Court File and Parties

COURT FILE NO.: CV-11-437408 DATE: 20160907 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Donna Thorne, on her own behalf and as litigation guardian of Breanna Pacquette a minor, Simone Pacquette, a minor and Owen Thorne, a minor, Kyle Thorne, Ryan Thorne and Sarah Thorne Plaintiffs – and – Patricia Hudson, Executrix of the Estate of Maxwell B. Hudson, deceased, 1419937 Ontario Inc., 1205055 Ontario Limited carrying on business as Aviation Technical Consultants, Corporate Aircraft Restorations Inc., Maurice Nesbitt, John Bayes, 735922 Ontario Limited carrying on business as Canadian Aero Engine & Accessories, Teledyne Continental Motors Inc., and Teledyne Technologies Incorporated Defendants

[no one appearing for the Plaintiffs]

Counsel: Hilary Book and Scott McGrath, for the Defendants Continental Motors Inc., and Teledyne Technologies Inc. Timothy Trembley, for the Defendant 1205055 Ontario Limited c.o.b. Aviation Technical Consultants Robert Fenn and Ashleigh Tomlinson, for the Defendants, Corporate Aircraft Restorations Inc., and Maurice Nesbitt

HEARD: June 16, 2016

E.M. Morgan, J.

Endorsement

[1] This is a motion for summary judgment brought by the Defendants, Teledyne Continental Motors Inc. and Teledyne Technologies Incorporated (together “CMI”), on the basis of a limitation period applicable under U.S. law. There are four claims arising from a 2007 airplane crash which remain live actions: Hudson et al. v Teledyne Continental Motors Inc. et al. (Court File No. CV-9-378589), Hudson et al. v Aviation Technical Consultants et al. (Court File No. CV-09-378588), 1419937 Ontario Inc. v Canadian Flight Academy Ltd et al. (Court File No. CV-09-378749), and Thorne et al. v Hudson et al. (Court File No. CV-11-437408) (collectively, the “Related Actions”). CMI seeks to have the various claims and cross-claims against it dismissed on the grounds that U.S. law applies to it and the relevant statute contains an ultimate limitation period that has long expired.

[2] CMI is the manufacturer of an airplane engine whose malfunction caused a fatal crash in New York State during a flight from Oshawa, Ontario to Wilmington, Delaware in 2007. CMI manufactured the engine in Pennsylvania, and originally sold it into the stream of commerce in January 1968. CMI has not had contact with the engine since that time, but has periodically published service bulletins and an overhaul manual for repair and maintenance of the engine.

[3] The motion is opposed by other Defendants who have cross-claimed against CMI, including the engineering consultants who had inspected the aircraft’s engine, 1205055 Ontario Limited c.o.b. Aviation Technical Consultants (“ATC”), and the engineers and maintenance company that serviced the aircraft, Corporate Aircraft Restorations Inc. and Maurice Nesbitt (together “CAR”).

[4] The Plaintiffs are the owners of the aircraft and the family and heirs of the individuals who died when the aircraft crash landed in New York State. The Plaintiffs take no position on the present motion.

I. The Accident

[5] At around 8:30 a.m. on May 17, 2007, a Canadian-registered Beech BE-A55 twin-engine aircraft bearing registration C-FDJP (the “Aircraft”) took off from Oshawa airport. The Aircraft was operated by Max Hudson and Joe Grieco, both of whom were pilots licensed by Transport Canada. Hudson and Grieco co-owned the Aircraft through their company, 1419937 Ontario Inc. (“141 Ontario”).

[6] About 45 minutes after takeoff, one of the pilots reported to air traffic control that the Aircraft was experiencing problems with its left engine, and requested a diversion to Dunkirk, New York. At 9:37 a.m., the Aircraft crashed during the attempted landing at Dunkirk. The individuals aboard the Aircraft were all fatally injured.

