Monty Clay v. AIG Aerospace Insurance Services, Inc.

Opinion

ACCEPTED 06-15-00024-CV SIXTH COURT OF APPEALS TEXARKANA, TEXAS 11/4/2015 4:20:17 PM DEBBIE AUTREY CLERK

NO. 06-15-00024-CV

============================================================= FILED IN 6th COURT OF APPEALS TEXARKANA, TEXAS 11/4/2015 4:20:17 PM IN THE SIXTH COURT OF APPEALS DEBBIE AUTREY Clerk TEXARKANA, TEXAS =============================================================

MONTY CLAY, ET AL. APPELLANTS

V.

AIG AEROSPACE INSURANCE SERVICES, INC., ET AL. APPELLEES

=============================================================

B RIEF OF A PPELLANTS

=============================================================

KEITH DOLLAHITE M. KEITH DOLLAHITE, P.C. 5457 Donnybrook Avenue Tyler, Texas 75703

ORAL ARGUMENT REQUESTED IDENTITY OF PARTIES AND COUNSEL

Party Attorneys Appellants/Plaintiffs, Monty Clay, Mike Simpson Individually, as Next Friend of Jacob Alan Powers Clay and Jonathan Clay, and as Matt Meyer Executor of the Estate of Amy Clay; Simpson Boyd Powers & Williamson and Lynda Wilson P.O. Box 685 Bridgeport, Texas 76426

Bryan Hughes Law Office of D. Bryan Hughes 701 N. Pacific Ave.| P.O. Box 450 Mineola, Texas 75773

Keith Dollahite M. Keith Dollahite, P.C. 5457 Donnybrook Avenue Tyler, Texas 75703 Appellants/Plaintiffs, Brendan Phillips Robert Waltman and Grace Phillips Waltman & Grisham 2807 South Texas Avenue, Suite 201 Bryan, Texas 77802

Bryan Hughes Law Office of D. Bryan Hughes 701 N. Pacific Ave.| P.O. Box 450 Mineola, Texas 75773

Keith Dollahite M. Keith Dollahite, P.C. 5457 Donnybrook Avenue Tyler, Texas 75703

i Party Attorneys Appellants/Plaintiffs, Dale Phillips, William Angelley Sr., Individually and as the Executor of Braden, Varner & Angelley, P.C. the Estate of Dale Leighroy Phillips, 703 McKinney Avenue, Suite 400 Jr.; and Karen B. Phillips Dallas, Texas 75202

Bryan Hughes Law Office of D. Bryan Hughes 701 N. Pacific Ave.| P.O. Box 450 Mineola, Texas 75773

Keith Dollahite M. Keith Dollahite, P.C. 5457 Donnybrook Avenue Tyler, Texas 75703 Appellees/Defendants, AIG Aerospace Ross Cunningham Insurance Services, Inc.; Chartis Don Swaim Aerospace Insurance Services, Inc.; Alex J. Whitman Chartis Aerospace Adjustment Steven D. Sanfelippo Services, Inc. Cunningham Swaim, LLP 7557 Rambler Road, Suite 440 Dallas, Texas 75231

ii TABLE OF CONTENTS

Identity of Parties and Counsel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i

Index of Authorities.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii

Statement of the Case. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . x

Issues Presented.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . x

Statement of Facts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

1. Amy Clay, a devoted wife and mother, worked for Scooter Phillips.. . . . . . 1

2. Scooter Phillips was a successful physical therapist and experienced pilot.. 1

3. Scooter Phillips replaced the engine in his airplane.. . . . . . . . . . . . . . . . . . . 2

4. Amy Clay and Scooter Phillips began a flight in his plane from Abilene to Oklahoma City. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

5. Six years earlier, the same engine was in an airplane destroyed by a hurricane .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

6. AIG insured the airplane and declared it a total loss. . . . . . . . . . . . . . . . . . . 9

7. AIG advertised the aircraft and its engine for sale to the public on AIG’s aviation website.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

8. AIG sold the aircraft and engine to Robert Ruhe. . . . . . . . . . . . . . . . . . . . . 13

9. The Ruhe family kept the engine in a box until August 2011, when Eric Ruhe sold the engine to Air-Tec.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

10. Air-Tec received the engine and clean logbook from Eric Ruhe. . . . . . . . . 15

11. Air-Tec sold the engine to Scooter Phillips. . . . . . . . . . . . . . . . . . . . . . . . . 18

iii 12. The families of Amy Clay and Scooter Phillips sued AIG.. . . . . . . . . . . . . 18

13. The jury answered two questions in favor of AIG and did not answer the ten remaining, conditionally submitted questions. . . . . . . . . . . . . . . . . . . . . . . 19

14. The trial court entered a take-nothing judgment. . . . . . . . . . . . . . . . . . . . . 20

Summary of the Argument. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Argument. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

I. The Court should grant a new trial because the jury's refusal to find that AIG was in the “business of selling aircraft engines and vacuum pumps” is clearly wrong.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

A. The standard of review for factual insufficiency is well-settled. . . . 23

B. The legal standards for a defendant engaging in the business of selling a product are also well-settled. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

C. The jury erred in refusing to find AIG was in the business of selling aircraft engines and vacuum pumps. . . . . . . . . . . . . . . . . . . . . . . . . . 25

D. The error was harmful because the record contains evidence of AIG’s products liability and the damages resulting from the deaths of Amy Clay and Scooter Phillips. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

E. This error alone requires a reversal and remand of the entire case for the claims of the family of Amy Clay.. . . . . . . . . . . . . . . . . . . . . . . . . . . 42

F. This error alone also requires a reversal and remand of the entire case for the claims of the family of Scooter Phillips. . . . . . . . . . . . . . . . . 44

G. Conclusion: the Court should reverse and remand the entire case for a new trial.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

iv II. Alternatively, the Court should grant a new trial because the jury’s negligence findings are clearly wrong.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

A. The jury’s refusal to find that AIG was negligent is clearly wrong.. 46

B. The jury’s finding that Scooter Phillips was negligent is also clearly wrong. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

III. Alternatively, the Court should grant a new trial because of the trial judge's harmful comments on the evidence about AIG's expert.. . . . . . . . . . . . . . . 51

A. The judge bolstered the credibility of AIG’s main expert. . . . . . . . . 51

B. The judge’s error was harmful. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

IV. Alternatively, the Court should grant a new trial because the trial court erred in not instructing the jury about the “as is” clause. . . . . . . . . . . . . . . . . . . . 55

A. An “as is” clause in the seller’s contract with its buyer does not immunize the seller from products liability to a downstream consumer or user. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

B. The trial court erred in not instructing the jury about the “as is” clause .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

Prayer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

Certificate of Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

Certificate of Service.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

v

1. Final Judgment and Charge of the Court 2. Photographs of Amy Clay and her Family 3. Photographs of Scooter Phillips and his Family 4. Transcript of Flight Radio Transmissions 5. Diagrams of Flight Path and Events 6. FAA Airplane Flying Handbook Excerpt 7. FAA Spatial Disorientation Publication 8. Photographs of Airplane Wreckage 9. Photographs of Airplane Damaged in Hurricane 10. AIG’s Advertisement and Bid Form 11. Example of Insurance Company Logbook Entry 12. AIG’s Sales Report and Summary

vi INDEX OF AUTHORITIES

Cases

Armstrong Rubber Co. v. Urquidez, 570 S.W.2d 374 (Tex. 1978). . . . . . . . . . . . 25

Blanton v. E. & L. Transp. Co., 207 S.W.2d 368 (Tex. 1948) .. . . . . . . . . . . . 42, 43

Champion v. Robinson, 392 S.W.3d 118 (Tex. App. – Texarkana 2012, writ ref’d n.r.e.) .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50-51

City of Irving v. Seppy, 301 S.W.3d 435 (Tex. App. – Dallas 2009, no pet.). . . . 58

Connecticut Gen. Life Ins. Co. v. Moore, 75 S.W.2d 329 (Tex. Civ. App. – Beaumont 1934, writ dis’d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

French v. Gill, 252 S.W.3d 748 (Tex. App. – Texarkana 2008, pet. denied). . . . 28

Fresh Coat, Inc. v. K-2, Inc., 318 S.W.3d 893 (Tex. 2010) .. . . . . . . . . . . . . . . . . 24

Gen. Motors Corp. v. Hudiburg Chevrolet, Inc., 199 S.W.3d 249 (Tex. 2006).. . 30

Glover v. Texas Gen. Indem. Co., 619 S.W.2d 400 (Tex. 1981). . . . . . . . . . . . . . 32

Hovenden v. Tenbush, 529 S.W.2d 302 (Tex. Civ. App. – San Antonio 1975, no writ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

MAN Engines & Components, Inc. v. Shows, 434 S.W.3d 132 (Tex. 2014). . . . . 24

McClung v. Ayers, 352 S.W.3d 723 (Tex. App. – Texarkana 2011, no pet.). . . . 23, 30, 46

McKisson v. Sales Affiliates, Inc., 416 S.W.2d 787 (Tex. 1967) .. . . . . . . . . . 44, 55

McLain v. Hodge, 474 S.W.2d 772 (Tex. Civ. App. – Waco 1971, writ ref’d n.r.e.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

vii Mid Continent Aircraft Corp. v. Curry County Spraying Service, Inc., 553 S.W.2d 935 (Tex. Civ. App. – Amarillo 1977), rev’d on other grounds, 572 S.W.2d 308 (Tex. 1978) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24, 56-57

Otis Elevator Co. v. Bedre, 776 S.W.2d 152 (Tex. 1989). . . . . . . . . . . . . . . . . . . 45

Parsons v. Ford Motor Co., 85 S.W.3d 323 (Tex. App. – Austin 2002, pet. denied) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Sanchez v. Texas Employers Ins. Ass'n, 618 S.W.2d 837 (Tex. Civ. App. – Amarillo 1981, writ ref’d n.r.e.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42-43, 45

SSP Partners v. Gladstrong Investments (USA) Corp., 275 S.W.3d 444 (Tex. 2008) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Strauss v. LaMark, 366 S.W.2d 555 (Tex. 1963). . . . . . . . . . . . . . . . . . . . . . . 43, 45

Thompson v. Janes, 227 S.W.2d 330 (Tex. Civ. App. –Austin 1950, no writ). 53-54

Statutes

TEX. BUS. & COM. CODE § 2.316. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

TEX. CIV. PRAC. & REM. CODE § 33.001. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

TEX. CIV. PRAC. & REM. CODE § 82.001, et seq. . . . . . . . . . . . . . . . . . . . . 19, et seq.

Rules

TEX. R. APP. P. 9.4(i). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

TEX. R. APP. P. 44.1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55, 60

Tex. R. Evid. 201(d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

viii Other

4 MCDONALD & CARLSON, TEXAS CIVIL PRACTICE § 22:58 (2d. ed. 2015). . . . 43, 53, 54

FAA Airplane Flying Handbook at pg. 3-5 (Appendix 6). . . . . . . . . . . . . . . . . . . . 5

FAA Medical Facts for Pilots at pg. 2 (Appendix 7). . . . . . . . . . . . . . . . . . . . . . 5-6

RESTATEMENT (SECOND) OF TORTS § 402A (1965). . . . . . . . . . . . . . . . . . 25, et seq.

RESTATEMENT (THIRD) OF TORTS: PRODUCT LIABILITY (1998).. . . . . . . . . . . 24, 31

TEXAS PATTERN JURY CHARGES CH. 70 (2012). . . . . . . . . . . . . . . . . . . . . . . . 23, 32

ix STATEMENT OF THE CASE

Nature of Wrongful death and survival action resulting from an airplane the Case crash that killed the pilot and his passenger. Course of the Five-day jury trial ending with a verdict (2 CR 1162; Appendix Proceedings 1 at pg. 4). Trial Court Honorable G. Timothy Boswell 402nd District Court, Wood County, Texas Trial Court’s Take-nothing judgment (2 CR 1159; Appendix 1 at pg. 1). Disposition

ISSUES PRESENTED

1. The Court should grant a new trial because the jury's refusal to find that AIG was in the “business of selling aircraft engines and vacuum pumps” is clearly wrong.

2. Alternatively, the Court should grant a new trial because the jury's negligence findings are clearly wrong.

3. Alternatively, the Court should grant a new trial because of the trial judge's harmful comments on the evidence about AIG's expert.

4. Alternatively, the Court should grant a new trial because the trial court erred in not instructing the jury about the “as is” clause.

x STATEMENT OF FACTS

1. Amy Clay, a devoted wife and mother, worked for Scooter Phillips.

Amy Clay, age 31, was a devoted wife and mother of two sons, ages 8 and 7

(4 RR 233-235, 239-240, 247-265). Amy and her husband were high school

sweethearts who later reconnected and married (4 RR 242-246). Amy was very close

to her mother, who is a widow and lived nearby (4 RR 231, 238-239). Appendix 2

contains photos of Amy and her family (PX-7). Amy worked as the office

administrator for Scooter Phillips’s pediatric physical therapy clinic in Abilene. She

loved working with children with disabilities (4 RR 235-236). She also worked as the

executive assistant for Scooter Phillips (4 RR 211-212, 237, 261-262).

2. Scooter Phillips was a successful physical therapist and experienced pilot.

Dale “Scooter” Phillips, age 48, was a dynamic, energetic businessman. He was

actively involved in the lives of his son, age 19, and his daughter, age 15 (4 RR 197-

199, 205-206, 221-226). He was also very close to his mother and father (4 RR 207-

210, 219-222). Appendix 3 contains photographs of Scooter and his family (PX- 8).

Scooter grew up in a small town near Oklahoma City. During college at

Abilene Christian University, he walked-on to the football team, became the starting

wide receiver, and graduated with a degree in biology (4 RR 200-203). He then went

to the University of Texas Health Sciences Center in Dallas, where he became a

1 physical therapist. After working for others in the field, he started his own successful

physical therapy clinics in Abilene (4 RR 203-205).

Scooter also became an avid and experienced pilot (PX-19; 4 RR 206-207). He

had more than 500 hours of total flight time (3 RR 138). Scooter’s father owned an

insurance company in Oklahoma City, which Scooter planned to take over when his

father retired and went into the mission field (4 RR 209). Scooter was a director of

the insurance company and often flew his private plane, a Piper PA-24-250, from

Abilene to Oklahoma City to attend business meetings at his father’s company (4 RR

201, 209-210, 212, 220). Amy Clay often flew with him to the meetings in Oklahoma

City (4 RR 211-212, 237, 261-262).

