Clay v. AIG Aerospace Ins. Servs., Inc.

• Decision Date: 31 March 2016
• Docket Number: No. 06–15–00024–CV,06–15–00024–CV
• Parties: Monty Clay, et al., Appellants v. AIG Aerospace Insurance Services, Inc., et al., Appellees
• Court: Texas Court of Appeals

488 S.W.3d 402

Monty Clay, et al., Appellants

v.AIG Aerospace Insurance Services, Inc., et al., Appellees

No. 06–15–00024–CV

Court of Appeals of Texas, Texarkana.

Submitted: February 1, 2016

Decided: March 31, 2016

M. Keith Dollahite, M. Keith Dollahite, PC, Tyler, TX, Robert Waltman, Waltman & Grisham, Bryan, TX, D. Bryan Hughes, Law Office of D. Bryan Hughes, Mineola, TX, Michael A. Simpson, Simpson Boyd Powers & Williamson, Bridgeport, TX, William Angelley, Braden, Varner & Angelley, PC, Dallas, TX, for appellant.

Ross Cunningham, G. Don Swaim, Steven D. Sanfelippo, Cunningham Swaim, LLP, Dallas, TX, for appellee.

Before Morriss, C.J., Moseley and Burgess, JJ.

OPINION

Opinion by Chief Justice Morriss

A small, private aircraft crashed, killing both the pilot, Dale “Scooter” Phillips, Jr., and his passenger, Amy Clay. Their estates and families (collectively, the Appellants) sued AIG Aerospace Insurance Services, Inc. (AIG), alleging that it was strictly liable and negligent because it failed to provide adequate warnings when it sold an unrepaired salvage aircraft with its included engine to a third party, who subsequently placed the engine and vacuum pump taken from that salvaged aircraft back into the stream of commerce, where it ended up in Phillips' airplane. After a jury trial, the jury found that AIG was not in the business of selling aircraft engines and vacuum pumps and, in effect, that Phillips' negligence was the sole proximate cause of the crash. Pursuant to the jury's findings, the trial court entered a take-nothing judgment in favor of AIG.

Appellants argue that there was factually insufficient evidence to support the jury's finding that AIG was not in the business of selling aircraft engines and vacuum pumps, that there was factually insufficient evidence to support the jury's negligence findings, that the trial court improperly commented on the evidence when a former astronaut was called as a witness, and that the trial court erred when it failed to provide the jury Appellants' requested instruction regarding the “as is” clause.¹

We affirm the trial court's judgment because (1) the jury's finding regarding AIG's business was supported by factually sufficient evidence, (2) the jury's finding that AIG's negligence, if any, did not proximately cause the accident was supported by factually sufficient evidence, (3) the trial court's comments regarding witness Gibson were not improper, and (4) the trial court was within its discretion in refusing to add Appellants' requested language to the “as is” jury instruction.

AIG had insured a Piper PA–32–250 aircraft, registration number N33033, owned by JAG Components, Inc. (JAG). The insured value of the aircraft was $100,000.00. In October 2005, the aircraft was severely damaged by a hurricane. The AIG claims adjuster determined that the aircraft was a “total loss,” as the cost to repair the aircraft exceeded its value, and paid JAG the insured value.

In November 2005, following its company practice, AIG offered the salvaged aircraft for sale on its salvage-sales website to help offset the company's cost of paying the insurance claim. When sold through the website, each salvaged aircraft is sold as a single unit to the highest bidder. Though AIG did not inspect or examine the JAG aircraft sold through the website, its sales listing noted that the aircraft was a “[h]urricane loss” with damage to “[b]oth wings, all control surfaces, tail section, prop, fuselage, [and] cowling” and included photographs showing that it had flipped over, that the interior and exterior sustained extensive damage, and that the propeller had been bent. Potential bidders for the aircraft were given the claims adjuster's contact information and were informed that the aircraft was being sold “AS IS/WHERE IS.”

Robert Ruhe, of Bob Ruhe AG Service, Inc., was the winning bidder at the price of $28,400.00 for the salvaged aircraft. In December 2005, Ruhe and his son, Eric, drove to Florida, picked up the salvaged aircraft from the storage facility where AIG had stored it, and hauled it back to Ruhe's home in Ohio. Included with the aircraft were a bill of sale, full set of maintenance records, photographs of the damage to the aircraft, as well as logbooks.² The logbooks made no reference to the hurricane damage.

Ruhe intended to rebuild the aircraft for his personal use, but he got too sick to ever work on it. Ruhe passed away in September 2008. The aircraft sat in a garage for several years.

