Israel Aerospace Industries Ltd. v. Airweld, Inc.

Filing 34

ORDER signed by Judge William B. Shubb on 10/10/2012 denying 23 plaintiff's Motion for Summary Judgment. (Kirksey Smith, K)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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----oo0oo---11
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ISRAEL AEROSPACE INDUSTRIES,
LTD.,

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Plaintiff,

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NO. CIV. 2:11-CV-00887-WBS-CKD
ORDER RE: MOTION FOR SUMMARY
JUDGMENT

v.

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AIRWELD, INC.,
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Defendant.
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----oo0oo---Plaintiff Israel Aerospace Industries, Ltd. (“IAI”),

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brought this action against defendant Airweld, Inc., arising

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from defendant’s alleged failure to deliver a customized

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aircraft part within a reasonable time.

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for summary judgment pursuant to Federal Rule of Civil

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Procedure 56 on its breach of contract claim.

Plaintiff now moves

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I.

Factual and Procedural Background
In 2005, Romanian Aviation Company (“ROMAVIA”)

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contacted Airweld, a California company that supplies aircraft

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parts, (Compl. ¶ 2 (Docket No. 1)), to inquire about purchasing

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a vapor cycle air conditioning (“VCAC”) system, (Petty Decl. ¶

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4 (Docket No. 25)).

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designated areas of an aircraft.

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intention to purchase a VCAC system for which Airweld holds a

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Supplemental Type Certificate (“STC”).

A VCAC system provides cooling for
ROMAVIA expressed its

(Id. ¶¶ 3, 6.)

When a

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particular VCAC system is covered by a STC, it can be installed

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on an aircraft without any additional approval from the Federal

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Aviation Administration (“FAA”).

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Summ. J. at 2:2-7 (Docket No. 24).)

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(Def.’s Mem. in Opp’n to Mot.

Plaintiff IAI is an Israeli company that develops

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aerospace technology and provides manufacturing and maintenance

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services for both military and commercial aircraft.

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1 (Docket No. 1).)

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VCAC system in its Boeing 707 aircraft.

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wanted IAI to purchase a standard VCAC system from Airweld, and

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have Airweld customize the VCAC unit to certain specifications.

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(Id. ¶ 8.)

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to purchase the modified system.

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Thereafter, Airweld communicated with IAI, rather than ROMAVIA,

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about providing the VCAC system.

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(Compl. ¶

In 2007, ROMAVIA asked IAI to install a
(Id. ¶ 6.)

ROMAVIA

IAI contacted Airweld in 2007 on behalf of ROMAVIA
(Petty Decl. ¶ 7.)

Later that year Airweld sent a technical

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representative to Israel to inspect the aircraft upon which the

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VCAC system was to be installed.

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against the modified system requested by IAI on behalf of
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(Id. ¶ 8.)

Airweld advised

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ROMAVIA because it would likely not provide the desired cooling

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for the designated areas of the aircraft.

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reason, Airweld requested a waiver acknowledging the fact of

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this possible shortcoming.

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(Id.)

For this

(Id.)

Before the modified VCAC system could be installed on

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the aircraft, it needed to be approved by the FAA.

(Stanzler

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Decl. Ex. C (“Petty Dep.”) at 8:21-23 (Docket No. 19).)

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was because the customized VCAC system was not covered by

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Airweld’s STC for the standard system.

This

(DeMarchi Decl. ¶ 14

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(Docket No. 26).)

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warned that the FAA approval process would be time consuming,

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especially given the specific modifications requested by IAI.

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(Petty Decl. ¶ 7.)

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Airweld informed IAI that it would obtain FAA approval for the

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modified system.

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12:15-17 (Docket No. 19).)

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Airweld notified IAI of this fact, and

However, because IAI wished to proceed,

(Stanzler Decl. Ex. D (“DeMarchi Dep.”) at

On February 6, 2008, Airweld finalized the order for

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the modified VCAC system, (Petty Decl. ¶ 17), when it received

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a waiver from Airweld acknowledging that the customized VCAC

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system would not provide the desired cooling, (id. ¶ 8).

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DeMarchi, Operations Manager for Airweld, made initial contact

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with the FAA on February 21, 2008, to begin the approval

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process.

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to requests for information from the FAA after that point.

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(Id. ¶ 8.)

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(DeMarchi Decl. ¶ 6.)

Rich

Airweld continued to respond

According to IAI, on February 7, 2008, it sent Airweld

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the total payment for the VCAC system, amounting to a total of

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$112,805, which included payment for the travel to Israel.
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(Compl. ¶ 13.)

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received that sum by April 3, 2008.

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also disputes that it has received full payment under the

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contract because of estimated expenses incurred in procuring

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European Aviation Safety Authority (“EASA”) certification for

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the modified system.