3. Scooter Phillips replaced the engine in his airplane.

In October 2011, Scooter Phillips saw an ad in a magazine for an engine he

could use to replace the existing one in his plane. In response to the ad, he contacted

the seller, Air-Tec, Inc., about the engine, and asked if the logbook for the engine was

complete (PX-43; 4 RR 90). Under federal regulations, to be used in an airplane, an

engine must have an accompanying logbook that details the history of the engine. The

engine logbook is the document that moves with the engine through the stream of

commerce (3 RR 103). The logbook is considered the “Bible of the engine” in the

aviation industry (4 RR 95).

2 The seller told Scooter the complete logbook was with the engine and answered

Scooter’s questions about the engine (PX-43; 4 RR 90). The engine logbook did not

indicate the engine had ever been damaged in any way or involved in any accident.

Upon visual inspection, the engine “looked perfect” (4 RR 95-96).

Scooter purchased the engine and logbook for $10,178.00 (4 RR 94). He then

had an FAA certified mechanic review the logbook, inspect and service the engine,

and install the engine in his airplane. On December 15, 2011, the mechanic noted his

work on the engine in its logbook. He installed new gaskets and hoses, flushed and

replaced the oil and coolant, and installed new engine mounts. He ran the engine,

checked the engine compression, and checked for oil leaks. He noted the number of

hours that had elapsed between the last major overhaul of the engine recorded in the

logbook and his installation of the engine in Scooter's plane. Everything about the

engine checked out and the mechanic indicated in the logbook that the plane was

“okay to return to service” (PX-24; 3 RR 188). There was nothing in the engine

logbook to indicate that the mechanic needed to tear down or further inspect the

engine before placing it into service (3 RR 189).

3 4. Amy Clay and Scooter Phillips began a flight in his plane from Abilene to Oklahoma City.

At 7:21 pm on the night of February 21, 2012, Amy and Scooter took off from

the airport in Abilene to fly to Oklahoma City for a meeting at his father’s company

(2 RR 213-214, 221). Appendix 4 is a transcript of the radio transmissions between

Scooter and the control tower (PX-1). Appendix 5 is a reconstruction of their flight

path with information about the sequence of events (PX-1).

The control tower cleared Scooter at takeoff to fly “VFR” or under visual flight

rules (2 RR 226). About 13 minutes after takeoff, Scooter called the control tower,

said he needed to turn around, and said “we’ve lost our suction and our attitude

indicator.” At that point they were 8,100 feet above the ground (PX 1; 2 RR 223). It

is undisputed that the vacuum pump on the engine – which powered the attitude

indicator instrument – failed during their flight (2 RR 118-119; 5 RR 175). The

vacuum pump was a component of the engine that the certified mechanic installed in

Scooter’s plane in December 2011 (2 RR 122-123).

It is well known in the aviation industry that the failure of a vacuum pump

during flight and the resulting loss of the attitude indicator instrument can lead to

spatial disorientation of the pilot and loss of control of the aircraft (5 RR 87-88). A

pilot like Scooter who is flying “VFR” (under visual flight rules) maintains his

4 orientation by monitoring visual cues (looking out the windows to see the horizon)

and also the attitude indicator instrument in the cockpit (which shows the position of

the aircraft in relation to the horizon) (3 RR 225-226). The attitude indicator shows

“the position of the nose relative to the horizon and will indicate whether [it] is

necessary to change the pitch attitude to return to level flight.” FAA Airplane Flying

Handbook at pg. 3-5 (Appendix 6).1

When visual cues are telling the pilot one thing, and his attitude indicator is

telling him something else or not functioning, the pilot can easily experience spatial

disorientation (3 RR 154-156, 220-221, 227-228). “Spatial orientation in flight is

difficult to achieve because numerous sensory stimuli (visual, vestibular, and

proprioceptive) vary in magnitude, direction, and frequency. Any differences or

discrepancies between visual, vestibular, and proprioceptive sensory inputs result in

a sensory mismatch that can produce illusions and lead to spatial disorientation.” FAA

Medical Facts for Pilots at pg. 2 (Appendix 7).2 Because a “sensory mismatch”

between what a pilot is seeing and feeling can cause spatial disorientation, the FAA

1 The Court is requested to take judicial notice of this publication pursuant to Tex. R. Evid. 201(d). The publication is also available at https://www.faa.gov/regulations_policies/handbooks_ manuals/aircraft/airplane_handbook/. 2 The Court is requested to take judicial notice of this publication pursuant to Tex. R. Evid. 201(d). The publication is also available at http://www.faa.gov/pilots/safety/pilotsafetybrochures /media/spatiald.pdf

5 recommends that “[w]hen flying at night or in reduced visibility, use the flight

instruments,” and “[i]f you experience a vestibular illusion during flight, trust your

instruments and disregard your sensory perceptions.” Id. at pg. 8.

About 13 minutes into their night flight, Scooter Phillips told the control tower

“we've lost our suction and our attitude indicator,” so he could not use that critical

instrument to keep his plane level. About 25 seconds later, Scooter told the controller

he was going to try to turn around. At that moment, Amy and Scooter were still about

8,000 feet above the ground (PX-1; 2 RR 223-224). Around a minute later, the

controller asked Scooter if he was flying VFR. Scooter responded “affirmative we are

VFR but we are having trouble.” Those were Scooter’s last words to the controller.

The controller then gave Scooter clearance to fly back to Abilene under visual flight

rules. At that point, Amy and Scooter were about 3,700 feet above the ground (PX-1;

2 RR 226-227).

The controller told Scooter the closest airport was Albany, five miles to his

southeast, and noted that “you’re altitude appears to be going up and down pretty

erratically ... you’ve lost a thousand feet in the last six seconds.” This means Amy and

Scooter were dropping to the ground at 6,000 feet per minute. A normal rate of

descent is 500 feet per minute. Scooter’s radio was then keyed open. The sound of a

woman screaming can be heard in the background on the audio recording of the radio

6 transmission. About 24 seconds later, their plane crashed into the ground, killing

Amy and Scooter (PX-1; 2 RR 227-230).

AIG's expert testified that a “graveyard spiral” occurs when a pilot does not

have a visible horizon, cannot tell the attitude of the aircraft by looking outside, and

gets disoriented. The disorientation causes the pilot to mistakenly turn the plane in

the wrong direction, which causes the plane to spiral downward rapidly. He agreed

that during the downward spiral, the cabin is a terrifying, thunderous cave of noise,

with any loose objects bouncing around inside the cabin, until the plane smashes into

the ground (5 RR 175-177). Amy and Scooter’s violent, rapid descent tore the right

wing off the plane; the wing landed about a half mile from the crash site. Their

remains were found the next day at the crash site, 34 miles from the Abilene airport

(2 RR 219, 221, 232-233). Appendix 8 contains photographs of the wreckage.

Amy and Scooter suffered horrific deaths because the logbook Scooter received

when he bought the engine did not contain vital information about the engine that

would have saved their lives, information that several years before, AIG intentionally

omitted from the same logbook when AIG sold the engine and its logbook back into

the stream of commerce.

7 5. Six years earlier, the same engine was in an airplane destroyed by a hurricane.

Six years before Scooter Phillips purchased the engine for his plane, the same

engine was in another airplane in Florida (PX-501; 2 RR 122-123). The engine was

in a Piper PA-32-260 airplane owned by Don Gregoire of Coral Springs, Florida (PX-

1; 4 RR 171). Gregoire put more than 200 flight hours on the plane, which always

flew well. He properly maintained the plane and its engine and had both inspected

regularly (4 RR 173-174). He never had any mechanical problems with the engine or

its vacuum pump (4 RR 180).

In October 2005, Don Gregoire had his plane stored outside, tethered to the

ground with ropes, at Pompano Airpark near Fort Lauderdale, about a mile from the

ocean (4 RR 174, 178). On October 24, 2005, Hurricane Wilma struck the Pompano

Airpark and other parts of Florida. Wilma was a very strong Category 2 or a weak

Category 3 hurricane when it struck land (2 RR 243). Don Gregoire testified the

hurricane “destroyed” his plane. The wind broke the steel hooks for the ropes

securing his plane to the ground and flipped his plane. He found his plane upside

down with damages to “just about everything,” which left it “well beyond repair” (4

RR 174-175). The propeller was damaged and Gregoire believed the engine “would

need a complete overhaul” (4 RR 179).

8 Appendix 9 contains photographs showing the condition of the upside-down

plane after the hurricane (DX-64; PX-61 to 64, 289 to 291). Photographs show that

the propeller – while attached to the engine – struck the ground or another object with

enough force to bend the propeller at a ninety-degree angle (PX-289; DX-64). The

severely damaged airplane remained upside down at the airpark and exposed to the

elements for about three weeks (4 RR 176, 178). From 4 to 5 inches of rain fell on the

plane while it was upside-down (2 RR 245-247; 4 RR 178).

6. AIG insured the airplane and declared it a total loss.

AIG Aerospace Insurance Services, Inc.3 insured Don Gregoire’s airplane and

he submitted a claim for the hurricane damages to AIG (DX-64; PX-38, 265, 273).

In response to his claim, AIG’s adjuster informed him that “[i]f the aircraft is a total

loss we will need to retrieve the aircraft logbooks to conclude the claim” (DX-64;

PX-265). As required by federal regulations, Gregoire had separate logbooks for the

engine, airframe, and propeller. The engine logbook recorded the history of the

engine, including its maintenance and inspections, and accompanied the engine from

its original date of manufacture through each transfer of ownership (PX-22).

AIG’s adjuster handled the claim from his office in Arizona, looked at photos

of the damaged plane, and declared the plane a total loss (2 RR 68-69, 102; 4 RR

3 The entity was named “AIG Aviation, Inc.” at the time in question (1 CR 178).

9 102). AIG’s policy limit was $100,000.00, minus a $100.00 deductible (DX-64; PX-

267). AIG paid the policy limit of $99,900.00 and required the following items from

Gregoire: a signed bill of sale for the aircraft with the identity of the buyer left blank,

the aircraft’s registration document, the airworthiness certificate, the keys, the engine

logbook, the airframe logbook, and the propeller logbook (2 RR 69-70; PX-283; DX-

64, AIG000049). AIG required a blank bill of sale because it did not want to be

named the owner of the aircraft with the FAA (2 RR 130-131). Gregoire delivered the

logbooks and other items to AIG (2 RR 102-103; DX-64, AIG000025). AIG took

possession of the destroyed aircraft and placed it in storage, where it remained under

AIG’s sole control (DX-64, AIG000024; 2 RR 76; 4 RR 104). Under the insurance

policy, upon paying Gregoire, AIG owned the aircraft (4 RR 102).

7. AIG advertised the aircraft and its engine for sale to the public on AIG’s aviation website.

AIG’s adjuster made the decision as to whether AIG would sell the damaged

airplane for scrap (thereby preventing any part of it from being used in aviation) or

sell it on AIG’s aviation website4 (thereby recycling component parts back into the

stream of aviation commerce). The adjuster testified that AIG’s only criterion for that

decision was whether AIG could make more money by placing the damaged aircraft

4 http://www.aigaviation.com/aviationsalvage/SalvageList.aspx

10 and its components back into the stream of commerce through selling them on its

website. Public safety was not a consideration to AIG (2 RR 70, 78-80). The adjuster

testified that his orders were to re-sell every total loss aircraft and it components

unless the aircraft was destroyed by fire so only ashes remained or the aircraft was

missing at sea (2 RR 71). During the three years before it acquired the damaged

aircraft from Don Gregoire, AIG had sold 1,140 aircraft or aircraft parts on its website

and received in return more than $17.7 million from such sales (PX-311, 2 RR 8-9;

Appendix 12).

The engine logbook recorded the date of the last major overhaul of the engine

(PX-22). AIG knew the engine logbook on its face indicated the engine would have

at least another 1,000 hours of useful life before it would need a major overhaul.

AIG’s internal valuation worksheet stated the engine was to be overhauled every

2000 hours (“TBO hours: 2000”)5 and that the logbook indicated the engine had been

operated for about 1000 hours since its last major overhaul (“Eng Hrs SMOH:

1000")6 (DX-64, AIG000031). Thus, AIG understood that taken at face-value, the

logbook indicated the engine was valuable because it did not contain any reference

to the hurricane damage (PX-22).

5 “TBO” means “time between overhaul.” http://www.acronymfinder.com. 6 “SMOH” means “since major overhaul.” http://www.acronymfinder.com.

11 Pursuant to AIG’s standard procedure, the adjuster posted an advertisement and

bid form on AIG’s website, along with photographs of the aircraft (2 RR 71-73, 103;

4 RR 102, 107; DX-64, AIG000020-21; Appendix 10). AIG advertised on its website

for sale to the public a specific engine (identifying its manufacturer, model, serial

number, and hours of use), a specific airframe (identifying its manufacturer, model,

serial number, and hours of use), a specific aircraft (identifying its manufacturer,

model, and serial number), and the specific instruments on the aircraft (identifying

their manufacturers and models) (DX-13, Appendix 10). AIG’s advertisement and bid

form stated “[h]urricane loss, aircraft flipped over;” described the damages as “[b]oth

wings, all control surfaces, tail section, prop, fuselage, cowling;” and explained how

to submit a bid. At the bottom, the document also said: “You are advised that the

described aircraft is for sale ‘AS IS/WHERE IS’...” (DX-13).

AIG’s advertisement and bid form did not state there was any damage to the

engine (DX-13). The adjuster knew that if AIG disclosed damage to the engine, AIG

would get less money (2 RR 80). The adjuster knew that when there is a prop strike

like this, “you're going to have some kind of engine damage” (2 RR 74). AIG knew

about an FAA directive that said when there is a prop strike, a mechanic should

determine if the strike damaged the engine (4 RR 107-108). AIG did not have a

mechanic inspect the engine (2 RR 80; 4 RR 110-111,120-121).

12 8. AIG sold the aircraft and engine to Robert Ruhe.

Robert Ruhe submitted a bid to AIG to purchase the aircraft, including its

engine, for $28,400.00 (DX-13). AIG accepted his bid and sold the aircraft to Ruhe

for $28,400.00 (2 RR 103-105; DX-64, AIG000010). On December 14, 2005, AIG

released the aircraft to Ruhe and sent him the logbooks, airworthiness certificate, and

blank bill of sale (2 RR 127-128; DX-64, AIG000011).

