Des Moines Flying Servs., Inc. v. Aerial Servs. Inc.
| Decision Date | 22 April 2015 |
| Docket Number | No. 14-0632,14-0632 |
| Parties | DES MOINES FLYING SERVICES, INC., Plaintiff-Appellee/Cross-Appellant, v. AERIAL SERVICES INC., CEDAR VALLEY AVIATION, LLC, and KIRK P. FISHER, Defendants-Appellants/Cross-Appellees. |
| Court | Iowa Court of Appeals |
Appeal from the Iowa District Court for Black Hawk County, Andrea J. Dryer, Judge.
The owner of an airplane appeals the district court's summary judgment in favor of the seller/installer of a faulty windshield. The seller/installer cross-appeals the damage calculation. AFFIRMED ON APPEAL; REMANDED ON CROSS APPEAL.
John R. Walker Jr. and Kate B. Mitchell of Beecher, Field, Walker, Morris, Hoffman & Johnson, P.C., Waterloo, for appellants.
Steven Lawyer of Law Firm of Steven V. Lawyer & Associates, P.L.C., West Des Moines, for appellee.
Heard by Vaitheswaran, P.J., and Tabor and Mullins, JJ.
This case involves the sale and installation of an airplane windshield that cracked in midflight. The airplane's owner, Aerial Services, Inc., claims Des Moines Flying Service, Inc. (DMFS), which sold and installed the windshield, breached an implied warranty of merchantability under Iowa Code section 554.2314 (2011). The district court granted summary judgment for DMFS, ruling the seller-installer was immune from suit under Iowa Code section 613.18. The court awarded DMFS damages in the amount of $23,046.08 for its costs in replacing the windshield.
Aerial appeals, contending section 613.18 applies only to tort suits, and, therefore, does not provide DMFS immunity on this commercial contract claim. DMFS cross-appeals contending the district court improperly calculated pre-judgment interest on its damage award. Finding the plain language of section 613.18 allows its application here, we affirm the district court's ruling on immunity. On the cross appeal, we remand for entry of a revised order on pre-judgment interest.
Aerial performs aerial photography, mapping, orthophotography,1 and other services. Given the nature of its business, the company owns and operates a Piper Cheyenne II airplane. To take aerial photographs, this plane flies at high air speeds and altitudes of 24,000 feet.
Aerial delivered the Cheyenne to DMFS on February 20, 2009, for a routine one-hundred hour inspection. DMFS, certified by the Federal Aviation Administration, repairs airplanes and sells airplane parts. It also serves as an authorized dealer and service center for Piper aircraft and parts. After inspecting the Cheyenne, DMFS customer service representatives recommended replacement of the pilot and co-pilot windshields. To replace a windshield in an aircraft, the service center may install only "the exact part number windshield" used in the original airplane design, or a specifically authorized alternative part. DMFS installed an approved co-pilot windshield in the Cheyenne on August 28, 2009.2
Just ten months later, on June 24, 2010, the windshield cracked while the Cheyenne was flying at an altitude of 24,000 feet. The pilot was able to do an emergency descent to depressurize the plane and flew the plane to Des Moines. DMFS employees inspected the plane, removed and replaced the broken windshield, and returned the plane to Aerial on June 30, 2010.
Aerial sent the cracked windshield to Trident Engineering Associates to determine the source of the damage. Trident determined the crack resulted from a grind mark on the edge of the exterior glass which raised the local stress on the edge and ply. This flaw occurred during the manufacturing of the windshield.3
DMFS sent Aerial an invoice totaling $23,046.08 for the cost and installation of the replacement windshield.4 Aerial refused to pay. DMFS sued for breach of contract.
Aerial answered, making seven counterclaims and raising three affirmative defenses. Among these claims, Aerial alleged DMFS breached the implied warranty of merchantability.
DMFS responded by arguing it was immune from any suit based on Iowa Code section 613.18. DMFS also argued the transaction was not covered by Iowa's Uniform Commercial Code as it was a contract for services, not goods.
