Eagle Jets,LLC v. Atlanta Jet, Inc.

• Decision Date: 11 April 2013
• Docket Number: Nos. A12A2005,A12A2033.,s. A12A2005
• Parties: EAGLE JETS, LLC v. ATLANTA JET, INC. Atlanta Jet, Inc. v. Eagle Jets, LLC.
• Court: Georgia Court of Appeals

321 Ga.App. 386

740 S.E.2d 439

EAGLE JETS, LLC

v.ATLANTA JET, INC.

Atlanta Jet, Inc.

v.Eagle Jets, LLC.

Nos. A12A2005, A12A2033.

Court of Appeals of Georgia.

March 29, 2013.

Reconsideration Denied April 11, 2013.

Stites & Harbison, Donald R. Andersen, Baker, Donelson, Bearman, Caldwell & Berkowitz, Gary Alan Barnes, Atlanta, for Appellant.

John C. Dabney, Jr., Cumming, Nelson, Mullins, Riley & Scarborough, Richard B. North, Jr., Brandee Jarski Kowalzyk, Jeffrey Lyle Mapen, Atlanta, for Appellee.

BRANCH, Judge.

A jury was asked to determine who was responsible for the costs associated with the loss of a helicopter that, only days after it was purchased, crashed on the delivery or “ferry” flight between Bolivia and Ft. Lauderdale, Florida, killing two people, including Sergio Rodrigo, a key person involved in the helicopter purchase. Eagle Jets, LLC, the ultimate purchaser, brought suit to recover the $1,025,000 purchase price from appellee Atlanta Jet, Inc. (“AJI”), which located and purchased the helicopter from the Bolivian seller and, in a “simultaneous transaction,” resold the helicopter to Eagle Jets. The jury found, among other things, that in connection with the transaction, Rodrigo was an agent of both Eagle Jets and AJI and that Eagle Jets accepted delivery of the helicopter in Bolivia prior to the ferry flight. Accordingly, the court entered judgment concluding that Eagle Jets was not entitled to recover. Eagle Jets appeals on various grounds, and AJI cross-appeals the trial court's denial of its claim for attorney fees. We affirm the judgment in favor of AJI but reverse the court's decision on attorney fees and remand for a determination of the amount.

Construed in favor of the jury's verdict, the evidence shows that in 2001, Tim Jones, a successful homebuilder who owned a helicopter that he used in connection with his work, met Rodrigo, a Delta pilot who had learned to fly helicopters and who performed independent contracting work for AJI as both a pilot and a salesman. Jones and Rodrigo became friends, and eventually Rodrigo told Jones about AJI's “investor program” for purchasing business turboprop and jet aircraft. Under the program, the investor would agree to purchase an aircraft and AJI would locate the aircraft, refurbish it, perform the necessary inspections, sell it, and split the profits with the investor. Prior to the eventual sale, the investor had use of the aircraft, although AJI could also use the aircraft for “demo flights” in connection with attempts to resell it. Consequently, AJI maintained insurance on aircraft purchased by investors under the program. Rodrigo's role in the investor program was to identify potential investors and to be a demo pilot for AJI as needed. Jones, through his company Eagle Jets, LLC, bought two aircraft under the investor program before buying the helicopter at issue in this case. In both cases in the investor program, Rodrigo functioned as AJI's agent and either was, or stood to be, compensated by AJI for his role.

When purchasing aircraft for other parties, either under the investor program or otherwise,AJI typically structured the deal as two separate sales transactions that were closed at the same time; AJI referred to them as “simultaneous” or “pass-through” transactions. One set of documents, including an aircraft purchase agreement (“APA”) and a bill of sale, documented AJI's purchase of the aircraft from the seller; another set of documents, including an almost identical APA and a bill of sale, documented AJI's sale of the aircraft to the ultimate purchaser/investor. Jones was aware of and consented to this procedure.

Eventually Jones desired a new helicopter, and he, Rodrigo, and Rick Steelman (the head of AJI) discussed Eagle Jets purchasing a used Eurocopter AS–350B3. But this purchase was not to be performed under the “investor program.” Rather, Eagle Jets would be purchasing the helicopter for itself and for Jones's personal use, not for resale. Steelman explained that “[t]he only reason we did the deal was because [Jones] was in our investor program, and it was a favor to a friend type of transaction.” Unlike in Eagle Jets's investor program transactions, AJI did not pay or plan to pay Rodrigo a commission on the Eurocopter transaction. Rather, Rodrigo was involved as a favor to Jones, who was going to sell Rodrigo his old helicopter. And AJI agreed to pursue the transaction for a $25,000 flat fee, which was a third of its normal rate. Finally, AJI did not purchase insurance for the Eurocopter.

