Airborne, Inc. v. Denver Air Center, Inc., 90CA2218

Decision Date23 April 1992
Docket NumberNo. 90CA2218,90CA2218
Citation832 P.2d 1086
PartiesAIRBORNE, INC., a Colorado corporation, Plaintiff-Appellee and Cross-Appellant, v. DENVER AIR CENTER, INC., a Colorado corporation, Defendant-Appellant and Cross-Appellee. . V
CourtColorado Court of Appeals

Fairfield and Woods, P.C., Brent T. Johnson, Denver, for plaintiff-appellee and cross-appellant.

Tilly & Graves, P.C., Donald Lawrence, Jr., Denver, for defendant-appellant and cross-appellee.

Opinion by Judge DAVIDSON.

In an action to recover damages for breach of contract and negligence, defendant, Denver Air Center, Inc., (Denver Air) appeals from a judgment entered after a bench trial in favor of plaintiff, Airborne, Inc. Airborne cross-appeals, asserting error in the calculation of damages and asking this court to amend the judgment to include damages incurred during the pendency of this appeal. We affirm in part and reverse in part.

Airborne is in the business of transporting parachutists to jump sites. Airborne purchased a twin-engine Beechcraft Bonanza and, in July 1986, began using the aircraft in its business. In June 1988, Airborne experienced problems with the right engine. It contracted with an out-of-state company to repair the engine and hired Denver Air to remove the engine for shipping and to reinstall the engine after repair. This work was completed in October 1988.

Thereafter, during takeoff with ten sky divers aboard, the right engine faltered and caught on fire. The pilot landed safely by giving full power to the left engine and by shutting down the right engine, but as a result both engines sustained damage. Airborne, unwilling to let Denver Air work on the plane again, asked Denver Air to pay for necessary repairs. Denver Air refused.

In November 1989, Airborne filed suit against Denver Air claiming negligence and breach of warranty for the work performed on the plane prior to the incident. Airborne sought damages for costs of repair, diminution in market value, and loss of use of the airplane as a result of the incident.

Because Denver Air stipulated just prior to trial that the engine fire resulted from the improper installation of exhaust stacks by its employees, the trial proceeded only to determine damages. After a bench trial, the court found that Airborne had not failed to mitigate its damages and entered judgment in favor of Airborne for approximately $80,000 for loss of use, $38,000 for repairs, and $25,000 for diminution in value.

I.

Denver Air's first contention of error pertains to damages flowing from the loss of use of the aircraft. Since certain contentions of Airborne in its cross-appeal also concern that issue, we address them together.

A.

The trial court found that Airborne should be awarded damages flowing from the loss of use of its airplane for 27 months. Both Denver Air and Airborne challenge this determination. Denver Air contends that the trial court erred in awarding 27 months of loss of use rather than only three months. On cross-appeal, Airborne contends that it is entitled to loss of use not only for the 27 months given by the trial court, but also for its loss of use of the aircraft during the pendency of this appeal. We conclude that Airborne is entitled only to damages flowing from loss of use of the aircraft for three months.

An owner may recover for the loss of use of personal property for the length of time reasonably required for repair. C. McCormick, Damages § 124 (1935); Urico v. Parnell Oil Co., 708 F.2d 852 (1983); Lamb v. R.L. Mathis Certified Dairy Co., 183 Ga.App. 455, 359 S.E.2d 214 (1987); Karlin v. Inland Steel Co., 77 Ill.App.3d 183, 32 Ill.Dec. 657, 395 N.E.2d 1038 (1979); Long v. McAllister, 319 N.W.2d 256 (Iowa 1982); McPherson v. Kerr, 195 Mont. 454, 636 P.2d 852 (1981); CJI-Civ.2d 6:13 (1988); see Hunter v. Quaintance, 69 Colo. 28, 168 P. 918 (1917) (plaintiff could not in any event recover for loss of use damages unless he showed whether length of time the vehicle was out of use was necessary and whether repairs were made with reasonable promptness); see also Cope v. Vermeer Sales & Service, 650 P.2d 1307 (Colo.App.1982). If the owner proves what length of time is reasonable for repair, he need not actually have his property repaired in order to recover loss of use damages. Cf. Francis v. Steve Johnson Pontiac-GMC-Jeep, Inc., 724 P.2d 84 (Colo.App.1986) (plaintiff entitled to reasonable rental value, even though no replacement vehicle was actually rented); Meakin v. Dreier, 209 So.2d 252 (Fla.Dist.Ct.App.1968) ("loss of use of a pleasure vehicle during the time reasonably necessary to make the repairs, though no substitute vehicle is leased, is properly an element of damages").

