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BCR Aviation, LLC v. Texas Gyro, Inc.

United States District Court, N.D. Texas, Dallas Division

June 11, 2019

BCR AVIATION, LLC, Plaintiff,
v.
TEXAS GYRO, INC. et al., Defendants.

          MEMORANDUM OPINION AND ORDER

          KAREN GREN SCHOLER, UNITED STATES DISTRICT JUDGE.

         This Order addresses Defendant Texas Gyro, Inc.'s ("Defendant") Motion to Dismiss (the "Motion") [ECF No. 7], For the following reasons, the Court grants the Motion in part and denies the Motion in part.

         I. BACKGROUND

         Plaintiff BCR Aviation, LLC ("Plaintiff) is the owner of a 1982 Beechcraft King Air B200 aircraft. Compl. ¶ 7. In 2015, Pollard Aircraft Sales ("Pollard") contracted Defendant to install certain equipment, including a flight display system. Id. ¶ 8; Mot. 2. After Plaintiff purchased the aircraft in mid-2018 from Noetic Aviation, LLC ("Noetic"), which purchased it from Pollard, Plaintiff discovered certain problems with Defendant's work. Compl. ¶¶ 9-12. Specifically, Plaintiff alleges that Defendant (1) installed a flight display system that was incompatible with the autopilot, (2) incorrectly wired the Traffic Collision Avoidance System ("TCAS"), and (3) placed the altimeter equipment "on the right side of the panel away from the pilot, rendering it nearly unusable," Id. Plaintiff further alleges that Defendant represented in the aircraft's logbook that the work was "done in accordance with the [Manufacturer's Supplemental Type Certificate] and the applicable [Federal Aviation Administration] regulations." Id. ¶ 10 &Ex. 2. Plaintiff allegedly purchased the aircraft in reliance on Defendant's representations in the logbook. Id. ¶ 13.

         As a result of the problems with the aircraft, Plaintiff allegedly was forced to "replac[e] the autopilot [and] repair ... the TCAS and altimeter system." Id. ¶ 14, Plaintiff allegedly incurred repair costs as well as costs in diagnosing the malfunctions and transporting the aircraft for maintenance, loss of income, "diminution in value of the Aircraft, and inconvenience." Id. Plaintiff brings the present action alleging negligence and gross negligence in Count I, breach of express and implied warranties in Count II, breach of contract in Count III, negligent misrepresentation in Count IV, fraud in Count V, and violation of the Texas Deceptive Trade Practices Consumer Protection Act ("DTPA") in Count VI.

         II. LEGAL STANDARD

         To defeat a motion to dismiss filed pursuant to Federal Rule of Civil Procedure 12(b)(6), a plaintiff must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atl Corp. v. Twombly, 550 U.S. 544, 570 (2007); Reliable Consultants, Inc. v. Earle, 517 F.3d 738, 742 (5th Cir. 2008). To meet this "facial plausibility" standard, a plaintiff must "plead[j factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Plausibility does not require probability, but a plaintiff must establish "more than a sheer possibility that a defendant has acted unlawfully." Id. The court must accept well-pleaded facts as true and view them in the light most favorable to the plaintiff. Sonnier v. State Farm Mitt. Auto. Ins. Co., 509 F.3d 673, 675 (5th Cir. 2007). However, the court does not accept as true "conclusory allegations, unwarranted factual inferences, or legal conclusions." Ferrer v. Chevron Corp., AM F.3d 776, 780 (5th Cir. 2007). A plaintiff must provide "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555 (internal citations omitted). "Factual allegations must be enough to raise a right to relief above the speculative level... on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Id. (internal citations omitted).

         The ultimate question is whether the complaint states a valid claim when viewed in the light most favorable to the plaintiff. Great Plains Tr. Co. v. Morgan Stanley Dean Witter & Co., 313 F.3d 305, 312 (5th Cir. 2002). At the motion to dismiss stage, the court does not evaluate the plaintiffs likelihood of success. It only determines whether the plaintiff has stated a claim upon which relief can be granted. Mann v. Adams Really Co., 556 F.2d 288, 293 (5th Cir. 1977).

         III. ANALYSIS

         A. Negligence and Gross Negligence

         The Court finds that the negligence and gross negligence claims are barred by the economic loss rule. "[T]here is not one economic loss rule broadly applicable throughout the field of torts, but rather several more limited rules that govern recovery of economic losses in selected areas of the law." Sharyland Water Supply Corp. v. City of Alton, 354 S, W.3d 407, 415 (Tex. 2011) (quoting Vincent R. Johnson, The Boundary-Line Function of the Economic Loss Rule, 66 Wash. & Lee L. Rev. 523, 534-35 (2009)). In the negligence context, the economic loss rule bars recovery of purely economic damages. Clark v. PFPP Ltd. P'ship, 455 S.W.3d 283, 287 (Tex. App.'-Dallas 2015, no pet.) (citation omitted).

In deciding whether the economic loss rule applies in [a] case, we examine the source of the defendant's duty and the nature of the claimed injury. To determine whether the claim sounds in tort or contract, the focus is on the substance of the cause of action and not simply the manner in which it was pleaded. "[A] party states a tort claim when the duty allegedly breached is independent of the contractual undertaking and the harm suffered is not merely the economic loss of a contractual benefit." "The nature of the injury most often determines which duty or duties are breached. When the injury is only the economic loss to the subject of a contract itself, the action sounds in contract alone."

Id. at 288-89 (second alteration in original) (citations omitted). The Court finds that Plaintiffs injury and Defendant's duty are both contractual in nature.

         The only losses Plaintiff alleges are (1) the costs of replacing the autopilot and repairing the TCAS and altimeter systems, (2) the costs of transporting the aircraft to diagnose the malfunctions, (3) the loss of use of the aircraft, (4) loss of income, (5) diminution in value of the aircraft, and (6) inconvenience. Compl. ¶ 14. The Complaint states that Defendant "had a duty to exercise reasonable care as to the installation of the autopilot, TCAS, and altimeter equipment."[1]Id. ¶ 18. Thus, the aircraft's equipment and the resulting damages are the subject matter of the original contract. See Clark, 455 S.W.3d at 287, 289-90 (economic loss rule barred a claim for negligence in the sale of a vehicle where the harm was the loss of the vehicle); Trans-Gulf Corp. v. Performance Aircraft Servs., Inc., 82 S.W3d 691, 693-95 (Tex. App.-Eastland 2002, no pet.) (economic loss rule barred a claim for the cost of replacing a sealant ...


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