When other insurance companies sell aircraft and their components in this

situation, they record in the logbooks that the aircraft was involved in an accident and

was deemed a total loss, and provide the claim number, name, and address of the

insurance company (2 RR 142-143; 3 RR 116, 178-182). Appendix 11 is an example

of this type of logbook entry by an insurance company (PX-9). In order for an engine

to be used in aviation, FAA regulations require that the engine have a logbook. As a

result, the engine logbook always accompanies the engine through the stream of

commerce from one owner to the next (3 RR 108). By recording the fact that an

aircraft was involved in an accident and was deemed a total loss in the engine

logbook, an insurance company selling aircraft can easily ensure that a downstream

owner of the engine like Scooter Phillips has vital, life-saving information about the

history of the engine (3 RR 118).

13 AIG’s corporate representative agreed that “[t]here's no history to the aircraft

if you don't put it in the logbooks” (2 RR 159). He agreed that without an entry about

the damage to the aircraft in the logbook, a reader would not know from the logbook

whether the aircraft was damaged at all (2 RR 158-159). It was AIG’s policy,

however, not to disclose in the logbooks the fact that the aircraft was damaged in an

accident when AIG sold the aircraft and its engine and delivered their logbooks to

the buyer. AIG provides “clean” logbooks to the buyer, which do not disclose in any

way any damages to the engine, airframe, or propeller (2 RR 82, 103, 134; 4 RR 108-

109). It would have taken AIG about five minutes and cost nothing to make entries

in the separate logbooks for the engine, airframe, and propeller, disclosing the

hurricane damage (2 RR 134-135). AIG also delivered the airworthiness certificate

for the airplane to Ruhe without marking on the certificate that the plane was not

airworthy (2 RR 133).

AIG’s adjuster testified that he understood that when AIG sold aircraft to a

buyer, the buyer could re-sell the engine fraudulently without disclosing the potential

damages to the engine, but he was not aware of any discussions at AIG about that

issue. The adjuster agreed that if AIG recorded accident information in the engine

logbook it delivered to its buyer, it could prevent fraudulent sales to downstream

purchasers (2 RR 83-84).

14 9. The Ruhe family kept the engine in a box until August 2011, when Eric Ruhe sold the engine to Air-Tec.

In December 2005, the aircraft was shipped from AIG’s storage facility in

Florida to Robert Ruhe in Ohio, who received the aircraft components disassembled

in boxes. Ruhe stored the boxes in a closed hangar with concrete floors (4 RR 88; 5

RR 43, 46). Robert Ruhe thereafter became ill and died in September 2008 (5 RR 49,

61). About three years after he died, his son, Eric Ruhe, decided to sell the engine (5

RR 50). Eric Ruhe saw an advertisement for Air-Tec, called its owner, and sold the

engine to Air-Tec for $6,000.00 (4 RR 83; 5 RR 51, 59-60). When the engine was in

the possession of the Ruhe family, no one worked on it, no one used it, and it

remained in its box (5 RR 51, 55). Eric Ruhe testified he looked at the engine and it

looked like any other engine (5 RR 61). In August 2011, Eric Ruhe sent the clean

engine logbook received from AIG with the engine to Air-Tec (5 RR 60; PX-3).

10. Air-Tec received the engine and clean logbook from Eric Ruhe.

Richard Waters is the owner of Air-Tec. Waters buys and re-sells only

Lycoming aviation engines like the one in question. Waters had been in the aviation

engine business for about 40 years, during which time he had bought and re-sold more

than 2,000 Lycoming engines (4 RR 80-82). Waters testified that Eric Ruhe called him

wanting to sell the engine. Ruhe told him “the engine is perfect. It's complete with all

15 accessories except the alternator;” “it’s in the hanger;” “a woman owns it and her

husband passed away, and she wants to sell it;” and “there is no damage on the engine

whatsoever” (4 RR 83, 86). Ruhe did not tell him the engine had been in an airplane

that was flipped and damaged in a hurricane. Waters did not have an opportunity to

review the engine logbook before he sent his check for $6,000.00 to Ruhe for the

engine. Waters had the engine shipped from Ruhe in Ohio to Waters’s mechanic in

Orlando, Florida (4 RR 85, 87-88).

The engine and its logbook arrived in the same shipping crate (4 RR 88). Upon

delivery, Waters immediately read the entire engine logbook, because when he buys

an engine, he goes by its logbook, which “tells me exactly what the engine is” (4 RR

82, 88, 95). He thought it was “a wonderful logbook” and well-kept (4 RR 89). The

last entry in the logbook was the 50-hour engine inspection and return to service, two

months before the date when Hurricane Wilma occurred (2 RR 243; 4 RR 98). There

was nothing in the engine logbook to indicate the engine had received a prop strike in

a hurricane or was sold by AIG (4 RR 95). Waters “checked the engine and ... it

looked perfect to me. And going by the logbook, I didn’t have any reason to take it

apart” (4 RR 96). The engine was not altered in any way when it was in Air-Tec’s

possession (4 RR 98).

16 At the time he testified, Waters knew that Amy Clay and Scooter Phillips were

killed because the vacuum pump failed on the engine that Ruhe had sold to him, and

that he had in turn sold to Scooter (4 RR 85). He testified that AIG should have

recorded the hurricane damage in the logbook and that AIG should not have delivered

the clean engine logbook to Ruhe. AIG should have sold the engine without a logbook

for someone to use in an airboat. But if AIG had sold it without its logbook, the

engine would not have been “worth anything” (4 RR 89).

The engine logbook did not indicate AIG had any involvement with the engine,

so Waters had no reason to contact AIG about the engine. Even if Waters had looked

on AIG’s aviation website for information, he would have found none. Thirty days

after posting an aircraft and its engine for sale on its aviation website, AIG deletes all

information about the aircraft and its engine from its website (2 RR 105). Waters

testified that if he had known the engine was in an airplane damaged in a hurricane,

he may or may not have purchased the engine. If he had bought it, he would have paid

only $1,500.00 and would have sold it to an airboater so it could never be used in an

airplane (4 RR 89-90).

17 11. Air-Tec sold the engine to Scooter Phillips.

After seeing an advertisement, Scooter Phillips called Air-Tec to ask about the

engine. Richard Waters told Scooter the engine logbook indicated an “exceptionally”

low number of hours since the last major overhaul of the engine. They then exchanged

some emails about the engine, and Scooter paid him $10,178.00 for the engine and

shipping (4 RR 90-91, 94).

As explained above, Scooter had an FAA certified mechanic review the

logbook, inspect and service the engine, and install the engine in his airplane.

Everything about the engine checked out and the mechanic indicated in the logbook

that the plane was “okay to return to service” (PX-24; 3 RR 188). Nothing in the

engine logbook indicated that the mechanic needed to tear down or further inspect the

engine before Scooter could use it (3 RR 189). Scooter had operated the engine for

only three hours before he and Amy left Abilene to fly to Oklahoma City, never to

return to their homes and families (PX-3).

12. The families of Amy Clay and Scooter Phillips sued AIG.

Amy Clay’s husband, mother, and children, and Scooter Phillips’s parents and

children, sued AIG, alleging wrongful death and survival claims based on products

liability and negligence (1 CR 162-177). Amy Clay’s family did not believe Scooter

Phillips was negligent and did not sue his estate. AIG denied the families’ claims,

18 alleged that Scooter Phillips was negligent, and asserted that the Ruhes and Air-Tec

were responsible third parties (1 CR 178-184).

AIG also filed a cross-claim against Holly Aero (located in Wood County),

which had overhauled and sold the vacuum pump in 2000 (1 CR 164, 185). AIG

alleged it was a “seller” of the vacuum pump and was entitled to statutory indemnity

from Holly Aero under TEX. CIV. PRAC. & REM. CODE § 82.002 (1 CR 186-187). AIG

also alleged it was a “non-manufacturing seller” entitled to the limitations on liability

in § 82.003 (2 CR 1109, 1113). Prior to trial, the court granted summary judgment in

favor of Holly Aero and dismissed it from the case (2 CR 1108).

13. The jury answered two questions in favor of AIG and did not answer the ten remaining, conditionally submitted questions.

Question 1 of the charge asked the jury:

Was AIG engaged in the business of selling aircraft engines and vacuum pumps?

The “business of selling” means involvement, as a part of its business, in selling, leasing, or otherwise placing in the course of commerce products similar to the products in question by transactions that are essentially commercial in character.

The jury answered “No” (2 CR 1166; Appendix 1 at pg. 8). As a result, the jury did

not answer the conditionally submitted products liability questions (2 CR 1167-1169;

Appendix 1 at pgs. 9-11).

19 Question 5 of the charge presented the negligence questions in broad form:

Did the negligence, if any, of those named below proximately cause the occurrence or deaths in question?

Answer "Yes" or "No" for each of the following:

1. AIG No 2. The Ruhes No 3. Air-Tec, Inc. No 4. Scooter Phillips Yes

(2 CR 1170; Appendix 1 at pg. 12). Because of these answers, the jury did not answer

the question on proportionate responsibility or the questions on damages (2 CR 1171-

1182; Appendix 1 at pgs. 13-24).

14. The trial court entered a take-nothing judgment.

Based on the jury’s verdict, the trial court entered a take-nothing judgment in

favor of AIG and against the families of Amy Clay and Scooter Phillips (2 CR 1159;

Appendix 1 at pg. 1). The families timely filed a motion for new trial asserting all the

complaints raised in this brief, which was overruled by operation of law (2 CR 1187).

The families now appeal the judgment to this Court (2 CR 1248).

20 SUMMARY OF THE ARGUMENT

AIG had a continuously operating aviation website dedicated solely to selling

to the public a wide variety of used engines, airframes, instruments, or aircraft.7 Any

person, anywhere in the world, at any time of the day or night, could see the items AIG

had for sale and could submit an offer to purchase by faxing a one-page form. AIG’s

website generated a high volume of interest from buyers: its advertisement and bid

form said “Due to the high volume of bids received by [AIG], we cannot confirm

receipt of your bid” (Appendix 10). During the three years before AIG sold the aircraft

and engine to Robert Ruhe, AIG sold 1,140 used engines, airframes, instruments, or

aircraft on its website. AIG received more than $17.7 million from such sales

(Appendix 12).

AIG’s corporate representative testified that AIG “recycled” airplane parts into

the stream of commerce through its website (2 RR 160). AIG advertised on its aviation

website, for sale to the public, the specific engine in question, identifying its

manufacturer, model, serial number, and hours of use (Appendix 10). Robert Ruhe saw

the advertisement and submitted an offer to purchase the aircraft and its engine. AIG

accepted his offer. Ruhe sent a check to AIG for $28,400.00 and AIG deposited his

check. AIG delivered a clean engine logbook and bill of sale to Ruhe and gave him

7 http://www.aigaviation.com/aviationsalvage/SalvageList.aspx

21 possession of the engine (2 RR 103-105, 127-128; DX-64). AIG’s transaction with

Ruhe was no different than AIG’s other 1,140 sales to buyers during the prior three

years, which produced more than $17.7 million in revenue to AIG from selling used

goods.

When asked, “Was AIG engaged in the business of selling aircraft engines and

vacuum pumps?” the jury answered “No.” The answer is so against the great weight

and preponderance of the evidence that it is clearly wrong and should be set aside. The

error caused the jury not to answer the products liability and damages questions, and

was harmful because the record contains evidence of AIG’s products liability and

damages to the families of Amy Clay and Scooter Phillips.

The remaining points in this brief shed light on what probably contributed to the

jury’s decision to ignore the evidence in answering this question, but the other points

are not necessary for the disposition of this case. The first issue is controlling because

if the jury’s answer is clearly wrong, the case should be reversed and remanded. The

families of Amy Clay and Scooter Phillips respectfully urge the Court to set aside the

jury’s answer and remand the case for a new trial.

22 ARGUMENT

I. The Court should grant a new trial because the jury's refusal to find that AIG was in the “business of selling aircraft engines and vacuum pumps” is clearly wrong.

A. The standard of review for factual insufficiency is well-settled.

“When a party attacks the factual sufficiency of an adverse finding on an issue

on which it has the burden of proof, it must demonstrate on appeal that the adverse

finding is against the great weight and preponderance of the evidence.” McClung v.

Ayers, 352 S.W.3d 723, 727 (Tex. App. – Texarkana 2011, no pet.). “In determining

factual sufficiency, we must consider and weigh all of the evidence, and can set aside

a verdict only if the evidence is so weak or if the finding is so against the great weight

and preponderance of the evidence that it is clearly wrong and unjust.” Id.

B. The legal standards for a defendant engaging in the business of selling a product are also well-settled.

Question 1 tracked TEXAS PATTERN JURY CHARGES 70.5 (2012) and asked the

jury: Was AIG engaged in the business of selling aircraft engines and vacuum pumps?

The “business of selling” means involvement, as a part of its business, in selling, leasing, or otherwise placing in the course of commerce products similar to the products in question by transactions that are essentially commercial in character.

23 (2 CR 1166; Appendix 1 at pg. 8).

It has long been the rule in Texas that strict products liability applies to a seller

of used goods. See, e.g., Parsons v. Ford Motor Co., 85 S.W.3d 323, 329 n.1 (Tex.

App. – Austin 2002, pet. denied); Mid Continent Aircraft Corp. v. Curry County

Spraying Service, Inc., 553 S.W.2d 935 (Tex. Civ. App. – Amarillo 1977), rev’d on

other grounds, 572 S.W.2d 308 (Tex. 1978) (used aircraft engine); Hovenden v.

Tenbush, 529 S.W.2d 302, 306 (Tex. Civ. App. – San Antonio 1975, no writ); McLain

v. Hodge, 474 S.W.2d 772, 776 (Tex. Civ. App. – Waco 1971, writ ref’d n.r.e.). Last

year, the Supreme Court held that a downstream purchaser of used goods can sue the

original seller for breach of the implied warranty of merchantability. MAN Engines &

Components, Inc. v. Shows, 434 S.W.3d 132 (Tex. 2014).

A seller of used goods is also subject to products liability under Sections 1, 8,

and 20 of the RESTATEMENT (THIRD) OF TORTS: PRODUCT LIABILITY (1998). The

Supreme Court has cited the Third Restatement with approval. See, e.g., Fresh Coat,

Inc. v. K-2, Inc., 318 S.W.3d 893, 897 (Tex. 2010) (citing the definitions of “seller”

and “product” in the Third Restatement). Illustration 1 to Section 8 of the Third

Restatement applies strict liability to a company selling used goods in a similar

context:

24 ABC Car Rental purchases and maintains a fleet of new cars for its business of short-term car leases. At regular intervals it sells these rental cars at public auctions. In connection with these auctions, ABC is in the business of selling used products within the meaning of this Section.