Here, the trial court, with record support, determined that repairs would require three months. That determination is not disputed by either party.

However, the trial court also allowed damages for the 24 months that the plane sat idle prior to trial. Denver Air contends that it was error to do so since an owner can recover for loss of use only for the time reasonably necessary to accomplish repairs--in this case, three months. Airborne argues, however, that because it was financially unable to have the plane repaired, the award of damages for this additional period was proper. Further, Airborne argues that the period should be extended to include the entire time it has been deprived of use of the plane during this appeal. We agree with Denver Air.

In a very few limited circumstances, courts have ruled that financial inability to pay, in combination with other factors, has been one relevant factor in determining the reasonableness of the length of time necessary for repair. See Urico v. Parnell Oil Co., supra (relevant where arbitrary conduct of insurer wrongfully delayed or interfered with repairs which were begun); see also Valencia v. Shell Oil Co., 23 Cal.2d 840, 147 P.2d 558 (1944) (defendant promised but failed to pay for repairs and plaintiff was financially unable to do so).

Other courts have refused to consider financial inability to pay. See Prothro v. Dillahunty, 488 So.2d 1163 (La.Ct.App.1986) (the fact that finances are not available to replace destroyed property cannot be used to extend the time for recovery of damages for loss of use).

Under the circumstances presented here, we conclude as a matter of law that no extension of time was warranted. Although Denver Air refused to pay for repairs on the aircraft and Airborne claimed it lacked funds to make the repairs, Airborne presented no evidence that Denver Air "wrongfully prolonged" any repair process. Contrary to Airborne's assertion, Denver Air's refusal to admit liability and pay for repairs does not in itself constitute a "wrongful delay or interference with the repair process." Cf. Urico v. Parnell Oil Co., supra (although liability was uncontested and insurer had agreed to pay for repairs, insurer then refused to make payments unless plaintiff waived all other claims).

Thus, we conclude as a matter of law that no extension of time was warranted and that Airborne's damages for loss of use are limited to the three-month period which the trial court found was reasonably necessary to complete repair.

B.

On cross-appeal, Airborne further contends that the trial court erred in calculating the damages for loss of profits. We agree.

Here, damages for loss of use was measured by the loss of net profits, meaning net earnings, or the excess of returns over expenditures. Lee v. Durango Music, 144 Colo. 270, 355 P.2d 1083 (1960). The ledger sheets from which the court calculated lost profits had entries over a 20-month period from May 1986 through December 1987. However, the president of Airborne testified that the Beechcraft was not used in the business until July 1986 and the ledger entries correspondingly showed revenues only for 18 months from July 1986 until December 1987.

Total revenues shown by the ledger entries were $58,210. The trial court made an error in calculation and divided by 19 months rather than 18 months. The court obtained a gross profit of $3,064 and then subtracted operational expenses to obtain a monthly net profit of $2,964. If divided by 18 months, the corrected monthly net profit is $3,134. Thus, damages for Airborne's three months loss of use total $9,402.

C.

Denver Air also contends that the trial court erred by admitting the exhibit on which the award for lost profits was based in violation of CRE 1006 and 1002. We disagree.

An award of damages cannot be based on speculation or conjecture. Lee v. Durango Music, supra. However, when recovery of lost net earnings is sought, it is sufficient for the plaintiff to provide a reasonable basis for computation, using the best evidence obtainable under the circumstances which will enable the trier of fact to arrive at a fairly approximate estimate of the loss. Tull v. Gundersons, Inc., 709 P.2d 940 (Colo.1985). Evidence of past performance will form the basis for a reasonable prediction of future profits. Tull v. Gundersons, Inc., supra.

CRE 1006 provides that the contents of voluminous writings which cannot conveniently be examined in court may be presented in the form of a testimonial or written summary. The rule requires the proponent of summary evidence to establish that the underlying materials upon which the summary is based would be admissible in evidence and that they were made available to the opposing party for inspection. Metro National Bank v. Parker, 773 P.2d 633 (Colo.App.1989).

Evidence admissible under CRE 1006 is not objectionable on the ground that it violates CRE 1002, the "best evidence rule." If proper foundation has been established, questions concerning the authenticity of the evidence or the credibility of the testimony go to the weight of the evidence, not its admissibility. Metro National Bank v. Parker, supra.

Here, based on his review of receipts and cash disbursement...

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