was "most anxious to participate in any evaluation you are currently performing." The letter also stated that Torrington intended to "continue to actively participate with the [National Transportation Safety Board] in their investigation [of the Rood crash and that] [w]e feel it is important to investigate all possible causes of the incident to assure the continued air worthiness of the Bell Helicopter."

The Navy issued its own bulletin in response to Bell's. This bulletin, known as a DCB-80, directed mechanics to "remove and replace" all bearings with the serial numbers listed in Bell's bulletin "not later than the next phase inspection." The DCB-80 also directed mechanics to "maintain vigilant normal required daily inspection" of bearings.

On March 12, 1992, some four months before this crash, a Navy mechanic inspected the helicopter involved in this suit. After the inspection, the mechanic filled out a maintenance service card. On the card, under the heading "discrepancy," the mechanic wrote, "Remove and Replace . . . hangar bearing for compliance with DCB-80." Because the hangar bearing did not have a serial number, it was not listed on the DCB-80. Under the heading "corrective action," the mechanic wrote, "R and R'd . . . hangar bearing for compliance with DCB-80 (not complied with)." The mechanic left the bearing in the helicopter.

The crash occurred on July 31, 1992. Upon initial inspection, the Navy thought the bearing had failed because its grease was too old. Later, after more testing, the Navy concluded that "the most likely cause of the failure was misalignment." The Navy JAG report concluded that the crash was caused by "misalignment and lubrication breakdown." The Navy's metallurgy lab wrote that the bearing failed because of overheating. The Navy lab concluded that "the cause of the overheating cannot be positively identified . . . however, the spalling on the #1 outer race indicated a misalignment." There is evidence in the record, however, indicating that contaminants in the grease caused the spalling.

After the crash, Stutzman's and Pulaski's survivors filed this wrongful death and survival suit against more than thirty corporate entities. Except for Torrington, Textron, Mobil, and Bell, all of the remaining defendants were either nonsuited or received directed verdicts. The plaintiffs asserted various products liability and negligence claims. Although the plaintiffs sued Bell and several related entities alleging that the helicopter was defective, at trial they focused on Textron's bearing as the cause of the crash.³ The plaintiffs presented evidence that grease in a Textron tail rotor bearing degraded over time. They contended that the bearing was defectively designed and marketed because it had no serial number to facilitate an appropriate tracking system, and because Textron gave the Navy erroneous information about the grease's shelf-life. They also presented evidence that Textron's manufacturing processes allowed contaminants in the bearings. Torrington, as a third-pa...