The doctrine of strict liability “applies to any person engaged in the business of

selling products for use or consumption.... [I]t is not necessary that the defendant

actually sell the product, but only that he be engaged in the business of introducing the

product into channels of commerce.” Armstrong Rubber Co. v. Urquidez, 570 S.W.2d

374, 375 (Tex. 1978). A “seller's liability is not based on fault; it is imputed by law.”

SSP Partners v. Gladstrong Investments (USA) Corp., 275 S.W.3d 444, 457 (Tex.

2008). To have strict liability for a product, it “is not necessary that the seller be

engaged solely in the business of selling such products....” RESTATEMENT (SECOND)

OF TORTS § 402A (1965), Comment f.

C. The jury erred in refusing to find AIG was in the business of selling aircraft engines and vacuum pumps.

As explained below, the jury’s answer of “No” to Question 1 is so against the

great weight and preponderance of the evidence that it is clearly wrong and unjust (2

CR 1166; Appendix 1 at pg. 8). Four reasons demonstrate why the Court should set

aside the jury’s answer.

25 First, as a part of its business, AIG had a dedicated, continuous website8 for

selling and placing in the course of commerce products similar to the product in

question by transactions that were essentially commercial in character. AIG’s internal

report for the period from January 1, 2003, to December 31, 2005, was introduced into

evidence (PX-311, 2 RR 8-9). The report proved that during the three years before

AIG sold the aircraft and its engine to Robert Ruhe, AIG had sold 1,140 similar

aircraft or aircraft components on its aviation website and received in return more than

$17.7 million from such sales (PX-311, 2 RR 8-9; Appendix 12).

AIG advertised on its website, for sale to the public, the specific engine in

question, identifying its manufacturer, model, serial number, and hours of use. AIG

advertised the engine as “Engine(s): Lycoming O-540 E4B5,” “Serial Number: L-

20394-40A,” “Approximate total hours: (estimated from logbooks or other info)

Engines: TSMOH:9 679.37 hrs” (DX-13; Appendix 10). Robert Ruhe saw this

advertisement on AIG’s website and submitted an offer to purchase the aircraft and

its engine. AIG accepted his offer. Ruhe sent a check to AIG for $28,400.00 and AIG

accepted his check (2 RR 103-105; DX-64, AIG000010).

8 http://www.aigaviation.com/aviationsalvage/SalvageList.aspx 9 TSMOH stands for “Time Since Major Overhaul.” http://www.acronymfinder.com.

26 AIG had possession of the engine and paid for its storage at a commercial

storage facility in Florida (DX-64, AIG000056-58). On December 15, 2005, AIG sent

a letter to Ruhe, confirming AIG’s receipt of his payment, delivering the clean engine

logbook and bill of sale to him, and authorizing him to take possession of the engine

from AIG’s storage facility in Florida (2 RR 127-128; DX-64, AIG000006). The

engine was then shipped in a box from AIG’s storage facility to Ruhe in Ohio (4 RR

88; 5 RR 43, 46). AIG was clearly a seller of the engine to Ruhe.

Second, AIG’s corporate representative admitted at trial that AIG was a seller

of aircraft when it sold the aircraft and engine to Robert Ruhe. He testified as follows:

Q. ...Was AIG in 2005 a seller of salvaged aircraft? A. Yes.

(2 RR 104). In the words of AIG’s corporate representative, when AIG sold the

aircraft, it was “recycling” aviation parts like the engine and its vacuum pump:

Q. And y'all never considered scrapping it or any part of it, did you? A. We sold the salvage, no, sir. Q. You wanted to get the money, didn't you? A. We sold the salvage to reduce the amount that -- the overall amount on the claim, yes, sir. Q. You got money, didn't you, $28,000 -- A. Yes, sir, we got $28,000 and we recycled parts, yes, sir. Q. Now, do you see a difference between recycling automotive parts and plane parts? A. Not really, no, sir.

(2 RR 160).

27 Third, AIG judicially admitted in its pleadings that it was engaged in the

business of selling aircraft engines and vacuum pumps. “Assertions of fact, not plead

in the alternative, in the live pleadings of a party are regarded as formal judicial

admissions. A judicial admission that is clear and unequivocal has conclusive effect

and bars the admitting party from later disputing the admitted fact.” French v. Gill,

252 S.W.3d 748, 754 (Tex. App. – Texarkana 2008, pet. denied).

In its live pleading, AIG made the following assertions of fact:

• “Holly Aero overhauled and sold the vacuum pump in 1999 and 2000.”

• “The overhaul was also performed in a negligent manner, rendering the vacuum pump defective.”

• “Holly Aero was responsible for or contributed to [Scooter’s] aircraft crashing on February 20, 2012.”

• “Holly Aero is a manufacturer” within the meaning of TEX. CIV. PRAC. & REM. CODE § 82.002.

• AIG “is a ‘seller’ under that statute solely for the purposes of ... § 82.002, and not for any other purposes, including Texas product liability law.”

(1 CR 186-187).

Also, in its motion for directed verdict, AIG asserted that the Phillips and Clay

families “have failed to prove the existence of at least one of the seven grounds upon

which AIG, as a nonmanufacturing seller, could be held liable to [the families] for

28 the harm they suffered as a result of the occurrence in question” (2 CR 1109). AIG

asserted that under § 82.003, “a party that sells a product that it did not manufacture

cannot be held liable under any theory asserted in this case unless the plaintiff proves

the existence of one of seven exceptions” specified in the statute (2 CR 1113).

By asserting the fact that it was a “seller” of the vacuum pump under § 82.002,

and a “non-manufacturing seller” under § 82.003, AIG factually admitted it was “a

person who is engaged in the business of distributing or otherwise placing, for any

commercial purpose, in the stream of commerce for use” – i.e., a “seller” as defined

in § 82.001(3). It is impossible for AIG to be a “seller” of the vacuum pump under §

82.002 and § 82.003, but not be “in the business of selling aircraft engines and

vacuum pumps” within the meaning of Question 1, as the following table

demonstrates:

“Seller” of vacuum pump under § 82.001(3) “Engaged in the business of selling aircraft as alleged in AIG’s pleading (1 CR 186-187; engines and vacuum pumps” as defined in 2 CR 1109, 1113). Question 1 (2 CR 1166). A “person who is engaged in the business of “The ‘business of selling’ means involvement, distributing or otherwise placing, for any as a part of its business, in selling, leasing, or commercial purpose, in the stream of commerce otherwise placing in the course of commerce for use or consumption a product or any products similar to the products in question by component part thereof.” transactions that are essentially commercial in character.”

As much as it would like to, AIG cannot have it both ways: it cannot sue another

party for the benefits of statutory indemnity under § 82.002 – and seek the benefits of

29 the limitations on liability under § 82.003 – without being a “seller” as defined in the

statute. As a result, AIG’s assertions of fact that it was the “seller” of the defective

vacuum pump as defined in § 82.001(3) are judicial admissions that AIG was

“engaged in the business of selling aircraft engines and vacuum pumps” as defined in

Question 1 (2 CR 1166).

Fourth, in determining factual sufficiency, the Court “must consider and weigh

all of the evidence ....” McClung v. Ayers, 352 S.W.3d 723, 727 (Tex. App. –

Texarkana 2011, no pet.). What evidence supports the jury’s answer of “No” to

Question 1? There is none. During closing argument, AIG’s counsel could not refer

the jury to any evidence that AIG was not “engaged in the business of selling aircraft

engines and vacuum pumps” as defined in Question 1 (6 RR 55-62).

Instead, AIG’s counsel argued that AIG “sold an aircraft. Not a vacuum pump,

not an engine, they sold a piece of aircraft salvage” (6 RR 55-56). This is the

equivalent of Ford Motor Company arguing it sold a Pinto car, but did not sell the

defective gas tank in the car that caused the car to explode on impact. Products

liability extends to any party who sells a product that has a defective component; it is

not limited to the party who sells only the defective component. See, e.g., Gen. Motors

Corp. v. Hudiburg Chevrolet, Inc., 199 S.W.3d 249, 252 (Tex. 2006).

30 AIG specifically advertised the engine itself for sale on its website, identifying

its manufacturer, model, serial number, and hours of use (DX-13, Appendix 10).

AIG’s corporate representative testified that AIG “recycled parts” through its website

sales (2 RR 160). AIG delivered a clean logbook for the engine to Ruhe when it sold

the engine to him. Contrary to AIG’s jury argument, AIG sold the engine containing

the defective vacuum pump to Ruhe and thereby placed it in the stream of aviation

commerce without any warning in the logbook of the prop strike or damage to the

engine.

AIG’s counsel also argued to the jury that AIG was “in the business of selling

insurance,” not “in the business of selling aircraft engines and vacuum pumps,” and

its sales of aircraft components was only “incidental to that business” (6 RR 61-62).

AIG’s argument violates the legal principle that it “is not necessary that the seller be

engaged solely in the business of selling such products....” RESTATEMENT (SECOND)

OF TORTS § 402A (1965), Comment f. See also RESTATEMENT (THIRD) OF TORTS:

PRODUCT LIABILITY § 8, Illustration 1 (1998) (car rental company that at regular

intervals sells used rental cars at public auctions is in the business of selling).

In short, for these four reasons, the evidence overwhelmingly proved AIG was

engaged in the business of selling aircraft engines and vacuum pumps as defined in

Question 1. The Court should set aside the jury’s answer of “No” to Question 1

31 because it is clearly wrong. Upon doing so, the Court “must reverse the judgment of

the trial court and remand for new trial.” Glover v. Texas Gen. Indem. Co., 619 S.W.2d

400, 401-402 (Tex. 1981).

D. The error was harmful because the record contains evidence of AIG's products liability and the damages resulting from the deaths of Amy Clay and Scooter Phillips.

The trial court conditionally submitted the products liability questions on a

“Yes” answer to Question 1, as specified in TEXAS PATTERN JURY CH. 70 (2012). As

a result of the jury’s erroneous answer of “No” to Question 1, the jury did not answer

the liability issues submitted under Questions 2, 3, and 4, which asked:

• “Did AIG fail to provide an adequate warning?”

• “Did AIG know of a defect to the aircraft engine and vacuum pump?”

• “Was there a defect in the marketing of the aircraft engine and vacuum pump at the time they left the possession of AIG that was a producing cause of the occurrence or deaths in question?”

(2 CR 1167-1169; Appendix 1 at pgs. 9-11). The trial court ruled correctly that the

evidence supported the submission of these questions by denying AIG’s motion for

directed verdict (5 RR 30, 194-198; 2 CR 1109). Thus, the jury's error in answering

“No” to Question 1 was harmful because the record contains evidence of AIG's

products liability, which caused the deaths of Amy Clay and Scooter Phillips, and

caused significant damages to their families, as explained below.

32 Appendix 9 contains photographs showing the condition of Don Gregoire’s

upside-down plane after Hurricane Wilma (DX-64; PX-61 to 64, 289 to 291). Gregoire

testified the hurricane “destroyed” his plane, which was “well beyond repair.” The

propeller was bent at a ninety-degree angle. As a result, Gregoire – an experienced

pilot – believed the engine “would need a complete overhaul” (4 RR 174-175, 179).

AIG’s adjuster in Arizona deemed the plane a total loss merely by looking at its

photos (2 RR 68-69, 102; 4 RR 102). He saw the propeller suffered a strike and was

bent at a ninety-degree angle (PX-289; DX-64). AIG’s adjuster knew that when there

is this kind of strike to the propeller, “you're going to have some kind of engine

damage” (2 RR 74). AIG also knew the FAA had an airworthiness directive that said

if there is a prop strike, the engine may have to be torn down to determine if the prop

strike caused damages to the engine (4 RR 107-108). AIG did not have a mechanic

inspect the engine, however, to determine if it would be suitable for future use in

aviation (2 RR 80; 4 RR 110-111,120-121, 128). The adjuster knew that if AIG

disclosed there was damage to the engine, AIG would get less money from selling the

aircraft (2 RR 80). AIG’s advertisement and bid form did not indicate there was any

damage to the engine, although it referred to other damages (DX-13).

Federal regulations require that an engine must have an accompanying logbook

detailing its history before the engine can be used in an airplane (3 RR 108). For that

33 reason, the logbook is considered the “Bible of the engine” in the aviation industry (4

RR 95). AIG’s corporate representative agreed that “[t]here's no history to the aircraft

if you don't put it in the logbooks” (2 RR 159). He agreed that without an entry about

the damage to the aircraft in the logbook, a reader would not know from the logbook

whether the aircraft was damaged at all (2 RR 158-159).

When other insurance companies sell an airplane and its engine in this situation,

they record in the logbooks that the aircraft was involved in an accident and was

deemed a total loss, and provide the claim number, name, and address of the insurance

company (2 RR 142-143; 3 RR 116, 177-182; PX-9; Appendix 11). By recording this

information in the engine logbook, an insurance company selling the engine can easily

provide vital, life-saving information to a downstream purchaser like Scooter Phillips

(3 RR 118). It would have taken AIG less than five minutes and cost nothing to make

the logbook entry (2 RR 134-135). But when the engine and its clean logbook were

delivered to Scooter Phillips, the logbook did not indicate the engine had ever been

damaged in any way or involved in any accident. Upon visual inspection, the engine

“looked perfect” (4 RR 95-96).

AIG intentionally sold the engine with a clean logbook. AIG's internal valuation

worksheet reflects that AIG knew the logbook – absent any record of the hurricane

damage – would indicate to a buyer that the engine had a significant useful life

34 remaining before its next major overhaul (PX-22; DX-64, AIG000031). Richard

Waters at Air-Tec confirmed this fact. Based on what he saw in the engine’s logbook,

he told Scooter Phillips the engine had an “exceptionally” low number of hours on it

(4 RR 90-91, 94). Nothing in the engine logbook indicated to Scooter’s FAA certified

mechanic that he needed to tear down or further inspect the engine before Scooter

could use it (3 RR 189). Waters had bought and re-sold more than 2,000 Lycoming

engines during his 40 years in the aviation industry (4 RR 80-82). He testified that

AIG should have recorded the hurricane damage in the logbook and that AIG should

not have delivered the clean engine logbook to Ruhe. AIG should have sold the engine

without a logbook so it could not be used in an airplane (4 RR 89).

