Cessna Aircraft Co. v. Aircraft Network, L.L.C.

200 S.W.3d 203, 2005 WL 3867729
CourtCourt of Appeals of Texas
DecidedSeptember 8, 2006
Docket05-04-01056-CV
StatusPublished
Cited by2 cases

This text of 200 S.W.3d 203 (Cessna Aircraft Co. v. Aircraft Network, L.L.C.) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Cessna Aircraft Co. v. Aircraft Network, L.L.C., 200 S.W.3d 203, 2005 WL 3867729 (Tex. Ct. App. 2006).

Opinion

OPINION

Opinion by

Justice WRIGHT.

Cessna Aircraft Company and Associated Aviation Underwriters, Inc. (AAU) appeal a trial court’s judgment following a jury trial. AAU contends that Aircraft Network lacks standing to sue AAU. Alternatively, AAU asserts the evidence is legally and factually insufficient to support the jury findings for breach of contract, fraud, negligent misrepresentation, and exemplary damages. Cessna asserts: (1) the evidence is legally and factually insufficient to support jury findings for breach of contract, negligent misrepresentation, and breach of the implied warranty for good and workmanlike manner; (2) the trial court improperly submitted certain questions to the jury; (3) the trial court erred in awarding attorney’s fees. In a cross-point, Aircraft Network contends the award for promissory estoppel should be reinstated should this Court reverse the award for breach of reimbursement contract. In a single point of error on cross-appeal, Aircraft Network contends the trial court erred in failing to offset the awards in favor of Cessna.

For the reasons that follow, we affirm in part, reform in part, reverse and render in part, and reverse and remand in part. We sustain AAU’s first point of error, reverse the trial court’s judgment with respect to AAU, and render judgment that Aircraft Network take nothing on its claims against AAU. We sustain Cessna’s first point of error to the extent it complains about the submission of the damages question and reform the judgment to delete a portion of the damages awarded for breach of bailment contract. We sustain Cessna’s second, third, and fourth points of error, reverse the trial court’s judgment on the claims for breach of reimbursement contract, negligent misrepresentation, and breach of implied warranty, and render judgment that Aircraft Network take nothing on those claims. We sustain Aircraft Network’s cross-point and reinstate the jury award for promissory estoppel. We reverse the awards of attorney’s fees and costs and remand those issues to the trial court for proceedings consistent with this opinion. In all other respects, the trial court’s judgment is affirmed.

Background

Aircraft Network owned a Cessna Citation III jet aircraft. In June of 2000, while on a trip to California, the aircraft developed problems. On June 13, 2000, Chuck Weese, pilot of the aircraft, took it to the Cessna service center in Long Beach, California for minor repairs. While *207 repairing the aircraft, a Cessna employee accidentally damaged the tail section of the aircraft when he jacked up the nose of the aircraft while the tail stand was still in place.

Cessna readily accepted responsibility for the damage to the aircraft caused by its employee. The damage to the aircraft rendered it unairworthy. John Sloan, the maintenance manager at the Long Beach service center, informed Weese that Cessna would replace the entire skin panel. However, it would take about six weeks to obtain the necessary parts. In the meantime, Sloan advised Weese that Cessna had an interim repair that it could make so that they could fly the aircraft while waiting for the parts.

Stevan Hammond, president of Aircraft Network, had planned a business trip to Europe in July. Hammond decided that he would not be comfortable taking the aircraft with an interim repair to Europe. Accordingly, Aircraft Network declined the interim repair and opted to wait on the permanent repair. Weese then flew the aircraft on a special flight permit back to Dallas where it was scheduled to have avionics work. The permanent repair would then be made at the Cessna service center in Wichita, Kansas.

Preparing for its trip to Europe, Aircraft Network located a Gulfstream II that it could lease for the trip. Paul Martin, claims attorney for AAU, informed Aircraft Network that it would pay the costs of substitute transportation on a “differential of operating costs” basis. On July 12, 2000, Martin sent a letter to Aircraft Network stating that AAU would support the European trip “provided that the operating costs you would have incurred, but for the damage to your aircraft, are deducted from the costs of the G-II.” Aircraft Network took the European trip in the G-II.

Aircraft Network also chartered other flights for business purposes. Aircraft Network tendered invoices for its chartered flights without any deduction for normal operating costs. A dispute arose as to costs covered for the chartered flights. Aircraft Network refused any payment offered by Cessna in return for a partial release of its claims.

Aircraft Network filed this lawsuit alleging claims against Cessna for negligence, breach of bailment contract, breach of contract for reimbursement, promissory es-toppel, fraud, negligent misrepresentation, and breach of implied warranties. Aircraft Network asserted claims against AAU for breach of reimbursement contract, promissory estoppel, fraud, negligent misrepresentation, and Insurance Code violations. Cessna filed a counterclaim against Aircraft Network for breach of contract for failure to pay for past services.

At the conclusion of the trial, the jury found in favor of Aircraft Network on its claims against Cessna for negligence, 1 breach of bailment contract, breach of reimbursement contract, negligent misrepresentation, and breach of implied warranty. The jury also found in favor of Aircraft Network on its claim against AAU for breach of reimbursement contract, fraud, and negligent misrepresentation. Cessna recovered on its counterclaim. The trial court rendered a judgment on the jury verdict awarding damages, exemplary damages, and attorney’s fees to Aircraft Network and damages to Cessna on its counterclaim. This appeal timely followed.

*208 Standing to Sue AAU

Initially, we address AAU’s assertion that Aircraft Network lacks standing to sue AAU because a third-party claimant cannot sue an insurer.

Potential conflicts arise with respect to an insurer’s duty to its insured when a third-party sues the insurer directly. The supreme court has addressed these concerns when considering whether a third-party claimant has standing to sue an insurer. See Transport Ins. Co. v. Faircloth, 898 S.W.2d 269 (Tex.1995); Allstate Ins. Co. v. Watson, 876 S.W.2d 145 (Tex.1994). In Faircloth, a woman was killed in a car accident involving Allied Van Lines. Allied’s insurer, Transport Insurance Company, entered into a $250,000 settlement agreement with Paula Faircloth, a minor thought to be the daughter of the deceased. Upon reaching the age of majority, Faircloth sued Transport for unfair settlement practices. The supreme court held that third-party claimants lack standing to sue an insurer for a claim for breach of the duty of good faith and fair dealing. Id. at 279. The supreme court noted that the insured’s interests are adverse to those of a third-party claimant. If an insurer owes duties to a third-party, the insurer’s duties to its insured would necessarily be compromised. Id.

Watson also involved a car accident. Watson sued Allstate, the other driver’s insurer, alleging claims for unfair settlement practices under the insurance code. Watson, 876 S.W.2d at 146.

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Bluebook (online)
200 S.W.3d 203, 2005 WL 3867729, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cessna-aircraft-co-v-aircraft-network-llc-texapp-2006.