Munich v. Columbia Basin Helicopter, Inc.

Decision Date26 August 2016
Docket NumberCase No. 2:13-CV-00906-SU
PartiesHANS W. MUNICH, Plaintiff, v. COLUMBIA BASIN HELICOPTER, INC., Defendant.
CourtU.S. District Court — District of Oregon

ORDER ON MOTION FOR SUMMARY JUDGMENT

SULLIVAN, United States Magistrate Judge:

Plaintiff Hans Munich, an Alaska resident, seeks to recover damages from Columbia Basin Helicopter, Inc. ("CBH"), an Oregon company, on allegations of breach of contract, or alternatively unjust enrichment. Plaintiff also alleges fraud and intentional interference with contractual relations. Defendant moves for summary judgment and plaintiff opposes the motion. Both parties have consented to this Court's jurisdiction pursuant to 28 U.S.C. § 636. For the following reasons, the Court grants defendant's motion for summary judgment as to plaintiff's intentional interference with contractual relations claim. The Court denies summary judgment on the remaining breach of contract, unjust enrichment, and fraud claims.

BACKGROUND

This case concerns the sale of a helicopter and the condition of the helicopter at the time of sale, specifically the helicopter's "airworthiness." Under the Federal Aviation Regulations ("FAR"), "No person may operate a civil aircraft unless it is in an airworthy condition." 14 C.F.R. § 91.7. An aircraft is "airworthy" when it complies with extensive federal safety mandates set forth in the FAR.1 14 C.F.R. § 3.5; see e.g. 14 C.F.R., Parts 21-49, 91, 125, 135. An aircraft must also comply with Airworthiness Directives ("ADs"), added requirements that Federal Aviation Administration ("FAA") issues periodically to supplement the FAR. See 14 C.F.R. §§ 39.3, 39.5, 39.7, 39.11, 39.13. In order to verify regulatory compliance, the FAR require aircraft-owners to maintain detailed and complete logbooks documenting inspections and work performed on the aircraft. See, e.g., 14 C.F.R. §§ 91.407(a), 91.417, 91.419, 43.9, 43.11. Furthermore, an aircraft may not be operated unless the FAA has found it airworthy, and issued a certificate of airworthiness. 14 C.F.R. §§ 91.7, 21.183, 21.185. Once an aircraft owner obtains an airworthiness certificate, "it remains in full force and effect as long as the [aircraft] complies with" essential maintenance, safety, and record-keeping requirements in the FAR. Old Republic Ins. Co. v. Griffin, 402 F.3d 876, 877 (9th Cir. 2005); 14 C.F.R. § 21.181.2 In the case of noncompliance, an airworthiness certificate is no longer effective. Id. If an aircraft is sold, the airworthiness certificate transfers to the new owner of the aircraft. 14

C.F.R. § 21.179.

In February 2012, plaintiff Munich contacted defendant CBH about purchasing one of its helicopters. David McCarty Decl., at 2 (Doc. #32); David McCarty Decl. Ex. 1, at 1-3 (Doc. #32-1). Plaintiff owns Yakutat Coastal Airlines, a company that provides scenic and recreational passenger flights in Alaska. Defendant, an eastern Oregon company, supplies helicopters and support personnel for agricultural, forest firefighting, and general utility lift purposes. Munich Decl. Ex. 2, at 1 (Doc. #39-2): David McCarty Decl., at 1; Def.'s Mot. Summ. J., at 3 (Doc. #30). Defendant's president, David McCarty, quoted plaintiff a price of $375,000 for a 1974 Hiller UH-12E Soloy helicopter. David McCarty Decl. Ex. 1, at 3.

Before signing a contract with defendant, plaintiff had a mechanic conduct a pre-purchase inspection of the helicopter. Munich Decl., at 3 (Doc. #39); David McCarty Decl., at 2-3. After signing the contract but before consummating the sale, plaintiff had another mechanic conduct an appraisal inspection for financing purposes. Munich Decl., at 3; David McCarty Decl., at 3-4. At both inspections, the recently refurbished helicopter was in "cosmetically excellent condition." Munich Decl., at 2. The helicopter's logbooks appeared to be in order and contained certifications that the helicopter was airworthy and in compliance with a recent annual inspection and all applicable ADs. Munich Decl., at 2-3. McCarty also represented to plaintiff that the helicopter was authorized to fly charter and commuter passenger flights pursuant to 14 C.F.R., Part 135 ("Part 135"), which sets forth stringent additional requirements beyond general airworthiness standards. Munich Decl., at 2; Smith Decl. Ex. 4 (Doc. #38-4) (Part 135 certification); see 14 C.F.R. §§ 135.1-135.43. However, plaintiff alleges that defendant failed to provide the two mechanics with all of thehelicopter's logbooks including the engine logbooks.3 Munich Decl., at 3; Munich Decl. Ex. 8, at 1 (appraiser email); Grogan Decl., at 1-2 (Doc. #41). Plaintiff states he was aware that defendant failed to provide the mechanics with complete logbooks and that defendant did not produce the engine logbooks, "but given the otherwise excellent condition of the Helicopter, and the representations and warranties provided, I was not concerned." Munich Decl., at 3.