[7] The evidence in the record establishes that the difficulties with the left engine in the Aircraft were caused by the release of a counterweight within the engine. The counterweight is a component that attaches to the engine’s crankshaft, the purpose of which is to dampen vibrations produced in the normal operation of the engine. Apparently, one of the counterweights separated at one of the attachment points, and the loose end thereby struck the crankcase. Over a course of time, the striking of the crankcase by the counterweight made a hole in the crankcase.

[8] The evidence likewise establishes that the counterweight separated because a retaining plate designed to keep the counterweight attached to the crankshaft moved, and thereby allowed another attachment accessory, the roller pin, to break away from the attachment assembly. The process of the roller pin moving through the shoulder of the counterweight had begun sometime prior to the date of the accident. It would appear that once that process began, the counterweight was damaged and was no longer serviceable. The counterweight could, however, have been replaced for a cost of $5,000 to $10,000.

[9] In 2003, the Aircraft was involved in an incident in which the landing gear remained up during the landing. This necessitated various repairs and inspections, which were performed by ATC in Orillia, Ontario. CMI alleges that ATC failed to properly install the counterweights on the engine crankshaft while performing its tasks in 2003. Specifically, CMI claims that ATC should not have re-used the retaining plates when the counterweights were re-installed on the engine following ATC’s inspection, and that as a result of re-using the old retaining plates one of them began to spin and eventually migrated through the counterweight.

[10] For its part, ATC claims that in performing its engine inspection and re-installation in 2003, it relied on the service bulletins and the overhaul manual published by the engine manufacturer, CMI. The service bulletins and overhaul manual were received and read by ATC personnel at ATC’s facility in Orillia. ATC therefore claims contribution or indemnity from CMI for negligent misrepresentation. Specifically, ATC pleads that CMI “prescribed and published inadequate or misleading standards, criteria, procedures and instructions for the repair, maintenance and overhaul of the Continental 10-470 L engine, including the connecting rods, crankshaft and counterweight assembly.”

[11] The Plaintiffs and CMI likewise allege that as the maintenance company for the Aircraft, CAR is at least partly responsible for the disrepair of the engine and, ultimately, the accident. CAR responds by indicating that by putting its engine into the stream of commerce that ended up with an accident and injury to Ontario plaintiffs, CMI has effectively attorned to Ontario jurisdiction. It points out that the Plaintiffs are for the most part Family Law Act claimants, all of whom are Ontario residents and all of whom suffered their losses in Ontario.

II. The Legal Arguments

[12] CMI submits that since the place of the crash was New York and the place of manufacture of the engine and production of the service bulletins and overhaul manuals was Pennsylvania, U.S. law applies to the tort. It further submits that this includes the General Aviation Revitalization Act (“GARA”), a United States federal statute enacted in 1994 that imposes an 18-year final limitation period on all civil actions against aviation manufacturers. Given that the engine installed in the Aircraft was some 39 years old at the time of the accident, the limitation under GARA would serve to bar the claims against CMI and put an end to its involvement in the actions.

[13] Counsel for ATC and CAR together put forward a number of counter-arguments. In the first place, they argue that GARA is improperly invoked by CMI since the U.S. Congress never intended for this statute to be applied extra-territorially to a Canadian legal action. They further argue that the Plaintiffs are Family Law Act claimants or the Canadian owners of the Aircraft, and so all suffered their losses in Ontario regardless of where the crash took place or where CMI’s negligence occurred. As noted above, they also contend that CMI effectively agreed to Ontario jurisdiction it put its product into the stream of commerce that ended up causing loss in Ontario.

[14] Finally, ATC submits that the negligent misrepresentations by CMI were received and relied upon in Ontario, and since the law of the tort is that of the place of the tort it is Ontario law that governs the claims against CMI.

a) Does GARA apply?

[15] CMI has produced an expert witness, Ann Thornton Field, an experienced U.S.-based aviation lawyer, who answers in the affirmative. Ms. Field’s view is that, assuming CMI did not have possession of the engine that it manufactured and did not supply any new parts or components for the engine after it was shipped to its first purchaser in 1968, the claims in the four related actions against CMI are barred by GARA. She states in her report:

GARA’s eighteen-year statute of repose begins to run on the date the general aviation aircraft or component is delivered to its first purchaser. If more than eighteen years elapse between the date of delivery and the date of the accident, the claim is barred unless one of the exceptions to GARA applies.

