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CB Aviation, LLC v. Hawker Beechcraft Corp.

August 12, 2010

CB AVIATION, LLC, PLAINTIFF,
v.
HAWKER BEECHCRAFT CORP., DEFENDANT.



The opinion of the court was delivered by: DuBOIS, J.

MEMORANDUM

I. INTRODUCTION

This is a breach of contract action arising out of the sale of an allegedly defective aircraft by defendant Hawker Beechcraft Corp. ("Hawker Beechcraft") to plaintiff CB Aviation, LLC ("CB Aviation"). The Court's Scheduling Order of June 4, 2010, directed the parties to file and serve memoranda of law addressing their respective positions on: (1) the issues to be tried to a jury and the issues to be tried to the Court sitting without a jury, and (2) all choice of law issues in the case. After reviewing those memoranda and the relevant material submitted by the parties, the Court concludes that the case should be tried to a jury, and that Pennsylvania law is applicable to defendant's affirmative defense of release, the only choice of law issue on which the parties disagree.

II. BACKGROUND

In October 2007, plaintiff, a Pennsylvania limited liability company, entered into a "Resale Aircraft Purchase Agreement" and an "Addendum to Resale Aircraft Purchase Agreement" (together, the "Agreement") with defendant, a Kansas corporation, to purchase a Raytheon Aircraft Company Model Beech 390 aircraft ("Aircraft"). (Compl. ¶¶ 1, 3-4.) The Agreement states that it is governed by the laws of the State of Kansas, including the Uniform Commercial Code as adopted in Kansas. (Compl. ¶ 23.) Under the Agreement, defendant agreed and represented that at the time of sale "the Aircraft will be in an airworthy condition." (Compl. ¶ 6.) The Aircraft was sold to plaintiff "with a fresh 1600-hour airframe inspection pursuant to the Agreement." (Compl. ¶ 9.) Plaintiff took delivery of the Aircraft on February 22, 2008. (Compl. ¶ 13.)

On or about March 2, 2008, the Aircraft's baggage door "departed" the Aircraft while in flight. (Settlement Agreement and Release, Ex. B to Pl.'s Mem. of Law.) Plaintiff notified defendant of the incident, and after executing a Settlement and Release Agreement ("Release"), defendant repaired the damage caused by the baggage door separation, at no cost to plaintiff. (Release ¶ 1; Def.'s Mem. of Law at 6; Pl.'s Mem. of Law at 4, 8.) In one of several prefatory clauses, the Release states as follows: "WHEREAS, the parties desire to resolve any claims associated with the baggage door departure on mutually acceptable terms." Paragraph Four of the Release provides:

In consideration of [defendant] bearing the cost of the repairs to [the Aircraft] . . . [plaintiff] herein release[s] and discharge[s] [defendant] . . . from any and all claims, demands and causes of action they have or claim to have against [defendant] arising out of or relating to the baggage door separation incident or the purchase of the Aircraft. This Release includes, but is not limited to, any claims for loss of use, diminution in value, the right to rescind or revoke the purchase of [the Aircraft], and any other damages or remedies available to [plaintiff]. (Release ¶ 4.)

Sometime in or around September 2009, at approximately 1800 total hours, the Aircraft underwent a regular 200-hour inspection. (Compl. ¶ 14.) The 1800-hour inspection revealed that the Aircraft contained a "structural" manufacturing defect that rendered the Aircraft nonairworthy. (Compl. ¶¶ 15, 18.) Thereafter, the Aircraft was repaired to "remedy this structural defect and place the aircraft in a purported airworthy state." (Compl. ¶ 19.) The structural defect and necessary repairs were disclosed, as required, to the Federal Aviation Administration. (Compl. ¶ 20.) This disclosure has substantially impaired the resale value of the Aircraft. (Compl. ¶ 21.) Since discovering the structural defect, plaintiff has not flown the Aircraft, and has notified defendant of its intent to "rescind the agreement, reject the Aircraft, and/or revoke its acceptance thereof." (Compl. ¶ 22.)

Plaintiff filed a Complaint in the Court of Common Pleas of Philadelphia County on March 24, 2010, containing four counts: (1) rescission, (2) breach of contract, (3) breach of express warranty, and (4) breach of express warranty. Defendant filed a Notice of Removal in this Court on March 30, 2010, averring federal jurisdiction based on diversity of citizenship pursuant to 28 U.S.C. §§ 1332. Defendant filed an Answer to plaintiff's Complaint on April 16, 2010, raising, inter alia, the affirmative defense of release. (Answer ¶ 2.) Defendant also filed a Demand for Trial by Jury on April 19, 2010.

III. DISCUSSION

A. Jury Trial or Bench Trial

Plaintiff contends that the case "should be resolved by a bench trial because it will permit the Court to apply the applicable legal principles to a factual record that will not be significantly disputed." (Pl.'s Mem. of Law at 2.) Defendant filed a timely jury demand pursuant to Federal Rule of Civil Procedure 38(b), and objects to a non-jury trial.*fn1 As Rule 38(a) states, "[t]he right of trial by jury as declared by the Seventh Amendment to the Constitution - or as provided by a federal statute - is preserved to the parties inviolate." Fed. R. Civ. P. 38(a). Having properly preserved its right by filing a timely demand, defendant is entitled to a jury trial; that it may be more "efficient" to litigate the case before the Court, as plaintiff argues (Pl.'s Mem. of Law at 3), is of no legal consequence.

B. Choice of Law

Plaintiff and defendant agree that the "contract pertaining to the sale of the Aircraft is, by its terms, governed by Kansas law." (Pl.'s Mem. of Law at 1-2; Def.'s Mem. of Law at 2.) Thus, the Court will apply Kansas law - and in particular, the Uniform Commercial Code as adopted in Kansas - ...


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