Court Opinion

ID: 4553700
Source: CourtListenerOpinion
Date Created: 2020-08-06 20:00:37.121966+00
Date Added: 2024-06-11T08:42:34.260590
License: Public Domain

NOT FOR PUBLICATION                         FILED
                      UNITED STATES COURT OF APPEALS                      AUG 6 2020
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                             FOR THE NINTH CIRCUIT

STARR INDEMNITY & LIABILITY                     No. 19-15960
COMPANY, substituted for Med-Trans
Corporation; MED-TRANS                          D.C. No. 4:14-cv-02100-BGM
CORPORATION,

                  Plaintiffs-Appellants,        MEMORANDUM*

    v.

ROLLS-ROYCE CORPORATION,

                  Defendant-Appellee.

                    Appeal from the United States District Court
                             for the District of Arizona
                  Bruce G. Macdonald, Magistrate Judge, Presiding

                        Argued and Submitted April 30, 2020
                             San Francisco, California

Before: WALLACE, GRABER, and COLLINS, Circuit Judges.

         Plaintiff Med-Trans Corporation owned a helicopter that suffered damage

during a “hard landing” in Aberdeen, South Dakota on April 14, 2012. Med-Trans

and its insurer, Starr Indemnity and Liability Company (collectively, “Plaintiffs”),

*
 This disposition is not appropriate for publication and is not precedent except as
provided by Ninth Circuit Rule 36-3.
brought tort and warranty claims against Defendant Rolls-Royce Corporation

(“Rolls-Royce”), alleging that a defect in the third-stage turbine wheel,

manufactured by Rolls-Royce, caused the hard landing. In a prior appeal, we held

that Texas law applied. See Starr Indem. & Liab. Co. v. Rolls-Royce Corp., 725 F.

App’x 592 (9th Cir. 2018). On remand, the district court entered summary

judgment in favor of Rolls-Royce. Plaintiffs appealed. Reviewing the district

court’s order de novo, United States v. JP Morgan Chase Bank Account, 835 F.3d
1159, 1162 (9th Cir. 2016), we affirm.

      1. Texas’s “economic loss rule” serves to “separat[e] the law of torts from

the law of contracts” by generally disallowing tort recovery for economic losses,

that is, “purely economic damages unaccompanied by injury to the plaintiff or his

property.” LAN/STV v. Martin K. Eby Constr. Co., Inc., 435 S.W.3d 234, 235, 240

(Tex. 2014) (citation and internal quotation marks omitted). In the product liability

context, Texas’s economic loss rule precludes tort recovery for damage caused by

a product to the “product itself” but not for damage caused to “other property.”

Equistar Chems., L.P. v. Dresser-Rand Co., 240 S.W.3d 864, 867 (Tex. 2007).

While damage by a product to itself may be a physical injury, recovery for such

damage is nonetheless barred by the economic loss rule, because the ultimate “loss

to the purchaser” is merely a failure to obtain “the benefit of the bargain with the

seller.” Mid Continent Aircraft Corp. v. Curry County Spraying Serv., Inc., 572

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S.W.2d 308, 312–13 (Tex. 1978). Applying these principles, we conclude that the

district court properly dismissed Plaintiffs’ tort claims.

      a. The economic loss rule bars tort recovery for damage to the helicopter,

because the helicopter was the “product,” of which the turbine wheel and engine

were merely components. In a case with analogous facts, the Texas Supreme

Court held that damage by a component to a product was economic loss that was

not recoverable in tort. See Mid Continent, 572 S.W.2d at 310–13 (damage to

airplane from crash due to missing “lock plate” engine component was economic

loss); see also Pugh v. Gen. Terrazzo Supplies, Inc., 243 S.W.3d 84, 92 (Tex. App.

2007) (“Texas courts have rejected the argument that damage to a finished product

caused by a defective component part constitutes damage to ‘other property.’”).

The absence of privity of contract between Med-Trans and Rolls-Royce does not

preclude application of the economic loss rule. See Nobility Homes of Texas, Inc.

v. Shivers, 557 S.W.2d 77, 78 (Tex. 1977); Pugh, 243 S.W.3d at 91. Nor does it

matter that the turbine wheel was a replacement part, see Equistar Chems., L.P. v.

