Austrian Airlines Oesterreichische Luftverkehrs Ag v. Ut Finance Corporation

Facts

United Technologies Corporation ('UTC') made a deal with P to specify jet engines made by one of UTC's affiliates for use on new aircraft being ordered by P. The price for each PW4168 system was approximately $10 million. The deal, therefore, was worth between approximately $20 and $100 million to Pratt & Whitney a subsidiary of UTC. As part of the deal, D agreed to buy a particular used aircraft from P some years in the future for a price in excess of $30 million. After 9-11, the bottom fell out of the used aircraft market. D insisted on strict compliance with the contractual requirements. The agreement provided that the 'purchase of the Aircraft shall occur on a date to be mutually agreed during the month of March, 2004' and made time of the essence. Any amendments and modifications to the agreement had to be in writing and signed by both parties. D's obligation to purchase was contingent upon P satisfying conditions to provide certain records, including in relevant part (1) the 'FAA/DGAC-Approved Airplane Flight Manual' (the 'AFM'), which had to be 'current and include all temporary revisions,' and (2) miscellaneous documentation, including historical records for certain 'life-limited' parts. P was obligated to deliver the Aircraft (1) 'in good operating condition, ready for flight, with all the equipment, components and systems functioning in accordance with their intended use within the limits and/or unrestricted guidelines established by the relevant manufacturers,' (2) with a letter from Airbus 'to confirm the Aircraft met the US-Type Certificate Data Sheet (TCDS) at the date of manufacture,' (3) in a condition that complied with all DGAC and FAA airworthiness directives that 'have a known due date for compliance falling within twelve . . . months following the Closing Date, (4) in the condition as it was when the parties entered into their agreement, 15 with at least a minimum amount of time left on all life-limited parts, and (6) with an export certificate of airworthiness from the Austrian aviation authority. P exercised the FAA option. Any given A310-325 would have been eligible for an FAA certificate of airworthiness provided the particular aircraft conformed in all material respects with the TC and any other applicable requirements. In early 2003, D hired Patrick Sturbelle, an FAA-certified designated airworthiness representative The Aircraft was in poor condition with 'large parts of the cabin [needing] to be refurbished.' There were more than 150 deficiencies that needed correction to bring the Aircraft into compliance with the APA. A major issue was two auxiliary center fuel tanks ('ACTs') because they were not part of the FAA-approved design of the A310-325. The ACTs were not listed in the TCDS and therefore were not part of the approved design type. Neither the FAA nor Airbus were able to locate any documentation to demonstrate that the FAA actually approved the extra tanks. In November 2003, D notified P that the Aircraft failed to meet the delivery conditions in a myriad of respects. Both sides understood by February that P would not deliver in conformity with the APA and were considering the possibility that D would waive some of the conditions in exchange for financial concessions by P. There is no dispute that the aircraft had significant deficiencies in many areas. The delivery deadline came and went. The parties continued to work towards a delivery. The deal fell through, and P leased the aircraft to Air Atlanta Icelandic from December 2004 through February 2007. It then sold the Aircraft to SATA Air for $ 12.5 million in March 2007. P sued D. P claims D acted in bad faith when it ignored alleged industry custom and rejected P's delivery of the Aircraft on May 3, 2004. D contends that it never waived any of the contract's provisions. The case was tried to the Court without a jury. D moved for judgment of dismissal on partial findings at the close of P's case.

Issues

Rule of Law

Holding and Decision

Legal Analysis

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