The opinion of the court was delivered by: Honorable Edward J. Lodge U. S. District Judge
ORDER ADOPTING REPORT AND RECOMMENDATION
On October 30, 2009, United States Magistrate Judge Larry M. Boyle issued a Report and Recommendation, recommending that Plaintiffs' motion to amend the complaint be denied, Defendant's motion for partial summary judgment be denied, and Defendant's motion for summary judgment be granted in part and denied in part. Any party may challenge a Magistrate Judge's proposed recommendation by filing written objections within fourteen days after being served with a copy of the magistrate's Report and Recommendation. 28 U.S.C. § 636(b)(1)(C). The district court must then "make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made." Id. The district court may accept, reject, or modify in whole or in part, the findings and recommendations made by the magistrate. Id.; see also Fed. R. Civ. P. 72(b).
Defendant filed objections challenging the Report and Recommendation's conclusions: 1) denying the motion for summary judgment as to the amount of damages available to Plaintiffs Silverhawk Aviation and David Currie and 2) denying summary judgment at to counts one and four of the complaint. (Dkt. No. 288). Plaintiffs have responded to the objections. Plaintiffs have not filed objections to the Report and Recommendation. The Court has considered the parties contentions and conducted a de novo review of the record and finds as follows.
Factual and Procedural Background
As noted by the Magistrate Judge, the factual and procedural history of this case have been set out in detail in prior orders obviating the need for an extensive recitation of such here. Simply, this is a products liability action arising out of a helicopter crash. Plaintiffs David Currie and Silverhawk Aviation LLC ("Silverhawk") are in the business of aerial fire fighting in the course of which it used helicopters. On August 13, 2003, an Aerospatiale AS350D helicopter was being operated near Webb, Idaho by Plaintiff John Britton when it suffered an engine failure and crashed. The helicopter was damaged beyond repair and Mr. Britton suffered physical injuries and related damages in the crash. The helicopter's engine was originally manufactured by Defendant Rolls-Royce Corporation and later overhauled by Defendant Dallas Airmotive, Inc. ("DAI") prior to being used in the helicopter in question. The Plaintiffs allege the crash was caused by DAI's negligence and improper overhaul of the engine.*fn1
I. Damages Available Under Idaho Law
DAI's first motion for partial summary judgment (Dkt. No. 153) sought a judgment as a matter of law "on damages of plaintiffs David Currie and Silverhawk Aviation LLC." (Dkt. No. 153, p. 1). The complaint seeks damages for the value of the aircraft as well as lost profits allegedly incurred as a result of the destruction of the aircraft. Defendants maintain that Idaho law does not permit recovery of any damages other than the value of a vehicle when it is totally destroyed; therefore any lost profits are not recoverable. (Dkt. No. 153, p. 2). DAI relies on McGuire v. Post Falls Lumber and Manufacturing Co., 23 Idaho 608, 614 (1913). Plaintiffs oppose the motion and objection to the report and recommendation arguing where no privity exists between the injured party and the prior seller, economic loss is recoverable in tort where there exists: 1) a special relationship, 2) a unique circumstance, or 3) loss considered to be parasitic to an injury. (Dkt. Nos. 145, 289). Plaintiffs rely on Duffin v. Idaho Crop Improvement Assoc., 895 P.2d 1195 (Idaho 1995).
The Magistrate Judge disagreed with both parties rejecting the Duffin exceptions to the economic loss rule and concluding that the rule in McGuire was limited to the value of property damage recoverable in tort. (Dkt. No. 258, p. 17). Instead, the Magistrate Judge concluded that where a tort claimant has suffered either personal injury or property damage, Idaho courts have generally allowed recovery for economic losses which may include lost wages or profits. (Dkt. No. 258, p. 17-18). Having reviewed the briefing on this question, this Court agrees with the Magistrate Judge, although on a somewhat different basis, that economic loss in the form of loss of profits are recoverable in this case.
In Duffin the Idaho Supreme Court recognized that "economic loss is recoverable in tort as a loss parasitic to an injury to person or property" and that "economic loss" is defined as "including 'costs of repair and replacement of defective property which is the subject of the transaction, as well as commercial loss for inadequate value and consequent loss of profits or use.'" Duffin, 895 P.2d at 1200 (citations omitted). Here, the alleged lost profits to Silverhawk and Mr. Currie include the alleged loss of profits caused by the total loss of the helicopter for use in their aerial fire fighting business. Because the lost profits are parasitic to the property damages from the helicopter, such economic losses are potentially recoverable under Idaho law. As such, DAI's motion for summary judgment (Dkt. No. 153) is denied.
II. Motion for Summary Judgment as to Count One
DAI objects to the Magistrate Judge's recommendation that Count One not be dismissed.
Count One raises a strict liability claim. DAI argues because it never sold a product but, instead, only provided a service, that it cannot be held strictly liable. (Dkt. No. 288, p. 4). Plaintiffs counter that DAI "remanufactured" the turbine engine such that it was materially altered and, therefore, DAI is a manufacturer and strict liability applied under Idaho Code § 6-1402. (Dkt. No. 289, p. 6-7). The Magistrate Judge concluded that whether the ...