For a sales contract, plaintiff downloaded a generic form entitled "Aircraft Purchase/Sales Agreement" from the Aircraft Owners and Pilots Association website. Munich Decl., at 2. The form contained blanks and alternative clauses in italics. Munich Decl. Ex. 1, at 1-3. Plaintiff filled in some of the blanks, signed the contract, and then faxed it to McCarty. Munich Decl., at 2; David McCarty Decl., at 3; McCarty Decl. Ex. 1, at 5-7 (Doc. #32-1) (partially signed contract). After reviewing the contract, McCarty signed it and sent it back to plaintiff. David McCarty Decl., at 3. Plaintiff and defendant have submitted different, competing versions of the final signed contract. See Munich Decl. Ex. 1, at 1-3 (signed contract); Brasel Decl., at 4-6 (Doc. #47) (signed contract); Suppl. David McCarty Decl., at 3-5 (Doc. #49) (signed contract). Plaintiff's version contains additional handwritten notations not included in defendant's version. Both parties assert that their submission is a "true" copy of the final contract. Munich Decl., at 2; Suppl. David McCarty Decl., at 2; Def.'s Suppl. Reply, at 9-10 (Doc. #46).

Although questions remain as to handwritten notations in the final contract, the parties do not dispute the printed text of the contract. The signed agreement contains two sections relating to theairworthiness and maintenance. Section No. 6 states, in pertinent part, "The Aircraft will be delivered to Buyer in its present condition, normal wear and tear excepted, with a valid FAA Certificate of Airworthiness." Munich Decl. Ex. 1, at 2; Suppl. David McCarty Decl., at 4. Section No. 7 of the form agreement provides two alternative clauses in italics that read:

7. Warranties.Alternative clauses for this section:
[Except as provided in this agreement, this Aircraft is sold 'as is.' There are no warranties, either express or implied with respect to merchantability or fitness applicable to the Aircraft or any equipment applicable thereto including warranties as to the accuracy of the Aircraft's logbooks, made by Seller. Buyer agrees that no warranty has been expressed or implied by Seller and that Buyer has inspected the Aircraft and understands that it is being purchased 'as is.' Buyer hereby expressly waives any claim for incidental or consequential damages, including damages resulting in personal injury against Seller].
[Seller warrants that (a) the Aircraft is in airworthy condition; (b) the Aircraft has a current annual inspection; (c) the Aircraft has a currently effective Standard Category airworthiness certificate issued by the Federal Aviation Administration; (d) all of the Aircraft's logbooks are accurate and current; (e) all applicable Airworthiness Directives have been complied with; (f)__________].

Munich Decl. Ex. 1, at 2; Suppl. David McCarty Decl., at 4.

In accordance with the contract, plaintiff paid $375,000 for the helicopter and took possession of the helicopter and its records on or about October 30, 2012. Munich Decl., at 2. A few days before he picked up the helicopter, plaintiff, an FAA-certified mechanic, performed his own brief inspection of the helicopter. David McCarty Decl., at 4; Ben McCarty Decl., at 2. After purchase, plaintiff flew the helicopter and was satisfied with its performance on those test flights. Munich Decl., at 3. However, plaintiff states that when he reviewed the full logbooks after purchase, he found that the helicopter engine had beenremoved in 2005 but could not find any record from the date of its reinstallation. Munich Decl., at 3. Further inspection of the logbooks revealed other gaps, raising concerns that various engine components could be past their life limits and may not have been replaced as required. Munich Decl., at 3-4.

In December, plaintiff contacted McCarty, who agreed to provide him with replacement parts from another engine and asked plaintiff to ship the turbine section of the engine to a Louisiana company, T&M Aviation, who would perform the work. Munich Decl., at 4; Munich Decl. Ex. 9, at 2-3 (Doc. #39-9)(emails); Def.'s Reply, at 9 (Doc. #42). Complying with McCarty's request, plaintiff shipped the engine section to T&M Aviation on January 17, 2013, and notified McCarty by email when it arrived. Munich Decl. Ex. 9, at 1 (emails); Munich Decl. Ex. 5, at 3 (UPS receipt) (Doc. #39-5). It is unclear how or when discussions ceased between plaintiff and McCarty, but in March, plaintiff had the engine section shipped from T&M Aviation to Sunrise Helicopter, Inc. in Texas. Larsen Decl. Ex. 1, at 36 (Doc. #31-1) (email); Peacocke Decl., at 1-2 (Doc. #40). When the engine section was disassembled and examined, plaintiff alleges that his representatives found it was in poor condition. Munich Decl., at 4. Also, even though CBH's records attested to full compliance with all ADs, the disassembled engine was missing the parts and modifications that AD 2005-10-13 required in order to prevent engine malfunctions during flight. Munich Decl., at 4; Peacocke Decl., at 2; see Smith Decl. Ex. 2, at 1 (Doc. #38-2). Plaint...

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