Global Aerospace, Inc. v. Aero Ways, Inc.

• Court: Court of Chancery of Delaware
• Decided: July 9, 2015
• Docket: CA 10735-VCN
• Status: Published

Opinion

EFiled: Jul 09 2015 04:27PM EDT Transaction ID 57528554 Case No. 10735-VCN COURT OF CHANCERY OF THE STATE OF DELAWARE

417 SOUTH STATE STREET JOHN W. NOBLE DOVER, DELAWARE 19901 VICE CHANCELLOR TELEPHONE: (302) 739-4397 FACSIMILE: (302) 739-6179 July 9, 2015

Richard A. Barkasy, Esquire Joseph J. Bellew, Esquire Schnader Harrison Segal & Lewis LLP Cozen O’Connor 824 N. Market Street, 8th Floor 1201 N. Market Street, Suite 1001 Wilmington, DE 19801 Wilmington, DE 19801

Re: Global Aerospace, Inc. v. Aero Ways, Inc. C.A. No. 10735-VCN Date Submitted: June 24, 2015

Dear Counsel:

Respondent Aero Ways, Inc. (“Aero Ways”) purchased insurance from

Petitioner Global Aerospace, Inc. (“Global”) for a leased aircraft.1 On July 25,

2013, the aircraft’s left main landing gear brake assembly and part of its left wing

were damaged. It was moved to its manufacturer’s facility in Wichita, Kansas for

repair, and Aero Ways made an insurance claim for the cost.

The insurance policy establishes an appraisal process for when, like here, the

parties are unable to agree on the cost of repair.2 “In such event, [Aero Ways] and

1 The aircraft is a 1986 Bombardier Challenger CL-601-1A business jet, U.S. registration No. N163WG. 2 The cost is a function of the selected repair strategy. Global Aerospace, Inc. v. Aero Ways, Inc. C.A. No. 10735-VCN July 9, 2015 Page 2

[Global] shall each select a competent appraiser, and the appraisers shall select a

competent and disinterested umpire.”3 The umpire serves to break the deadlock

should the appraisers’ values diverge. Although both sides have selected

appraisers, the appraisers cannot agree on an umpire. Global has petitioned the

Court to designate a suitable candidate.4

After considering both sides’ views on the matter, the Court has selected

Ann L. Kolarik as umpire. Ms. Kolarik is a Designated Engineering

Representative (“DER”), i.e., an individual authorized by the Federal Aviation

Administration (“FAA”) to determine an aircraft’s suitability for flight.5 She is a

structural engineer authorized to evaluate and act with respect to the wing

structures of airplanes such as the aircraft.

3 Verified Pet. for the Appointment of a Neutral Umpire ¶ 18 (“Pet.”). 4 The insurance policy does not specify a process for selecting an umpire when the appraisers cannot reach an agreement. The Federal Arbitration Act, which applies here, provides that “if no method [for appointing an umpire] be provided [in the applicable agreement], . . . then upon the application of either party to the controversy the court shall designate and appoint an . . . umpire . . . .” 9 U.S.C. 5. 5 A DER is “an individual, appointed in accordance with 14 CFR § 183.29, who holds an engineering degree or equivalent, possesses technical knowledge and experience, and meets the qualification requirements of Order 8100.8D.” Pet. ¶ 29. Global Aerospace, Inc. v. Aero Ways, Inc. C.A. No. 10735-VCN July 9, 2015 Page 3

The FAA Consultant DER Directory indicates that Ms. Kolarik is based in

Wichita, and there has been no indication that any party or appraiser has a current

or ongoing personal or professional relationship with her. According to her

LinkedIn profile, she is a senior engineer at Bombardier Inc., the parent of the

company that manufactured the aircraft. Her selection is partly intended to address

Aero Ways’s concern that the umpire have familiarity with the wing structure of

the aircraft’s model.6

Of course, should Ms. Kolarik be unavailable or unwilling to act as umpire,

the Court may need to make another selection. Additionally, should either party

identify a material concern relating to Ms. Kolarik’s appointment (i.e., a conflict of

interest), the Court may revise its determination.

IT IS SO ORDERED.

Very truly yours,

/s/ John W. Noble JWN/cap cc: Register in Chancery-K

6 Global proposed that the Court appoint any structural DER with a specialty in airplane wings. Aero Ways suggested four former employees of Bombardier (the aircraft’s manufacturer) or, alternatively, an individual with experience in the repair of damaged wings on aircraft similar to the model in question.