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MITCHELL AIRCRAFT SPARES, INC. v. EUROPEAN AIRCRAF

October 27, 1998

MITCHELL AIRCRAFT SPARES, INC., Plaintiff,
v.
EUROPEAN AIRCRAFT SERVICE AB, Defendant.



The opinion of the court was delivered by: ALESIA

MEMORANDUM OPINION AND ORDER

 Before the court are the parties' cross-motions for summary judgment. For the following reasons, the court denies both motions.

 I. BACKGROUND1

 Plaintiff Mitchell Aircraft Spares, Inc. ("Mitchell") has filed suit against defendant European Aircraft Service AB ("EAS") in this court, asserting claims for breach of contract and breach of warranty. Mitchell is an Illinois corporation with its principal place of business in Illinois. Mitchell acts as a speculator and broker in the market for surplus commercial aircraft parts. Greg Fletcher ("Fletcher") is a vice president and part owner of Mitchell.

 EAS is a Swedish corporation with its principal place of business in Sweden. EAS buys parts from companies in Western Europe and the United States and sells these parts to airlines, overhaul shops, brokers, and companies like itself. Leif Hedberg ("Hedberg") is a vice president and part owner of EAS. Hedberg's main responsibilities at EAS are purchasing and sales.

 The dispute between these parties arises from an agreement between the parties that EAS would sell certain aircraft parts, specifically integrated drive generators ("IDGs"), to Mitchell. An IDG is an aircraft part used on L-1011 aircraft and is composed of two parts: a constant speed drive or transmission and a generator. In June of 1996, EAS had three IDGs available for purchase. EAS listed these IDGs on the Inventory Locator Database ("ILD"), which is an international database that contains listings of surplus aircraft parts available for purchase. The parties dispute exactly how EAS listed these parts: Mitchell claims that EAS listed the parts as three number 729640 IDGs; EAS claims that it listed the parts with two or three alternative part numbers, one of which was 729640. (Def.'s Rule 12(N)(3)(b) Statement P 14; Pl.'s Resp. to Def.'s Rule 12(N)(3)(b) Statement (hereinafter "Pl.'s Resp.") P 14.)

 On or about June 30, 1996, Fletcher contacted Hedberg about the three IDGs that EAS had listed on the ILD. One of Fletcher's sub-specialties within the Mitchell organization is buying and selling L-1011 IDGs. Fletcher, who considers himself to be an expert with respect to the buying and selling of IDGs, told Hedberg that he had experience in dealing with IDGs. Fletcher asked Hedberg about the availability, the condition, and the price of the three IDGs and about how soon EAS could ship the parts. Hedberg told Fletcher that EAS had three IDGs for the L-1011 available and that they were in "as removed" condition. At his deposition, Fletcher testified that he also asked Hedberg if EAS had any IDGs part number 729640 and Hedberg responded "Yes." (Pl.'s Resp. P 14.) At Hedberg's deposition, Hedberg testified that he and Fletcher did not discuss the part number of the IDGs in that first conversation. (Hedberg Dep. at 59.)

 Fletcher and Hedberg then began negotiations over the IDGs. Hedberg testified that he told Fletcher that EAS could not determine the exact part number of the IDGs available for sale. (Def.'s Rule 12(N)(3)(b) Statement P 20.) Fletcher then requested information about the IDGs "to try to confirm the part number of the units that [EAS] wished to sell and that [Mitchell] wished to buy." (Id. P 21.) In response, Hedberg sent Fletcher a fax dated July 3, 1996. In the fax, Hedberg listed the information off of the data plates on the three IDGs. The information was given to Hedberg by Mr. Goran at Mondair. The July 3 fax did not expressly state that the IDGs were part number 729640; rather, the fax gave the part numbers for the generators and transmissions that went together to form the IDG. Hedberg testified that he "made it clear" to Fletcher that he did not have the information necessary to determine whether the part number of the IDGs was 729640. (Id. P 23.) Fletcher testified that he could not remember if Hedberg told him that EAS could not determine the part number of the IDGs. (Pl.'s Resp. P 20.) Hedberg testified that he sent Fletcher the July 3 fax "so that [Mitchell] might make a determination" of the part number of the IDGs and that Fletcher told him that he was going to contact Sundstrand Aerospace, the original manufacturer of the IDGs. (Def.'s Rule 12(N)(3)(b) Statement PP 22-23.) Fletcher testified that he did not tell Hedberg that he was going to call Sundstrand concerning the information contained in the July 3 fax. (Pl.'s Resp. P 23.) Fletcher further testified that both EAS and Mitchell knew that Mitchell was only interested in purchasing IDGs with part number 729640 at the time that the July 3 fax was sent. (Pl.'s Resp. P 22.)

