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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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 ----oo0oo---11 12 13 ISRAEL AEROSPACE INDUSTRIES, LTD., 14 Plaintiff, 15 NO. CIV. 2:11-CV-00887-WBS-CKD ORDER RE: MOTION FOR SUMMARY JUDGMENT v. 16 AIRWELD, INC., 17 18 Defendant. / 19 20 21 22 23 ----oo0oo---Plaintiff Israel Aerospace Industries, Ltd. (“IAI”), 24 brought this action against defendant Airweld, Inc., arising 25 from defendant’s alleged failure to deliver a customized 26 aircraft part within a reasonable time. 27 for summary judgment pursuant to Federal Rule of Civil 28 Procedure 56 on its breach of contract claim. Plaintiff now moves 1 2 I. Factual and Procedural Background In 2005, Romanian Aviation Company (“ROMAVIA”) 3 contacted Airweld, a California company that supplies aircraft 4 parts, (Compl. ¶ 2 (Docket No. 1)), to inquire about purchasing 5 a vapor cycle air conditioning (“VCAC”) system, (Petty Decl. ¶ 6 4 (Docket No. 25)). 7 designated areas of an aircraft. 8 intention to purchase a VCAC system for which Airweld holds a 9 Supplemental Type Certificate (“STC”). A VCAC system provides cooling for ROMAVIA expressed its (Id. ¶¶ 3, 6.) When a 10 particular VCAC system is covered by a STC, it can be installed 11 on an aircraft without any additional approval from the Federal 12 Aviation Administration (“FAA”). 13 Summ. J. at 2:2-7 (Docket No. 24).) 14 (Def.’s Mem. in Opp’n to Mot. Plaintiff IAI is an Israeli company that develops 15 aerospace technology and provides manufacturing and maintenance 16 services for both military and commercial aircraft. 17 1 (Docket No. 1).) 18 VCAC system in its Boeing 707 aircraft. 19 wanted IAI to purchase a standard VCAC system from Airweld, and 20 have Airweld customize the VCAC unit to certain specifications. 21 (Id. ¶ 8.) 22 to purchase the modified system. 23 Thereafter, Airweld communicated with IAI, rather than ROMAVIA, 24 about providing the VCAC system. 25 (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 26 representative to Israel to inspect the aircraft upon which the 27 VCAC system was to be installed. 28 against the modified system requested by IAI on behalf of 2 (Id. ¶ 8.) Airweld advised 1 ROMAVIA because it would likely not provide the desired cooling 2 for the designated areas of the aircraft. 3 reason, Airweld requested a waiver acknowledging the fact of 4 this possible shortcoming. 5 (Id.) For this (Id.) Before the modified VCAC system could be installed on 6 the aircraft, it needed to be approved by the FAA. (Stanzler 7 Decl. Ex. C (“Petty Dep.”) at 8:21-23 (Docket No. 19).) 8 was because the customized VCAC system was not covered by 9 Airweld’s STC for the standard system. This (DeMarchi Decl. ¶ 14 10 (Docket No. 26).) 11 warned that the FAA approval process would be time consuming, 12 especially given the specific modifications requested by IAI. 13 (Petty Decl. ¶ 7.) 14 Airweld informed IAI that it would obtain FAA approval for the 15 modified system. 16 12:15-17 (Docket No. 19).) 17 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 18 the modified VCAC system, (Petty Decl. ¶ 17), when it received 19 a waiver from Airweld acknowledging that the customized VCAC 20 system would not provide the desired cooling, (id. ¶ 8). 21 DeMarchi, Operations Manager for Airweld, made initial contact 22 with the FAA on February 21, 2008, to begin the approval 23 process. 24 to requests for information from the FAA after that point. 25 (Id. ¶ 8.) 26 (DeMarchi Decl. ¶ 6.) Rich Airweld continued to respond According to IAI, on February 7, 2008, it sent Airweld 27 the total payment for the VCAC system, amounting to a total of 28 $112,805, which included payment for the travel to Israel. 3 1 (Compl. ¶ 13.) 2 received that sum by April 3, 2008. 3 also disputes that it has received full payment under the 4 contract because of estimated expenses incurred in procuring 5 European Aviation Safety Authority (“EASA”) certification for 6 the modified system. 7 Airweld disputes this date, and states that it (DeMarchi Decl. ¶ 3.) It (Answer ¶ 14.) On December 2, 2010, IAI sent a letter to Airweld 8 canceling their contract because Airweld had failed to deliver 9 the VCAC system. (Stanzler Decl. Ex. F.) Despite this 10 cancellation, IAI responded to Airweld’s request for 11 information needed by the FAA to continue the approval process 12 on December 8, 2010. 13 that it did not receive the cancellation letter until April 14 2011. 15 unit to IAI. 16 (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 17 defendant, asserting claims for breach of contract and 18 rescission based on mutual mistake. 19 summary judgment pursuant to Rule 56 as to its breach of 20 contract claim. 21 II. Plaintiff now moves for Discussion 22 Summary judgment is proper “if the movant shows that 23 there is no genuine dispute as to any material fact and the 24 movant is entitled to judgment as a matter of law.” 25 Civ. P. 56(a).1 Fed. R. A material fact is one that could affect the 26 27 28 1 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.” 4 1 outcome of the suit, and a genuine issue is one that could 2 permit a reasonable jury to enter a verdict in the non-moving 3 party’s favor. 4 248 (1986). 5 Anderson v. Liberty Lobby, Inc., 477 U.S. 242, The party moving for summary judgment bears the 6 initial burden of establishing the absence of a genuine issue 7 of material fact and can satisfy this burden by presenting 8 evidence that negates an essential element of the non-moving 9 party’s case. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 10 (1986). 11 the non-moving party cannot produce evidence to support an 12 essential element upon which it will bear the burden of proof 13 at trial. 14 must, however, be viewed in the light most favorable to the 15 party opposing the motion. 16 v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). 17 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”) 18 governs IAI’s breach of contract claim. See Cal. Com. Code § 19 2102 (West 2002).2 20 provided for in the contract, the Code provides a gap filler to 21 designate the proper time. 22 Inc., 206 Cal. App. 4th 999, 1011 (3d Dist. 2012). 23 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 24 25 26 27 28 2 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).) 5 1 reasonable time.”3 2 “reasonable time” “depends upon what constitutes acceptable 3 commercial conduct in view of the nature, purpose and 4 circumstances of the action to be taken.” 5 The parties’ course of dealing, course of performance, or trade 6 usage can be used in the determination. 7 Ultimately, what constitutes a reasonable time under the 8 circumstances is a question of fact. 9 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. 10 (D.S.D. Apr. 13, 2010) (“[T]he question of what is a 11 ‘reasonable time’ for shipment or delivery in this case is a 12 question of fact properly left to the jury.”). 13 Airweld does not dispute that it promised to deliver a 14 VCAC system with FAA certification. There is no evidence 15 presented, however, to show that Airweld and IAI agreed to a 16 specific time for delivery.4 17 breach and whether IAI validly canceled the contract turns on 18 whether Airweld’s failure to deliver the VCAC system by Thus, both whether Airweld was in 19 20 21 22 23 24 25 26 27 28 3 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). 4 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. 6 1 December 2, 2010, was unreasonable. 2 IAI fails to provide a substantial explanation as to 3 why a delivery period almost three years past the finalization 4 of the contract is unreasonable, except to say that it is 5 “patently” so. 6 IAI does seem to suggest that Airweld was on notice that it was 7 eager to receive the system. 8 email to Airweld notifying it that IAI had scheduled a new 9 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 10 installed and that it “must have the VCAC on or before this 11 date.” 12 February 24, 2010, that it had called and emailed the FAA to 13 get an update.5 14 whether Airweld responded to a May 4, 2010, email request for 15 another update, (see id. at 29:10-21), it did send an email to 16 IAI on December 9, 2010, requesting additional information to 17 provide to the FAA, (DeMarchi Decl. Ex. I). 18 (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’ 19 conduct to dispute that non-delivery by December 2010 was 20 unreasonable. 21 onset of the project that the FAA approval process “would be 22 time consuming.” 23 after the order was finalized that the proposed deviation from 24 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 25 26 27 28 5 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. 7 1 additional time. 2 customization it wanted “would not function sufficiently to 3 cool all of the areas that IAI wanted to have cooled by the 4 system.” 5 deadline, (id. ¶ 14), and IAI proffers no evidence that it 6 received assurances that the approval process would be 7 completed by a certain date. 8 9 (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. 10 “Trade usage” “is any practice or method of dealing having such 11 regularity of observance in a place, vocation, or trade as to 12 justify an expectation that it will be observed with respect to 13 the transaction in question. 14 usage must be proved as facts.” 15 Airweld states that “[t]here is no schedule published by the 16 FAA that would enable anyone to determine how long the FAA may 17 take when issuing an STC or an amendment to an existing STC.” 18 (DeMarchi Decl. ¶ 9.) 19 Airweld, he has known the approval process to take anywhere 20 from six months to five years, depending on the project.6 21 Airweld explained this unpredictability of the FAA timeline to 22 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 23 6 24 25 26 27 28 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. 8 1 suggests that it would not have been unreasonable to still be 2 awaiting FAA approval of the customized VCAC system in December 3 2010. 4 IAI’s argument does not establish that its position, 5 according to which Airweld’s failure to deliver the FAA- 6 approved unit by December 2010 amounted to breach of the 7 contract and entitled IAI to cancel, is correct as a matter of 8 law.7 9 would constitute a reasonable time for delivery under the Indeed, each party offers conflicting evidence as to what 10 contract at issue. 11 conflicting evidence is reserved for a jury. 12 remains a genuine issue of material fact, the court must deny 13 plaintiff’s motion for summary judgment on its breach of 14 contract claim. 15 Any inferences to be drawn from this Because there IT IS THEREFORE ORDERED that plaintiff’s motion for 16 summary judgment be, and the same hereby is, DENIED. 17 DATED: October 10, 2012 18 19 20 21 22 23 24 25 26 27 28 7 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. 9

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