In August 2011, Eric Ruhe sold the engine from the salvaged aircraft to Air–Tec for $6,000.00, which was, according to Eric, about half the cost of a used engine that did not require an overhaul. Eric testified that, before the sale, he orally informed Air–Tec's owner, Richard Waters, that the engine was not airworthy, that it was a “salvage” engine that had been in an aircraft that was flipped over and damaged in a Florida storm, and that it needed a complete overhaul because “it was sitting in a box for almost six years and it had never run.” Eric testified that he sold the engine to Air–Tec “as is,” though he had no documentation thereof. Eric further testified that the aircraft was obviously severely damaged and that it was clearly not airworthy because, in part, the craft and the engine had not been properly inspected and tested during the five years before the sale to Air–Tec.

Air–Tec's sole business is buying and selling Lycoming engines, the same type of engine in the salvaged aircraft. Waters testified that Eric did not tell him that the engine had been in a damaged or salvaged aircraft. Waters stated that Eric told him that there was “no damage on the engine whatsoever,” that the engine was “perfect ... complete with all accessories except the alternator.”

The engine was shipped to Air–Tec along with the engine's logbooks, which provided the engine's maintenance and inspection history. Waters described the logbooks as the “Bible” of the engine. There is no mention in the engine's logbooks that the engine, or aircraft of which it was a part, was salvaged or damaged by storm, wind, or water. However, the logbooks did mention that the engine had not undergone its FAA-mandated annual inspections for the previous six years, and it was determinable from the logbooks' contents that the engine's vacuum pump had been in service for at least twelve years and that the pump had been operated for 636 hours. Air–Tec did not modify or overhaul the engine, as Waters testified that he inspected the engine and that “it looked perfect ... [a]nd going by the logbook, [he] didn't have any reason to take it apart.”

Subsequently, Air–Tec advertised the engine for sale. Phillips contacted Waters and inquired about the engine. Based on the information in the logbook, and what Eric told Waters at the time of sale, Waters informed Phillips that the engine had not been run since August 2005 (the last entry in the logbook), that it had been 553 hours since its last overhaul, and also told him about the “[log]book, compression checks, everything.” Phillips purchased the engine from Air–Tec for $9,000.00, and at Phillips' direction, Air–Tec shipped the engine and the logbooks to Phillips' mechanic, Carroll Aviation, Inc. It is undisputed that Carroll Aviation installed the engine in Phillips' personal aircraft, a Piper PA–24–250.

At about 7:21 p.m. on February 20, 2012, Phillips' Piper took off from Abilene Regional Airport (ABI), bound for the University of Oklahoma Westheimer Airport (OUN) in Norman, Oklahoma. Phillips was piloting the plane, and Amy Clay was his passenger. About thirteen minutes after takeoff, while the aircraft was 8,100 feet above the ground, Phillips told the control tower that he was going to turn the plane around and return to ABI, saying that “we've lost our suction and our attitude indicator.” It is undisputed that, during the flight, the engine's vacuum pump failed, causing the attitude indicator instrument to fail. The control tower gave Phillips clearance to return, and Phillips informed the tower that he was “going to try to turn around.” Phillips' last communication came at 7:35 p.m., when he confirmed he was operating under visual flight rules (VFR),³ but he was “having trouble.” The control tower informed Phillips that his “altitude appear[ed] to be ... going up and down pretty erratically” and that he had “lost a thousand feet in the last six seconds.” At that time, the aircraft was only about 3,700 feet above the ground. The aircraft crashed into the ground about thirty seconds later, killing both Phillips and Clay.

(1) The Jury's Finding Regarding AIG's Business Was Supported by Factually Sufficient Evidence

Appellants contend that the evidence is factually insufficient to support the jury's finding that AIG was not engaged in the business of selling aircraft engines and vacuum pumps. We disagree.

To prevail on a challenge that the evidence is factually insufficient to support an adverse finding on an issue on which the complaining party has the burden of proof, that party must show that the adverse finding is so against the great weight and preponderance of the evidence that it is clearly wrong and unjust. Dow Chem. Co. v. Francis, 46 S.W.3d 237, 242 (Tex.2001)

; Cain v. Bain, 709 S.W.2d 175, 176 (Tex.1986) (per curiam). The jury is the sole judge of the credibility of witnesses and the weight to be given to their testimony, and an appellate court must not merely substitute its own judgment for that of the jury. Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757, 761 (Tex.2003) ; Marin v. IESI TX Corp., 317 S.W.3d 314, 334 (Tex.App.–Houston [1st Dist.] 2010, pet. denied), abrogated on other grounds by

Zorrilla v. Aypco Constr. II, LLC, 469 S.W.3d 143 (Tex.2015).

Texas courts follow the principles set out in Section 402A of the Restatement (Second) of Torts regarding strict-products-liability claims like the one filed by the Appellants. New Tex. Auto Auction Servs., L.P. v. Gomez D e Hernandez...