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Airweld disputes this date, and states that it
(DeMarchi Decl. ¶ 3.)

It

(Answer ¶ 14.)

On December 2, 2010, IAI sent a letter to Airweld

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canceling their contract because Airweld had failed to deliver

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the VCAC system.

(Stanzler Decl. Ex. F.)

Despite this

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cancellation, IAI responded to Airweld’s request for

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information needed by the FAA to continue the approval process

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on December 8, 2010.

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that it did not receive the cancellation letter until April

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2011.

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unit to IAI.

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(Id. ¶ 22.)

(DeMarchi Decl. ¶ 22.)

Airweld asserts

Airweld never delivered a modified VCAC

(DeMarchi Dep. at 12:24-26.)

On April 1, 2011, plaintiff filed this action against

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defendant, asserting claims for breach of contract and

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rescission based on mutual mistake.

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summary judgment pursuant to Rule 56 as to its breach of

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contract claim.

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II.

Plaintiff now moves for

Discussion

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Summary judgment is proper “if the movant shows that

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there is no genuine dispute as to any material fact and the

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movant is entitled to judgment as a matter of law.”

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Civ. P. 56(a).1

Fed. R.

A material fact is one that could affect the

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Rule 56 was revised and rearranged effective December 1,
2010. However, as stated in the Advisory Committee Notes to the
2010 Amendments to Rule 56, “[t]he standard for granting summary
judgment remains unchanged.”
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outcome of the suit, and a genuine issue is one that could

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permit a reasonable jury to enter a verdict in the non-moving

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party’s favor.

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248 (1986).

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Anderson v. Liberty Lobby, Inc., 477 U.S. 242,

The party moving for summary judgment bears the

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initial burden of establishing the absence of a genuine issue

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of material fact and can satisfy this burden by presenting

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evidence that negates an essential element of the non-moving

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party’s case.

Celotex Corp. v. Catrett, 477 U.S. 317, 322-23

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(1986).

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the non-moving party cannot produce evidence to support an

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essential element upon which it will bear the burden of proof

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at trial.

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must, however, be viewed in the light most favorable to the

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party opposing the motion.

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v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).

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Alternatively, the moving party can demonstrate that

Id.

Any inferences drawn from the underlying facts

Matsushita Elec. Indus. Co., Ltd.

The California Uniform Commercial Code (“Code”)

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governs IAI’s breach of contract claim.

See Cal. Com. Code §

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2102 (West 2002).2

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provided for in the contract, the Code provides a gap filler to

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designate the proper time.

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Inc., 206 Cal. App. 4th 999, 1011 (3d Dist. 2012).

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the parties do not otherwise agree, the time for delivery is “a

When the time for delivery is not expressly

See Apex LLC v. Sharing World,
Thus, if

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IAI alleges in the Complaint that the contract between
it and Airweld requires Israeli law to be applied to the present
action. (Compl. ¶ 5.) However, IAI agrees that California law
will apply for purposes of this motion. (Pl.’s Mem. in Supp. of
Mot. Summ. J. at 4:3-4 (Docket No. 18).)
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reasonable time.”3

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“reasonable time” “depends upon what constitutes acceptable

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commercial conduct in view of the nature, purpose and

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circumstances of the action to be taken.”

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The parties’ course of dealing, course of performance, or trade

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usage can be used in the determination.

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Ultimately, what constitutes a reasonable time under the

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circumstances is a question of fact.

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Mech. Serv., Inc., No. Civ. 07-5061-KES, 2010 WL 1492844, at *8

Cal. Com. Code § 2309(1).

What is a

Id. § 2309 cmt. 1.

Id. § 1205 cmt. 2.

See Blesi-Evans Co. v. W.

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(D.S.D. Apr. 13, 2010) (“[T]he question of what is a

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‘reasonable time’ for shipment or delivery in this case is a

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question of fact properly left to the jury.”).

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Airweld does not dispute that it promised to deliver a

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VCAC system with FAA certification.

There is no evidence

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presented, however, to show that Airweld and IAI agreed to a

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specific time for delivery.4

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breach and whether IAI validly canceled the contract turns on

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whether Airweld’s failure to deliver the VCAC system by

Thus, both whether Airweld was in

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There is a paucity of California case law on this
particular provision of the Code. However, “[c]ase law from other
jurisdictions applying California's Commercial Code, the Uniform
Commercial Code (UCC), or the uniform code of other states, are
considered good authority in litigation arising under the
California act.” Fariba v. Dealer Servs. Corp., 178 Cal. App. 4th
156, 166 n.3 (4th Dist. 2009).
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IAI alleges in the Complaint that “[t]he parties agreed
that Airweld would deliver a conforming VCAC unit to IAI in a
reasonable period of time when the VCAC unit could be installed in
the aircraft.” (Compl. ¶ 21.) However, IAI offers no evidence in
support of this allegation. Airweld disputes that a “‘reasonable
period of time’ was ever firmly established.” (Answer ¶ 21.) Even
if the parties did agree that the system would be delivered at a
“reasonable time,” the same question arises of what is a reasonable
time under these particular circumstances.
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December 2, 2010, was unreasonable.

