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Sky Jet, M.G. Inc. v. Elliott Aviation, Inc.

United States District Court, N.D. Illinois, Eastern Division

February 24, 2017

SKY JET, M.G., INC., Plaintiff,
v.
ELLIOTT AVIATION, INC. and ELLIOTT AVIATION OF THE QUAD CITIES, INC., Defendants.

          MEMORANDUM OPINION AND ORDER

          HARRY D. LEINENWEBER, JUDGE.

         Plaintiff Sky Jet M.G., Inc. (“Sky Jet”) sued Defendants, Elliott Aviation, Inc. (“Elliott”) and Elliott Aviation of the Quad Cities, Inc. (“Quad Cities”) (collectively, the “Defendants”), alleging negligence and breach of contract against Elliott (Counts I and III, respectively) and negligence against Quad Cities (Count II). After several months of discovery, Defendants moved for summary judgment on Count III and partial summary judgment on Counts I and II [ECF No. 39].

         Defendants' Motion for Summary Judgment on Count III is granted in part and denied in part. Sky Jet's warranty claim is time-barred, but it may pursue a breach-of-contract claim for damages in excess of the repair or replacement value of the left landing gear. Defendants' Motion for Partial Summary Judgment on Count I based on the Contract's negligence disclaimer is granted in part and denied in part. The Contract limits liability for negligence but the facts do not establish, as a matter of law, that Sky Jet's recovery is limited to repair or replacement of the left landing gear. The Court denies Defendants' Motion for Partial Summary Judgment on Counts I and II to the extent it is based on the absence of extra-contractual duties to Sky Jet. The undisputed facts do not show that Quad Cities was a party to the Contract or is otherwise entitled to its negligence liability disclaimer. Nor do the facts speak clearly as to Elliott's freedom from extra-contractual liability for Quad Cities' or its own potentially tortious conduct.

         I. BACKGROUND

         Sky Jet offers private aircraft charters throughout Quebec, Ontario, and the United States. (ECF No. 41 (“Defs.' SOF”) ¶ 2.) Elliott and its subsidiary company, Quad Cities, offer aviation-related services such as inspection, servicing, repair, and maintenance of aircraft and aviation components. (Id. ¶¶ 5-6.) Sky Jet entered into a contract with Elliott for maintenance of its Beech King Air 200 (“the Subject Aircraft”). (ECF No. 48 (“Pl.'s Resp.”) ¶ 11-12.) That contract was in the form of a quotation; Elliott prepared it on May 31, 2013, and Sky Jet accepted the terms by signing on June 4, 2013 (“the Contract”). (Id. ¶ 13.) Under the Contract, Sky Jet agreed to pay $15, 000 in exchange for maintenance “overhaul” of its left and right landing gears, including removal and disassembly of the landing gear components, their actuators, and the gear box. (Pl.'s Resp., Ex. A, p.3.) The Contract either incorporates or expressly includes the following six (6) salient provisions:

         In Flight Responsibilities

Customer agrees and understands that Customer is responsible for all claims, demands, suits, judgments, losses, damages, costs and expenses arising out of the inflight operation of the Aircraft, except to the extent that such claims, demands, suits, judgments, losses, damages, costs and expenses arise out of Elliott Aviation's negligence in performing Services, (as defined in the Proposal) on the Aircraft. Customer agrees that Elliott Aviation is not responsible for the pilots who operate the Aircraft regardless of who provides the pilot(s). Customer represents and warrants that it has procured insurance for the hull of the Aircraft and acknowledges that Customer is responsible for all damages to the hull of the Aircraft regardless of which party causes the damage to the hull. Upon request, Customer shall provide evidence of hull and liability insurance in a form satisfactory to Elliott Aviation.
Limitations of Liability
IN NO EVENT SHALL COMPANY BE LIABLE FOR ANY LOSS OF USE OF THE AIRCRAFT OR LOSS OF PROFITS, DIMUNITION IN VALUE OR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES OR LOSSES, INCLUDING WITHOUT LIMITATION, ANY LOSS OR DAMAGE TO THE AIRCRAFT RESULTING FROM ANY FAILURE OR REFUSAL TO PERFORM CUSTOMARY RECOMMENDED OR REQUIRED STORAGE AND MAINTENANCE PROCEDURES ON ANY AIRCRAFT REMAINING OR HELD ON THE COMPANY'S PREMISES, UNLESS SPECIFICALLY AGREED IN WRITING. IN NO EVENT SHALL ANY ACTION BE COMMENCED AGAINST COMPANY MORE THAN ONE YEAR AFTER THE CAUSE OF ACTION WITH RESPECT TO WHICH THE CLAIM IS MADE HAS ACCRUED. In the event Elliott Aviation physically damages Customer's property, Customer's sole and exclusive remedy, and Elliott Aviation's sole and exclusive liability, is limited to the repair or replacement (at Elliott Aviation's option) of the damaged portion of the property.
Warranty and Disclaimers
The “Statement of Warranty” of the Company in effect as of the date of this Work Authorization shall govern the work. A copy has been provided to Customer, or will be provided to Customer, upon request. THE STATEMENT OF WARRANTY IS EXCLUSIVE AND IN LIEU OF ALL OTHER EXPRESS AND IMPLIED WARRANTIES WHATSOEVER, INCLUDING, BUT NOT LIMITED TO, IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. Any repair or replacement shall be performed at an Elliott Aviation facility and Customer shall be responsible for transportation costs.
Scope of Warranty
This warranty and the liability of Elliott Aviation for breach of warranty shall be limited to correcting or repairing such portions of the Work that is [sic] not in accordance with the Aircraft Work Authorization or Specifications. Elliott Aviation warrants only that the Work shall be free from defects under normal aircraft use. Elliott Aviation's obligations under this Warranty, and Owner's exclusive remedy, shall be limited solely to the repair, or replacement, at Seller's election, of any workmanship which is determined to be defective under normal use and service within the earliest to occur of three hundred (300) hours of aircraft operation or one (1) year after completion of the Work (the “Warranty Period”).
Right to Subcontract. Elliott Aviation has the right to subcontract any Service to any subcontractor properly certified and rated by the Approved Aviation Authority.
Assignment. This Agreement may not be assigned without the prior written consent of the other party, except that your consent will not be required for an assignment by us to one of our affiliates.

