Court: Louisiana Court of Appeal; April 19, 2017; Louisiana; State Appellate Court
The trial court granted summary judgment dismissing Rotorcraft Leasing, LLC (Rotorcraft) and Catlin Insurance Company, Inc.’s (Catlin) claims against H.E.R.O.S. Inc. (HEROS) and Delavan, Inc. (Delavan) concerning the loss of a 2008 Bell Helicopter, Model 206 L-4, which sank in the Gulf of Mexico after an emergency landing on September 14, 2010. The helicopter's loss was valued at $2,000,000, with Catlin covering the claim minus a $300,000 deductible. Rotorcraft's initial suit against HEROS, filed on September 9, 2011, claimed admiralty jurisdiction under the “savings to suitors” clause and sought relief under Louisiana's Products Liability Act and redhibition law. After amending the suit to include Delavan, Rotorcraft alleged the fuel nozzle manufactured by Delavan was defective and caused the crash. Following a settlement with HEROS, Delavan moved for partial summary judgment, arguing that Rotorcraft's products liability claims were barred by the East River doctrine, that a redhibition claim was invalid as the purchase was for repair services, and that any redhibition claims were time-barred under Louisiana law. The trial court granted these motions, dismissing both the products liability and redhibition claims, and deemed the prescription exception moot. Rotorcraft appealed, asserting that the trial court erred in law, claiming that Louisiana redhibition law provided a remedy for defects in the nozzle and that the East River doctrine did not apply because the helicopter's loss was distinct from the nozzle itself. The appellate court found that the trial court had erred in granting summary judgment, emphasizing that such judgments require showing no genuine issue of material fact after adequate discovery, and affirmed that the appeals court reviews these judgments de novo.
The trial court's decision to grant Delavan's motion for summary judgment is overturned due to legal errors regarding Rotorcraft's potential products liability claim and its standing under Louisiana's redhibition law. The East River doctrine does not bar Rotorcraft’s claim, as the allegedly defective fuel nozzle, purchased separately from the helicopter, is distinct and resulted in damage beyond itself. The nozzle's failure directly led to the helicopter's forced landing and subsequent sinking, which involved damage to other property and endangered the pilot's life. Federal precedents confirm that recovery in tort for such losses is permissible, as the East River case does not preclude tort claims for damages caused to other property by a defective product. Additionally, the determination of what constitutes "other property" depends on defining the defective product, as clarified in the Supreme Court cases of East River and Saratoga Fishing. In Saratoga Fishing, the Court ruled that items added by a prior purchaser can be considered "other property" when assessing damages, reinforcing Rotorcraft's position in this case.
Items added to a product by the initial user are classified as ‘other property,’ and the subsequent sale of the product by the initial user does not alter this classification. In the case of Transco, the owner of the tugboat MV Lacabi contracted with Bollinger Shipyard to install two diesel engines purchased from Diesel Engine Parts Company (DEPCO), which had acquired one engine from Diesel Specialists, Inc. A fire allegedly caused by one of the engines led to a lawsuit for breach of contract and warranty. DEPCO filed a third-party complaint against Diesel and a cross-claim against Bollinger for improper installation and products liability. Diesel argued that the MV Lacabi was the “product” as it was refurbished under contract, while the owner contended that it purchased the engine from DEPCO, making the vessel “other property” entitled to damage recovery.
The federal district court ruled that the claim was not barred by the East River doctrine, referencing the U.S. Supreme Court's decision in Saratoga Fishing, which emphasized that warranty provisions govern such disputes. The court determined that plaintiffs could pursue their warranty claim under Louisiana law. It cited Turbomeca v. Era Helicopters, stating that a defective product causing damage only to itself permits recovery only under warranty or contract theory. The reasoning in Saratoga Fishing clarified the East River rule, suggesting contract law, particularly warranty law, is appropriate for addressing responsibilities of sellers when products fail. The trial court's judgment was based on Louisiana’s redhibition warranty, with no evidence of waiver presented. The current case mirrors this reasoning, asserting that the defective fuel nozzle is the "product" involved in the sale between Rotorcraft and HEROS, while the sunken helicopter is “other property” damaged by the nozzle. Despite maritime law's application, Louisiana’s redhibition law remains applicable, and no waiver of warranty was shown in the sale of the fuel nozzle.
Delavan's warranty argument is unsuccessful because it fails to demonstrate a valid waiver of warranty regarding the fuel nozzle sold from HEROS to Rotorcraft. The burden of proving an effective waiver rests with Bell, which must show that the waiver was clearly articulated in writing, part of the contract, and adequately communicated to the buyer. Delavan's reliance on a 2000 warranty card from Rolls-Royce, pertaining to a different transaction that did not involve Rotorcraft, HEROS, or Delavan, is misplaced. The fuel nozzle in question is distinct from the one originally involved in the Rolls-Royce sale. Additionally, the warranty card from Rolls-Royce only protects them and does not exempt Delavan from liability for the fuel nozzle sold to Rotorcraft. A similar precedent was established in Tucker, where a warranty waiver from an original helicopter purchase was ruled insufficient to bar claims related to subsequent defective parts. The warranty in question explicitly limited liability and remedies, excluding claims for incidental or consequential damages.
The waiver of warranty card cited by Delavan lacks applicability in the current case because it pertains to a different transaction involving distinct parties. Unlike the case of Tucker, where the parties were the same, the original sale occurred ten years prior, and thus the waiver cannot cover the subsequent purchase of a separate fuel nozzle by Rotorcraft from HEROS. The warranty card associated with the original sale intended for the fuel nozzle integrated into an engine sold to Rolls-Royce does not extend to a new component purchased independently by Rotorcraft. Legal and public policy considerations indicate that a waiver of redhibition must be clearly stated and brought to the buyer's attention at the time of the relevant purchase, not a prior one. The original purchase by PHI in 1990 does not satisfy the requirement for the 2000 purchase of replacement parts. HEROS did not provide a waiver of warranty to Rotorcraft with the defective fuel nozzle. Additionally, the original sale from Delavan to Rolls-Royce included express warranties, not waivers. Consequently, Rotorcraft retains the right to pursue claims for products liability and redhibition against Delavan, leading to the reversal of the trial court’s summary judgment and remand for further proceedings.
Delavan provided a warranty for the sale of fuel nozzles to Rolls-Royce, ensuring that all goods would meet specified standards, be merchantable, and free from defects. Delavan also acknowledged knowledge of Rolls-Royce's intended use for the nozzles. The court rejected Delavan’s argument regarding a waiver of warranty related to a card issued by Rolls-Royce, asserting it did not affect Rotorcraft's rights under Louisiana's Products Liability Act (LPLA) or redhibition laws. The issue of prescription was raised but deemed moot at the trial court level; however, the appellate court found it relevant. Delavan contended that the prescription period should start from the original sale in 2000, while the court maintained that the relevant prescription period began when Rotorcraft learned of the defect, following the 2010 purchase of the nozzle. The claims were filed within the one-year limitation, and the court determined Delavan did not meet the burden of proving prescription as a defense. The trial court's judgment was reversed, affirming that Rotorcraft's claims were not prescribed, and the case was remanded for further proceedings, with costs assessed against Delavan. The ruling referenced the East River case, clarifying that tort claims under admiralty law do not apply to defective products causing only economic loss.
