Aircraft fail to meet contract specifications: Breach of contract: Fraud: Completion costs: Verdict: Punitive damages

Law Reporter, May 2002

Aircraft fail to meet contract specifications: Breach of contract: Fraud: Completion costs: Verdict. Punitive damages.

Raytheon E-Sys., Inc. v. Learjet Inc., Tex., Hunt County 196th Jud. Dist. Ct., No. 62284, Jan. 16, 2002.

Raytheon was awarded a contract by the Federal Aviation Administration to modify six Learjet aircraft for use in a federal flight inspection program. Raytheon then contracted with Learjet Inc., to perform the modifications.

The completed aircraft allegedly failed to meet the required specifications. Later, Raytheon allegedly discovered that Learjet had misrepresented the heating and cooling capabilities of the planes. Learjet refused to reimburse Raytheon for the cost of bringing the aircraft up to federal standards. As a result, Raytheon estimates that it suffered damages of more than $13 million.

Raytheon sued Learjet, alleging breach of contract and fraud. Specifically, plaintiff claimed that defendant had fraudulently induced plaintiff to enter into the contract by misrepresenting the heating and cooling capabilities of the planes. In addition, plaintiff contended defendant knew the planes could never meet the specifications of the contract but failed to reveal this information to plaintiff.

Learjet countersued, arguing plaintiff failed to pay invoices and gas and freight charges, and had converted defendant's parts.

A jury awarded plaintiff about $24.2 million, including about $11.6 million punitive damages.

Defendant was later awarded about $19,200 on its countersuit.

Plaintiff's accounting expert witness was Tim Overman, Dallas, Tex.

Plaintiff's Counsel

Harold H. Walker Jr., *Martin E. Rose, James J. McGoldrick, and Leave Capps Medford, all of Dallas, Tex.