Relentless Air Racing v. Airborne Turbine Ltd.





























Filed 3/25/13 Relentless Air Racing v. Airborne Turbine
Ltd. CA2/6













NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS





California
Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or
relying on opinions not certified for publication or ordered published, except
as specified by rule 8.1115(b). This
opinion has not been certified for publication or ordered published for
purposes of rule 8.1115.





IN THE COURT OF
APPEAL OF THE STATE OF CALIFORNIA



SECOND APPELLATE
DISTRICT



DIVISION SIX




>

RELENTLESS AIR RACING, LLC, Plaintiff, Cross-defendant and Respondent, v. AIRBORNE TURBINE LTD. PARTNERSHIP, Defendant, Cross-complainant and Appellant.

2d Civil No. B237191 (Super. Ct. No. CV090342) (San Luis Obispo County)

Here a jury found
defendant breached a contract to provide a Federal Aviation Administration
(FAA) airworthiness certificate for an airplane defendant sold to
plaintiff. We affirm.

FACTS

In April 2004, Airborne
Turbine Ltd. Partnership (Airborne) sold a former French military jet to the
predecessor of Relentless Air Racing, LLC (Relentless).href="#_ftn1" name="_ftnref1" title="">[1] The jet is known to the parties as the
"Paris Jet." The contract
required Airborne to obtain a standard category airworthiness certificate
(certificate) for the jet from the FAA.
The certificate would allow the jet to be used as a charter aircraft to
generate revenues. Relentless paid
$175,000 and took possession of the jet.

Airborne had difficulty
obtaining the FAA certificate because of the jet's type of engines. Nevertheless, Wayne Fulton, a principal in
Airborne, kept assuring Relentless that he could obtain the certificate.

As early as 2005,
Relentless's principal, Kevin Eldredge, urged Fulton
to "unwind" the agreement.
Eldredge wanted Airborne to repurchase the Paris Jet for the original
purchase price plus the amount Relentless spent in restoring it.

Instead, the parties
entered into a new agreement on October
3, 2007. Under the new
contract, Relentless agreed to purchase a helicopter from Airborne for
$165,000. The purchase price was paid by
a promissory note. The contract provides that payment in full on
the note is due within 30 days of the date "the FAA releases the Standard
Category Airworthiness for [the] Paris Jet."

The contract further
provides:

"If Standard
Category Certificate for Paris #027 cannot be attained on or before March 31st,
2008, [t]he promissory note for this sale will be reduced by $5000.00 each
month starting April 1st, 2008 until FAA issues Standard Category Airworthiness
for Paris Jet #027 OR [Airborne] agrees to purchase Paris Jet #027 for
$204,540.00."

The contract prohibits
Relentless from assigning the contract or any interest therein.

Relentless took
possession of the helicopter subject to a security agreement giving Airborne a
lien on the helicopter to secure its purchase price. The security agreement provides that if the
helicopter is sold or transferred, the entire purchase price will become due.

On December 31, 2008,
Fulton sent Eldredge an e‑mail.
The e‑mail states that in March 2008 Fulton told Eldredge about
his efforts to obtain the FAA certificate for the Paris Jet. The e‑mail further states:

"Despite [Airborne's]
repeated efforts before and after that time, the stalemate situation has not
changed--persons and entities beyond [Airborne's] control are delaying and
frustrating the transfer of the Paris Jet Type Certificate to the new
designated Holder, and this is preventing [Airborne] from being able to deliver
to Relentless a replacement Standard Category Airworthiness Certificate for
Paris Jet S/N 27. [Airborne]
therefore hereby declares Force Majeure as to the inability of [Airborne] to
deliver a replacement Standard Category Airworthiness Certificate for Paris Jet
S/N 27, due to matters beyond [Airborne's] control."

Eldredge testified
Fulton did not offer to purchase the jet.
Eventually, Eldredge sold the jet on eBay for $100,000.

Eldredge testified that
Fulton breached the contract by telling him he could not perform. Eldredge believed he had a right to do
anything he could to minimize his damages.

In January 2009,
Relentless sold the helicopter to Robinson Air Crane, Inc. (Robinson) for
$215,000. The sale was subject to
Airborne's lien. Eldredge testified,
"I didn't believe that I could remove the lien until the price was at zero
on the helicopter."

When Airborne learned
the helicopter had been sold and moved to Florida, it twice attempted to
repossess it. The attempts were
unsuccessful. Airborne did manage
however to take the helicopter's logbooks.
The helicopter cannot legally be operated without the logbooks.

Relentless brought an
action for breach of contract. Airborne
cross-complained for breach of contract, conversion, unjust enrichment,
interference with contract and other causes of action.

The jury found in favor
of Relentless, but awarded only one dollar in damages. The jury made special findings as follows:

"1. Airborne Turbine Ltd. Partnership and
Relentless Air Racing, LLC entered into a contract.

"2. Airborne Turbine Ltd. Partnership
acknowledged or indicated clearly and positively, by words or conduct, that it
would not or could not fulfill its duty under the Aircraft Purchase Agreement
to deliver a Standard Category Airworthiness Certificate for the Paris Jet to
Relentless Air Racing, LLC.

