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AIRCRAFT GUAR. CORP. v. STRATO-LIFT

June 15, 2000

AIRCRAFT GUARANTY CORPORATION
V.
STRATO-LIFT, INC., V. BERNARD VAN MILDERS AND BERNARD VAN MILDERS, B.V.



The opinion of the court was delivered by: Joyner, District Judge.

DECISION

This breach of contract action was tried before the undersigned in December, 1998. The parties have submitted their proposed factual findings, legal conclusions and briefs and the matter is now ripe for disposition. Accordingly, the Court now make the following:

FINDINGS OF FACT

1. Plaintiff, Aircraft Guaranty Corporation ("AGC"), is a Delaware corporation with its principal place of business in Heidelberg, Germany. The plaintiff also maintains a business address in the office of its Vice President, William Walker, in Houston, Texas. Plaintiff's President and Chairman of the Board is Connie Wood.

2. AGC's principal business is providing title servicing and management services to non-U.S. citizens who want to own U.S. registered aircraft.

3. Defendant is Strato-Lift, Inc. ("SLI"), a Pennsylvania corporation, with its principal place of business in Morgantown, Pennsylvania. Strato-Lift is in the business of manufacturing platform equipment. Although it has bought and sold various aircraft since 1985, it is not in the business of buying and selling aircraft but rather uses its planes for transporting its customers, going to trade shows and training programs and bringing people into its manufacturing plants.

4. Bernard Van Milders is a citizen and resident of Belgium and is the President of B. Van Milders, N.V., a corporation organized and existing under the laws of Belgium.

5. B.Van Milders, N.V. ("Van Milders") acts as an officer of several different companies, including Flying Partners, a Belgian partnership which sells partnership interests in corporate jets and planes to international businesses. The principal business of B. Van Milders, N.V. is buying and selling airplanes, largely through Flying Partners. There is no such entity as Bernard Van Milders, B.V., B. Van Milders, b.v., Bernard Van Milders, b.v. or B. Van Milders, B.V.

6. B. Van Milders, N.V. and Aircraft Guaranty Corporation have a relationship whereby AGC sets up trusts and lease/operation agreements to procure November (FAA) registrations for Flying Partners aircraft in the United States. By utilizing an American/FAA registration, Flying Partners is able to reduce its operational costs in that it need only comply with the registration requirements of one country, as opposed to many, European countries.

7. At all times material hereto, Connie Wood was acting in his capacity as an officer, director, employee and agent of Plaintiff, Aircraft Guaranty Corporation.

8. In the summer of 1995, Strato-Lift decided to expose the 1993 Cessna Citation II which it purchased in April, 1995 from First of America Bank Corporation to the market. This was in keeping with Strato-Lift's practice of buying late model, low mileage aircraft, keeping and using them for a few months and then re-selling them for the same or a slightly higher price than that originally paid. In this fashion, SLI was able to avoid a lot of the maintenance costs associated with flying a plane for a lot of hours.

9. SLI thus retained Kenneth F. Goodrich, d/b/a K.F. Goodrich Associates, Inc. ("Goodrich")*fn1, a sole proprietorship located in New Milford, Connecticut, to broker the sale of its plane. Goodrich thereafter advertised the plane in various trade publications distributed both nationally and internationally.

10. At all times material hereto, Kenneth F. Goodrich and/or K.F. Goodrich & Associates, Inc. was acting as the authorized agent for Defendant, Strato-Lift, Inc.

11. In late October or early November, 1995, Mr. Van Milders informed Mr. Wood that he was interested in obtaining a late model Cessna Citation aircraft to be used in the Flying Partners program. Specifically, Van Milders was looking for a plane which was built no earlier than 1991 with less than 1500 hours of air time and he authorized AGC to locate such a plane for him.

12. Although AGC was purportedly acting on behalf of its "trust client," B. Van Milders, N.V., it was AGC — not Van Milders which was to take title to the plane from Strato-Lift.

13. On or about December 18, 1995, Mr. Wood requested a specification sheet on SLI's Citation II aircraft, which had a serial number of "725" from Mr. Goodrich. That same date, Mr. Goodrich responded via facsimile transmission with the requested specification sheet and advised that the asking price for the plane was $3,550,000.

14. Wood and Goodrich began negotiating for the sale of the plane and following the exchange of various offers and counter-offers, on December 27, 1995, Mr. Wood offered to purchase the plane for the sum of $3.5 million subject to eleven (11) listed conditions. Mr. Goodrich signed the letter agreement and faxed it back to AGC that same day.

15. Among the conditions listed in the December 27, 1995 letter agreement were:

4. Completion of a prepurchase inspection and test flight prior to and after completion of all maintenance and modifications performed. Prepurchase inspection and test flights will be at purchaser's expense and discretion. Items to be inspected and the results of said inspection are to be to the sole discretion and satisfaction of the purchaser. Purchaser reserves the right to reject the aircraft for any reason. Airworthiness discrepancies discovered during the prepurchase inspection or test flights must be corrected prior to delivery by seller unless otherwise waived by purchaser.
5. Prepurchase inspection to be conducted at a disinterested third party maintenance facility mutually agreeable to both parties. Purchaser to bear expense of fuel and pilot expense to move ...

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