James W. Toren and Wilmington Trust Company, as Trustees of the Brnf Liquidating Trust v. Braniff, Inc., and Dalfort Corporation

893 F.2d 763, 1990 U.S. App. LEXIS 1479, 1990 WL 3583
CourtCourt of Appeals for the Fifth Circuit
DecidedFebruary 7, 1990
Docket88-7045
StatusPublished
Cited by13 cases

This text of 893 F.2d 763 (James W. Toren and Wilmington Trust Company, as Trustees of the Brnf Liquidating Trust v. Braniff, Inc., and Dalfort Corporation) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
James W. Toren and Wilmington Trust Company, as Trustees of the Brnf Liquidating Trust v. Braniff, Inc., and Dalfort Corporation, 893 F.2d 763, 1990 U.S. App. LEXIS 1479, 1990 WL 3583 (5th Cir. 1990).

Opinions

GARZA, Circuit Judge:

James W. Toren and Wilmington Trust Co. (collectively “Toren”), trustees for the trust liquidating now-bankrupt Braniff Airways, Inc. (“Airways”), sued Braniff, Inc. (“Braniff”) and Dalfort Corp. (“Dalfort”), successors to Airways, alleging breach of a lease agreement and unjust enrichment. The district court entered judgement, based on a jury verdict, for Braniff and Dalfort. Toren now appeals, complaining that the district court erred in construction and en[765]*765forcement of the lease agreement. We AFFIRM the judgment of the district court.

In May of 1982, Airways filed a petition for reorganization under Chapter 11 of the Bankruptcy Code, and in connection with that filing, submitted a Plan of reorganization. Under that Plan, Airways changed its name to Dalfort and created a subsidiary named Braniff, which was controlled but not wholly owned by Dalfort. For the benefit of the secured creditors of Airways, the Plan created the BRNF Liquidating Trust (“BRNF”), and Toren was named trustee. The Plan transferred assets of Airways to BRNF, which then leased them to Braniff (the “Lease”).1 Braniff continued to operate as an airline under the Plan, and Dalfort did all of Braniff’s maintenance work.

Pursuant to the Lease, Braniff returned ten aircraft to BRNF in 1985, but did not then return rotable parts also included in the Lease. Instead, Braniff kept the rota-bles and exchanged them, through formal and informal loan agreements, with other airlines. It is industry custom for one airline to exchange rotables with others, as no airline can maintain a full stock of rotables at each airport it services.

Toren sued Braniff in Federal court, alleging that the rotable loan agreements Braniff had with other airlines were prohibited by the Lease, and that Braniff was unjustly enriched by those loans. The Lease provided that Texas law should control its interpretation. The district court found that the Lease was ambiguous, submitted it to a jury for interpretation, and entered judgment in Braniff s favor based on that jury verdict. Toren now appeals the judgment, complaining that the district court erred in finding the Lease was ambiguous, and in submitting the Lease to the jury for interpretation. Also, Toren complains that Braniff should be charged for Toren’s attorney’s fees.

Ambiguity of the Lease

The preliminary question of whether a contract is ambiguous is one of law. Carpenters Amended and Restated Health Benefit Fund v. Holleman Construction Co., Inc., 751 F.2d 763, 767 (5th Cir.1985). In answering that question, the court should consider the intent of the parties as evidenced by the terms of the contract and industry custom. Coker v. Coker, 650 S.W.2d 391, 393 (Tex.1983). But once a court has found ambiguity in a contract, “the interpretation of the instrument is a question of fact for the jury.” Reilly v. Rangers Management, Inc., 727 S.W.2d 527, 529 (Tex.1987). In this case, the district court found that the lease was ambiguous as to whether Braniff’s loans of rotables were prohibited. Therefore, the court submitted the Lease to the jury for interpretation. Toren complains that the district court erred in failing to find that the Lease prohibited Braniff’s lending of rotables as a matter of law. Toren contends that sections 6 and 20(b) of the Lease unambiguously prohibit the loans, and, since determination of whether a contract is ambiguous is a question of law, the district court should not have found ambiguity or submitted the Lease to the jury for interpretation.

1. Section Six2

In support of its argument, Toren takes two words from Section 6-"encum-brance" and "claim"-out of context, and argues that those words unambiguously prohibit Braniff from lending rotables. But Toren ignores the list of words which falls before the chosen two. The specific items listed (security interest, mortgage, pledge, lien, charge) refer to financing agreements in which the lender takes a non-possessory interest in property as security for an indebtedness. While "encumbrance" and "claim" are less clearly defined, in Texas, "[w]here there is a list of [766]*766certain specific items, followed by general words, the general words are held to refer to the same class of items as those items specifically mentioned.” Haney v. Minnesota Mutual Life Ins. Co., 505 S.W.2d 325, 328 (Tex.Civ.App. — Houston [14th Dist.] 1974, writ ref’d n.r.e.). Given this construction of “encumbrance” and “claim,” it is ambiguous whether Section 6 was intended to prohibit the lending of rotables.

Industry custom, too, shows that the parties to the Lease did not intend specifically to prohibit the lending of rotables. The Lease itself reflects that the parties contracted with reference to industry custom and usage.3 And the testimony of expert witnesses Joe Dooley, Fred Maurstad, and Charles Thornton explained clearly that lending of rotables among airlines is industry custom. Given the language of the Lease itself, and its construction in light of industry custom, we affirm the district court’s finding of ambiguity and submission of the Lease to the jury for interpretation.

2. Section Twenty4

Toren complains that the district court should have found that Section 20(b) of the Lease prohibited the lending of rota-bles as a matter of law, and therefore submission of the Lease for interpretation by the jury was error. This contention must fail, for several reasons. First, Section 20(a) of the Lease governs assignment by Toren, the Lessor. Where Section 20(b) addresses assignment of the “Lease and all or any part of [Braniff’s] rights,” Section 20(a) addresses assignment of the “Lease, the Leased Property and all or any part of [Toren’s] rights” (emphasis added).5 The parties specifically addressed assignment of the leased property by Toren, but did not do so for Braniff. We cannot say, therefore, that Section 20(b) unambiguously addresses and prohibits Braniff’s lending of the leased property.

Second, even if Section 20(b) did address assignment of the leased property by Braniff, it is not clear whether Braniff’s lending of rotables falls within Section 20(b)’s prohibitions. That is, whether Braniff’s loan agreements constitute assignments, transfers, or conveyances as those terms are used in Section 20(b). Because Section 20(b) does not unambiguously prohibit Braniff’s lending of rotables, the district court did not err in submitting the lease to the jury for interpretation, and we affirm the district court’s judgment based on the jury’s findings.

Return of Rotables

Section 3(a)(vii) of the Lease provides that Braniff should return to Toren any rotables that “are surplus to [Bran-iff’s] needs, as determined in good faith by [Braniff].” The district court submitted an interrogatory to the jury on the issue 6, and the jury found that Braniff had made a good faith determination of which rotables were surplus to its needs.

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893 F.2d 763, 1990 U.S. App. LEXIS 1479, 1990 WL 3583, Counsel Stack Legal Research, https://law.counselstack.com/opinion/james-w-toren-and-wilmington-trust-company-as-trustees-of-the-brnf-ca5-1990.