(Pl.'s Resp. ¶¶ 17-20 & Ex. A, p.5.)

         Quad Cities, not Elliott, performed the maintenance and certified on June 19, 2013 that the Subject Aircraft was in airworthy condition and that all work was performed in conformance with applicable manufacturing maintenance manuals. (ECF No. 50, “Defs.' Resp., ” ¶ 4.) Only Quad Cities provided any work, testing, or services on the Subject Aircraft. (Id. ¶ 3.)

         On September 22, 2014, the Subject Aircraft's left landing gear malfunctioned in flight, forcing the pilots to land it with only partial landing gear assistance. (Pl.'s Resp. ¶ 16.) In addition to that affecting the landing gears, the Subject Aircraft sustained other damage upon landing. (Id.)

         Sky Jet filed suit against Defendants on September 15, 2015, claiming that Elliott and Quad Cities “breached the duty owed to Sky Jet to use reasonable care in the inspection, servicing, repairing, and maintenance of the Subject Aircraft and its component parts and assemblies.” (ECF No. 1, “Compl., ” ¶¶ 17, 21.) Specifically, Sky Jet alleged that Defendants negligently and carelessly inspected, serviced, repaired, and maintained the Subject Aircraft's landing gear systems, assemblies, actuators, gearbox, and motor; negligently and carelessly certified the Subject Aircraft as airworthy; and negligently violated FAA regulations, the instructions provided with the aircraft manufacturer's maintenance manual, and other industry standards and customs. (See, id.) Sky Jet's breach of contract claim against Elliott includes similar allegations plus an additional assertion that Elliott failed to “comply with other express warranties.” (Id. ¶ 27.)

         In terms of damages, Sky Jet seeks recovery for “property damage to the Subject Aircraft, to a cargo pod affixed to the Subject Aircraft, and to other property in or near the Subject Aircraft; diminished value of the Subject Aircraft; loss of revenues and profits; loss of good will; damage to business reputation; loss of the use of the Subject Aircraft and other aircraft; investigation, maintenance, and recovery costs; and other damages as allowed by law.” (Compl. ¶ 18; see, Id. ¶¶ 22, 28.) Sky Jet does not distinguish among its counts with respect to the types of damages sought.

         II. LEGAL STANDARD

         Summary judgment must be granted “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A genuine issue of material fact exists if “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In evaluating summary judgment motions, courts must view the facts and draw reasonable inferences in the light most favorable to the non-moving party. Scott v. Harris, 550 U.S. 372, 378 (2007). The Court does not make credibility determinations as to whose story is more believable. Omnicare, Inc. v. UnitedHealth Grp., Inc., 629 F.3d 697, 704 (7th Cir. 2011). It must consider only evidence that can be “presented in a form that would be admissible in evidence.” Fed.R.Civ.P. 56(c)(2).

         The party seeking summary judgment bears the initial burden of showing that there is no genuine dispute and that it is entitled to judgment as a matter of law. Carmichael v. Vill. of Palatine, 605 F.3d 451, 460 (7th Cir. 2010); see, also, Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If this burden is met, then the adverse party must “set forth specific facts showing that there is a genuine issue for trial.” Anderson, 477 U.S. at 256.

         III. ANALYSIS

         In their memorandum of law, Defendants argued that (i) Elliott is entitled to summary judgment on Count III because Sky Jet's breach of contract and warranty claims are time-barred; (ii) they are entitled to partial summary judgment on the negligence counts because the Contract limits Sky Jet's recoverable damages to repair or replacement of the left landing gear; and (iii) they are entitled to partial summary judgment on the negligence counts because they sound in contract and do not allege any extra-contractual duty owed to Sky Jet.

         In response, Plaintiff contended that (i) the breach of contract cause of action is timely because, under the discovery rule, it accrued when the aircraft crashed, not when the work was performed; (ii) the limitation of liability does not apply to Elliott's own negligence; and (iii) it never agreed to any limitation of the liability of Quad Cities.

         Defendants then filed a reply, arguing that (i) Sky Jet's contractual agreement to a one-year limitations period dooms its breach of contract claim, and Sky Jet's failure to plead the discovery rule bars its application; (ii) the Contract limits Sky Jet's recoverable damages because Elliott assigned the contract to Quad Cities; and (iii) the limitation of liability provision of the Contract applies to both of Sky Jet's negligence claims, and Defendants did not owe any extra-contractual duties to Sky Jet anyway.

         The Court granted Sky Jet leave to file a sur-reply to address these arguments. In its sur-reply [ECF No. 55], Sky Jet argued that (i) Defendants have not carried their burden of showing that the Contract was in fact assigned to Quad Cities; and (ii) if indeed Elliott established an assignment of the Contract to Quad Cities, then Elliott is not entitled to summary judgment on Sky Jet's claims against it.

         A. The ...


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