In the fall of 2003, AJI located a Eurocopter in Bolivia that was owned by a company named HeliBol and negotiated with HeliBol to purchase the helicopter for $1,000,000, which price was communicated to Jones; in turn, AJI agreed to sell it to Eagle Jets for $1,025,000, the difference being AJI's $25,000 fee. Steelman's business practice was to enter into oral agreements and then to ask Barbara Moore, AJI's contract administrator and director of sales support, to arrange for the written agreements, which is how the Eurocopter transaction proceeded. Moore set up the deal as a pass-through transaction in accordance with AJI's practice by preparing paperwork relative to both Eagle Jets and HeliBol.

On September 15, 2003, Moore sent a proposed APA signed by Steelman to Jones at Eagle Jets; Eagle Jets was identified as the purchaser and AJI as the seller. Under the terms of the proposed APA, Eagle Jets bore the risk of loss beginning when Eagle Jets paid the purchase price to AJI:

Title to the aircraft free and clear of all liens and encumbrances and risk to the Aircraft shall pass to Purchaser when the purchase price is paid in full to Seller. Seller will maintain full insurance coverage on the aircraft until the risk or [sic] passes to Purchaser.

The APA also states: “After delivery of the aircraft by Seller to the pre-purchase inspection facility, the aircraft shall not be flown until Purchaser or its designee accepts the aircraft and pays the purchase price in full.” Eagle Jets did not respond in writing nor otherwise object to the terms of this first draft of the proposed agreement. On October 20, 2003, a representative of HeliBol signed the parallel APA between HeliBol and AJI.

Meanwhile, all parties proceeded with the pre-purchase inspection of the Eurocopter. Both the Eagle Jets/AJI APA and the AJI/HeliBol APA allowed the parties to address problems discovered during the inspection by agreeing either that the seller would repair any issues prior to closing or that the buyer would perform repairs after closing in exchange for a reduction in the sales price.¹ From October 28 through November 1, 2003, the one and only pre-purchase inspection of the Eurocopter was conducted in Santa Cruz; present were Tim Gorman, the person responsible for the inspection; Fernando Morales,the president of HeliBol; HeliBol's maintenance director; Rodrigo; and Peter Leonard–Morgan, another AJI agent.

During the multi-day inspection, a small number of problems with the Eurocopter were discovered, and AJI and HeliBol agreed on how to handle them; this information was communicated to Jones. For instance, Rodrigo told Jones that the pre-purchase inspection identified three issues that needed to be addressed. AJI and HeliBol decided that one would be remedied on site in Bolivia, one (that did not affect flight safety) would be postponed for repair in Ft. Lauderdale, and one was moot because the parties agreed to change certain equipment attached to the helicopter. Jones never objected to these developments. In fact, Jones admitted he knew that there were problems with the helicopter and that some items would be addressed in Bolivia but that some would be addressed in Ft. Lauderdale, yet he told AJI to proceed with the purchase.

Accordingly, on November 13, 2003, AJI forwarded to Eagle Jets a modified proposed APA together with “Addendum 1—Acceptance,” which stated that the pre-purchase inspection had been performed in Santa Cruz, Bolivia, and it described the results of the inspection and the manner in which the items would be resolved. Addendum 1 also stated that an additional inspection procedure remained open—the “VEMD ² full power check inspection”—and that “Purchaser (Eagle Jets, LLC.) shall fly a pilot to Bolivia to verify the power check inspection.” HeliBol's corresponding Addendum 1 gave the same information except it stated that “Purchaser (Atlanta Jet, Inc.) shall fly a pilot to Bolivia to verify the power check inspection.” Jones called Moore on the following day and asked her to revise one item on the first page of the APA, but Jones did not ask for other revisions or complain about other aspects of the APA, including the risk of loss provision. Moore made the revision, and on that same day—November 14—she sent the revised page to Jones. Moore followed up with Jones's assistant several times thereafter requesting that Jones sign the APA, and Moore was assured that Jones would do so. Nevertheless, Jones never signed the APA nor otherwise accepted the APA in writing.

Subsequently, the VEMD power check revealed a potential problem with the “T4 computer” that could not be fully diagnosed on site in Bolivia. On site in Bolivia, Gorman, Rodrigo, AJI, and HeliBol agreed that the problem did not impair airworthiness, that it would be addressed in Ft. Lauderdale, and that AJI would retain $25,000 of the purchase price from HeliBol in order to pay for any required repairs; the retention would be adjusted thereafter between HeliBol and AJI depending on the actual cost of the repairs. Rodrigo sent an email to Steelman about the problem on November 21, 2003, but did not copy Jones. Steelman testified that he, Steelman, told Jones about this problem, and Jones admitted that on the same day as the email, Rodrigo told him over the telephone from Bolivia about some type of problem, although he could not remember the nature of the problem discussed. Steelman...