Great Lakes Aircraft Co., Inc. v. City of Claremont

• Citation: 135 N.H. 270,608 A.2d 840
• Decision Date: 09 March 1992
• Docket Number: No. 89-476,89-476
• Parties: GREAT LAKES AIRCRAFT CO., INC. v. CITY OF CLAREMONT.
• Court: Supreme Court of New Hampshire

Page 840

608 A.2d 840

135 N.H. 270

GREAT LAKES AIRCRAFT CO., INC. v. CITY OF CLAREMONT.

No. 89-476.

Supreme Court of New Hampshire.

March 9, 1992.

Rehearing Denied July 14, 1992.

Upton, Sanders & Smith, Concord (Ernest T. Smith, III, orally, and Gilbert Upton on the brief), for plaintiff.

Wadleigh, Starr, Peters, Dunn & Chiesa, Manchester, and Clauson, Smith & Whelan, Hanover (Eugene M. Van Loan, III, orally, and K. William Clauson on the brief), for defendant.

BROCK, Chief Justice.

The defendant, the City of Claremont (City), appeals from a jury verdict in the Superior Court (Barry, J.) awarding the plaintiff, Great Lakes Aircraft Company (GLAC), damages of $5,250,000 for breach of a ground lease. The City appeals on numerous grounds relating to issues both of liability and of damages. We affirm the verdict as to liability and reverse, in part, the damages award.

In 1979, the City and the Federal Aviation Authority (FAA) agreed to develop a master plan and Airport Layout Plan (ALP) for the development of the Claremont airport. In 1984, the City entered into an airport lighting agreement with the FAA. Under the agreements, the City became eligible for federal financial aid and, in return, was obligated to develop the airport in accordance with the ALP.

Early in 1984, GLAC purchased the rights to build the Great Lakes aircraft, an open cockpit biplane, and established its manufacturing operation at Hampshire Manufacturing, a commercial space located in Claremont. The following year, after GLAC became a tenant at will, it began a search for a different and more suitable manufacturing location elsewhere. Encouraged by letters sent previously to GLAC by the City indicating its willingness to lease land at the Claremont airport, GLAC turned to the City for help in finding new manufacturing space.

At about this same time, GLAC became interested in acquiring Champion Aircraft, a Texas company with a line of three different aircraft which, at that time, were not in production. GLAC's intention to produce both Great Lakes and Champion aircraft added significant space requirements to its immediate need for a manufacturing facility.

GLAC considered a number of locations. Together with Kenneth Lurvey, the City's acting community development director, GLAC negotiated to acquire the Garrison Stove property located near the airport. On July 8, 1985, while negotiations were pending, Lurvey wrote to Bruce Moore, a GLAC director, stating that if the Garrison Stove property could not be acquired, "the City [had] vacant land at the Airport that could be leased for [GLAC's] purpose." The letter went on to specify the available lot and to describe the general terms of the lease.

John Labelle, president of GLAC, told Lurvey that the land referred to in the July 8 letter lacked sufficient access and was therefore unacceptable. Soon after, however, the Garrison Stove property was withdrawn from the market, and Labelle met with Lurvey at the airport to review other potential building sites. After viewing several unacceptable locations, Lurvey told Labelle: "You can have the space across from the Satzow's Meat Market." Lurvey did not mention that the ALP reserved this land for "future airport growth" and "T-hangars."

GLAC considered the location suitable and hired Peter Daniels, a contractor with previous experience developing commercial projects at the airport, to construct the new facility. Daniels engaged Wayne McCutcheon as a surveyor, and, after receiving a copy of the ALP from the City, Daniels and McCutcheon put together a site plan. The plan was reviewed by Lurvey, endorsed by the airport commission, approved by the planning board, and finally presented to the city council, which authorized the city manager, Joanne Wrench, to enter into a ground lease with GLAC.

The lease, executed on November 26, 1985, required GLAC to begin construction within thirty days and to complete construction within nine months after the execution date. GLAC broke ground in mid-December. In early February 1986, however, the FAA inspected the airport and sent a letter to the City objecting to the GLAC construction because: (1) Form 7460 (notice of intent to construct) had not been filed; (2) the location of the building appeared to violate the Airport Master Plan which required a 300-foot set-back, although the ALP indicated a 250-foot set-back and the building was setback 255 feet; (3) the building displaced T-hangars proposed on the ALP; and (4) the GLAC facility might not constitute "airport use" and, therefore, should not be located in an airport use area. The FAA stated that "any on airport construction which is in violation of [the] ALP would place the City in non-compliance and could jeopardize future federal funding."