Michael Gallagher worked for 24 years as an aircraft mechanic, flight engineer,

and flight mechanic. He then worked for the Federal Aviation Administration for 16

years. He was the manager of the FAA’s small airplane division in Kansas City, where

he was responsible for all the rules concerning the design and manufacturing of all

general aviation aircraft, from the small two-seater up to business jets. He started the

FAA division that dealt with unapproved parts and unsalvageable aviation scrap. He

then moved to Washington, D.C., and became the FAA’s manager of production and

airworthiness, responsible for all the rules concerning quality assurance, production,

and airworthiness of aircraft (3 RR 66-67).

35 When he was with the FAA, Gallagher was in contact with aviation insurance

companies like AIG and aircraft manufacturers. In connection with this case, he

investigated what insurance companies do in this type of situation to make certain that

a downstream buyer like Scooter Phillips is informed about the condition of an engine

he purchased. Some insurance companies make entries in logbooks to disclose the fact

that the aircraft was involved in an incident or accident and deemed a total loss, and

to disclose the contact information for the insurance company (3 RR 81-83, 86). Other

insurance companies selling salvage aircraft remove the data plate from the aircraft so

it cannot be used again in aviation and destroy the airworthiness certificate (3 RR 86-

88).

Gallagher testified that the FAA is the only organization that can mandate

changes to an aircraft once it is in use. If the FAA determines there is an unsafe

condition in an aircraft, the FAA will issue an “airworthiness directive” that mandates

either an inspection, a replacement of a part, or removal of the aircraft to resolve the

unsafe condition. Before AIG sold the engine, the FAA had issued an airworthiness

directive that if a prop strike occurred to this type of Lycoming engine, the engine

must be inspected per the manufacturer’s service bulletin (PX-368.4; 3 RR 90-92).

AIG’s adjuster was aware of the prop strike directive before AIG sold the engine (4

RR 107-108). The directive makes the owner of the aircraft responsible for complying

36 with the directive. AIG was therefore required to comply with the directive before

returning the engine to service. Instead of returning the engine to service, however,

AIG sold the engine to Robert Ruhe (3 RR 93-94).

Gallagher testified that by AIG not making an entry regarding the prop strike

in the engine logbook, there was no way for downstream owners and mechanics

involved with the engine to know “that there was a potentially unsafe condition caused

by the prop strike, which would require the airworthiness directive to be complied

with ....” (3 RR 96). AIG did not comply with the prop strike directive for the engine,

and because it did not make any entry in the engine logbook regarding that fact, there

was no way for Scooter Phillips or his FAA certified mechanic to know there had been

a prop strike, that it created a dangerous condition, and that it required action per the

FAA airworthiness directive and manufacturer’s service bulletin (3 RR 96).

Another FAA regulation requires the “registered owner or operator” of the

aircraft to make entries in the engine logbook regarding compliance with FAA

airworthiness directives, such as the one regarding the prop strike to the engine. AIG

evaded this safety rule by not becoming the “registered owner” of the aircraft with the

FAA (3 RR 98; PX-368.1A). In Gallagher’s opinion, however, a reasonably prudent

insurance company who chose not to register itself as the “registered owner” should

still record the prop strike in the engine logbook to make certain that downstream

37 purchasers were informed of the condition of the engine. Gallagher explained:

everybody within the ... aviation industry has respon- sibilities to keep aircraft safe and keep people safe. That includes salvagers, insurance companies, operators, pilots. ... [AIG] should have documented ... that there was an airworthiness directive that had not been ... completed yet to let folks down the stream understand that there needed to be some further work on that engine.

(3 RR 98-99).

Dr. Robert Block holds a B.S. in Metallurgy from the Massachusetts Institute

of Technology, a Master's in Metallurgical Engineering from Columbia University,

and a Ph.D. in Metallurgical Engineering from the University of Illinois. He is

registered engineer and is a Professor Emeritus from the University of Oklahoma,

Department of Chemical Engineering and Material Science. He is an expert on

aviation engine failures (4 RR 134-136).

Dr. Block examined the vacuum pump and its parts by visual and microscopic

means (4 RR 138). The heat damage to the shaft from the aircraft engine to the

vacuum pump indicates the rotor inside the pump stopped turning during the flight but

the engine drive shaft continued turning (4 RR 149). When he opened the case for the

vacuum pump, he discovered very fine powder particles inside the pump, which

proved the inside of the pump was grinding itself up during the failure process until

the pump jammed and stopped working (4 RR 151).

38 The propeller was attached to the crankshaft, which ran through the engine to

the back of the engine case. During the hurricane, when the propeller struck the

ground or another object with such force as to bend it, the energy transferred from the

propeller through the crankshaft in the engine to the vacuum pump, and damaged the

central shaft inside the vacuum pump. This is not something that happens in the

ordinary use of the plane. The engine is on shock mounts and does not normally

generate the level of impact that occurred when the propeller was struck and bent

during the hurricane. The vacuum pump continued working for a time, but the damage

to the central shaft caused the rotor to bounce as it was turning, which made marks

inside the case and caused the grinding that resulted in the fine powder inside the case,

until the pump jammed and stopped working (4 RR 153-156).

Lee Coffman holds three FAA certifications: as an airframe mechanic, a power-

plant mechanic, and an inspector. He has performed aviation engine maintenance and

overhauls for 50 years. He has been an expert in about 400 aviation accident cases,

including some involving failures of vacuum pumps (3 RR 128-131, 136-137). He

examined the vacuum pump and the facts regarding the crash.

The vacuum pump was located on a pad at the back of the engine, and a drive

shaft from the engine to the vacuum pump powered the pump (3 RR 154). The vacuum

pump, in turn, powered the attitude indicator, which was the instrument in the aircraft

39 panel (3 RR 149). Coffman’s examination of the vacuum pump confirmed that it failed

during the flight. The coupling between the engine drive and the pump drive melted,

proving the engine drive continued to turn after the pump drive stopped turning, which

created the friction and heat that melted the material (3 RR 161). Coffman agreed with

Dr. Block that the strike to the propeller during the hurricane could have damaged the

vacuum pump and caused it to fail (3 RR 169).

As an experienced mechanic, Coffman also addressed another factor that

contributed to the failure. There is a hose from the vacuum pump that points

downward. During normal operation, air goes from the vacuum pump down through

the hose to help cool the engine. When the airplane was flipped upside-down, the hose

was pointed upward so water and debris could flow through the hose into the vacuum

pump (4 RR 171-172). When upside-down for three weeks after the hurricane, 4 to 5

inches of rain were dumped on the plane and its engine (4 RR 176, 178; 2 RR

245-247). The presence of any moisture or foreign particles can easily damage the

vacuum pump and cause it to fail (3 RR 169). Coffman concluded that moisture or

foreign particles entered the vacuum pump as a result of the hurricane, which

contributed to the pump failure (3 RR 171-174).

In Coffman’s opinion, AIG’s failure to record the prop strike and hurricane

damage in the engine’s logbook was “totally improper because as a mechanic, we

40 depend on that logbook to provide us the history of this engine so that we know how

to treat it to continue its airworthiness .... If various things happen, then there are

procedures we are to follow to make it airworthy again and to sign it off properly, and

if we don't know the history, we cannot do that as mechanics” (3 RR 175). FAA

regulations do not restrict who can record information in the engine logbook:

“Anybody can make an entry into a logbook” (3 RR 177). Based on his 50 years of

experience with engine logbooks, it was customary and common-place for individuals

to record non-maintenance information about the history of an engine in its logbook.

Logbooks often record damages so the mechanic will know what work may be

necessary in response to the damage (3 RR 175-176).

Coffman had personally seen numerous entries in logbooks by many insurance

companies, going back to the 1970's, in which an insurance company recorded the fact

that the aircraft or engine was damaged in an accident and provided the name of the

insurance company so the person reading the logbook could contact the insurance

company for more information. In his opinion, AIG should have recorded such

information in this engine logbook (3 RR 177-182).

The jury’s error in answering Question 1 and resulting failure to answer the

products liability issues also caused the jury not to answer the damages questions,

which were likewise conditionally submitted (1 CR 1173-1180; Appendix 1 at pgs.

41 15-22). The record contains overwhelming evidence that the deaths of Amy Clay and

Scooter Phillips caused substantial damages to their estates and families (3 RR 234-

260; 4 RR 6-79; 196-227, 231-270). Economists testified that the pecuniary loss to the

family of Amy Clay was more than $2.2 million, and the economic loss to the family

of Scooter Phillips was over $4.2 million (3 RR 252; 4 RR 32).

In summary, the record contains evidence that –

• AIG failed to provide an adequate warning;

• AIG knew of a defect to the aircraft engine and vacuum pump;

• there was a defect in the marketing of the aircraft engine and vacuum pump at the time they left the possession of AIG that was a producing cause of the occurrence or deaths in question; and

• the deaths caused significant damages to the families of Amy Clay and Scooter Phillips.

As a result, the jury’s erroneous answer to Question 1 was harmful and requires a

reversal and remand for a new trial. Blanton v. E. & L. Transp. Co., 207 S.W.2d 368,

369 (Tex. 1948) (jury’s failure to answer a question raised by the evidence is harmful

error).

E. This error alone requires a reversal and remand of the entire case for the claims of the family of Amy Clay.

When questions are properly submitted conditionally, a party has “no right to

insist on an unconditional submission.” Sanchez v. Texas Employers Ins. Ass'n, 618

42 S.W.2d 837, 844 (Tex. Civ. App. – Amarillo 1981, writ ref’d n.r.e.). When “the jury's

finding on the dominant issue is against the weight and preponderance of the evidence,

there is no presumption of a deemed finding on the unanswered subordinate issue(s).”

Id. See 4 MCDONALD & CARLSON, TEXAS CIVIL PRACTICE § 22:58 (2d. ed. 2015). The

Court cannot presume how the jury would have answered an unanswered question

based upon the jury's answer to another question. Blanton v. E. & L. Transp. Co., 207

S.W.2d 368, 369 (Tex. 1948). If the Court finds the jury’s answer to Question 1 is

clearly wrong, Amy Clay’s family is entitled to a reversal and a remand for a new trial

on their claims. Strauss v. LaMark, 366 S.W.2d 555, 558 (Tex. 1963).

Amy Clay had flown with Scooter Phillips a number of times and knew he was

a good pilot (4 RR 262). AIG continually attacked Scooter Phillips throughout the

trial, but never once suggested Amy was responsible for the crash. Amy did not cause

the crash and her own death. She had no ability to protect herself from AIG’s

conscious decision – motivated by nothing but greed – not to disclose in the engine

logbook the critical information that the engine had been in an airplane destroyed by

a hurricane and had suffered a prop strike so severe it bent the prop at a ninety-degree

angle. For almost fifty years, Texas law has recognized the plight of a victim in Amy’s

position by allowing the person or her family to assert a products liability claim. See

RESTATEMENT (SECOND) OF TORTS § 402A (1965) at Comment l (a “user” of a product

43 entitled to the protection of § 402A includes “those who are passively enjoying the

benefit of the product, as in the case of passengers in automobiles or airplanes ....”);

McKisson v. Sales Affiliates, Inc., 416 S.W.2d 787 (Tex. 1967) (adopting § 402A).

The Court should set aside the jury’s erroneous answer to Question 1 and grant Amy’s

family a new trial.

F. This error alone also requires a reversal and remand of the entire case for the claims of the family of Scooter Phillips.

Question 5 presented the negligence questions in broad form:

Did the negligence, if any, of those named below proximately cause the occurrence or deaths in question?

Answer "Yes" or "No" for each of the following:

1. AIG No 2. The Ruhes No 3. Air-Tec, Inc. No 4. Scooter Phillips Yes

(2 CR 1170; Appendix 1 at pg. 12).

The trial court gave a conditional instruction that if the jury found there was a

marketing defect by AIG (Question 4) or that AIG was negligent (Question 5), then

the jury should answer the proportionate responsibility issue (Question 6) (2 CR 1171;

Appendix 1 at pg. 13). As a result of the jury’s erroneous answer to Question 1, the

jury did not answer the marketing defect issue in Question 4 and the proportionate

44 responsibility issue in Question 6.

AIG may argue the jury’s finding that Scooter Phillips was negligent bars his

family’s right to a new trial. It does not. The Phillips family would be barred from a

recovery only if a jury finds Scooter’s “percentage of responsibility is greater than 50

percent.” TEX. CIV. PRAC. & REM. CODE § 33.001. The jury did not assign any

percentage of responsibility to Scooter Phillips. Because of the jury’s error in

answering “No” to Question 1, the jury did not answer Question 4 on AIG’s marketing

defect, and did not answer Question 6 on proportionate responsibility. Because the

questions were properly submitted conditionally, the Court cannot presume or deem

how the jury would have answered Questions 4 or 6. Sanchez v. Texas Employers Ins.

Ass'n, 618 S.W.2d 837, 844 (Tex. Civ. App. – Amarillo 1981, writ ref’d n.r.e.).

A reversal as to Question 1 requires a reversal of the entire case. Strauss v.

LaMark, 366 S.W.2d 555, 558 (Tex. 1963). The issues of a defendant’s strict liability

or negligence, on one hand, and a plaintiff’s comparative negligence, on the other, are

“indivisible;” thus, in remanding the issue of the defendant’s liability, the Court of

Appeals must also remand the issue of the plaintiff’s comparative negligence. Otis

Elevator Co. v. Bedre, 776 S.W.2d 152, 153 (Tex. 1989).

45 G. Conclusion: the Court should reverse and remand the entire case for a new trial.

The jury’s answer to Question 1 is clearly wrong and should be set aside for the

four reasons presented above. The jury’s error is harmful because the record contains

evidence of AIG's products liability and the damages to the families of Amy Clay and

Scooter Phillips. Consequently, the Court should reverse and remand for a new trial.

The following alternative points require consideration only if the Court finds this point

is not dispositive or does not set aside the jury’s answer to Question 1.

II. Alternatively, the Court should grant a new trial because the jury’s negligence findings are clearly wrong.

A. The jury’s refusal to find that AIG was negligent is clearly wrong.

The jury’s refusal to find that AIG was negligent is so against the great weight

and preponderance of the evidence that it is clearly wrong and unjust. McClung v.

Ayers, 352 S.W.3d 723, 727 (Tex. App. – Texarkana 2011, no pet.). The evidence

regarding AIG’s negligence is set forth above under section I.D. and is incorporated

under this point.

