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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND NATIONAL COACH WORKS OF VIRGINIA v. * * * * * * * *

CIVIL NO. CCB-99-362

DETROIT DIESEL CORPORATION, et al.

MEMORANDUM OPINION On November 16, 1997, an engine fire destroyed a bus that was traveling on Interstate 95 in Maryland. Three passengers who were injured in escaping the bus filed suit in 1999. They have settled their claims. The bus company, National Coach Works of Virginia ["National Coach"], the bus manufacturer, Motor Coach Industries, Inc. ["Motor Coach"], and the engine manufacturer, Detroit Diesel Company ["Detroit Diesel"], dispute the cause of the engine fire that later spread throughout the bus. National Coach, the defendant in the original case and plaintiff in the surviving action ["the plaintiff"], filed counter-claims against Motor Coach and Detroit Diesel [collectively "the defendants"]. National Coach argues that it can recover from Motor Coach under an implied-warranty theory, under two express warranties, for negligence, and under product-liability law. National Coach also argues that it can recover from Detroit Diesel under an implied-warranty theory, under one express warranty, for negligence, and under product-liability law. National Coach seeks $300,000.00 in damages. Motions for summary judgment by both defendants are currently before the Court. National Coach has

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also filed a Motion to Add Lancer Insurance Company as Real Party in Interest.1

I. Background The following relevant facts are not in dispute. In 1992, Motor Coach sold a bus to National Coach. Motor Coach had purchased the engine from Detroit Diesel and installed it in the bus before selling it to National Coach. Motor Coach received the engine from Detroit Diesel, fully assembled. The engine rods are inside the engine and cannot be touched without disassembling the engine. During preparation of a bus, Motor Coach does not dismantle the engine in any way. Motor Coach installed the engine, the oil pressure gauge, and the wiring linking the engine to other parts in the body of the bus. Motor Coach also altered the programming of the DEDEC, an electronic control module that is part of the system of warning lights that warn the driver of problems in the engine. Opp. Ex. 3B at 3; Opp. Ex. 19 at 11. The alterations involved "input[ting] some information for vehicle speed information, to properly operate the cruise control," including programming in the "axle ratios" and "what the customer expects for set limits for his top speed and also his cruise settings, for cruise control." Opp. Ex. 19 at 11. Detroit Diesel programmed the engine for shutting down in case of emergency. Opp. Ex. 19 at 29. National Coach bought the bus from Motor Coach under a sales agreement dated November 11, 1992 ["the sales agreement"]. Motor Coach's Mem. in Supp. of Mot. Ex. 1. The sales agreement contains a choice-of-law provision specifying that North Dakota law should govern the contract. The

The Court will use the abbreviation "Pl.'s Mot." to refer to the Motion to Add Lancer Insurance Company as Real Party in Interest. All other abbreviations used by the Court refer to pleadings related to the motions for summary judgment. 2

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sales agreement refers to a warranty covering the bus for 24 months or 200,000 miles, whichever is shorter. Detroit Diesel warranted the engine in a "Power Protection Plan" ["the engine warranty"], also called a "P-3." Detroit Diesel's warranty was for five years or 500,000 miles. When National Coach bought the bus, the president of National Coach, John Oakman, negotiated the price of the engine warranty directly with Detroit Diesel. A document styled as the "MCI-Coach Sales Order" ["the sales order"] lists pages of details about the bus, including an item described as "Extended warranty coverage on an Engine (5 years or 500,000 miles

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Maryland Law