Airplane Sales International Corp. v. United States

58 Fed. Cl. 226, 2003 U.S. Claims LEXIS 241, 2003 WL 22427407
CourtUnited States Court of Federal Claims
DecidedAugust 20, 2003
DocketNo. 99-88C
StatusPublished

This text of 58 Fed. Cl. 226 (Airplane Sales International Corp. v. United States) is published on Counsel Stack Legal Research, covering United States Court of Federal Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Airplane Sales International Corp. v. United States, 58 Fed. Cl. 226, 2003 U.S. Claims LEXIS 241, 2003 WL 22427407 (uscfc 2003).

Opinion

OPINION AND ORDER

HODGES, Judge.

The Naval Museum contracted with the Naval Foundation for the transfer and sale of eleven C-130 aircraft hulks. Plaintiff Airplane Sales is a third-party beneficiary of the contract.1 Airplane Sales sued for breach of contract and specific performance, claiming that the Government did not deliver parts to which plaintiff was entitled. The court denied cross-motions for summary judgment, and we scheduled a trial to clarify the contract’s meaning and the parties’ intent.

BACKGROUND

This dispute arose from a transaction among plaintiff Airplane Sales, the National Museum of Naval Aviation, and the Naval Aviation Museum Foundation. The National Museum of Naval Aviation is a government entity. The Naval Aviation Museum Foundation is a private, non-profit corporation that supports the Naval Museum. The Naval Museum transfers aircraft and other surplus equipment to the Foundation, which [227]*227sells them to private companies. The Foundation uses the proceeds to fund restoration projects for the Museum’s displays and for other educational purposes.2 Airplane Sales agreed to purchase eleven C-130 aircraft hulks and associated parts from the Museum Foundation for $200,000. An airplane “hulk” is the fuselage or shell of the plane. The Museum released the hulks and parts to Airplane Sales but plaintiff claimed that it did not receive some parts that were listed in the aircraft logbooks. Defendant argued that plaintiff was not entitled to all the logbook parts, but only those associated with the plane that were “lying around” in or under the hulk. Plaintiff claimed that it relied on the logbooks as a direct representation of parts included in the sale because an aircraft’s logbooks detail the maintenance history of its parts.

The parties filed cross-motions for summary judgment. The Government argued that language in the contract stating that parts “have been or will be removed” preserved defendant’s right to strip the hulks as it wished. Plaintiff responded that the contract was ambiguous on this point and inconsistent with an “as is” disclaimer of warranty in the contract. The court agreed that the contract was ambiguous and not necessarily subject to an interpretation that would allow the Government to strip parts from the hulks after it demilitarized them. See Airplane Sales Int’l Corp. v. United States, 54 Fed.Cl. 418 (2002).

The court noted, “it is necessary to determine what [the hulks’] ‘as is/where is’ [condition] was at the time of the transfer, in order to assess defendant’s potential liability for any allegedly withheld parts after transfer.” Id. at 422 The court also commented that the “will-be” language allowing the planes to be stripped of equipment, conflicted with the “as-is/where-is” language that disclaimed all warranties that might otherwise apply to these parts.3 Id. at 420.

Plaintiffs argument that aircraft parts belonging to Airplane Sales were lost or sold raised issues of material fact, the court ruled. Id. at 422. Trial was necessary for a court to determine (1) whether the Government had the right to remove parts after executing the contract; and (2) whether parts covered by the contract were lost or stolen. See id.

We concluded that the issues for trial were “exceedingly narrow.” Airplane Sales Int’l Corp. v. United States, No. 99-88C (Fed.Cl. June 12, 2003) (order noting that the “central issue [is] whether log books identifying certain parts were included in the transaction, and whether plaintiff was entitled to rely on the information [they] contained ----”). Other issues were whether it was reasonable and customary for a salvage buyer to rely on logbooks and how to interpret contract terms that the court had found ambiguous.

DISCUSSION

The Naval Museum transferred eleven C-130 aircraft hulks to the Museum Foundation pursuant to a program providing for exchange of historical artifacts and obsolete combat material. See 10 U.S.C. § 2572(a)(3)-(4). The contract between the Museum and the Foundation described the C-130 aircraft as “non-flyable hulks ... classified as scrap.”

They have been or will be stripped of their electronic, communications, and navigation equipment, all four engines, all landing gear assemblies, various panels, fixtures, doors, and other ancillary parts and com-ponents____ These are located in open storage at AMARC and are supplied in “as is” condition, following appropriate demilitarization.

[228]*228The contract also stated that “the Government does not warrant the fitness of the equipment transferred to the Contractor ... for any purpose and the equipment is offered only as is/where is with no guarantee stated or implied.”

A Release Letter from the Naval Museum to the Foundation describes the subject matter of plaintiffs bargain:

loose aircraft parts and components in and around the aircraft hulks and identified as belonging to the specific aircraft hulks set forth in their respective logbooks, not including] any parts or components belonging to other aircraft nor does it include parts identified for reclamation, demilitarization, or other U.S. Government requirements. This language is clear, and it is consistent with trial testimony. Plaintiff was entitled to parts and components that were “in and around” the hulks, mostly lying on the ground nearby, if they could be identified as belonging to one of the eleven hulks. Plaintiff did not have rights to parts that belonged to other aircraft, even if they were lying beneath a hulk that was included in the contract. The logbooks associated the salvaged parts with the planes they were removed from. Plaintiff argued that by purchasing the logbooks, it purchased the parts listed in the logbooks. The only exception was parts that were excluded by contract or “lined out in the logbooks.”4 Defendant disputed the notion that the logbooks provided an inventory of parts that accompanied a particular hulk. Moreover, the Government disclaimed all warranties of fitness of the hulks and their associated parts. If the Museum sold the logbooks along with the hulks and parts, it sold them “as is.” Plaintiff could not rely on the logbooks as an inventory because defendant disclaimed their accuracy and completeness. Captain Hawkins was see-retary-treasurer of the Naval Foundation. He testified that language in the Release Letter and the contract limited the transfer to parts in and around the hulk if the logbooks identified them as having come from one of the eleven C-130 aircraft. Plaintiff was not entitled to parts belonging to hulks that were not among those aircraft. Captain Hawkins and Mr. Swet-man, former Director of the Naval Aviation Supply Office at the Base, testified credibly to these procedures.5 They emphasized an additional requirement: “We have to be able to find them.” They noted that parts became separated from their aircraft when workers moved the hulks but did not necessarily move the parts associated with them.6 Plaintiff produced no evidence that defendant purposely hid or substituted parts.

Airplane Sales offered its experience with a prior salvage transaction as evidence that logbooks represented parts that were included in the contract.

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Related

Airplane Sales International Corp. v. United States
54 Fed. Cl. 418 (Federal Claims, 2002)

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Bluebook (online)
58 Fed. Cl. 226, 2003 U.S. Claims LEXIS 241, 2003 WL 22427407, Counsel Stack Legal Research, https://law.counselstack.com/opinion/airplane-sales-international-corp-v-united-states-uscfc-2003.