In ruling on a factual insufficiency point, the Court “must consider and weigh

all of the evidence.” Id. AIG presented the following evidence at trial regarding its

conduct. AIG’s corporate representative testified that AIG did not take “legal title” to

the aircraft (2 RR 130-131). AIG sold the aircraft “as is, where is” with damage

46 notations on the advertisement and bid sheet (2 RR 133). AIG “had no idea” that

Air-Tec or Scooter Phillips would purchase the engine (2 RR 134). AIG did not sell

the engine to Scooter Phillips (2 RR 106).

AIG’s representative testified that the purpose of the logbooks is to record the

aircraft's “maintenance events,” not to document the history of the aircraft (2 RR

135-136). The hurricane damage was not a “maintenance event” (2 RR 155). He had

heard that some insurance companies made entries in logbooks to disclose that the

aircraft was damaged in an accident or other occurrence, but it was his understanding

that “there's no industry standard of what is put into a logbook with respect to salvaged

aircraft” (2 RR 142-143). He testified it is “up to the sellers to disclose what they

know about the airplane to future buyers” (2 RR 148).

AIG’s expert, Dr. Ken Orloff, testified that under FAA regulations, an owner

of an aircraft is not required to enter information regarding damages in the aircraft's

logbooks, but the owner may do so (5 RR 122-123). Under FAA regulations, to

become the “registered owner” of an aircraft, the new owner must send the FAA the

bill of sale, a completed form, and $5.00. AIG had its insured, Don Gregorie, provide

a signed bill of sale that left blank the name of the new owner of the aircraft (5 RR

123-126). AIG did not insert its name as the new owner in the bill of sale and did not

submit it to the FAA to become the “registered owner” of the aircraft, so Orloff

47 believed the FAA regulations requiring the “registered owner” to maintain logbooks

and records for the aircraft and its engine did not apply to AIG (5 RR 129-131). When

asked why a reasonably prudent insurance company in this situation would not

disclose the damages to the plane and its engine in the logbooks, Orloff answered that

the FAA does not require that such damages be recorded in logbooks (5 RR 131-134).

Considering and weighing all the evidence, the jury's refusal to find that AIG

was negligent is so against the great weight and preponderance of the evidence that

it is clearly wrong and unjust.

B. The jury’s finding that Scooter Phillips was negligent is also clearly wrong.

The issue of whether Scooter Phillips acted reasonably was hotly contested at

trial. AIG presented Dr. Ken Orloff as an expert witness on pilot error. Orloff testified

the vacuum pump on the engine had exceeded its useful life (5 RR 82-83). The

original manufacturer of the vacuum pump had issued service bulletins to mechanics,

and Scooter should have known about and complied with those service bulletins (5 RR

83-90). He also testified that the engine installed in Scooter’s plan had not had annual

inspections during the time it was in the possession of the Ruhes, and Scooter’s

mechanic should have performed an annual inspection on the engine before returning

his plane to service (5 RR 92-98).

48 AIG also presented Robert “Hoot” Gibson as an expert witness. Gibson testified

that Scooter Phillips showed “poor judgment” due to the weather conditions and

marginal visibility. VFR conditions were the “bare minimum” for VFR flight (5 RR

141). Gibson testified that Scooter made the correct decision to turn around after the

vacuum pump failed, but because he had limited visual horizons, he had difficulty

turning around (5 RR 147-148).

The logbook for Scooter’s plane indicated that seven months earlier, he had an

autopilot installed in the plane, and the logbook stated the autopilot was “tested in

accordance with the installation manual.” From this, Gibson concluded the autopilot

was functional, even though it was undisputed that Scooter was hand-flying his plane

without the autopilot engaged and there was no way to know if the autopilot even

worked. Gibson opined that if Scooter had used the autopilot, the aircraft would have

competed the 180 degree turn on its own and flown towards Abilene (5 RR 153-154,

157-158). AIG presented no evidence, however, that the autopilot was actually

operational. Gibson also testified that the original manufacturer of the vacuum pump

had issued bulletins or instructions regarding the replacement of the pump, and

Scooter should have known about the bulletins or instructions and replaced the

vacuum pump (5 RR 155-156). AIG presented no evidence, however, that Scooter

ever received or knew about the bulletins. And the experts disagreed on whether the

49 original manufacturer’s bulletins even applied to the vacuum pump after Holly Aero

performed a complete overhaul of the vacuum pump and returned it to service before

Scooter Phillips purchased the engine (3 RR 198-200, 229-232).

The Phillips family also presented an expert witness on piloting an airplane. Lee

Coffman, who holds multiple FAA certifications as a mechanic, flew for many years

as a VFR pilot (one who uses visual references outside the plane and instruments) and

is now an IFR pilot (one who is certified to fly by instruments alone). He holds both

commercial and private licensees. He had himself flown the same model airplane as

Scooter’s plane (3 RR 123-135). Coffman testified it was proper for Scooter to take-

off on the night of February 20, 2012. Scooter had experience flying at night and more

than 500 hours of total flight time. Of his prior fifteen flights from Abilene to

Oklahoma City, Scooter had flown thirteen of them at night (3 RR 137-138). Visibility

was at least eight miles when Scooter and Amy took off from Abilene. Visibility

improved during the flight as they flew away from Abilene and climbed (3 RR

141-147). In Coffman's opinion, the failure of the vacuum pump caused Scooter to

experience spatial disorientation and lose control. The failure of the vacuum pump

caused the crash, not Scooter (3 RR 154-157, 160).

In short, the jury’s finding that Scooter Phillips was negligent is so against the

great weight and preponderance of the evidence and should be set aside. Champion

50 v. Robinson, 392 S.W.3d 118, 124 (Tex. App. – Texarkana 2012, writ ref’d n.r.e.)

(court should reverse when the evidence is too weak to support a finding or the great

weight of the evidence is against the finding).

III. Alternatively, the Court should grant a new trial because of the trial judge's harmful comments on the evidence about AIG's expert.

A. The judge bolstered the credibility of AIG’s main expert.

Robert “Hoot” Gibson – AIG’s main expert on pilot error – was the final

witness to testify, so his testimony was the last evidence heard by the jurors before

they deliberated (5 RR 184-185). When AIG called Hoot Gibson to testify, the trial

judge made the following inexplicable comments:

The Court: Call your next witness.

AIG’s counsel: Your Honor, we call Hoot Gibson.

The Court: I've heard that name before. Mr. Gibson, come on up and let me get you sworn in. I've been wanting to meet you for years. (Witness sworn.)

The Court: Please have a seat.

AIG’s counsel: Mr. Gibson, can you introduce yourself to the judge and the jury.

The Court: But you might really want to do it to the jury.

(5 RR 135-136).

51 Gibson then told the jury that after graduating from college, he joined the Navy,

became a fighter pilot, and flew F-4 Phantoms and F-14 Tomcats in combat in Viet

Nam. In 1978, NASA selected him for the first space shuttle class of astronauts. He

went to space five times on the space shuttle, the first as the copilot and then four

times as the captain. He had 36 days in space. He continued to fly NASA jets, the

T-38s, and in 18 years with NASA, had over 3,000 hours in the T-38s (5 RR 137-138).

The judge’s comments significantly boosted the credibility of Hoot Gibson and

AIG by communicating to the jury that Gibson was a famous and preeminent authority

(“I've heard that name before”); had special importance to the judge (“come on up and

let me get you sworn in ... I've been wanting to meet you for years”); and the jury

should pay close attention to Gibson’s qualifications as an expert (it was not necessary

for Gibson to introduce himself to the judge “but you might really want to do it to the

jury”) (5 RR 135-136).

B. The judge’s error was harmful.

Although Hoot Gibson was the last witness to testify, he was present throughout

the trial. For all five days of the trial, the jury saw Gibson sitting in the courtroom with

AIG’s corporate representative and lawyers, saw Gibson talking to them during

breaks, saw Gibson helping them with their defense, and even saw Gibson carrying

their boxes up and down the stairs at the start and end of each day (5 RR 179-180). By

52 the time Gibson testified, the jury closely identified Gibson with AIG. Consequently,

the judge’s highly prejudicial comments about Gibson in effect told the jury that the

position of AIG in the case was correct and the position of Amy and Scooter’s families

was not. AIG continually attacked Scooter Phillips throughout the trial and the issue

of his negligence was hotly contested. With the judge’s comments fresh in their minds,

the jurors found that AIG was not engaged in the business of selling aircraft engines

and vacuum pumps and was not negligent (despite overwhelming evidence to the

contrary) and that Scooter Phillips was negligent (just as Hoot Gibson told them to

find) (2 CR 1166, 1170).

“Neither by word nor by act ... may the judge, either consciously or

unintentionally, convey to the jury his or her own views concerning the credibility of

the witnesses, the weight of their evidence, or the merits of the controversy. This

prohibition is designed to protect the litigants right to a trial by juror based upon the

jury's weighing of the evidence presented.” 4 MCDONALD & CARLSON, TEXAS CIVIL

PRACTICE § 21:41 (2d. ed.). “Prohibited comments extend to those pertaining to the

weight of the evidence and the credibility of the witnesses as these are matters for the

jury's determination.” Id.

For example, in Thompson v. Janes, 227 S.W.2d 330 (Tex. Civ. App. – Austin

1950, no writ), in response to an objection that a witness was not qualified to express

53 an opinion, the trial judge stated: “I believe this witness would be better qualified to

answer the question than anybody else ....” Id. at 331. The Court of Appeals held this

comment was reversible error because the judge indicated that the witness knew more

than anyone else about the disputed issue. Id. “Our judicial system, in which the right

to trial by jury is held inviolable, denies the right of a trial judge, in the presence and

hearing of the jury, to comment upon the credibility of a witness or the weight to be

given his testimony.” Id. at 332.

Counsel for the Clay and Phillips families did not immediately object to the

judge’s comments because doing so would only have emphasized to the jury the

importance of the comments. “[W]hen the impact of the court's action is such that its

harmful effect could not be prevented by its withdrawal, no objection by counsel is

required, and an attempted withdrawal by the court will be futile.” 4 MCDONALD &

CARLSON, TEXAS CIVIL PRACTICE § 21:41 (2d. ed.). See Connecticut Gen. Life Ins. Co.

v. Moore, 75 S.W.2d 329, 332 (Tex. Civ. App. – Beaumont 1934, writ dis’d) (judge’s

comment about an affidavit that “it could have been sworn and subscribed to by

anybody... let it go in... the jury can pass on it” was “of a nature so injurious that the

failure of appellant to except thereto at the time it was made did not render it

harmless”). Consequently, the families were not required to make an objection at the

time the judge made his comments. The families made the trial court aware of this

54 error in their motion for new trial, which was overruled by operation of law (2 CR

1187).

In short, the judge’s comments bolstering the credibility of AIG’s main witness

on pilot error – whom the jury closely identified with AIG – probably caused the

rendition of an improper judgment. The Court should therefore reverse and remand for

a new trial. TEX. R. APP. P. 44.1.

IV. Alternatively, the Court should grant a new trial because the trial court erred in not instructing the jury about the “as is” clause.

A. An “as is” clause in the seller’s contract with its buyer does not immunize the seller from products liability to a downstream consumer or user.

The “as is” clause has its origin in the law of sales and the Uniform Commercial

Code. The UCC recognizes that in a contract for the sale of goods, the seller can

disclaim or exclude express and implied warranties to the buyer by including an “as

is” clause in the sales contract. UCC § 2.316 provides:

unless the circumstances indicate otherwise, all implied warranties are excluded by expressions like ‘as is’ ... or other language which in common understanding calls the buyer’s attention to the exclusion of warranties and makes plain that there is no implied warranty....

TEX. BUS. & COM. CODE § 2.316(c)(1).

Texas adopted the Restatement (Second) of Torts § 402A in 1967. McKisson

v. Sales Affiliates, Inc., 416 S.W.2d 787 (Tex. 1967). Section 402A makes it clear that

55 a disclaimer like an “as is” clause does not immunize a seller from products liability

to a downstream consumer or user of the product, regardless of whether the “as is”

disclaimer is contained in the initial contract between the original seller and buyer, or

is attached to the product itself and received by the downstream consumer. Comment

m to § 402A states:

The rule stated in this Section [402A] is not governed by the provisions ... of the Uniform Commercial Code, as to warranties; and it is not affected by limitations on the scope and content of warranties .... The consumer's cause of action does not depend upon the validity of his contract with the person from whom he acquires the product, and it is not affected by any disclaimer or other agreement, whether it be between the seller and his immediate buyer, or attached to and accompanying the product into the consumer's hands.

RESTATEMENT (SECOND) OF TORTS § 402A (1965), Comment m.

Thirty-eight years ago, the Amarillo Court of Appeals recognized this principle

of products liability law in Mid Continent Aircraft Corp. v. Curry County Spraying

Service, Inc., 553 S.W.2d 935 (Tex. Civ. App. – Amarillo 1977), rev’d on other

grounds, 572 S.W.2d 308 (Tex. 1978). In that case, Defendant #1 bought “a 1971

single engine Piper Pawnee aircraft, designed for agricultural work, in a wrecked

condition.” Id. at 937. FAA certified mechanics repaired the airframe, overhauled the

engine, and noted the repairs in the logbooks. Defendant #1 then sold the aircraft “as

56 is” to Defendant #2, who sold it “as is” to the Plaintiff. Thereafter, during a flight, the

engine failed, and the Plaintiff’s pilot was forced to make a rough landing, which

damaged the airplane. The pilot was not injured. The Plaintiff sued Defendants #1 and

#2 in strict liability for the economic damages to the plane.

The Court of Appeals held that strict products liability applied to a seller of a

used aircraft engine. Id. at 940. The Court also held the “as is” clause in the invoice

from Defendant #2 to the Plaintiff “exonerated” Defendant #2 “from any liability

under contract law,” but did not absolve it “of the strict liability imposed for physical

harm by tort law.” Id. at 942. The Court of Appeals also recognized that a “separate

log book reflecting each type of repairs is required to be maintained with the aircraft.”

Id. at 936.

On further appeal, the Supreme Court held that “[i]n transactions between a

commercial seller and commercial buyer, when no physical injury has occurred to

persons or other property, injury to the defective product itself is an economic loss

governed by the Uniform Commercial Code,” not by strict liability, and the “as is”

disclaimer effectively negated the implied warranties arising under the UCC. 572

S.W.2d at 313. The Supreme Court reversed on the ground that the Plaintiff’s

economic damages to the product itself were not recoverable in a products liability

action.

