Aeropesca Ltd. v. Butler Aviation Intern., Inc.

• Decision Date: 06 February 1980
• Docket Number: No. 561,561
• Citation: 411 A.2d 1055,44 Md.App. 610
• Parties: AEROPESCA LIMITED v. BUTLER AVIATION INTERNATIONAL, INC., et al.
• Court: Court of Special Appeals of Maryland

Page 610

44 Md.App. 610

411 A.2d 1055

AEROPESCA LIMITED v. BUTLER AVIATION INTERNATIONAL, INC., et al.

No. 561.

Court of Special Appeals of Maryland.

Feb. 6, 1980.

T. Joseph Touhey, Glen Burnie, with whom were Donald M. Lowman and Touhey,[411 A.2d 1057] Rushworth & Lowman, Glen Burnie, on the brief, for appellant

Donald L. DeVries, Jr., Baltimore, with whom were Charles E. Iliff, Jr. and Semmes, Bowen & Semmes, Baltimore, on the brief, for appellees.

Argued before GILBERT, C. J., and THOMPSON and LOWE, JJ.

GILBERT, Chief Judge.

THE PREFACE

This case may have had its origin when Icarus on wings of feather and wax, fashioned by his father Daedalus, made his ill-fated flight. ¹ In the matter now before us, Aeropesca Limited, a Colombian corporation (ALC) made what might well have been, depending upon what version of events one believes, an ill-fated flight from Baltimore-Washington International Airport to Miami, Florida, and, thereafter, to Bogota, Colombia. The flight was commenced only after the appellee and cross-appellant, Butler Aviation International, Inc. (Butler), represented to the Federal Aviation Administration (FAA) that ALC's Vickers Viscount airplane was "airworthy" when in point of fact it was not.

Understandably aggravated by what it must have viewed as a "rip-off," ALC sued Butler ² in the Circuit Court for Anne Arundel County alleging in one count that Butler breached its contract and in the other count, an action of fraud and deceit. The case was tried non-jury before Judge Raymond G. Thieme, Jr. The judge concluded that ALC was entitled to one hundred dollars ($100) damages on the breach of contract count, and seventeen thousand one hundred twenty dollars and sixty-two cents ($17,120.62) damages in the tort action. Judge Thieme rejected ALC's claim for punitive damages opining that despite Butler's "reprehensible" conduct, motivated by "greed," no evidence of actual malice was ALC, in this Court, has raised five issues for our review. Four of them are concerned with punitive damages, the fifth relates to the matter of compensatory damages for breach of contract. We think the four issues regarding punitive damages may be combined and stated simply as: Did the trial judge err in his interpretation of the law insofar as the assessment of punitive damages is concerned?

presented nor would the "existence of implied malice" support punitive damages. (Emphasis supplied.)

Butler has also appealed and it puts three issues to us, namely: 1) that the proof failed to supply the "essential elements of actionable fraud"; 2) a failure to perform, or to perform properly, that which one had agreed to perform is not fraudulent; and 3) ALC, a non-registered foreign corporation, is precluded from maintaining an action in the courts of Maryland.

THE FACTS

With minor editing, we adopt Judge Thieme's "Statement of Facts," as it appears in his "Memorandum and Order":

"(ALC) is . . . engaged in transporting freight and passengers in Colombia and to surrounding South American countries. Its offices are in Bogota. At the time of the trial the corporation's airplanes consisted of two C-46s and four Vickers Viscounts. These aircraft are four engined turbojet passenger liners each capable of carrying approximately fifty-two passengers. During the early part of 1974 . . . (ALC) was anxious to have major maintenance work done on HK1319, one of its Viscounts.

Representatives of . . . (Butler) travelled to Bogota where an agreement was reached on the work to be done on HK1319. . . . At this time . . . (ALC) expressed its interest in purchasing another Viscount. The . . . (Butler) representatives advised . . . (ALC) of some Viscounts that were available within a price range of $60,000 $75,000. It is . . . (one of those) Viscount(s) which eventually became the subject matter of this suit.

Upon their return to the States, John Wightman, a sales representative for . . . (Butler), confirmed their discussions regarding the purchase of another Viscount . . ., indicating the manner of payment and the cost of the plane would be $70,000.00. An estimated additional $20,000.00 to $30,000.00 would be required to license the aircraft for export to Bogota.

