United States Aviation Underwriters, Inc. v. Pilatus Business Aircraft, Ltd.

582 F.3d 1131, 2009 U.S. App. LEXIS 25488, 2009 WL 2915069
CourtCourt of Appeals for the Tenth Circuit
DecidedAugust 26, 2009
Docket07-1432, 07-1435
StatusPublished
Cited by156 cases

This text of 582 F.3d 1131 (United States Aviation Underwriters, Inc. v. Pilatus Business Aircraft, Ltd.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Tenth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States Aviation Underwriters, Inc. v. Pilatus Business Aircraft, Ltd., 582 F.3d 1131, 2009 U.S. App. LEXIS 25488, 2009 WL 2915069 (10th Cir. 2009).

Opinion

*1136 MURPHY, Circuit Judge.

I. Introduction

This case arises out of an airplane crash in the Sea of Okhotsk. On board the airplane were members of a fraternal aviation organization. The purpose of the trip was aircraft evaluation and demonstration. No one was seriously injured in the crash. The airplane’s insurer, the aviation company that operated the airplane, and one of it co-owners brought this product liability action against, inter alia, the manufacturers of the airplane and its engine. A jury returned a verdict finding the manufacturers partially liable for the crash.

Exercising jurisdiction pursuant to 18 U.S.C. § 1291, we hold that the district court correctly refused to apply admiralty law to this crash because the activity of flying for the purpose of aircraft evaluation and demonstration bears no relationship to a traditional maritime activity. The verdict, however, cannot stand because the district court erred in failing to direct the application of Idaho’s comparative fault statute. The district court also erred in allowing the aviation company’s owner to recover for an incidental business loss. Finally, the district court erred in admitting certain evidence of other engine shutdowns with dissimilar causes and permitting an expert to give an opinion on a question of law. The judgment of the district court is reversed and the case is remanded for a determination of whether the defendants are entitled to a new trial or judgment as a matter of law.

II. Background

The aircraft in question was a Pilatus PC-12/45 single engine turboprop with an engine manufactured by Pratt & Whitney Canada Corporation (“Pratt & Whitney”). Pratt & Whitney is a Canadian company and the engine was designed and manufactured in Canada. The engine was then shipped to Switzerland where Pilatus, a Swiss company, installed it.

The airplane was sold to Pilatus Business Aircraft, Ltd. (“Pilatus Colorado”), a Colorado-based subsidiary of Pilatus. Pilatus Colorado then sold the airplane to Western Aircraft, Inc., its regional distributor located in Boise, Idaho. The purchase agreement between Pilatus Colorado and Western Aircraft stated the sale would be governed by Colorado law.

Western Aircraft then sold the airplane to Donald Simplot, a resident of Boise, Idaho. Simplot was the principal for DJS Aviation, LLC, a company located in Boise, Idaho. The purchase agreement for this sale stated the agreement would be governed by Idaho law. DJS Aviation leased the airplane to Access Air, a company also located in Boise. The lease agreement stated the lease would be governed by Idaho law.

In 2001 members of the Japanese Aircraft Owners and Pilots Association (“the Association”) planned a trip around the world in single-engine airplanes. The Association is a fraternal organization that promotes aviation. The purpose of the trip was flight evaluation and demonstration. Three members of the Association decided to make the trip in a Pilatus PC-12. They contacted Access Air in Boise and arranged to charter the airplane for a trip that would begin and end in Boise. Because the purpose of the trip was aircraft evaluation, the itinerary included a visit to the Pilatus factory in Switzerland. The pilot for the trip was Michael Smith, an employee of Access Air.

The trip began as planned, and in a series of flights the group crossed North America, Europe, Africa, and Asia. After a stop in Hakodate, Japan, the airplane took off for Magadan, Russia. Over an hour into the flight, Smith felt a vibration in the airplane and heard a whining noise. *1137 Shortly thereafter he felt the engine intermittently surging. Sensing possible engine failure, Smith followed the pilot operating handbook’s procedure for “Emergency Failure.” Smith moved the power control lever forward, thereby increasing the power, to gain control of the engine. The engine did not respond to the increase in power. Following the procedure in the handbook, Smith moved the power control lever to full forward and then began moving the manual override lever forward. The manual override lever bypasses the engine’s fuel control unit and allows the pilot to manually increase the flow of fuel to the engine. As he was moving the manual override lever forward, Smith noticed the engine’s inter-stage turbine temperature was 1144 degrees Celsius, well over the engine’s temperature limit of 760 degrees. Temperatures above 1000 degrees normally cause damage to the engine. The engine also began making loud “popping and grinding noises” when he reduced the power.

When Smith saw the temperature reading, he determined the engine had failed. At that point he shut down the engine and the propeller came to an immediate stop. While preparing for an emergency landing, Smith tried to restart the engine. The propeller remained in a fixed position and Smith ceased his attempts to restart the engine. Smith then guided the plane to a crash landing in the Sea of Okhotsk. No one was seriously injured. The passengers evacuated in a life raft and were rescued by a passing Russian freighter.

The airplane sank and was never recovered. Onboard the plane and lost forever were a handful of items belonging to Paul Leadabrand, a co-owner of Access Air. These items included, among other things, a pair of sunglasses, music CDs, and leather binders. The total value of Leadabrand’s lost property was $601.14. Leadabrand also paid $2422.21 for Smith’s transportation back to the United States. These expenditures were part of the insurance claim filed by Access Air.

U.S. Aviation Underwriters, Inc. (“Underwriters”) insured the crashed airplane. After paying Access Air for its loss, Underwriters exercised its right of subrogation and brought this suit in 2001 in the United States District Court for the District of Colorado against, inter alia, Pratt & Whitney and Pilatus. In the same action, Leadabrand also brought a claim for personal losses caused by the crash. The complaint contained claims under Colorado law based upon strict product liability and negligence. Before trial, the plaintiffs abandoned their negligence claims. Pratt & Whitney and Pilatus argued the case should be governed by admiralty law and, under either admiralty law or Colorado law, the claims were barred by the economic loss rule. The district court concluded the claimed losses were barred by neither Colorado’s nor admiralty’s economic loss rule. The district court also concluded admiralty law did not govern the case.

In the pretrial order, Underwriters alleged liability due to defective design, defective manufacture, and failure to warn. Defendants listed among their defenses that “[t]he plaintiffs are barred from recovery for the loss of the aircraft by the economic loss rule either under Admiralty law, Idaho law or Colorado law.” They also asserted that “Idaho law applies to the scope of the contractual duties between the aircraft owner and the defendants and to their comparative responsibilities in this case.”

About five months before trial, Pilatus filed a motion urging the court to apply Idaho’s comparative fault statute.

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Bluebook (online)
582 F.3d 1131, 2009 U.S. App. LEXIS 25488, 2009 WL 2915069, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-aviation-underwriters-inc-v-pilatus-business-aircraft-ca10-2009.