57 More recently, the Dallas Court of Appeals also held that a contractual “as is”

clause does not apply to tort claimants in a similar context. In City of Irving v. Seppy,

301 S.W.3d 435 (Tex. App. – Dallas 2009, no pet.), the city rented a civic theater to

a community theater organization. The rental contract stated the organization was

renting the space from the city “as is.” Thereafter, during a production, a volunteer for

the organization was walking on a catwalk at the theater, slipped, fell to the ground,

and was killed. The city contended that the “as is” clause in its rental agreement with

the organization barred the tort claims of the family of the volunteer. Rejecting that

argument, the Court of Appeals held that an “as is” provision “is not binding on those

who were not parties or third-party beneficiaries of the contract containing the

provision” and was “inapplicable under these circumstances.” Id. at 446.

B. The trial court erred in not instructing the jury about the “as is” clause.

As explained above, the bottom of AIG’s advertisement and bid form for the

aircraft and its engine said: “You are advised that the described aircraft is for sale ‘AS

IS/WHERE IS’...,” and Robert Ruhe signed the form (DX-13; Appendix 10). The trial

court initially granted the motion in limine of the Clay and Phillips families, which

carefully limited how AIG could present and refer to the “as is” clause (2 CR 1085-

1086). AIG then persuaded the court to vacate its order regarding the “as is” clause

and allow it to present and refer to it with virtually no limitations (2 CR 1107).

58 AIG argued relentlessly at every opportunity during each phase of the trial that

the “as is” clause at the bottom of the bid form signed by Robert Ruhe protected AIG

from any liability for the deaths of Amy Clay and Scooter Phillips. AIG discussed the

“as is” clause during voir dire with potential jurors10 and repeatedly questioned

witnesses about it (e.g., 2 RR 51-52, 53-54, 59- 62, and 3 RR 107-108). In closing

argument, AIG’s counsel told the jury:

• “So what's this case about? This case is about the sale of a salvage aircraft that was sold as-is/where-is and was installed by Mr. Scooter Phillips on his airplane” (5 RR 51).

• “Ruhe ... knew that it was as-is/where-is, and that ... he was buying salvage; not an aircraft, not an engine...” (5 RR 56).

• “Was there a defect in the marketing ... ? How did AIG market that vacuum pump, that engine, that aircraft salvage? They marketed it with a definition of it’s as-is/where-is” (5 RR 63).

• “As-is/where-is means it may have damage, but we don't know what it is. It's a term of art. It's a term that's used in aviation” (5 RR 64).

In the charge, at the request of the Clay and Phillips families, the trial court

instructed the jury that –

An “As Is” or an “As Is / Where Is” clause in a contract is legally binding only on the parties to that contract.

(2 CR 1165; Appendix 1 at pg. 7).

10 The court reporter did not include the voir dire in her record and is filing a supplemental record containing the voir dire.

59 The Clay and Phillips families requested, but the trial court denied, the

following additional instruction:

The clause does not have any effect on a person who is not a party to the contract containing the clause.

(2 CR 1130). This instruction is a correct statement of Texas law, as explained above.

The trial court's failure to give this additional instruction enabled AIG to improperly

argue that the “as is clause” had an effect on Amy Clay and Scooter Phillips, and

protected AIG from any liability to their families, contrary to Texas law. The court’s

failure to instruct the jury fully on this issue probably caused the rendition of an

improper judgment; thus, the Court should reverse and remand for a new trial. TEX.

R. APP. P. 44.1.

PRAYER

For these reasons, the families of Amy Clay and Scooter Phillips request the

Court to reverse the trial court, to remand the case for a new trial, and to order AIG

to pay all costs of the appeal. They also request the general and special relief at law

and in equity they are entitled to receive.

60 Respectfully submitted,

M. Keith Dollahite, P.C. 5457 Donnybrook Avenue Tyler, Texas 75703 (903) 581-2110 (903) 581-2113 (Facsimile) keith@mkdlaw.us

/s/ Keith Dollahite By:___________________________________ M. Keith Dollahite State Bar No. 05958550

CERTIFICATE OF COMPLIANCE

Pursuant to TEX. R. APP. P. 9.4(i)(3), I certify that this document contains 14,545 words based on the word count of the computer program used to prepare the document, excluding the sections not counted under TEX. R. APP. P. 9.4(i)(1), which is below the maximum of 15,000 words in TEX. R. APP. P. 9.4(i)(2).

/s/ Keith Dollahite ______________________________________

CERTIFICATE OF SERVICE

This document was filed and served electronically on all attorneys of record on November 4, 2015.

/s/ Keith Dollahite ________________________________________

© 2015 M. Keith Dollahite, P.C.

61 HI-Feb-2015 :48 SpanDSP Fax ~er .2143774858 p.2 214-377-4858 ~;37;35 02-10-2015 2/29 .' * ." ''''. v/,: ... <: <, ,';.. J CAUSE NO. 2013-215 v . '. '~'" "',1"" '''0 :.,.,/ / ,~ , ,.':' . l '· ~

M NTY CLAY, ET AL., § IN THE DISTRICT COURT OF ." /"": § Plaintiffs, § § v. § WOOD COUNTY, TEXAS § AI AEROSPACE INSURANCE § SE VICES, INC., ET AL., § § Defendants. §

On January 20, 2015, this case was called to trial. Plaintiffs Monty Clay, individually and

ext friend of Jacob Clay and Jonathan Clay and as personal representative for the estate of

Clay, Lynda Wilson, individually, Brendan Phillips, individually, Dale Phillips, Sr.

individually and as the executor and personal representative of the estate of Dale Leighroy

Phillips, Jr., and as next friend of Grace Ann Phillips, and Karen B. Phillips, individually,

(collectively "Plaintiffs") appeared in person and through counsel, and announced ready for trial.

De*ndants AlG Aerospace Insurance Services, Inc., Chartis Aerospace Insurance Services, Inc.

andl Chartis Aerospace Adjustment Services, Inc. (collectively "Defendants" or "AIG") also

app~ared in person and through counsel, and announced ready for trial. After a jury was impaneled and sworn, it heard the evidence and arguments of counsel on

all pf Plaintiffs' claims other than their claims for breach of express and implied warranties, l Whi h were dismissed by way of summary judgment before trial. After Plaintiffs rested, the

Co rt denied Defendants' motion for directed verdict on all of Plaintiffs' remaining claims.

De ndants reurged their directed verdict after both sides rested, and the Court again denied that I ·1 On January 27, 2015, all parties rested. Thereafter, the Court in consultation with

eys for all parties prepared a written charge to submit the case to the Jury. All parties I APPENDIX 1 Page 1 000001 :t.. 001159 10-Feh-20iS :49 SpanDSP Fax H~er 2143774858 p.3 214-377-4858 :37:57 02-10-2015 3/29

'

thr ugh their attorneys were allowed to examine the charge and were provided with an

op ortunity to make objections to the charge. The Court then read its written charge to the jury,

thereafter the parties through their counsel were allowed to present final arguments to the

ju ,and the jury thereafter retired to deliberate the verdict.

On January 27, 2015, the Jury returned to open Court and announced through its II presiding juror that the jurors had reached a unanimous verdict The verdict was read aloud in I I I

op~n Court in the presence of the Jury and the attorneys representing the parties. Thereafter, the I I ~ Coert determined that no party through their attorneys had any objection to the receipt of the

ver ict, The Court then received the verdict to be filed among the papers of this cause, and I dis harged the Jury. The questions submitted to the jury and the jury's findings are attached as ~ r E 'bit A and fully incorporated herein by reference.

I WHEREFORE, the Court having considered the contents of the docket before it,

including but not limited to all orders, pleadings and motions, as well as the arguments of f [ corsel, the evidence presented at trial, and the verdict of the jury rendered on January 27, 2015,

all jof which are incorporated herein by reference, now renders final judgment in favor of i Defendants. Accordingly, the Court ORDERS, ADJUDGES, AND DECREES that Plaintiffs f

tak nothing by way of their claims against Defendants, and that a final take-nothing judgment is

he by entered in favor of Defendants and against Plaintiffs. I r All costs of court expended or incurred in connection with this case are hereby awarded t III of Defendants and against Plaintiffs.

This judgment finally disposes of all claims and all parties, and is appealable. I ( SO ORDERED this ~ayof ~~15. r I

fI, e Hon. G. Timothy Boswell i Judge Presiding l

rr L JUDGMENT APPENDIX 1 Page 2 000002 001160 HI-Feb-2Et1S :49 SpanDSP Fax H4Ifer . .2143174858 p.4 214-377-4858 ~:38:20 02-10-2015 4/29

I

Exhibit "A"

APPENDIX 1 000003 , 001161 IB-Feb-2BlS SpanDSP Fax ~er .2143774858 p.S 214-377-4858 ~:3a:25 02-10-2015 5/29

CAUSE NO. 2013-215

M ·NTY CLAY, ET AL. \l& IN THE DISTRICT COURT § § V. § § AI AEROSPACE INS. SERVS., INC., ET 1. § § _ . r:~'" ~ ~

CHARGE OF THE COURT rn M~MBERS OF THE JURY: After the closing arguments, you will go to the jury room to decide the case, ans er the questions that are attached, and reach a verdict. You may discuss the case wi otherjurors only when you are all together in the jury room.

Remember my previous instructions: Do not discuss the case with anyone else, eitl er in person or by any other means. Do not do any independent investigation about the case or conduct any research. Do not look up any words in dictionaries or on the Int met. Do not post information about the case on the Internet. Do not share any special knowledge or experiences with the other jurors. Do not use your phone or any other electronic device during your deliberations for any reason. I will give you a number whtre others may contact you in case of an emergency.

Here are the instructions for answering the questions.

1. Do not let bias, prejudice, or sympathy play any part in your decision.

2. Base your answers only 011 the evidence admitted in court and on the law that is in these instructions and questions. Do not consider or discuss any evidence that was not admitted in the courtroom.

3. You are to make up your own minds about the facts. You are the sole judges of the credibility of the witnesses and the weight to give their testimony. But on matters of law, you must follow all of my instructions.

4. If my instructions use a word in a way that is different from its ordinary meaning, use the meaning I give you, which will be a proper legal definition.

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5. All the questions and answers are important. No one should say that any question or answer is not important.

6. Answer "yes" or "noll to all questions unless you are told otherwise. A "yes" answer must be based on a preponderance of the evidence unless you are told otherwise. Whenever a question requires an answer other than "yes" or "no," your answer must be based on a preponderance of the evidence unless you are told otherwise.

The term "preponderance of the evidence" means the greater weight of credible evidence presented in this case. If you do not find that a preponderance of the evidence supports a "yes" answer, then answer "no:' A preponderance of the evidence is not measured by the number of witnesses or by the number of documents admitted in evidence. For a fact to be proved by a preponderance of the evidence, you must find that the fact is more likely true than not true.

7. Do not decide who you think should win before you answer the questions and then just answer the questions to match your decision. Answer each question carefully without considering who will win. Do not discuss or consider the effect your answers will have.

8. Do not answer questions by drawing straws or by any method of chance.

9. Some questions might ask you for a dollar amount. Do not agree in advance to decide on a dollar amount by adding up each.juror's amount and then figuring the average. , 10. Do not trade your answers. For example, do not say, "I will answer this question your way if you answer another question my way." t ( 11. Unless otherwise instructed, the answers to the questions must be based on the f decision of at least ten of the twelve jurors. The same ten jurors must agree on f

I every answer. Do not agree to be bound by a vote of anything less than ten jurors, even if it would be a majority.

As I have said before, if you do not follow these instructions, you will be guilty of juror misconduct, and I might have to order a new trial and start this process over again. t T s would waste your time and the parties' money, and would require the taxpayers of thi county to pay for another trial. If a juror breaks any of these rules, tell that person to sto and report it to me immediately. I f ! rl

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Here are additional instructions for answering the questions.

1. A fact may be established by direct evidence or by circumstantial evidence or both. A fact is established by direct evidence when proved by documentary evidence or by witnesses who saw the act done or heard the words spoken. A fact is established by circumstantial evidence when it may be fairly and reasonably inferred from other facts proved.

2. "Negligence" means failure to use ordinary care, that is, failing to do that which a person of ordinary prudence would have done under the same or similar circumstances or doing that which a person of ordinary prudence would not have done under the same or similar circumstances.

3. "Ordinary care" means that degree of care that would be used by a person of ordinary prudence under the same or similar circumstances.

4. "Producing cause" means a cause that was a substantial factor in bringing about the occurrence or injury, and without which the occurrence or injury would not have occurred. There may be more than one producing cause.

5. "Proximate cause" means a cause, unbroken by any new and independent cause, that was a substantial factor in bringing about an occurrence or injury, and without which cause such occurrence or injury would not have occurred. In order to be a proximate cause, the act or omission complained of must be such that a person using ordinary care would have foreseen that the occurrence or injury, or some similar occurrence or injury, might reasonably result therefrom. There may be more than one proximate cause of an occurrence or injury.

6. "New and independent cause" means the act or omission of a separate and independent agency, not reasonably foreseeable, that destroys the causal connection, if any, between the act or omission inquired about and the occurrence in question and thereby becomes the immediate cause of such occurrence.

7. There may be more than one cause of an occurrence or injury, but if an act or omission of any person not a party to the suit was the "sole cause" of the occurrence or injury, then no act or omission of any party could have been a cause of the occurrence or injury.

8. "AIG" means AIG Aerospace Insurance Services, Inc.

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9. "The Rubes" means RobertG. Rube, Eric J. Rube, and their affiliated companies, Rube Sales, Inc. and BobRube AG Service, Inc.

10. An "As Is" or an "As Is / Where Is" clause in a contractis legally binding only on the parties to that contract.

i I I I [ i

I f ~

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Was AlG engaged in the business of selling aircraft engines and vacuum pumps?

The "business of selling" means involvement, as a part of its business, in selling, leasing, or otherwise placing in the course of commerce products similar to the products in question by transactions that are essentially commercial in character.

Answer "Yes" or "No."

Answer: ---IA-v-/.=O---

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If you answered "Yes" to Question 1, then answer the following question. o erwise, do not answer the following question.

Q STION 2

Did AIG fail to provide an adequate warning?

"Fail to provide an adequate warning" means:

I, AIG exercised substantial control over the content of a warning or instruction that accompanied the aircraft engine and vacuum pump;

2. the warning or instruction was inadequate; and

3. the harm to Scooter Phillips and Amy Clay resulted from the inadequacy of the warning or instruction.

