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GENERAL ELECTRIC CO. v. VARIG — S.A.

February 6, 2004.

GENERAL ELECTRIC COMPANY, Plaintiff -against- VARIG — S.A. (VIACO AEREA RIO-GRANDENSE) Defendant


The opinion of the court was delivered by: RICHARD HOLWELL, District Judge

MEMORANDUM OPINION AND ORDER

Plaintiff General Electric Company ("GE") filed a complaint seeking declaratory judgment decreeing that an agreement entered into with defendant VARIG — S.A. (Viacao Aerea Rio-Grandense) ("VARIG") is enforceable as to its limited liability and choice of law provisions. GE now moves for summary judgment. VARIG has chosen not to oppose GE's motion. For the reasons stated herein, GE's motion for summary judgment is granted.

BACKGROUND

  GE filed its complaint on December 19, 2001, and the matter was initially assigned to the Honorable Sidney H. Stein, United States District Court for the Southern District of New York VARIG filed an answer on May 15, 2002. The parties then engaged in discovery and participated in several mediation sessions before the Honorable James C. Francis IV, United States Magistrate Judge for the Southern District of New York.

  On September 3, 2003, GE moved for summary judgment, in accordance with Local Civil Rule 56.1, GE submitted a Rule 56.1 Statement of Undisputed Material Facts in Support of Its Motion for Summary Judgment (hereinafter "Statement").

  By letter dated October 3, 2003, VARIG asked Judge Stein for an extension of time in Page 2 which to file its opposition brief so that it could properly consider whether it wanted to oppose the motion. Judge Stein granted VARIG's requested extension. By letter dated October 14, 2003, VARIG informed the Court that, "after due consideration," it had decided not submit opposition papers to GE's motion for summary judgment.

  This case was transferred to the Honorable Richard J. Holwell, United States District Court for the Southern District of New York, on December 18, 2003. Below are this Court's findings of fact and conclusions of law.

  FACTS

  The following facts are supported in the record provided by GE and are thus deemed admitted for purposes of this summary judgment motion. See Giannullo v. City of New York, 322 F.3d 139, 140 (2d Cir. 2003) ("If the opposing party then fails to controvert a fact so set forth in the moving party's Rule 56.1 statement, that fact will be deemed admitted.").

  GE is a New York corporation with its principal place of business in the State of New York. (Statement ¶ 1.) GE manufactured a GE Model CF6-80C2B2 airplane engine bearing the serial number 690-165 ("Engine"). (Id ¶ 5.)

  VARIG is a Brazilian corporation that is registered to do business in New York and operates flights out of John F. Kennedy International Airport in New York City, among other places. (Id. ¶¶ 2-3, 12.) In 1987, VARIG entered into an agreement, titled General Terms Agreement 6-5969 ("GTA"), with GE to buy the Engine. (Id. ¶ 6.)

  The GTA's choice-of-law provision stated that "[t]his Agreement shall be construed, interpreted and applied in accordance with the law of the State of New York." (Aff. of Louis Page 3 Martinez in Supp. of GE's Mot. for Summ. J., Ex. H at 9.) After defining VARIG as "Airline," the GTA further stated:
"Article XIII — Limitation of Liability
The liability of GE to Airline arising out of, connected with, or resulting from the manufacture, sale, possession, use or handling of any Product (including Engines installed on Airline's aircraft as original equipment) whether in contract, tort (including negligence) or otherwise, shall be set forth in the Product Support Plan included in Exhibit B hereof, and shall not in any event exceed the purchase price of the Product giving rise to Airline's claim. The foregoing shall constitute the sole remedy of Airline and the sole liability of GE. In no event shall GE be liable for special or consequential damages. THE WARRANTIES AND GUARANTEES SET FORTH IN THE PRODUCT SUPPORT PLAN ARE EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES AND GUARANTEES WHETHER WRITTEN, STATUTORY, ORAL OR IMPLIED (INCLUDING WITHOUT LIMITATION ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR PURPOSE)."' (Id. at 1, 7.)
  The Product Support Plan, Exhibit B to the GTA, contained a series of warranties and schedules for service and replacement of Engine parts. (Id. at B-1 to B-20.) In addition, the Plan repeated that this "Product Support Plan set[s] forth the maximum liability of GE with respect to claims of any kind, including negligence, arising out of manufacture, sale, possession, use or handling of the Products or Parts thereof or therefore, and in no case shall GE's liability to Airline exceed the purchase price of the Product giving rise to Airline's claim." (Id. at B-1 7.)

  In 1997, VARIG and GE amended the products and parts delivery terms of the GTA. (Id., Ex. H; Statement ¶ 11.) However, the amendment stated: "Except as set forth herein, all other provisions of the GTA remain unchanged and in full force and effect." (Aff. of Louis Martinez in Supp. of GE's Mot. for Summ. J., Ex. H; Statement ¶ 11.)

  On or about June 7, 2000, the Engine malfunctioned as the plane in which it was mounted (owned by VARIG) was preparing to take off. (Statement ¶¶ 9, 12-14.) The pilots safely Page 4 stopped the ...


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