The City responded by issuing a stop-work order to GLAC on February 13. Assured by the City that the problem would be taken care of, GLAC promptly ceased construction without contest. The City filed Form 7460 with the FAA and, by March 6, authorized its engineering firm, Dufresne-Henry, to update the ALP to reflect the GLAC project as required by the FAA. The City imposed a $3,000 spending cap on the ALP updating project. On April 11, 1986, after submitting the appropriate forms to the FAA, the City authorized GLAC to resume construction. Without a formal waiver from the FAA, however, GLAC was unable to go forward with its financing plan; although the FAA gave assurances that a formal waiver would be forthcoming, it first required the completion of the revised ALP.

At this point, the City, believing that GLAC had sufficient assurances to proceed with construction, delayed finalizing the ALP by refusing Dufresne-Henry's request for authority to exceed the original $3,000 spending cap on the City's contract. This dispute between the City and Dufresne-Henry lasted from April 23, 1986, until July 10, 1986, all the while leaving GLAC without serious financing options. The revised ALP, submitted on August 13, 1986, gained FAA approval by September 11, 1986. The waiver by this time was too late; several of GLAC's creditors had filed actions and attached assets, rendering GLAC insolvent and unable to proceed with construction.

In August 1986, GLAC initiated this action claiming negligence and breach of contract against the City, former City Manager Joanne Wrench, and Wayne McCutcheon. After the City moved to dismiss the negligence claims on the grounds of governmental immunity pursuant to a provision of the Aeronautics Act, RSA 422:17, claims against the other defendants were dropped, and GLAC filed an amended writ in February 1989, containing five counts in assumpsit against the City.

In April 1989, shortly before trial, the City filed two motions in limine. The first moved to exclude evidence of pre-lease misrepresentations, and the second moved to exclude the use of evidence relating to the purchase of Champion Aircraft for the purpose of determining damages. The court denied both motions, and the case proceeded to a lengthy trial, resulting in a general verdict awarding GLAC $5,250,000 in damages. The court denied the City's post-trial motions, and this appeal followed.

I. Governmental Immunity

First, the City argues that the trial court erred in denying its motions for summary judgment and for directed verdict on the ground that GLAC's claims for breach of contract are barred by governmental immunity. RSA 422:17 provides:

"The construction, maintenance and operation of air navigation facilities is hereby declared a public governmental function and no action or suit shall be brought or maintained against the state or any county or municipality thereof, or its officers, agents, servants or employees in or about the construction, maintenance, operation, superintendence or management of any air navigation facility."

This issue turns on the scope of the language "no action or suit." The City asserts that "no action or suit" encompasses contract actions and, therefore, that the trial court erred in not dismissing GLAC's claims in assumpsit. GLAC, on the other hand, maintains that the phrase "no action or suit" prohibits only tort actions.

As a first step in statutory construction, we examine the language found in the statute itself, Town of Wolfeboro v. Smith, 131 N.H. 449, 452, 556 A.2d 755, 756 (1989); Appeal of Coastal Materials Corp., 130 N.H. 98, 101, 534 A.2d 398, 399 (1987), and where possible, we "ascribe the plain and ordinary meanings to words used," Leach v. O'Neill, 132 N.H. 665, 668, 568 A.2d 1189, 1191 (1990). However, "[t]o divine the intent of a statute, we will determine its meaning from its construction as a whole, not by examining isolated words and phrases." Petition of Jane Doe, 132 N.H. 270, 276, 564 A.2d 433, 438 (1989). With these rules of construction to guide us, we hold that the governmental immunity granted by RSA 422:17 does not preclude GLAC's contract action. Rather, reading "no action or suit" in context with the preceding clause, which declares the construction of an airport to be "a public governmental function," we conclude that the statutory intent is to confer immunity only from tort liability.

We note first that RSA 422:17 was enacted in 1941, well before our decision in Merrill v. Manchester, 114 N.H. 722, 332 A.2d 378 (1974), which abrogated, with limited exceptions, municipal tort immunity, reasoning that it "offends the basic principles of equality of burdens and of elementary justice." Id. at 724, 332 A.2d at 380. Prior to Merrill, the question of governmental immunity turned on whether the municipality acted in a proprietary capacity or, rather exercised a governmental function:

"Insofar as the municipalities exercise a governmental function they are held immune from liability for their torts. When acting in their corporate or proprietary capacity they are liable for their torts under the same principles applied to private corporations."

Id. at 725, 332 A.2d at...