Answer "Yes" or IINo. 1I

Answer: - - - - - - -

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If you answered "Yes" to Question 1, then answer the following question. o rwise, do not answerthe following question.

Q STION 3 I Did AIG knowof a defect to the aircraft engine and vacuum pump?

"Know of a defect" means: I 1. AIG actually knew of a defect to the aircraft engine and vacuum pump at the time AIG supplied the aircraft engineand vacuum pump; and

2. the harm to Scooter Phillips and Amy Clay resulted from the defect. It Answer "Yes" or "No."

Answer: ------- If t t

I t f.

I[ I r I r It f I r t ! l f i -7- i ~.

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If you answered IIYes" to Question 1t then answer the following question. Oth rwise, do not answer the following question.

I Was there a defect in the marketing of the aircraft engine and vacuum pump at the time they left the possession of AlG that was a producing cause of the occurrence or deai in question?

A "marketing defect" with respect to the product means the failure to give f adequate warnings of the product's dangers that were known or by the application r of reasonably developed human skill and foresight should have been known or [ failure to give adequate instructions to avoid such dangers, which failure rendered the product unreasonably dangerous as marketed.

"Adequate" warnings and instructions mean warnings and instructions given in a Ir ! form that could reasonably be expected to catch the attention of a reasonably prudent person in the circumstances of the product's use; and the content of the warnings and instructions must be comprehensible to the average user and must convey a fair indication of the nature and extent of the danger and how to avoid it II to the mind of a reasonably prudent person.

An "unreasonably dangerous II product is one that is dangerous to an extent beyond I that which would be contemplated by the ordinary user of the product with the ordinary knowledge common to the community as to the product's characteristics.

Answer "Yes" or "No." I f f Answer: ------- r

! I I ~ !

I I

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QVESTION 5

I Did the negligence, if any, of those named below proximately cause the occurrence or I eatbs in question?

Answer "Yes" or "No" for each of the following:

1. AIG No 2. The Ruhes N=.-o _ 3. Air-Tee, Inc. /t/O 4. Scooter Phillips Ye. 5

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If you answered "Yes" to Questions 4 or 5 as to AlO, and if you answered "Yes" to Question 5 for more than one of those named below, then answer the following question. Otherwise, do not answerthe following question and go to the next page. I Assign percentages ofresponsibility only tothose youfound caused or contributed to cause the occurrence or deaths. The percentages you find must total 100 percent. The percentages must be expressed in whole numbers. The percentage of responsibility a hbutable to anyone is notnecessarily measured bythenumber ofactsor omissions found. Th percentage attributable to anyone need notbethesame percentage attributed tothatone in werlng another question. .

Foreachperson you found caused or contributed to cause the occurrence or deaths, thepercentage ofresponsibility attributable to each:

1. AIO

2. The Ruhes

3. Air-Tee, Inc.

4. Scooter Phillips

Total: 100%

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Here are additional instructions for answenng the following questions about

1. In answering questions about damages, answer each question separately.

2. Do not increase or reduce the amount in one answer because of your answer to any otherquestion about damages.

3. Do not speculate about what any party's ultimate recovery mayor may not be. Any recovery will be determined by the court when it applies the law to your answers at the time ofjudgment.

I I

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Answer Question 7 if you answered "Yes" for AlG to Questions 4 or 5, Otherwise, do not answer Question 7.

Q~ESTION 7 . What sum of money, if paid now in cash, would fairly and reasonably compensate those named below for his or her damages, if any, resulting from the death of AmyClay?

Consider the elements of damages listed below and none other. Consider each ele ent separately. Do not award any sum of money on any element if you have oth rwise, under some other element, awarded a sum of money for the same loss. That is, do at compensate twice for the same loss, if any. Do not include interest on any amount of amages you find.

Answer separately, in dollars and cents, for damages, ifany. I 1. Pecuniary loss sustained in the past by I Monty Clay Answer: ----------- Il Jacob Clay Answer: ----------- Jonathan Clay Answer: _

"Pecuniary loss" means the loss of the care, maintenance, support, services, ! l advice, counsel, and reasonable contributions of a pecuniary value that the person, in reasonable probability, would have received from Amy Clay had she lived. f

2. Pecuniary loss that. in reasonable probability, will be sustained in the future by i Monty Clay Answer:

Jacob Clay Answer: J t Jonathan Clay Answer:

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3. Loss of companionship and society sustained in the past by

Monty Clay Answer: ------------ Jacob Clay Answer: ------------ Jonathan Clay Answer: ------------ Lynda Wilson Answer: ------------ "Loss of companionship and society" means the loss of the positive benefits flowing from the love, comfort, companionship, and society that the person, in reasonable probability, would have received from Amy Clay had she lived.

4. Loss of companionship and society that, in reasonable probability, will be sustained in the future by

Monty Clay Answer:

Jacob Clay Answer:

Jonathan Clay Answer:

Lynda Wilson Answer:

5. Mental anguish sustained in the past by

Monty Clay . Answer:

Jacob Clay Answer:

Jonathan Clay Answer:

Lynda Wilson Answer:

"Mental anguish" means the emotional pain, torment, and suffering experienced by the person because of the death of Amy Clay.

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6. Mental anguish that. in reasonable probability, will be sustained in the future by

Monty Clay Answer: _

Jacob Clay Answer: _

Jonathan Clay Answer: _ - - - - - - - - - - Lynda Wilson Answer: _

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Answer Question 8 if you answered "Yes" for AlO to Questions 4 or 5, Otherwise, do ot answer Question 8.

Q STION 8

What sum of money would have fairly and reasonably compensated Amy Clay for

1. Pain and mental anguish

"Painand mental anguish" means the conscious physical pain and emotional pain, torment, and suffering experienced by Amy Claybefore her death as a resultof the occurrence in question.

Answer in dollars and cents for damages, if any.

Answer: ------------ 2. Funeral and burial expenses

"Funeral and burial expenses" means the reasonable amount of expenses for funeral and burial for Amy Clay reasonably suitable to her station in life.

Answer in dollars and cents for damages, if any.

Answer: ------------

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APPENDIX 1 000018 10-Feb-2015 21:56 SpanDSP Fax ~er . 2 1"1377"1858 p.20 214-377-4858 ~:42:08 02-10-2015 20/29 !

Answer Question 9 if you answered "Yes" for AIG to Questions 4 or 5, and ans ered:

I 2. 1. "No" for Scooter Phillips to Question 5, or 50 percent or less for Scooter Phillips to Question 6. II OJerwise, do not answer Question 9. f J Q STION 9

What sum of money, if paid now in cash, would fairly and reasonably compensate tho e named below for his or her damages, if any, resulting from the death of Scooter Philips? I i t ! Consider the elements of damages listed below and none other. Consider each element separately. Do not award any sum of money on any element if you have oth' rwise, under some other element, awarded a sum of money for the same loss. That is, do at compensate twice for the same loss, if any. Do not include interest on any amount of amages you find. I Answer separately, in dollars and cents, for damages, if any. Do not reduce the I am, unts, if any, in your answers because of the negligence, if any, of Scooter Phillips. Any recovery will be determined by the court when it applies the law to your answers at I the Itime ofjudgment.

1. Pecuniary loss sustained in the past by I Grace Phillips Answer: _ t Brendan Phillips

Dale Phillips, Sr. Answer:

Answer: ----------- I f ----------- !' I

Karen Phillips Answer: ----------- I! "Pecuniary loss" means the lass of the care, maintenance, support, services, advice, counsel, and reasonable contributions of a pecuniary value that the person, in reasonable probability, would have received from Scooter Phillips had he lived. I f t r

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2. Pecuniary loss that, in reasonable probability. will be sustained in the future by

Grace Phillips Answer:

Brendan Phillips Answer:

Dale Phillips, Sr. Answer:

Karen Phillips Answer:

3. Loss of companionship and society sustained in the past by

Grace Phillips Answer: ----------- Brendan Phillips Answer: ----------- Dale Phillips, Sr. Answer: ----------- Karen Phillips Answer: ----------- "Loss of companionship and society" means the loss of the positive benefits flowing from the love, comfort, companionship, and society that the person, in reasonable probability, would have received from Scooter Phillips had he lived.

4. Loss of companionship and society that. in reasonable probability, will be sustained in the future by

Grace Phillips Answer: _

Brendan Phillips Answer: ----------- Dale Phillips, Sr. Answer: ----------- Karen Phillips Answer: _

t

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5. Mental anguish sustained in the past by

Grace Phillips Answer:

Brendan Phillips

Dale Phillips, Sr. Answer:

Answer: If Karen Phillips Answer:

"Mental anguish" means the emotional pain, torment, and suffering experienced by the person becauseof the death of Scooter Phillips.

6. Mental anguish that in reasonable probability, will be sustained in the futureby

Grace Phillips

Brendan Phillips Answer:

Answer: ----------- I ----------- Dale Phillips, Sr. Answer: _

Karen Phillips Answer: -----------

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~ Answer Question 10 if you answered "Yes" for AlG to Questions 4 or 5, and "" ered: 1. "No" for Scooter Phillips to Question 5, or 2. SO percent or less for Scooter Phillips to Question 6.

01erwise, do not answer Question 10.

Q*STIONIO . What sum of money would have fairly and reasonably compensated Scooter Phillips for-

1. Pain and mental anguish

"Pain and mental anguish" means the conscious physical pain and emotional pain, torment, and suffering experienced by Scooter Phillips before his death as a result of the occurrence in question.

Answer in dollars and cents for damages, if any.

Answer: ----------- 2. Funeral and burial expenses

"Funeral and burial expenses" means the reasonable amount of expenses for funeral and burial for ScooterPhillips reasonably suitable to his station in life.

Answerin dollars and cents for damages, if any.

Answer: _

Do not reduce the amount, if any, in your answers because of the negligence, if an~, of ScooterPhillips. Any recovery will be determined by the court when it applies the laVtj' to your answers at the time of judgment.

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I Answer the following question regarding AlG only if you unanimously answered I nY~1I to Questions 4 or 5 regarding AlG. Otherwise, do not answer the following I question regarding AIG.

I To answer "Yes" to the following question, your answer must be unanimous. You may answer "No" to the following question only upon a vote of ten or more jurors. Otherwise, I you must not answer the following question.

QfSTION II . Do you find by clear and convincing evidence that the harm to Amy Clay resulted frotP gross negligence? I "Clear and convincing evidence" means the measure or degree of proof that I produces a finn belief or conviction of the truth of the allegations sought to be established.

"Gross negligence" means an act or omission by AIG,

1. which when viewed objectively from the standpoint of AlG at the time of I I its occurrence involves an extreme degree of risk, considering the probability and magnitude of the potential harm to others; and f I: 2. of which AlG has actual, subjective awareness of the risk involved, but t nevertheless proceeds with conscious indifference to the rights, safety, or welfare of others.

Answer "Yes II or IINo. 1I I! Answer: ------- I f.

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Answer the following question regarding AIG only if you unanimously answered "Yes" to Questions 4 or 5 regarding AIG. Otherwise, do not answer the following quer'tion regarding AIG.

, To answer "Yes" to the following question, your answer must be unanimous. You may answer "No" to the following question only upon a vote of ten or more jurors. 0t1frwise, you must not answer the following question.

Qu/ESTION 12

Do you find by clear and convincing evidence that the harm to Scooter Phillips res1'lted from gross negligence?

, "Clear and convincing evidence" means the measure or degree of proof that produces a finn belief or conviction of the truth of the allegations sought to be established.

"Gross negligence" means an act or omission by AIG,

1. which when viewed objectively from the standpoint of AIG at the time of its occurrence involves an extreme degree of risk, considering the probability and magnitude of the potential harm to others; and

2. of which AIG has actual, subjective awareness of the risk involved, but nevertheless proceeds with conscious indifference to the rights, safety, or welfare of others.

Answer "Yes" or "No."

Answer: -------

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Presiding Juror:

1. When you go into the jury room to answer the questions, the first thing you will need to do is choose a presiding juror.

2. The presiding juror has these duties:

a. have the complete charge read aloud if it will be helpful to your deliberations; b. preside over your deliberations, meaning manage the discussions, and see that you follow these instructions;

c. give written questions or comments to the bailiff who will give them to the judge; I d. write down the answers you agree on; I e.

f. get the signatures for the verdict certificate; and

notify the bailiff that you have reached a verdict. I 3. Do you understand the duties of the presiding juror? If you do not, please tell me I I now.

Instructions for Signing the Verdict Certificate:

1. Unless otherwise instructed, you may answer the questions on a vote often jurors. The same ten jurors must agree on every answer in the charge. This means you I I

2. may not have one group of ten jurors agree on one answer and a different group of tenjurors agree on another answer.

If ten jurors agree on every answer, those ten jurors sign the verdict. I t,

If eleven jurors agree on every answer, those eleven jurors sign the verdict.

If all twelve of you agree on every answer, you are unanimous and only the presiding juror signs the verdict. f t I f

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3. All jurors should deliberate on every question. You may end up with all twelve of you agreeing on some answers, while only ten or eleven of you agree on other answers. But when you sign the verdict, only those ten who agree on every answer will sign the verdict.

4. There are some special instructions before Questions 11 and 12 explaining how to answer those questions. Please follow the instructions. If all twelve of you answer those questions, you will need to complete a second verdict certificate for those questions.

5. Do you understand these instructions? I f you do not, please tell me now. I i If( - -z-

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I I f 1

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Verdict Certificate

Our verdict is unanimous. All twelve of us have agreed to each and every answer. The presidingjuror has signed the certificate for all twelve of us.

Signature of PresidingJuror

'P rt2. "(!,,~ SJ4\.; t.. E \ Printed Name ofPresiding Juror

Our verdict is not unanimous. Eleven of us have agreed to each and every answer and have signed the certificate below. If

+ Our verdict is not unanimous. Ten of us have agreed to each and every answer and have signed the certificatebelow. I Signature Printed Name I 1. f 2.! 3. I 4. I 5.! 6. I i i 7. f ~ 8. f. 9. H. 1 .

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APPENDIX 1 000027 001185 I 10-Feb-2015 22:59 214-377-4858 SpanDSP Fax ~r .2143774858 16:44:31 02-10-2015 p.29 29/29 I I If ydu have answered Questions 11 and 12,then you must sign this certificate also. I, t I Additional Certificate J Ice 'fy that the jury was unanimous in answering Questions 11 and 12. All twelve of us agre d to each of the answers. The presiding juror has signed the certificate for all twelve I ofus, ! I Signature of Presiding Juror ! 1

Printed Name of Presiding Juror I

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