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IAI fails to provide a substantial explanation as to

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why a delivery period almost three years past the finalization

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of the contract is unreasonable, except to say that it is

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“patently” so.

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IAI does seem to suggest that Airweld was on notice that it was

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eager to receive the system.

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email to Airweld notifying it that IAI had scheduled a new

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maintenance date for the airplane on which the system was to be

(Pl.’s Mem. in Supp. of Mot. Summ. J. at 1:28.)

On February 18, 2010, IAI sent an

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installed and that it “must have the VCAC on or before this

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date.”

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February 24, 2010, that it had called and emailed the FAA to

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get an update.5

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whether Airweld responded to a May 4, 2010, email request for

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another update, (see id. at 29:10-21), it did send an email to

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IAI on December 9, 2010, requesting additional information to

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provide to the FAA, (DeMarchi Decl. Ex. I).

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(DeMarchi Dep. at 28:6-9.)

(Id. at 29:2-8.)

Airweld responded on

Although it is unclear

Airweld, in contrast, offers evidence of the parties’

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conduct to dispute that non-delivery by December 2010 was

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unreasonable.

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onset of the project that the FAA approval process “would be

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time consuming.”

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after the order was finalized that the proposed deviation from

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the system for which it already had FAA approval would require

Airweld maintains that it told IAI from the

(Id. ¶ 14.)

It informed IAI both before and

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IAI does not argue that this deadline constitutes a
modification of the contract within the meaning of Code section
2209 and proffers no evidence that Airweld agreed to the new term.
As such, the court does not consider whether it became part of the
contract.
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additional time.

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customization it wanted “would not function sufficiently to

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cool all of the areas that IAI wanted to have cooled by the

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system.”

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deadline, (id. ¶ 14), and IAI proffers no evidence that it

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received assurances that the approval process would be

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completed by a certain date.

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(Id. ¶ 4.)

(Id. ¶ 11.)

It also advised IAI that the

Finally, Airweld never gave a tentative

Airweld also offers trade usage evidence to suggest
that uncertainty is the norm in the FAA approval process.

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“Trade usage” “is any practice or method of dealing having such

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regularity of observance in a place, vocation, or trade as to

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justify an expectation that it will be observed with respect to

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the transaction in question.

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usage must be proved as facts.”

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Airweld states that “[t]here is no schedule published by the

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FAA that would enable anyone to determine how long the FAA may

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take when issuing an STC or an amendment to an existing STC.”

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(DeMarchi Decl. ¶ 9.)

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Airweld, he has known the approval process to take anywhere

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from six months to five years, depending on the project.6

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Airweld explained this unpredictability of the FAA timeline to

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IAI.

The existence and scope of such a
Cal. Com. Code § 1303(c).

According to the Operations Manager of

(Id. at ¶¶ 4, 14.)

(Id.)

The evidence offered by Airweld thus

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IAI objects to DeMarchi’s estimation as mere speculation
because DeMarchi has only “personally witnessed” the FAA process
take two-and-a-half years. (Pl.’s Reply to Opp’n to Mot. for Summ.
J. at 5 n.6.) However, DeMarchi clearly asserts that he is “aware
of STC applications that have taken [five] years to obtain
approval.” (DeMarchi Decl. ¶ 9.) For DeMarchi to assert that he
is “aware” of such applications is to imply that he has personal
knowledge of them, even though he was not personally involved with
those particular application processes.
As such, the court
overrules IAI’s objection.
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suggests that it would not have been unreasonable to still be

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awaiting FAA approval of the customized VCAC system in December

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2010.

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IAI’s argument does not establish that its position,

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according to which Airweld’s failure to deliver the FAA-

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approved unit by December 2010 amounted to breach of the

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contract and entitled IAI to cancel, is correct as a matter of

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law.7

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would constitute a reasonable time for delivery under the

Indeed, each party offers conflicting evidence as to what

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contract at issue.

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conflicting evidence is reserved for a jury.

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remains a genuine issue of material fact, the court must deny

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plaintiff’s motion for summary judgment on its breach of

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contract claim.

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Any inferences to be drawn from this
Because there

IT IS THEREFORE ORDERED that plaintiff’s motion for

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summary judgment be, and the same hereby is, DENIED.

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DATED:

October 10, 2012

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The court does not reach Airweld’s defenses, including
possible excuses for performance, because it has not found as a
matter of law that Airweld’s performance was due at the time IAI
purported to cancel the contract.
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