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The Lima Delta Co. v. Gulfstream Aerospace Corp.

Superior Court of Delaware

February 13, 2019

THE LIMA DELTA COMPANY, a Delaware Corporation, TRIDENT AVIATION SERVICES, LLC, a Delaware Limited Liability Company, and SOCIETE COMMERCIALE ET INDUSTRIELLE KATANGAISE, Plaintiffs,
v.
GULFSTREAM AEROSPACE CORPORATION, a Delaware Corporation, and GULFSTREAM AEROSPACE CORPORATION, a Georgia Corporation, Defendants.

          Submitted: December 5, 2018

         On Defendants' Motion to Dismiss Plaintiffs' Amended Complaint GRANTED

          Jennifer L. Dering, Esquire, Joseph A. Martin, Esquire, Jeffrey Lubin, Esquire (Argued), Martin Law Firm LLC, Attorneys for Plaintiffs

          Brett D. Fallon, Esquire, Morris James LLP, Gary L. Halbert, Esquire (Argued), Holland & Knight LLP, Attorneys for Defendants

          OPINION

          JOHNSTON, J.

PROCEDURAL AND FACTUAL CONTEXT

         A Gu1fstream aircraft crashed on February 12, 2012 in the Democratic Republic of the Congo. Defendant Gu1fstream Aerospace Corporation, a Georgia Corporation ("Gu1fstream")[1] manufactured the aircraft and sold it in January 1990. Plaintiff The Lima Delta Company ("Lima Delta") purchased the aircraft on the secondary market on May 4, 2011. Plaintiff Societe Commerciale et Industrielle Katangaise ("Socikat") is referred to in the Complaint as the "equitable owner." Plaintiff Trident Aviation Services, LLC ("Trident") managed the aircraft for Socikat.

         The Complaint was filed on February 5, 2014. An Amended Complaint was filed August 10, 2018. Plaintiffs allege that the crash was caused by failure of the aircraft's "brake-by-wire" system. Plaintiffs seek damages on the bases of negligence, strict liability, and breach of warranty

         Defendants seek dismissal of the Amended Complaint. Defendants contend that: the tort claims are barred by the economic loss doctrine; the strict liability claim is preempted by Delaware's UCC; the fraud claim fails for lack of particularity; and the breach of warranty claim is precluded by the statute of limitations.

         MOTION TO DISMISS STANDARD

         In a Rule 12(b)(6) Motion to Dismiss, the Court must determine whether the claimant "may recover under any reasonably conceivable set of circumstances susceptible of proof."[2] The Court must accept as true all well-pleaded allegations.[3]Every reasonable factual inference will be drawn in the non-moving party's favor.[4]If the claimant may recover under that standard of review, the Court must deny the Motion to Dismiss.[5]

         ANALYSIS

         Strict Liability

         Plaintiffs have withdrawn their strict liability claim.

         Economic Loss Doctrine

         There is no recovery in tort for purely economic loss caused by a defective product.[6] Economic losses include monetary loss, cost of repair or replacement, loss of business or employment opportunities, and diminution in value.[7] The rationale underlying the economic loss doctrine is that the "increased cost to the public that would result from holding a manufacturer liable in tort for injury to the product itself is not justified."[8] The UCC's contractual warranty, with limitations on liability, is the appropriate remedy.[9] In Delaware, the economic loss doctrine is a complete bar to recovery in tort of economic losses caused by defective products.[10]

         Plaintiffs assert that this case presents a matter of first impression in Delaware. Plaintiffs allege that the airplane crash was caused by faulty brakes. Further, Defendants knew the brakes were defective, but failed to notify the Federal Aviation Administration ("FAA"), as required. Five people were killed in the crash. Plaintiffs argue that those deaths are sufficient to make the economic loss doctrine inapplicable in this case. Plaintiffs reason that where personal injury is clear, the product, i. e., braking system, has not damaged only itself. Rather, the product has caused personal injury and damage to other property.

         The focus of the economic loss doctrine analysis is the nature of damages sought. In this case, Plaintiffs are not requesting recovery for personal injuries. Instead, Plaintiffs argue that the defective product is the braking system. The damage is to Plaintiffs' "other property" - the aircraft. Plaintiffs concede that in this lawsuit, they are not seeking personal injury damages or third-party property damages. Plaintiffs request damages measured as the value of the aircraft, loss of use of the aircraft, lost earnings, and incidental and consequential losses. Personal injury damages and damages to property owned by non-parties are not part of this action.

         Plaintiffs cite Silivanch v. Celebrity Cruises, Inc.[11] for the proposition that the economic loss doctrine does not preclude a tort action where the defective product causes personal injury, even if the plaintiff is not one of the injured.[12] In that case, the product was a water filter. Evidence demonstrated that the defective design of the filter was a proximate cause of an outbreak of Legionnaires disease on the ship.[13]

         The Court finds Silivanch distinguishable. The defective product was the filter. The defective filter damaged another product - the ship's water supply. The tainted water supply directly caused the disease outbreak. There were no direct claims in Silivanch for personal injuries. The plaintiff was seeking indemnification and contribution for the sick passengers' claims. The damages awarded ...


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