United States Aviation Underwriters, Inc. v. Dassault Aviation
2007 U.S. Dist. LEXIS 35028, 2007 WL 1417148, 505 F. Supp. 2d 1252 (2007)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
The economic loss doctrine bars a commercial buyer from recovering in tort (negligence or strict liability) for purely economic losses where the only damage is to the product itself. A contract provision preserving remedies for 'bona fide' tort claims does not create a right to sue in tort for economic loss, but merely preserves claims that would otherwise be legally viable.
Facts:
- On April 14, 1992, Compass Foods entered into a purchase agreement with Dassault Falcon Jet Corporation for a Falcon 900 corporate jet.
- The purchase agreement included a limited warranty and a disclaimer which stated, 'THIS DISCLAIMER IS NOT INTENDED TO LIMIT PURCHASER’S REMEDIES RELATED TO BONA FIDE CLAIMS AGAINST SELLER FOR NEGLIGENCE OR STRICT PRODUCT LIABILITY.'
- The limited warranty provisions in the agreement had expired before the incident occurred.
- The agreement contained a choice of law provision selecting the laws of the State of New Jersey.
- On February 6, 2001, the Falcon 900 jet was involved in an accident in Pinedale, Wyoming, which caused substantial damage to the airplane.
- The plaintiffs' complaint did not allege any damage to persons or to any property other than the aircraft itself.
Procedural Posture:
- Plaintiffs initially filed a complaint in the U.S. District Court for the District of New Jersey in 2003, which was subsequently withdrawn without prejudice.
- On December 16, 2003, Plaintiffs filed a new complaint in the U.S. District Court for the Eastern District of Arkansas.
- On September 28, 2005, the Arkansas district court granted a motion to transfer the case to the U.S. District Court for the District of Wyoming.
- Following the transfer, the court permitted Plaintiffs to file a First Amended Complaint.
- Defendant SNECMA filed a Motion to Dismiss Plaintiffs' strict liability and negligence claims.
- Defendants Dassault Aviation and Dassault Falcon Jet Corp. filed a Motion for Partial Summary Judgment on the tort claims and a Motion to Dismiss the declaratory relief claim.
- Plaintiffs filed a cross-Motion for Summary Judgment on their claim for declaratory relief.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does the economic loss doctrine bar a commercial buyer's tort claims for negligence and strict liability when a defective product damages only itself, even where the purchase agreement contains a provision stating it is not intended to limit the purchaser's remedies for 'bona fide claims' against the seller?
Opinions:
Majority - Johnson, District Judge
Yes. The economic loss doctrine bars the plaintiffs' tort claims for negligence and strict liability because the only damage sustained was to the product itself. The doctrine's purpose is to maintain the distinction between tort law, which protects society's interest in safety from physical harm, and contract law, which protects the bargained-for expectations of the parties. Under both Wyoming and New Jersey law, a commercial buyer seeking damages for purely economic loss resulting from a defective product is limited to remedies available under contract and warranty law, such as the Uniform Commercial Code. The court rejected the plaintiffs' argument that the 'bona fide claims' language in the purchase agreement created an exception to this rule. It interpreted this clause not as creating new tort rights, but as merely preserving whatever legally cognizable tort remedies the purchaser would have had absent the disclaimer, such as claims for personal injury or damage to other property. Citing the Supreme Court's decision in East River S.S. Corp. v. Transamerica Delaval, the court also dismissed the idea that a 'sudden, calamitous event' transforms a purely economic loss into property damage recoverable in tort.
Analysis:
This decision reinforces the vitality of the economic loss doctrine as a barrier between contract and tort law in commercial disputes. It clarifies that contractual language preserving 'bona fide' tort claims cannot be used to circumvent this doctrine; such clauses only save claims that are independently viable under tort law, not those seeking purely economic damages. The ruling emphasizes that sophisticated commercial parties are expected to allocate the risk of product failure and economic loss through contractual negotiations, warranties, and insurance, rather than relying on tort remedies. This precedent strengthens the position of manufacturers against tort claims for product self-damage and directs commercial plaintiffs firmly toward their contractual remedies under the UCC.
