Precision Gear Co. v. Continental Motors, Inc.

In 2005, an airplane crashed in Oklahoma due to an engine failure caused by a faulty gear. Litigation (crash litigation) ensued in Alabama state court. Tulsair Beechcraft, Inc. (Tulsair) (defendant), which installed the engine, was a defendant in the crash litigation. In 2011, after settling the crash litigation, Tulsair sued Continental Motors, Inc. (Continental) (plaintiff), which allegedly manufactured the engine, in Alabama state court, seeking statutory indemnity under Oklahoma law to recoup the money Tulsair spent in settling and defending the crash litigation. More than two years after its claims accrued, Continental filed indemnity claims against Precision Gear Company (Precision) (defendant), which manufactured the faulty gear, and General Metal Heat Treating, Inc. (Metal) (defendant), which heat-treated the faulty gear. Continental alleged that Precision and Metal did not perform their roles according to Continental’s specifications. The parties all agreed that Oklahoma law governed the substance of their dispute, that Alabama law governed procedural issues, and that the statute of limitations typically was a procedural issue. But the parties disagreed as to whether Alabama or Oklahoma law governed whether Continental’s indemnification claims should be classified as tort claims or contract claims. This was important because Alabama law provided for a two-year limitations period for tort claims and a six-year period for contract claims, and Alabama treated indemnification claims as sounding in tort. By contrast, Oklahoma law treated indemnification claims as sounding in contract and thus as subject to a six-year limitations period. Precision and Metal moved to dismiss the complaint based on Alabama’s two-year statute of limitations for tort claims. Continental responded that Oklahoma law should govern whether its indemnification claims were tort claims or contract claims because Oklahoma law undisputedly governed the substance of Continental’s claims. The trial court applied Oklahoma law in deciding that Continental’s claims sounded in contract and thus were subject to Alabama’s six-year statute of limitations for contract claims. The trial court thus denied Precision and Metal’s motion. Precision and Metal appealed.