Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—M.D. Tenn.: No reduction in punitive damages or new trial for airplane sellers, (May 6, 2014)

By Linda O’Brien, J.D., LL.M.

The federal district court in Nashville has refused to grant a reduction in an award of punitive damages or a new trial following a jury verdict in favor of a purchaser of an airplane against the sellers for intentional misconduct in concealing the dangerous condition of the airplane from the purchasers (Readick v. Avis Budget Group, Inc., April 25, 2014, Gardephe, P.).

N5ZX Aviation purchased an airplane from Owen and Chris Bell. N5ZX filed suit against the Bells, alleging negligence, intentional misrepresentation or fraud, breach of warranty, and willful violation of the Tennessee Consumer Protection Act (TCPA). N5ZX alleged that the defendants made fraudulent, material misrepresentations concerning the condition and airworthiness of the airplane and were negligent in the inspection, repair, certification, and maintenance of the airplane such that it was in dangerous condition when sold. A jury awarded N5ZX compensatory and punitive damages. The defendants moved to alter or amend judgment to reduce the punitive damages award, or to order a new trial.

The court found that there was a reasonable relationship between the punitive damages award and the actual and potential harm caused by the defendants’ conduct. The Due Process Clause prohibits the imposition of grossly excessive or arbitrary punishments on a tortfeasor. The court noted that the actual harm caused to the plaintiff was economic rather than physical; however, the potential harm caused by the defendants’ conduct included an increased risk of physical injury and even death, given the non-airworthy condition of the airplane.

The plaintiff presented evidence that the airplane was not airworthy and that the defendants knew of and concealed the airplane’s dangerous condition. The jury reasonably found that the defendants’ sale of the airplane in dangerous condition was evidence of deceitful misconduct and a reckless disregard for the safety of others. Thus, the punitive damages award was reasonably related to the defendants’ intentional, reprehensible misconduct. Moreover, the TCPA provided for treble damages if the violation is willful.

Finally, the court declined to disturb the jury’s verdict, since it was based upon sufficient evidence and reasonably reached. When presented with conflicting evidence, credibility and factual determinations were properly left for the jury to resolve, the court concluded.

The case is No. 3-11-0674.

Attorneys: R. Mark Dietz (Dietz & Jarrard, PC) for N5ZX Aviation, Inc. Marc A. Walwyn (Walwyn & Walwyn) for Owen C. Bell.

Companies: N5ZX Aviation, Inc.

Cases: StateUnfairTradePractices TennesseeNews