[16] The statutory exceptions are not relevant to the present analysis, as Ms. Field further points out that none of them apply to the situation at hand. She also opines with authority that the Aircraft in which the engine was installed satisfies the statutory definition of a “general aviation aircraft”. The Aircraft’s engines are considered a component of the Aircraft and are therefore also covered under the GARA definition of applicable aircraft.

[17] In view of GARA’s relatively clear language and the 39-year lapse in time between the engine’s manufacture date and the accident date, it is Ms. Field’s conclusion that GARA “would bar all claims against CMI relating to alleged defects in the design, manufacture, and distribution of the aircraft’s engines.” According to Ms. Field’s reading of the statute, the policy of bringing finality to the long-tail liability assumed by aircraft manufacturers would apply to the Aircraft regardless of which jurisdiction it ends up in.

[18] In response, ATC has produced its own equally experienced U.S. aviation law expert, Christopher Barth, who takes issue with Ms. Field’s conclusion. He indicates that under United States law, there is a presumption that statutes are to be applied only within the territorial limits of the country. Clear statutory language is required if the legislative mandate is to be extended to apply extra-territorially.

[19] In Mr. Barth’s view, the absence of such language is based on the fact that GARA was enacted in order to regulate U.S. domestic litigation, and has no operation outside of the territorial United States. As he put it in his report, “Congress was deeply concerned about the enormous product liability costs that our tort system had imposed upon manufacturers of general aviation aircraft.” (emphasis added in ATC’s factum). In Mr. Barth’s reading of the statute, Congress did not act in order to impose limitations on non-U.S. courts.

[20] Both experts are right in their own way.

[21] Ms. Field is correct in her understanding that GARA applies to the acts of the manufacturer in the United States, regardless of where the aircraft or its component part ends up. As she puts it, assuming that CMI took no further steps on which a claim could be based following the shipping of the engine to its purchaser in 1968, the claims against CMI relating to the Aircraft’s engine would be barred by GARA.

[22] Mr. Barth is correct in his understanding that GARA does not authorize the extra-territorial application of GARA. Assuming that the matter was being litigated in a United States court – after all, as a U.S. federal statute GARA only speaks to U.S. federal courts – there would be no statutory basis for that court to apply the federal statute to an aircraft manufacturer outside of the United Sates. In that circumstance, the claims against the manufacturer would not be barred by GARA as they would be aimed at acts that lay outside of the statute’s field of operation.

[23] The matter is not, however, being litigated in an American court, but rather, from the perspective of the U.S. Congress and its enactment, is being litigated in the court of a foreign country. As Ms. Field points out, and as is obvious given the fundamental principle of the sovereignty of nations, Congress does not address foreign courts one way or another. Rather, foreign courts – i.e. this court – applies its own choice of law rules in order to decide which jurisdiction’s law to apply. This proposition that courts are sovereign within their own jurisdiction has been confirmed by the U.S. courts:

Congress has no power to tell courts of foreign countries whether they could entertain a suit against an American defendant. It would be up to any foreign court to determine whether it wanted to apply GARA to litigation occurring within its borders.

Blazevska v Raytheon Aircraft Co., 522 F. 3d 948 (9th Cir. 2008).

[24] In Canada, conflicts of law rules have been determined to be “national rather than international in character”: Castel, Jean-Gabriel and Walker, Janet. Canadian Conflict of Laws (Butterworths, 5th ed., 2004) at 1-1. The United States Congress, in enacting GARA, did not address whether the legislation is applicable in a Canadian court precisely because that question is one of Canadian domestic law. Just as a court in Canada can decide to apply New York contract law or Michigan tort law in the appropriate case notwithstanding that those bodies of American law are silent on extra-territoriality, so this court can decide in accordance with its own conflict rules wither to apply a U.S. federal statute.

