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Law Offices of Steven D. Smith v. Borg-Warner Security Corp.12/23/1999
ime it was manufactured or did not perform as a reasonable consumer would expect under normal use.
Judge Hodges held Facet Enterprises, Inc. [a Borg-Warner subsidiary], legally responsible for the death of Kenneth Swanson because of Facet's failure "to manufacture a carburetor and carburetor float that would perform in a manner that a reasonable consumer would expect." He also found by clear and convincing evidence that:
Facet knew that some . . . composite floats [had a manufacturing defect that led them to] absorb fuel and become "heavy"; that [Facet] knew [that] a heavy carburetor float . . . could cause an unexpected loss of power while in flight; that although they suspected [that] the use of auto gas adversely affected the . . . float, none of the tests conducted by them substantiated this; that in spite of the lack of evidence, they published to the FAA, the engine manufacturer, and the public, as fact, that auto gas had an adverse effect on the . . . float; [that it saved Facet money to convince the FAA to attribute the float problem to the use of auto gas, and not to a defect]; that Facet concealed from the consumers (the engine manufacturer, the airplane manufacturer, and the ultimate user) the fact that some floats in use had [manufacturing defects]; that this failure to disclose is outrageous conduct and [reflects] a reckless disregard of the rights of others entitling Swanson to an award of punitive damages.[ ]
Borg-Warner settled with the Swanson estate prior to entry of final judgment. [This court later held, in Borg-Warner's suit for contribution against the makers of the engine, plane, and carburetor float, that Judge Hodges's findings collaterally estop Borg-Warner from relitigating whether it had outrageously and fraudulently concealed evidence, with reckless disregard for the rights of others.[ ] Borg-Warner appropriately does not challenge that fact in this appeal.]
On April 23, 1990, the Palmer estate filed a Civil Rule 60(b) motion for relief from judgment. The Palmer estate argued that the finding in the Swanson estate's case that Borg-Warner had engaged in misconduct by concealing from the public the cause of carburetor failure, required that the earlier judgment dismissing the Palmer estate's case be vacated. Judge Hodges denied this motion without comment, findings or conclusions. The Palmer estate appeal .
In Palmer II, this court considered the claim that Borg-Warner had fraudulently concealed the real reason that the carburetor tended to cause crashes, i.e., a defect, not the use of auto gas. It held that newly discovered evidence of such concealment could warrant relief from the judgment of dismissal under Alaska Civil Rule 60(b)(2). Once relieved from the dismissal, the estate then could argue that Borg-Warner's conduct equitably estopped it to plead the statute of limitations.
This court focused in part on whether the Palmer estate could show the diligence required for equitable estoppel, i.e., that it had filed suit soon after it had "discovered or reasonably should have discovered the fact that evidence of a potential cause of action had been fraudulently concealed." This court made two pertinent comments about the relationship between the estate's and Smith's negligence in investigating the cause of the crash, and Borg-Warner's deceit in having, before the crash, concealed evidence that would have aided that investigation:
In Palmer I, we held that the statute of limitations began to run on the date the Palmer estate became aware of the crash because it "reasonably should have known from [that] date that potential claims existed against the pilot, the carrier, or the manufacturers." 818
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