Law Offices of Steven D. Smith, P.C. v. Borg-Warner Security Corp.

993 P.2d 436, 1999 Alas. LEXIS 171, 1999 WL 1244290
CourtAlaska Supreme Court
DecidedDecember 23, 1999
DocketS-8250
StatusPublished
Cited by16 cases

This text of 993 P.2d 436 (Law Offices of Steven D. Smith, P.C. v. Borg-Warner Security Corp.) is published on Counsel Stack Legal Research, covering Alaska Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Law Offices of Steven D. Smith, P.C. v. Borg-Warner Security Corp., 993 P.2d 436, 1999 Alas. LEXIS 171, 1999 WL 1244290 (Ala. 1999).

Opinion

OPINION

COMPTON, Justice.

I. INTRODUCTION

This is the fourth appeal to arise from a 1986 airplane crash apparently caused by a defective carburetor made by Borg-Warner Security Corporation (Borg-Warner). The first two appeals concerned the superior court’s 1989 dismissal, on statute-of-limitations grounds, of a wrongful-death suit against Borg-Warner. 1 Attorney Steven Smith, representing the estate of passenger Merrett Palmer, had filed the suit. Smith learned after the suit’s dismissal that Borg-Warner had fraudulently concealed evidence of the allegedly defective carburetor. In 1994, after the estate’s successful second appeal, the superior court held on remand that Borg-Warner’s conduct excused the estate’s lateness in filing suit. The estate eventually recovered five million dollars. Smith, however, was paid nothing. While its appeals were pending, the estate had terminated Smith’s contingent-fee contract and sued him for malpractice. In settling that suit, Smith had waived any claim for attorney’s fees based on his contingent-fee contract with the estate.

In 1994 Smith sued Borg-Warner for fraud and intentional interference with contract. The superior court dismissed his claims on the basis of the statute of limitations. Applying the two-year limitation period for torts, and the discovery rule, the court held that by the time Smith had lost his contingent-fee contract, been sued for malpractice, and learned of Borg-Warner’s fraudulent concealment, he had discovered his potential claims against Borg-Warner. Unfortunately for Smith, that time was 1990.

Smith argues on appeal that he could not have sued until the superior court reinstated the estate’s claim in 1994. He reasons that he had been collaterally estopped to argue, and/or had not yet discovered, that Borg-Warner’s fraud, and not his own negligence, had been the legal cause of the estate’s tardiness in filing suit. Smith also argues that the six-year statute of limitations for actions for injury to personal property governs his claims, not the two-year tort statute, because he seeks to recover economic losses. Finally, he claims that Borg-Warner’s misconduct should estop it to plead or should equitably toll the statute of limitations. We affirm.

II. FACTS AND PROCEEDINGS

A. Preface

The complex history of this second-generation lawsuit is necessary to provide the context for the issues before us. It involves two streams of sometimes overlapping events, each of which has its own causal sequence. One is the Palmer estate’s ultimately successful claim against Borg-Warner, including five key rulings by the superior court and this court from 1989 to 1994. The other is Smith’s litigation with the estate and with Borg-Warner and its attorneys. We first recount the history of Palmer v. Borg-Warner from 1986 to 1994, and then return to 1986 and recount Smith’s interactions with the estate, Borg-Warner, its counsel, and the courts, indicating the stage of and then-in-force holdings in Palmer v. Borg-Warner.

*439 B. The Palmer v. Borg-Warner Litigation

The following account, with alterations as noted in the margin, 2 is from this court’s second Palmer v. Borg-Warner Corp. 3 opinion (Palmer II). We stress that Borg-Warner’s fraudulent concealment was not, as in many such cases, a response to the underlying tort, i.e., the 1986 crash that killed Palmer. It instead consisted of Borg-Warner’s 1981 deception of the Federal Aviation Administration (FAA) in order to conceal a manufacturing defect that later caused, inter alia⅜ the 1986 crash.

On September 8, 1986, a Piper aircraft crashed in the Brooks Range. Kenneth Swanson, the pilot, and Merrett Palmer, his sole passenger, died in the accident. Palmer’s widow was informed of her husband’s death by September 11, 1986. On October 1, 1986, the aircraft’s engine was removed from the scene of the crash and later transported to Fairbanks. The National Transportation Safety Board (NTSB) then began an investigation into the cause of the crash, issuing its findings in July 1987. (The NTSB controls access to aircraft wreckage from the time of a crash until its investigation is complete.) The NTSB’s report found probable cause to believe that the crash had been caused by pilot error.
The report also noted that the “carburetor was intact and showed no signs of external damage other than heat damage” and that the “carburetor was equipped with a fibre composite float which was heavily damaged by the fire.”
On July 30, 1987, the Palmer estate filed a wrongful-death action against the estate of Kenneth Swanson. In November the Swanson estate answered, asserting, inter alia, that (a) third parties were responsible for the accident; and (b) the Palmer estate had failed to join indispensable third parties. Neither the basis for the third parties’ liability nor the third parties were identified. On September 7, 1988, one day before the second anniversary of the crash, Swanson’s estate filed a wrongful-death action against Borg-Warner, the carburetor manufacturer, 4 specifically alleging that a defective carburetor had caused the crash. [Swanson’s attorneys had obtained evidence of Borg-Warner’s concealment of the defect through discovery in an unrelated suit, and had not shared this finding with Smith.]
On September 19, 1988, the Palmer estate, after learning that the cause of the crash was more likely a defective carburetor float than pilot error, agreed to the dismissal of its suit against the Swanson estate. The Palmer estate filed suit against Borg-Warner the next day, two years and nine days after Palmer’s widow had first learned of the accident.
Borg-Warner moved for summary judgment against the Palmer estate, arguing that the estate’s suit for wrongful death was barred by the two-year statute of limitations provided in AS 09.10.070. The Palmer estate argued that, “[a]s of September 20, 1986, Plaintiffs did not know, nor could they have reasonably been expected to know, that the carburetor of the aircraft ... may have been defective.”

On March 14, 1989, the superior court granted summary judgment for Borg-Warner, ruling the claim time-barred as a matter of law. (Judge Hodges concluded that as of September 11, 1986, the Palmer estate had been obliged to investigate in some manner its potential claims for wrongful death.) An Order of Dismissal was entered against the Palmer estate, and the estate appealed. We affirmed the dismissal, ruling [in November 1990] that the estate’s suit against Borg-Warner had been untimely filed. Palmer v. Borg-Warner Corp., 818 P.2d 632, 636-37 (Alaska 1990) (Palmer I). Alleged fraudulent concealment of the cause of the crash

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993 P.2d 436, 1999 Alas. LEXIS 171, 1999 WL 1244290, Counsel Stack Legal Research, https://law.counselstack.com/opinion/law-offices-of-steven-d-smith-pc-v-borg-warner-security-corp-alaska-1999.