 Fletcher did not contact Sundstrand immediately. Rather, Fletcher determined from the information contained in the July 3 fax that the parts available for sale were part number 729640. Fletcher then called Hedberg and said: "It appears that all three IDGs are what we want, part number 729640. Let's negotiate a price." (Fletcher Dep. at 38.) Hedberg testified that he relied on the information Fletcher told him regarding the IDGs because Fletcher "had been dealing with IDGs for years and is very knowledgeable about them" and because Fletcher "had been talking with Sundstrand about the IDGs." (Pl.'s Resp. P 16.) Fletcher and Hedberg agreed upon a price of $ 50,000 per IDG.

 Mitchell then issued a purchase order for the IDGs. The purchase order describes the IDGs as part number 729640. The purchase order also states that the "UNITS ARE TO BE AS DESCRIBED IN TELEFAX OF JUL 3, 1996 FROM LEIF TO GREG: UNIT # 1: CSD SN 5201 / GEN SN 2370; UNIT # 2: CSD SN 1692 / GEN SN 180; UNIT # 3: CSD SN 233 / GEN SN 432C." EAS then prepared an invoice which describes the parts as "729640 IDG." The invoice also references Mitchell's purchase order. EAS also provided Mitchell with a "Material Certification Form," which describes the parts as 729640 IDGs and references Mitchell's purchase order.

 EAS then shipped the IDGs to Mitchell. Mitchell then forwarded the IDGs to Sundstrand for overhaul. After working on the parts, Sundstrand informed Mitchell that all three of the IDGs were part number 708524 and not part number 729640. At Hedberg's request, Mitchell sent the IDGs with serial numbers 233 and 1692 to Nortek in Miami Florida. Nortek confirmed that those IDGs were part number 708524. Mitchell claims that it has suffered damages in the amount of $ 120,000 as a result of having received IDGs that were part number 708524 instead of part number 729640.

 Unable to resolve the dispute, Mitchell filed suit in this court for breach of contract and breach of warranty. Only July 21, 1998, Mitchell filed a motion for summary judgment. On August 4, 1998, EAS filed a motion for a determination of the applicable law. Mitchell did not oppose EAS's motion. On August 13, 1998, the court issued an order, ruling that the applicable law is the United Nations Convention on Contracts for the International Sale of Goods ("CISG"), 15 U.S.C. app. (West 1998). Mitchell then filed its amended motion for summary judgment, which was fully briefed on September 18, 1998. EAS filed its motion for summary judgment on September 22, 1998, which was fully briefed on October 21, 1998.

 II. DISCUSSION

 A. Choice-of-law issues and the court's subject matter jurisdiction

 Before addressing the merits of the parties' motions, the court must address the issues raised with regard to choice-of-law and subject matter jurisdiction. After an initial review of this case, the court determined that it had diversity jurisdiction because the case is between a citizen of Illinois and a citizen of Sweden and the amount in controversy exceeds $ 75,000. 28 U.S.C. 1332(a)(2). Because it was a diversity case, EAS moved the court to determine whether the substantive law of Sweden, Illinois, or the CISG governed this contract dispute. EAS argued that the CISG governed. Mitchell did not oppose the motion and did not argue that the CISG did not govern. Thus, the court determined that the CISG governed.

 The parties then submitted their motions for summary judgment, in which each party raised an issue not raised in the parties' briefs regarding the choice-of-law determination. EAS argued for the first time that the court's subject matter jurisdiction is actually not based on diversity but is based on a federal question because the case arises under the CISG, a convention of the United States. See 28 U.S.C. § 1331. Mitchell argued for the first time that issues of contract formation are ...


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