Kittredge Aviation, Inc. v. Bombardier Aerospace Corp.

15 Mass. L. Rptr. 673
CourtMassachusetts Superior Court
DecidedJanuary 24, 2003
DocketNo. 013480BLS
StatusPublished

This text of 15 Mass. L. Rptr. 673 (Kittredge Aviation, Inc. v. Bombardier Aerospace Corp.) is published on Counsel Stack Legal Research, covering Massachusetts Superior Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kittredge Aviation, Inc. v. Bombardier Aerospace Corp., 15 Mass. L. Rptr. 673 (Mass. Ct. App. 2003).

Opinion

van Gestel, J.

This matter comes before the Court on motions by all defendants, Bombardier Aerospace Corporation and Bombardier, Inc. (collectively “Bom[674]*674hardier”) and General Electric Company (“GE”), seeking summary judgment on all counts against them in the First Amended Complaint. The counts ask for relief for the following: Count One, revocation of acceptance under U.C.C. Sec. 2-608; Count Two, breach of the implied warranty of merchantability under U.C.C. Sec. 2-314; Count Three, breach of the implied warranty of fitness for a particular purpose under U.C.C. Sec. 2-315; Count Four, breach of express warranty; Count Five, negligence by providing a defective aircraft and failing to diagnose and cure the defect; Count Six, negligent misrepresentation; Count Seven, violation of G.L.c. 93A, Sec. 11; Count Eight, breach of contract; Count Nine, negligence described as willful, wanton and reckless misconduct; and Count Ten, violation of G.L.c. 93A, Sec. 9. All ten counts run against Bombardier. Counts Two through Five, Seven and Nine run against G.E.

BACKGROUND

This case involves the purchase for $23.7 million of a Challenger 604jet aircraft (the “aircraft”) from Bombardier. The plaintiff David S. Wetherell (“Wetherell”), who at the time of the purchase was the President and CEO of CMGI, Inc., was a “super high net worth individual.”3 The purpose for Wetherell’s purchase of the aircraft is somewhat in dispute. GE says it was to be used in connection with CMGI business, as well as for pleasure. Wetherell says that the vast majority of trips on the aircraft were for personal and family travel.4

The Bollard Group, LLC (“Bollard”) is an advisory firm to super high net worth individuals like Wetherell, providing, among other things, tax and estate planning services and long-term diversification advice. Bollard assisted Wetherell in choosing and purchasing the aircraft. Bollard has assisted other super high net worth clients in both purchasing and selling private jets, yachts and similar items. Anastasios Parafestas (“Parafestas”), the founder of Bollard, recommended to Wetherell that he purchase a Challenger 604 aircraft from Bombardier.

Parafestas, an attorney and member of the Massachusetts Bar, and other Bollard employees have substantial experience in assisting clients in purchasing aircraft, including a Challenger 601 model aircraft originally involved here, and in negotiating aircraft acquisition contracts in general. Wetherell’s Challenger 604 aircraft, however, was the first new Challenger aircraft purchased from Bombardier by Parafestas or any other Bollard employee.

The Challenger 604 aircraft is equipped with CF34 engines manufactured by GE in Lynn, Massachusetts. The CF34 engine is a derivative of the military TF34 engine.

Design changes on aircraft engines are typical over time, as the fleet of the particular engine model matures and develops experience in the field. Thus, as the CF34 engine developed experience over time in the commercial sector, GE made changes to its design, some of which have modified features of the original TF34 for use in the commercial application. GE has made thousands of design changes to the CF34 since its commercial certification, including a 1996 removal of the “A-sump pump,” which was an extra “lube and scavenge” pump designed to provide military engines with enhanced “scavenge” capability during extreme military maneuvers, such as steep dives and climbs. The term “scavenge” refers to an aspect of oil circulation in an engine.

Following engineering analysis, studies and testing, GE concluded that the A-sump pump was redundant on commercial engines, which are not required to perform the more extreme maneuvers required of military aircraft, and that the primary lube and scavenge pump provided adequate scavenge capability for commercial engines. Also, GE learned that the A-sump pump caused low oil pressure conditions during takeoff.

The FAA approved this change to the CF34 engine’s design in 1996.

After removal of the A-sump pump there have been several events of low oil pressure (“LOP”) on CF34 engines on aircraft flying at altitudes of37,000 feet or higher.

The Challenger 604 aircraft is certified to fly up to 41.000 feet, and Challengers often cruise at or around that altitude.

Initially, GE was of the belief that the cause of the LOP events in the CF34 engines was the result of the use of a particular type of engine oil, Mobil 254. Thus, both Bombardier5 and GE withdrew their approval of Mobil 254 for use in the CF34 engine. However, additional LOP events subsequently occurred on aircraft not using Mobil 254 oil. Accordingly, GE continued its investigation and determined, as early as November 1999, that the absence of an A-sump pump can, in some instances, cause reduced scavenge capability on CF34 engines at high altitudes. No engines equipped with an A-sump pump have experienced a high altitude LOP event of this nature.

GE redesigned the primary lube and scavenge pump to increase the capacity of the CF34 engines at high altitudes. The redesigned pump, referred to as the “P06 pump,” was introduced through an FAA-approved service bulletin in the fall of 2001. No CF34 engines equipped with P06 pumps have experienced high altitude LOP events in over approximately 300.000 hours of operation.

To facilitate Wetherell’s aircraft purchase, Bollard formed the plaintiff Kittredge Aviation, Inc. (“Kittredge”) as a holding company that would be the actual purchaser and owner of the jet. Wetherell is Kittredge’s sole shareholder. The purpose of organizing a corporation to own the aircraft was to limit Wetherell’s [675]*675personal liability and to maintain the privacy of the aircraft’s beneficial owner.

Kittredge’s only assets are the aircraft and cash provided by Wetherell in connection with the aircraft. Kittredge has never had any business operations aside from purchasing and operating the aircraft. Nor has it ever had any employees or generated any revenues. Kittredge does not have a separate place of business aside from that of the Bollard Group.

Negotiations surrounding the purchase of the Challenger 604 began in the late summer and early fall of 1999 between Bombardier and Bollard, which represented Kittredge. At that time there was no brand-new Challenger 604 aircraft available for Kittredge to purchase from Bombardier, so Bollard arranged for Kittredge to buy, as a temporary measure, a used Challenger 601, then owned by another of Bollard’s clients. The Challenger 601 was, in effect, to act as a “bridge,” so that Wetherell could have access to a private jet until such time as Bombardier could build a new Challenger 604. Bollard and its attorneys negotiated the terms of the purchase of the Challenger 601.

Upon completion of the new Challenger 604, Kitteredge would trade in the 601 to Bombardier.

Wetherell intended to use — and, in fact, did use— the Challenger 601 for both CMGI business and personal purposes. For 2000 and 2001, Kittredge was reimbursed in the amount of approximately $1 million for business use of the 601.

Douglas Bertoia (“Bertoia”), Director of Contracts at Bombardier, provided the initial draft of the Challenger 604 Aircraft Purchase Agreement (the “APA”) to Bollard. Along with the draft APA, Bertoia provided Bollard with an Addendum that contained terms that Bollard had negotiated on behalf of one of its other clients.

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