Dresser-Rand Co., 123 S.W.3d 584, 588–90 (Tex. App. 2003) (applying the

economic loss rule to damage caused by replacement parts, given that purchasers

of replacement parts can “negotiate for whatever warranty or liability limits they

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choose”), rev’d on other grounds, 240 S.W.3d 864 (Tex. 2007),1 nor that the

engine in the damaged helicopter had been transferred from another helicopter, see

Grizzly Mountain Aviation, Inc. v. Honeywell Int’l, Inc., 2013 WL 5676069, at *1,

*6–7 (Tex. App. Oct. 17, 2013).

      b. The district court did not decide whether specially installed medical

equipment aboard the helicopter should be considered “other property” for

purposes of the economic loss rule, because the court held that Plaintiffs failed to

raise a genuine issue of fact as to whether any such medical equipment was

installed on the subject helicopter. We agree.

      In moving for summary judgment based on the economic loss rule, Rolls-

Royce properly observed that Plaintiffs’ complaint alleged damage only to the

helicopter and not to any specific “other property.” See Celotex Corp. v. Catrett,

477 U.S. 317, 323 (1986). At that point, the burden shifted to Plaintiffs to “‘set

forth specific facts showing that there [was] a genuine issue for trial.’” Anderson

v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986) (citation omitted); see also FED.

R. CIV. P. 56(c)(1)(A). Plaintiffs argued that “emergency medical services

equipment” that had been installed on the helicopter was also damaged and that the

1
 The Texas Supreme Court held that the defendant had failed to preserve the
economic-loss-rule issue in the trial court, and it therefore “express[ed] no opinion
on that part of the court of appeals’ opinion which addresses the rule and its
application.” 240 S.W.3d at 866 n.2.

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“other property” exception to the economic loss rule therefore applied. But the

only evidence they provided in support of the equipment’s installation was a 2004

“invoice” that was not an invoice at all but rather a sales “estimate”—and the

estimate was for a different helicopter. This document is wholly insufficient to

show that any medical equipment was actually installed in the relevant helicopter.2

      2. Although Plaintiffs brought a claim “for breach of express and/or implied

warranty,” they did not provide a copy of any written warranty in opposing

summary judgment. Rolls-Royce, on the other hand, provided copies of warranties

that it claims were delivered with the engine and turbine wheel.3 We conclude that

2
  At oral argument, Plaintiffs’ counsel belatedly argued that the record contains
sufficient evidence in the form of the helicopter’s “minimum equipment list,”
which was generated four days before the hard landing and which contained two
entries in the “component” column labeled “Airmed Inspection.” This vague and
isolated reference, unsupported by any other evidence to explain its meaning, “‘is
not enough to create a genuine issue of material fact in order to preclude summary
judgment.’” Trunk v. City of San Diego, 629 F.3d 1099, 1116 n.17 (9th Cir. 2011)
(citation omitted).
3
  Along with its reply in support of its motion for summary judgment, Rolls-Royce
submitted an affidavit in which a company employee swore that the written
warranties were in fact delivered with the engine and turbine wheel. Plaintiffs
argue that the district court should have granted their motion to strike the affidavit
as late-filed, but we hold that there was no abuse of discretion. See Dutta v. State
Farm Mut. Auto. Ins. Co., 895 F.3d 1166, 1172 (9th Cir. 2018) (“[I]n the context of
summary judgment, it may be in the interests of judicial economy to overrule an
objection to late-filed dispositive evidence.”). Rather than striking the evidence,
mitigation of the unfairness “may take the form of granting the objecting party
leave to file a sur-reply in opposition to the new matter.” Id. Plaintiffs did object
to the new evidence in this case, but they failed to ask for an opportunity to file a
response, and on appeal they have not explained what, if any, arguments or new
evidence of their own that they would have offered.

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the district court properly granted summary judgment to Rolls-Royce on Plaintiffs’

warranty claims.

      In moving for summary judgment on Plaintiffs’ warranty claims, Rolls-

Royce met its burden by producing written warranties that (1) had indisputably

expired by the time of the hard landing and (2) expressly disclaimed any implied

warranties. Rolls-Royce also provided sufficient proof that the warranties were

authentic and had been delivered with the products, in light of both the affidavit

from the company’s employee and the fact that the warranties themselves appeared

to apply to the products, based on their text and on the page shape and hole-punch

pattern of the engine warranty that matched the logbook in Med-Trans’s

possession. Plaintiffs did not produce any evidence to rebut the warranties

submitted by Rolls-Royce. Summary judgment was properly granted.

      AFFIRMED.

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