When Viscount HK1319 was brought to . . . (Butler's) facilities in Baltimore for the contracted repairs, representatives of . . . (ALC) accompanied it for the purpose of pursuing the matter of the purchase of another Viscount. From Baltimore they were taken to Georgetown, Delaware by . . . (Butler). There, based upon the assurances of . . . (Butler) that Viscount N7440 was the best as well as the easiest to ferry away for necessary repairs, . . . (ALC) subsequently entered into an agreement with Samuel Goldman, representative of Viscount International Corporation which owned the plane, . . . for its purchase for $62,000.00 . . .. Subsequent discussions regarding the necessary repairs . . . (were) had back in Baltimore. . . . (ALC) was assured by . . . (Butler) that the total cost of the plane and the necessary repairs which were to be done by . . . (Butler) would be $90,000.00. After their return to Bogota, . . . (ALC) received the contract from . . . (Butler on May 8, 1974) . . . which (ALC) accepted in Bogota. . . . (Butler) forwarded a statement to . . . (ALC ON May 29, 1974, which showed) . . . the status of the accounts between them on both the HK1319 and the newly purchased Viscount N7440.

In response to an August 2, 1974, notification from . . . (Butler) that N7440 was ready, Captain Sarmiento, an . . . (ALC) pilot, arrived in Baltimore around August 14, 1974, to fly the plane back to Bogota. At . . . (that) time . . . (Butler) requested additional monies for labor and parts on N7440. A dispute then arose over the additional work claimed . . . (Butler), on August 19, 1974, certified that Viscount N7440 was airworthy. . . . As a result of a test flight on August 23, 1974, discrepancies were found in the operation of the plane. . . . They were: pressurization inoperative due to an inoperative door seal, controls heavy, difficulty in trimming the plane, fuel gauges inoperative and the oleo switch (controls braking of the plane upon landing through the propeller pitch). . . . (ALC) was assured by . . . (Butler) that . . . (the deficiencies) would be corrected. . . . (T)here is no evidence (, however,) that . . . (Butler) attempted to correct . . . (the) problems after the test flight on August 23, 1974, and prior to the release of the aircraft for flight from Baltimore to Miami . . . (a month later). An Export Certificate of Airworthiness was issued by the Federal Aviation Administration on September 10, 1974, for Viscount N7440 (a/k/a 745D).

to have been performed and whether . . . (the agreement) was a fixed price contract or a cost-plus contract. . . . (E)ventually . . . (ALC) . . . (was) required to place $25,000.00 in escrow . . . so that the plane could be released. . . . No bill was ever shown to have been prepared by . . . (Butler) and to have been submitted to . . . (ALC) for . . . (that) additional work.

. . . (On board the aircraft in its flight to Miami) were Captain Sarmiento and his co-pilot, both employees of . . . (ALC), Raymond DeLuna, an avionics technician employed by . . . (Butler), who, among other duties, was on the flight '. . . to see anything that might be wrong with the aircraft in the flight and to note it and then notify Mr. Burns and then repair it.' . . . Colonel Diaz, his wife and children, Colombian nationals returning home and Captain Marovitch, a pilot required to be on board under FAA regulations.

During the course of the flight, problems again occurred with the plane. The Aircraft Log Book The . . . Aircraft Log Book indicate(s) that . . . (the) items were subsequently repaired by Air Tech in Miami, an independent contractor retained and paid by . . . (Butler) after efforts by . . . (Butler) employees sent from Baltimore to correct the problems proved unsuccessful. Testimony showed that some of . . . (the) items affected the airworthiness of the plane.

indicate(s) that the following items were inoperative on the flight to Miami: The DME (a navigational device), the spill valve (controls intake of outside air), pressurization (the door liner failed to inflate and seal the door), fuel gauges, fuel trim on engine # 2, controls heavy, stall warning, tachometer, radar, autopilot, ADF (a navigational device) and some radio channels on the VHF equipment, air stair, left oleo switch (controls the braking action of the propeller upon landing), hydrolic system had low pressure (hydrolic fluid was discovered, after landing, on the exterior of the fuselage skin from the nose to the tail), corrosion around the toilet, dead flashlight batteries and noise in the elevator trim tab.

On October 29, 1974, the plane, flown by Captain Sarmiento, left Miami for Bogota. Again, some of the items initially complained of after the Baltimore test flight of August 24, 1974, were plaguing the plane. . . . Specifically: The ADF was inoperative, and the pressure system was inoperative and an engine had to be feathered in flight. However, Captain Sarmiento did indicate that on the flight to Bogota there was no longer a problem with the controls. Upon its final landing in Bogota, the plane was inspected by Jose Escolar, . . . (ALC's) Director of Maintenance. He testified to various items . . . which in his opinion rendered the plane unairworthy. The plane was . . . grounded in Colombia for a considerable period of time."

I ALC'S ELIGIBILITY TO PROCEED IN MARYLAND COURTS

We shall first consider Butler's third issue inasmuch as should it be decided favorably to Butler, the case is at an end. Butler asserts that because ALC failed to register as a foreign corporation doing business in this State, pursuant to Md.Corp. & Ass'ns. (1975) Code Ann. § 7-202, it is precluded from maintaining an action in the Maryland courts. Md.Corp. & Ass'ns. (1975) ...