Rose•Walker, L.L.P.

11.02.2007

Appeals Court Hands Texas Company Aviation Case Victory

Key components of 2005 verdict against Textron Lycoming upheld

DALLAS – The Fourteenth Court of Appeals in Houston, Texas, has handed down a decision in an aviation fraud case, upholding key components of the jury’s verdict while setting aside the damages award.

In 2005, a jury in Grimes County, Texas, found the Lycoming engines division of Providence, RI-based Textron (NYSE:TXT) liable for fraud, and ordered the company to pay approximately $96 million to Navasota, Texas-based Interstate Southwest Ltd.  The case revolved around a number of small airplane engine failures that occurred when the airplanes’ crankshafts broke in flight. 

Between 2000 and 2002, there were 24 failures and 12 deaths in Cessnas, Pipers and other airplanes equipped with Lycoming engines.  Interstate Southwest supplied Lycoming with the crankshaft forgings for those engines.

Though Lycoming blamed Interstate for the failures, testing by Interstate’s legal team showed the trouble was a defect in Lycoming’s own design for the crankshafts, and the jury agreed. The jury also found Lycoming committed fraud on Interstate, and awarded Interstate nearly $10 million in actual damages and another $86 million in exemplary damages. The trial court later entered judgment for the full $96 million.

Most importantly, the courtroom victory effectively nullified Lycoming’s $173 million counterclaim.  This key part of the win remains unchanged by the appellate court’s ruling.

In its decision, the Fourteenth Court of Appeals upheld the jury’s finding that the crankshaft failures were caused solely by a defect in Lycoming’s design, and also held that the contract provision under which Lycoming sought indemnity was unenforceable. The court set aside the damages award, however, holding that the damages Interstate sustained as a result of Lycoming’s fraud were not recoverable under Texas law.

“The important thing to remember is that we defeated Lycoming’s $173 million claim, and that’s still true,” says Marty Rose of Rose•Walker, L.L.P., lead counsel for Interstate Southwest.  “And it’s still true that the jury found Lycoming committed fraud.”

Rose•Walker, L.L.P. is a premier trial law firm, focusing on complex civil litigation. It represents businesses and individuals, and its many major courtroom victories have helped Rose•Walker earn a national reputation for excellence. To learn more about the firm, please visit www.rosewalker.com.

For more information on the appellate decision, please contact Mark Annick at 800-559-4534, 214-213-1754 (mobile) or mark@androvett.com.