June 1, 1992
By John S. Yodice
"Statute of repose" is a legal term that AOPA President Phil Boyer used in President's Position: Liability Reform-For All" (April Pilot). He said that there may be key components of the product liability reform legislation (which was introduced but did not pass in the last several sessions of Congress) that may stand a better chance of being enacted if they were proposed separately: One is the so-called statute of repose, which would relieve manufacturers from the burden of product liability lawsuits on aircraft manufactured more than 20 years ago.
A recent decision of a federal court of appeals provides an excellent opportunity to look at a statute of repose and to see how it works. Boyer was talking about a proposed federal statute of repose. The court decision we are discussing involves a statute of the State of Indiana. Only a dozen-or so states have enacted statute repose. The proposed federal statute would apply in all states.
Our case involves a Model A23A Musketeer that was manufactured in 1967 by the Beech Aircraft Corporation and sold and delivered to its first owner in that same year. Some 19 years later, Beech was sued because the airplane was allegedly defective.
On February 18, 1984, a U.S. Army aviator rented the Musketeer from its owner after the owner gave the Army pilot a check ride in the airplane. The Musketeer then departed for a flight to Hammond, Indiana, carrying not only the Army pilot, but two other passengers who were also Army personnel.
During the flight, the aircraft ran out of gas, and the engine quit. The pilot tried to reach nearby Evansville Regional Airport and was being vectored by a radar controller at the Indianapolis Air Route Traffic Control Center. He didn't make it. The airplane crashed on approach to the airport, killing the pilot and the front seat passenger and seriously injuring the rear-seat passenger.
Here are the last ATC communications before the crash: Time: 1036:15Z. Center: "39Quebec the computer shows that it's going to be about 35 minutes flying time to Evansville Airport; are you going to have enough, uh, fuel to get there." 1036:26Z. 39Q: "This is 39Quebec affirmative." 1038:35Z. 39Q: "39Quebec out of gas, going down this time."
In February 1986, Beech was sued for the deaths and for the personal injuries, based on two legal theories, one of strict liability in tort and the other in negligence. Both theories are product liability claims and essentially involved the Musketeer's fuel system and the occupant restraint system (seat belts/shoulder harnesses). The manufacturer of the seat belts was added to the suit in August 1986, more than two years after the accident. The manufacturer was sued for breach of warranty with respect to the strength of the seat belts.
Some of the plaintiffs' allegations give an insight to the nature of the claims. The plaintiffs alleged that the Musketeer was defective when manufactured and delivered because "the fuel gauges were not accurate, the fuel tanks trapped fuel, the fuel system had a propensity to dump or vent fuel overboard, and [the Musketeer] was uncrashworthy in that, among other things, the pilot and passenger stations were not equipped with shoulder harnesses, the seat belts were too weak, and the instrument panel and yokes were not designed and manufactured to minimize impact injuries to occupants.
Beech apparently had had some problems with the fuel system. The original specifications for the Musketeer stated that it had, a fuel capacity of 59.8 gallons with 58.8 gallons usable. This was revised sometime later to state that the fuel capacity was 59.8 gallons with only 52.2 gallons usable, 6.6 fewer usable gallons than had originally been thought. In 1971, Beech corrected the usable fuel information in the pilot/ operator's manual. In 1974, Beech issued a service instruction regarding a fuel gauge correction decal kit. This service instruction had not been complied with on this aircraft. The plaintiffs complained that the fuel service instruction had not been disseminated all owners in 1974.
Seat belts and shoulder harnesses are a frequent basis for product liability claims that an aircraft is not "crash worthy," The Musketeer was originally designed and manufactured with seat belts but without shoulder harnesses. Beech later designed and offered a retrofit for shoulder harnesses. In 1980, Beech issued a service instruction regarding installation of shoulder harnesses, but shoulder harnesses were never installed in the Musketeer. Plaintiffs complained that Beech did not offer to pay for the installation of shoulder harnesses in connection with the 1980 service instruction.
These issues were never tried. The trial court held as a preliminary matter that these claims were barred by the Indiana "Statute of Limitations," which contains a statute of repose. The Indiana statute specifically applies to "any product liability action in which the theory of liability is negligence or strict liability in tort."
The part of the statute that contains the conventional statute of limitations bars the bringing of a lawsuit after two years after a cause of action arises, as, for example, when an air crash occurs. This is typical of the form of a statute of limitations that we find in all states and the federal jurisdiction. It was the basis on which the claim against the seat belt manufacturer was dismissed and is not part of our discussion here.
The Indiana Statute of Limitations also contains a statute of repose that bars the right to bring an action after 10 years, but the statute of repose is unrelated to the time when the claim arose. The bar instead is tied to an independent event-the delivery of the product to the initial user or consumer. It is typical of the form of statutes of repose and is the basis on which the claims against beech were dismissed.
The plaintiffs appealed, and the appeals court upheld the trial court.
In the appeal, the plaintiffs made many arguments to avoid the statute of repose, some of which further illustrate the statue of repose.
The plaintiffs argued that a revised pilot/operator manual was a replacement part, essentially another product, and that, therefore, the 10-year Indiana statute of repose began running anew. A complaint related to a replacement part furnished within the statute of repose would not be barred if the part was defective and it was the cause of the injuries. Plaintiffs argued that the "product"-the manual-was defective because it misrepresented and overstated the amount of usable fuel to the pilot. So they argued that the furnishing of this defective manual in 1979 recommenced the running of the 10-year statute of repose.
The court rejected this argument.
The court was not persuaded that the manual was a replacement part. The court reasoned that product liability law does not apply to a transaction that, by its nature, involves wholly or predominantly the sale of a service rather than a product. The court held that the manual was more in the nature of a service rather than a product.
Plaintiffs also argued that even if the statute of repose barred the product liability claims, it should not bar the claim of Beech's negligent failure to warn of the product's dangerous nature. That, they said, constitutes a breach of continuing duty. The court disagreed. The court held that the failure-to-warn claim is essentially a product liability claim, and it is clear that the legislature intended that the statute of repose govern all product liability actions.
Plaintiffs also argued that the Indiana statute of repose is unconstitutional under both the Indiana and U.S. constitutions. The court rejected these arguments, as well. The Indiana Constitution guarantees "open courts" and "due course of law" for injury to one's person, property, or reputation, but the remedies can be defined and limited-by the legislature. The court reasoned that because there is no vested property right in an unaccrued cause of action (that is, no injury or damage has yet occurred), the Indiana legislature was free to limit such causes of action as it saw fit. The Indiana legislature did adopt a statute of repose, and that statute was in effect when these deaths and injuries occurred. As far as the federal constitution is concerned, other federal courts have similarly held that an unaccrued cause of action is not a property right protected by the Fourteenth Amendment, and "the Indiana legislature could, if it wanted, do away entirely with wrongful death actions beginning tomorrow. While the statutes [of repose] are harsh, we cannot agree that they deny due process or equal protection or that they invalidly deprive one of access to the courts in light of policy reasons for the statutes such as avoiding the risks and cost of litigation to manufacturers after a lengthy passage of time."
Our analysis of this case gives us a good look at a statute of repose and how it works. If a federal statute of repose is enacted, it will probably be similar to the Indiana statute.
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