"3. Airborne Turbine Ltd. Partnership was not
excused from having to do all, or substantially all, of the significant things
that the contract required Airborne Turbine Ltd. Partnership to do.

"4. Airborne Turbine Ltd. Partnership breached
the contract with Relentless Air Racing, LLC by attempting to repossess the
helicopter and taking the logbooks for the helicopter.

"5. Relentless Air Racing, LLC was harmed by that
breach.

"6. Relentless Air Racing, LLC's damages as a
result of Airborne Turbine Ltd. Partnership's breach of the contract were $1.00
(One Dollar)."

DISCUSSION

I.

Airborne contends the
trial court erred in determining as a matter
of law that it had a contractual duty to provide Relentless with an FAA
airworthiness certificate.

Over Airborne's
objection, the trial court approved question 2 of the special verdict
form. The jury was asked whether
Airborne clearly acknowledged that it would not or could not "fulfill its
duty" under the contract to deliver the FAA certificate. Airborne argues the court improperly removed
from the jury the question whether it (Airborne) had any such duty.

The interpretation of a
contract is purely a question of law unless it depends on the credibility of
extrinsic evidence. (See >Parsons v. Bristol Development Co.
(1965) 62 Cal.2d 861, 865.) Where the
extrinsic evidence is not in conflict, the interpretation remains a question of
law. (Ibid.)

Airborne argues the
contract imposes no duty on it to do anything.
According to Airborne, the contract only creates a condition for
payment. Relentless must pay for the
helicopter within 30 days following the "release" of the FAA
certificate.

But the reasonable
interpretation of the contract is that Airborne has the obligation either to
obtain the FAA certificate or repurchase the jet. Relentless holds the helicopter as security
for the performance of the obligation.

This interpretation is
supported by Fulton's testimony. Fulton
testified on cross-examination:

"Q. And isn't it true that Mr. Eldredge wanted
the following to happen by March 31st, 2008, the date you selected: He either wanted you to get the certificate
to him or make an offer to purchase the Paris Jet, one or the other, because he
wanted to have a date certain or drop-dead date for his protection?

"A. Yes."

Fulton further
testified:

"Q. Okay.
Basically, now you have a chance to unwind it in a contract for $204,540
by a certain date or give him [the] FAA certificate? That is your deal; right?

"A. Yes, and that was a good option. It was a very nice aircraft."

Airborne points to no
conflict in the extrinsic evidence on the interpretation of the contract. The trial court was correct in determining
that as a matter of law Airborne had a duty to provide the FAA
certificate. The provision of the certificate
was not simply a condition of payment for the helicopter.

II

Airborne contends the
trial court erred in ruling the date of breach alleged in Relentless's
complaint is not a judicial admission.

Relentless's unverified
Judicial Council form complaint alleges Airborne breached the contract on June
4, 2009. That date corresponds with a
day on which Airborne attempted to take the helicopter from Robinson. Relentless's theory at trial was that
Fulton's e‑mail of December 31, 2008, constituted an anticipatory breach
of the contract. Airborne claims that if
the default occurred on June 4, 2009, Relentless had no right to sell the
helicopter to Robinson before that date.

Judicial admissions may
be made in a pleading. (>Myers v. Trendwest Resorts, Inc. (2009)
178 Cal.App.4th 735, 746.) Facts
established as judicial admissions are conclusive and may not be contradicted
by the party making the admission. (>Ibid.)
The trial court has the discretion to disregard the admission. (Kurinij
v. Hanna & Morton (1997) 55 Cal.App.4th 853, 871.)

Here the trial court
refused Airborne's request to treat the allegation as a judicial
admission. The court stated that
Airborne took the opportunity at trial to examine Eldredge on when he believed
the breach occurred and the complaint was not verified.

Airborne argues there is
no authority that a judicial admission cannot be made in an unverified
complaint. But certainly the trial court
can consider whether an admission is made under oath in determining whether the
admission should be conclusive.

Moreover, the complaint
does not allege that the breach of June 4, 2009, was the first or only breach
of the contract. Thus the allegation
does not contradict evidence of an anticipatory breach on December 31,
2008. The trial court did not abuse its
discretion in refusing to treat the allegation as a judicial admission.

Airborne also claims the
trial court erred in refusing to allow it to refer to the June 4, 2009, breach
allegation in argument to the jury. If
it was error, the error is harmless.
Fulton's December 31, 2008, e‑mail is strong evidence of an
anticipatory breach. There is no
reasonable probability Airborne would have obtained a more favorable result in
the absence of the alleged error. (9
Witkin, Cal. Procedure (5th ed. 2008) § 445, p. 499.)

III

Airborne contends the
trial court erred in refusing its proposed instruction on anticipatory breach.

The record does not
contain the jury instructions given by the trial court. But the parties agree the court gave CACI No.
324. That instruction states:

"A party can
breach, or break, a contract before performance is required by clearly and
positively indicating, by words or conduct, that he or she will not or cannot
meet the requirements of the contract.

