DES MOINES FLYING SERVS. v. AERIAL SERVS. SUPREME COURT OF IOWA JUNE 3, 2016, FILED NO. 14-0632…

DES MOINES FLYING SERVS. v. AERIAL SERVS. SUPREME COURT OF IOWA JUNE 3, 2016, FILED NO. 14-0632 REPORTER 880 N.W.2D 212; 2016 IOWA SUP. LEXIS 66; CCH PROD. LIAB. REP. P19,852 On February 20, 2009, Cedar Valley Aviation, a wholly owned subsidiary of Aerial Services, Inc. (ASI), brought a Piper 522AS (Cheyenne II) in for maintenance to Des Moines Flying Service, Inc. (DMFS). Among numerous other checks and repairs, DMFS noted both the pilots and copilots windshields were delaminated and installed new windshields. The replaced windshields were original to the aircraft, thirty-three years
DES MOINES FLYING SERVS. v. AERIAL SERVS. SUPREME COURT OF IOWA JUNE 3, 2016, FILED NO. 14-0632 REPORTER 880 N.W.2D 212; 2016 IOWA SUP. LEXIS 66; CCH PROD. LIAB. REP. P19,852 On February 20, 2009, Cedar Valley Aviation, a wholly owned subsidiary of Aerial Services, Inc. (ASI), brought a Piper 522AS (Cheyenne II) in for maintenance to Des Moines Flying Service, Inc. (DMFS). Among numerous other checks and repairs, DMFS noted both the pilots and copilots windshields were delaminated and installed new windshields. The replaced windshields were original to the aircraft, thirty-three years old. The new windshields cost $19,323.63 each with an additional $6,300 charge for labor. The entire bill, dated August 31, 2009, included many other services and totaled $69,655.58. No warranties or disclaimers were contained on the invoice. On June 24, 2010, ASI was making a routine photography flight at 24,000 feet when the copilots windshield cracked without impact from another object. The pilot performed an emergency descent and proceeded to Des Moines for inspection and repair. The crack occurred a few days shy of ten months after the new windshield was installed and the plane had been returned to ASI. ASI submitted an affidavit from an expert stating that the average life of the windshield should be ten (10) or twenty (20) years absent improper installation, a product defect, or an impact with a foreign object. No person or property (other than the windshield) was harmed by the crack in the windshield. Only economic losses resultedthe cost of the windshield repair and the cost to hire another aviation company to complete contracted work during the repairs. On June 29, 2010, DMFS replaced the windows and invoiced ASI. ASI refused to pay the invoice and DMFS brought this suit for non-payment. ASI claimed that it owed nothing to DMFS since the original replacement windows were defective and DMFS was liable and had an obligation to cure the defective installation or defective window. DMFS stated that under Iowa tort law, it was immune from liability since it was not the manufacturer of the windshields and that no allegation had been made of defective installation. DMFS interpretation of Iowa tort was was indeed correct, if the lawsuit sounded in tort law and not breach of contract under the UCC, which has no such immunity provision. The trial court ruled in DMFS favor that it was immune under Iowas tort law provisions. The issue to be decided is whether the lawsuit is in tort or contract? If it is tort, then immunity lies for DMFS. If the law suit is in contract under the UCC, then DMFS can be liable. The court wrote: We hold a products liability case must existrequiring that personal injury or property damage occur due to a manufacturing or design defectto trigger the immunity provision of section 613.18(1)(a). In so holding, we utilize the same distinctions consistently used in our cases to determine if a party is liable for damages under tort products liability law and [UCC breach of contract claims]. If a defective product results only in economic loss, we only allow the buyer to bring a claim under . . . [breach of contract] for direct economic losses against a remote seller and [breach of contract] claims for consequential economic losses against the seller in privity with them unless disclaimed. Once any property damage or personal injury exists resulting from a manufacturing or product defect, the manufacturer becomes the liable party under tort law and Iowa Code section 554.2318. [Defendant]s statutory protection [under section 613.18(1)(a)] from claims of breach of the [UCC contract] is coextensive with its statutory protection from product defect claims, the tort defenses and any permissible disclaimers made in the warranty. See Iowa Code 554.2316, .2318; id. 668.12 (products liability defenses). In economic loss cases, the immediate seller is liable for the breach of {the UCC contract], subject to any warranty exclusions, modifications, or disclaimers found in the sales contract. Id. 554.2316. Conclusion. For the reasons stated, we conclude the district court erred in its application of Iowa Code section 613.18(1)(a) in a case limited to economic losses. HN18[ ] Section 613.18(1) (a) immunity only applies to claims that include claims of personal injury or property damage . . . the district court summary judgment dismissing ASIs implied warranty claim is reversed.