On February 7, 2013, the district court granted summary judgment in favor of DMFS, finding it was immune from suit under section 613.18. On February 24, 2014, following a hearing, the district court ruled in favor of DMFS, finding Aerial owed DMFS $23,046.08 for parts and labor associated with installation of the new windshield on June 29, 2010. DMFS filed a motion to enlarge, asking the court to find it was entitled to pre-judgment interest on the amount of the invoice. The district court ruled DMFS was entitled to pre-judgment interest of $3621.08 in addition to the original judgment. Aerial appeals the ruling of immunity. DMFS cross-appeals from the calculation of the pre-judgment interest.
We review the district court's summary judgment ruling for correction of legal error. Boelman v. Grinnell Mut. Reins. Co., 826 N.W.2d 494, 500 (Iowa 2013). Summary judgment is appropriate when the record reveals no genuineissues of material fact and the moving party is entitled to judgment as a matter of law. Iowa R. Civ. P. 1.981(3); see Emp'rs Mut. Cas. Co. v. Van Haaften, 815 N.W.2d 17, 22 (Iowa 2012). When reviewing a motion for summary judgment, we view the facts in the light most favorable to the nonmoving party, and give the nonmoving party every legitimate inference that can be reasonably deduced from the record. Hoyt v. Gutterz Bowl & Lounge L.L.C., 829 N.W.2d 772, 774 (Iowa 2013).
We likewise apply an errors-at-law review to questions of statutory interpretation, Schaefer v. Putnam, 841 N.W.2d 68, 74 (Iowa 2013), as well as the calculation and award of pre-judgment interest. Gosch v. Juelfs, 701 N.W.2d 90, 91 (Iowa 2005).
This case started with DMFS demanding payment for a replacement windshield. This appeal involves Aerial's counterclaim that DMFS breached an implied warranty of merchantability under Iowa Code section 554.2314 by selling a defective product. Section 554.2314 appears in Article 2 of Iowa's Uniform Commercial Code (UCC), which applies to the sale of goods. Iowa Code § 554.2102. As a threshold argument for affirming the district court, DMFS argues by installing the new windshield, it was not primarily selling a good, but performing a service. We will address this argument before analyzing the intersection between the warranty provision in section 554.2314 and the immunity provision in section 613.18.
The Iowa UCC applies to mixed contracts for goods and services. See Semler v. Knowling, 325 N.W.2d 395, 398 n.1 (Iowa 1982). To determine whether contracts for goods and services are covered by the UCC we examine "whether their predominant factor, their thrust, their purpose, reasonably stated, is the rendition of service, with goods incidentally involved . . . or is a transaction of sale, with labor incidentally involved." M & W Farm Serv. Co. v. Callison, 285 N.W.2d 271, 274 (Iowa 1979) (citing Bonebrake v. Cox, 499 F.2d 951, 960 (8th Cir. 1974)).
DMFS argues the primary purpose of its contract with Aerial was the installation of the windshield, with its sale only incidental to that purpose. The DMFS invoice dated August 31, 2009, showed the cost of the pilot and co-pilot windshields were each $19,323.63. The "labor totals" listed in the invoice for removing the windows, prepping the frames, and installing the new windows were $6300. The cost disparity between the goods and the labor suggests the predominant factor—the gist—of the contract was for the specialized part. See RMP Indus., Ltd. v. Linen Center, 386 N.W.2d 523, 528 (Iowa Ct. App. 1986) ().
The instant case is similar to Bonebrake, where the owner of a bowling alley entered into a contract for the sale and installation of lane beds, gutters, and ball returns to replace similar equipment damaged by a fire. Bonebrake, 499 F.2d at 953. The Eighth Circuit held the contract focused on the replacement ofthe damaged equipment and the service of installation was incidental to the sale. Id. at 960. Here, Aerial brought its plane to DMFS for an inspection and agreed to purchase certain parts from DMFS to replace those that were worn, including a new co-pilot windshield. The windshield's installation was secondary to its purchase. Therefore, Iowa's UCC applies to this contract.
Having determined Iowa Code chapter 554 applies to this transaction, we turn to Aerial's claim that DMFS breached an implied warranty of merchantability when it sold a defective windshield in August 2009. In light of the breach, Aerial argues it should not be held responsible for the cost of the replacement windshield in 2010.
The implied warranty of merchantability is set forth in section 554.2314, which provides, in pertinent part:
In response, DMFS argues the district court was correct in finding it was immune from Aerial's warranty action by virtue of section 613.18(1)(a). That section reads as follows:
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