[25] This local law theory of conflict of laws posits that, “judges always apply domestic rules of law, but sometimes create these in accordance with foreign law”: Knop, Karen; Michaels, Ralf; Riles, Annelise. “International Law in Domestic Courts: A Conflict of Laws Approach”, 103 ASIL Proceedings (2009); Scholarship@Cornell Law: A Digital Repository (Cornell Law Faculty Publications, 2009), at 269, 271. Applying this prevailing theory, the applicability or inapplicability of GARA under the circumstances is a question of Ontario law. Whether the U.S. Congress has authorized it or has not authorized it is of no moment.

b) The choice of law analysis

[26] In Tolofson v Jensen; Lucas v Gagnon, [1994] 3 SCR 1022, the Supreme Court adopted a strict lex locus delicti rule for choice of law in tort. The law of the place where the wrong occurred is the substantive law for tort claims in cases with multijurisdictional facts. Unless this result would cause an injustice “beyond ordinary differences between the laws of the forums”, Wong v Lee (2002), 58 OR (3d) 398, at para 12 (Ont CA), the exercise is a relatively mechanical one; indeed, the Tolofson approach has been characterized as a “choice of reform that was extreme in its simplicity”: Wai, Robert. “In the Name of the International: The Supreme Court of Canada and the Internationalist Transformation of Canadian Private International Law” (2009), 39 Can Yb’k Int Law 117, 134. Once it is determined where the wrong took place, the law of that jurisdiction applies.

[27] More specifically, the law of the place of the wrong provides the applicable limitation period as part of the substantive law. This was reconfirmed by the Supreme Court in Castillo v Castillo, [2005] 3 SCR 870, at para 7, where Major J. indicated that, “In Tolofson …this Court concluded that limitations law, which in the past had frequently been classified as procedural in common law traditions and substantive in civil law traditions, was, in fact, substantive in nature and must be treated as such.” Accordingly, the termination of a claimant’s rights due to expiry of a limitation period “does not constitute injustice sufficient to support an exception to the lex loci delicti rule”: Somers v Fournier (2002), 60 OR (3d) 225, at para 42 (Ont CA).

[28] There are, of course, cases where locating the place of the tort raises “thorny issues”, most notably, as La Forest J. stated in Tolofson, “where an act occurs in one place but the consequences are directly felt elsewhere”. In general, however, it is incumbent on courts applying the lex locus delicti rule to locate “the place most substantially affected by the defendant’s activities or its consequences”: Gulevich v Miller, 2015 ABCA 411, at para 46.

[29] Harking back to the Supreme Court’s earlier choice of law ruling in Moran v Pyle National (Canada) Ltd., [1975] SCR 393, 408, it is apparent that strict invocation of “[t]he place of acting and the place of harm theories are too arbitrary and inflexible to be recognized in contemporary jurisprudence.” For this reason, neither the fact that the harm to the Family Law Act plaintiffs occurred in Ontario, nor that the alleged misdeeds of CMI occurred in Pennsylvania, is dispositive of the choice of law analysis.

[30] Just as “there is no actionable wrong without the injury”, Leonard v Houle (1997), 36 OR (3d) 357 (Ont CA), there is no recoverable injury without the wrongful act. Indeed, it has been suggested that, “the “basis upon which the locus of the tort is determined varies from tort to tort”: North, PM and Fawcett, JJ. Cheshire and North Private International Law (London: Butterworths, 11th ed, 1987) at 541. Accordingly, one must turn to the specific tort alleged against CMI in order to locate it and to determine which law applies to it.

c) Where is the lex locus delicti?

[31] The crux of the claims and cross-claims against CMI is not negligence in the production of the engine that malfunctioned. After all, the malfunction occurred some 39 years after the engine left CMI’s hands and entered the market. Eventually, all machinery, including aircraft engines and their component parts, suffer the wear and tear of time. Rather, the claims against CMI are in the nature of negligent misrepresentation, and take aim at the allegedly faulty instructions issued by CMI from time to time in the form of bulletins and manuals for the repair and overhaul of its engine.