"If [Relentless]
proves that [it] would have been able to fulfill the terms of the contract and
that [Airborne] clearly and positively indicated, by words or conduct, that
[it] would not or could not meet the contract requirements, then [Airborne]
breached the contract."

Airborne proposed to add
the following paragraphs to the instruction:

"However '[i]n the
event [that Airborne] repudiate[d] the contract before the time for [its]
performance has arrived, [Kevin Eldredge and Relentless have] an election of
remedies--[they] may "treat the repudiation as an anticipatory breach and
immediately seek damages for breach of contract, thereby terminating the
contractual relation between the parties, or [they] can treat the repudiation
as an empty threat, wait until the time for performance arrives and exercise
[their] remedies for actual breach if a breach does in fact occur at such
time."' (Romano v. Rockwell Internat., Inc. (1996) 14 Cal.4th 479,
489 . . . .)

"Put another way,
if the plaintiffs elected to 'wait until the time of performance arrives and
exercise [their] remedies for actual breach' if it were to occur, they may not
recover based upon any alleged anticipatory repudiation by [Airborne]."

The trial court wisely
rejected Airborne's proposed instruction because the final paragraph misstates
the law. Airborne reads >Romano as providing that a plaintiff who
does not immediately seek damages for anticipatory breach waives that right and
must wait until the time for performance to seek damages for actual
breach. But Romano does not say that. >Romano says that the plaintiff
"may" immediately seek damages for anticipatory breach. (Romano
v. Rockwell Internat., Inc., supra,
14 Cal.4th at p. 489.) Nothing in >Romano says the plaintiff must
immediately seek damages for anticipatory breach or waive that right.

In Romano, the question was whether the href="http://www.fearnotlaw.com/">statute of limitations for breach of an
employment contract begins to run when the employee is notified he will be
terminated or upon actual termination.
The court decided the statute begins to run upon actual
termination. (Romano v. Rockwell Internat., Inc., supra, 14 Cal.4th at p. 491.)
The case neither holds nor discusses the issue raised by Airborne here.

In
fact, Airborne's contention was expressly rejected in Central Valley General Hospital v. Smith (2008) 162 Cal.App.4th
501, 516-518. There, a referee
interpreted Taylor v. Johnston (1975)
15 Cal.3d 130 as requiring a plaintiff who seeks damages based on anticipatory
breach to immediately seek such damages or lose the right to treat the matter
as an anticipatory breach. The Court of
Appeal disagreed stating:

"We
disagree with the referee's interpretation of Taylor and the way in
which the word 'immediately' was applied to the facts of this case. In our view, the following is a correct
statement of the law of California: A
party to a contract does not lose the right to treat an implied repudiation of
the contract as an anticipatory breach by failing to seek damages immediately
after learning of the events that constitute the implied repudiation.

name="SDU_9"> "The
California Supreme Court stated that an injured party 'can treat the
repudiation as an anticipatory breach and immediately seek damages for breach
of contract . . . .'
(Taylor [v.
Johnston], supra, 15 Cal.3d at p. 137, italics
added.) This language authorizes
the injured party to immediately seek damages, but it does not necessarily require
the party to seek damages immediately or lose the right to treat the
repudiation as an anticipatory breach.
In essence, the first sentence of the quote from Taylor describes
the earliest point at which an injured party may seek damages. It does not say that the earliest point is
the only point. Nor does that sentence
identify the last point at which a repudiation may be treated as an
anticipatory breach." (>Central Valley General Hospital v. Smith,> supra, 162 Cal.App.4th at p. 516.)

Airborne cites >Whitney Inv. Co. v. Westview Dev. Co. (1969)
273 Cal.App.2d 594, 603, for the proposition that "[w]hile a notice of
termination or cancellation of a contract for breach need not be formal and
explicit, it should clearly indicate to the defaulting party that the injured
party considers the contract terminated."
But Whitney does not say the
plaintiff must immediately notify a defaulting party of an election to declare
an anticipatory breach. There is no
reason why plaintiff cannot wait to decide whether to treat the defendant's
repudiation as an anticipatory breach.
Of course, where the plaintiff continues to accept the defendant's
performance after the anticipatory breach, plaintiff may be deemed to have
waived the breach. (Ibid.) But here Airborne
points to no evidence of its efforts to obtain the FAA certificate after the
December 31, 2008, e‑mail, much less Relentless's acceptance of that
performance.

The judgment is
affirmed. Costs are awarded to
respondent.

NOT TO BE PUBLISHED.









GILBERT,
P. J.





We
concur:







YEGAN, J.







PERREN, J.





Dodie
A. Harman, Judge



Superior
Court County of San Luis Obispo



______________________________





Cox Wootton Griffin Hansen
& Poulos LLP, Rupert P. Hansen for Defendant, Cross-complainant and
Appellant.

Adamski Moroski Madden
Cumberland & Green LLP, David M. Cumberland, Joshua Michael George for
Plaintiff, Cross-defendant and Respondent.