[32] In Air Canada v McDonnell Douglas Corp., [1989] 1 SCR 1554, the Supreme Court of Canada considered the location of the tort of failure to warn, which is closely related to negligent misrepresentation. The Court concluded that while the action may be multijurisdictional in nature, the key to an obligation to warn is that it be delivered to the place where it will be effective. As Gonthier J. expressed it, “The locus of a failure to warn is the place at which the warning ought to have been received, and that place may be either where the user is located or where the goods are used.”

[33] Following this logic, in Central Sun Mining Inc. v Vector Engineering Inc., 2013 ONCA 601, at paras 30, 34, the Ontario Court of Appeal applied the point to a claim of negligent misrepresentation: “The core of the tort of negligent misrepresentation is that the misrepresentation is received and acted upon…” The Court went on to affirm that this has been the approach to claims of this nature for some time, and is not a view that is on shaky or novel ground: “Indeed, in 2249659 Ontario Ltd. v Sparkasse Siegan, 2013 ONCA 354, 115 O.R. (3d) 241, at para. 31, this court reflected such an approach by saying that the tort of negligent misrepresentation occurs where the misinformation is received or acted upon.” It is undisputed that the bulletins and manuals containing the representations by CMI that are identified as actionable by ATC were received by ATC at its offices in Oshawa, Ontario.

[34] As Goudge JA. concluded in Central Sun Mining, at para 31, “[t]here can be no question that the appellant acted on these studies in Ontario. That is where it relied on the studies to take the decisions about where to locate the mine and how to build and operate it.” The same thing applies to ATC’s reliance on the repair bulletins and overhaul manuals in re-installing the crankshaft and counterweight after the 2003 engine inspection. The reception and reliance took place in Ontario. To the extent that the materials disseminated by CMI contained negligent misrepresentations, the place of these misrepresentations, and thus the law applicable to them, was Ontario.

III. Conclusion

[35] There is little, if any, disagreement between the parties to this motion about the relevant facts. The airplane crash has been thoroughly studied, the mechanical cause of the crash appears to be known by all, and the locations of the various events, from manufacture of the engine to servicing of the engine to takeoff of the aircraft to the crash landing, are a matter of record. While the question of fault remains controversial and the details of whether and how the accident might have been avoided will doubtless be among the issues canvassed at trial, the facts relevant to the present motion are all before me in a clear and concise record.

[36] Accordingly, I have little trouble concluding that this is an appropriate case in which to make a determination regarding summary judgment under Rule 20.04. In Hyrniak v Mauldin, [2014] 1 SCR 87, at para 60, the Supreme Court indicated that, “[t]here will be no genuine issue requiring a trial if the summary judgment process provides [the motion judge] with the evidence required to fairly and justly adjudicate the dispute and is a timely, affordable and proportionate procedure”. The record before me contains more than enough evidence to adjudicate the choice of law and limitation issue raised in the motion, and to determine that this is not a case where CMI deserves judgment based on an application of GARA.

[37] CMI’s motion is dismissed. The various claims against CMI in the Related Actions will remain intact and will proceed to trial.

[38] ATC and CAR deserve their costs of this motion.

[39] Counsel for ATC seeks costs in the total amount of $24,671.79. Counsel for CAR indicated at the hearing that his client has incurred costs in the range of $24,000. Counsel for CMI has submitted a Bill of Costs indicating that it would seek just over $32,000 for the motion for summary judgment.

[40] Costs are discretionary under section 131 of the Courts of Justice Act. Under Rule 57.01(1)(0.b), I am authorized to take into account, inter alia, “the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed.” Given that the two successful parties have incurred costs that are somewhat less than the unsuccessful one, the amounts requested should not be beyond the reasonable expectations of CMI.

[41] CMI shall pay each of ATC and CAR costs in the amount of $24,000, both amounts being inclusive of disbursements and HST.

Morgan, J. Released: September 7, 2016