Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-15-02235/USCOURTS-ca8-15-02235-0/pdf.json

Parties Involved:
Elliott Aviation, Inc.
Appellee
Gosiger, Inc.
Appellant

Document Text:

United States Court of Appeals

For the Eighth Circuit

___________________________

No. 15-2235

___________________________

Gosiger, Inc.

lllllllllllllllllllll Plaintiff - Appellant

v.

Elliott Aviation, Inc.

lllllllllllllllllllll Defendant - Appellee

____________

Appeal from United States District Court 

for the Southern District of Iowa - Des Moines

____________

 Submitted: January 13, 2016

 Filed: May 23, 2016

____________

Before MURPHY, SMITH, and BENTON, Circuit Judges.

____________

BENTON, Circuit Judge.

Elliott Aviation, Inc. damaged Gosiger, Inc.’s aircraft. Gosiger seeks damages

for the diminished value of the aircraft. The district court granted summary 1

The Honorable John A. Jarvey, United States District Judge for the Southern 1

District of Iowa. 

Appellate Case: 15-2235 Page: 1 Date Filed: 05/23/2016 Entry ID: 4401352 
judgment to Elliott Aviation, ruling that the contract did not allow diminution-invalue damages. Having jurisdiction under 28 U.S.C. § 1291, this court affirms.

I.

Gosiger, an Ohio corporation, owns a business aircraft BB1488, a King Air

B200. Elliott Aviation, an Iowa corporation, services aircraft. In October 2012, by

a “Specification for Gosiger Inc.,” Gosiger contracted with Elliott for maintenance

on the aircraft and installation of a new avionics suite. 

The “Responsibilities” section says:

On Ground Responsibilities. Elliott Aviation is responsible for all

claims, demands, suits, judgments, losses, damages, costs and expenses

which arise on the ground out of Elliott Aviation’s negligence in

performing Services on the Aircraft.

In Flight Responsibilities. Customer agrees and understands that

Customer is responsible for all claims, demands, suits, judgments,

losses, damages, costs and expenses arising out of the in flight operation

of the Aircraft, except to the extent that such claims, demands, suits,

judgments, losses, damages, costs and expenses arise out of Elliott

Aviation’s negligence in performing Services (as defined in the

Proposal) on the Aircraft. . . . . 

Immediately after the “Responsibilities” section is a “Limitations of Liability”

section:

IN NO EVENT SHALL COMPANY BE LIABLE FOR ANY LOSS OF

USE OF THE AIRCRAFT OR LOSS OF PROFITS, DIMINUTION IN

VALUE . . . DAMAGES OR LOSSES, . . . . In the event Elliott Aviation

physically damagesCustomer’s property, Customer’s sole and exclusive

remedy, and Elliott Aviation’s sole and exclusive liability, is limited to

-2-

Appellate Case: 15-2235 Page: 2 Date Filed: 05/23/2016 Entry ID: 4401352 
the repair or replacement (at Elliott Aviation’s option) of the damaged

portion of the property.

While servicing Gosiger’s aircraft on the ground, Elliott Aviation cut the right

wing, main spar. Elliott repaired it in accordance with the aircraft manufacturer’s

recommendation. The parties began to negotiate about the damage to the aircraft. 

Gosiger wanted compensation for diminution in value of the aircraft. 

In January 2013, Elliott Aviation offered Gosiger $9,000 for diminution in

value. The parties signed a “Return to Service Agreement,” which says:

To allow Gosiger Inc. to accept delivery and utilize their aircraft while

at the same time giving Gosiger, Inc. time to evaluate the $9,000.00

diminution settlement offer for BB1488, Elliott Aviation is offering to

allow Gosiger Inc. to pay their existing invoice down to an outstanding

balance of $60,000.00 USD. 

This Agreement continues: 

Should Gosiger agree to these terms, Gosiger Inc. would pay Elliott

Aviation 438,843.21 USD upon delivery of the aircraft with the

remaining 60,000.00 USD (less settlement amount) due to Elliott

Aviation within 5 days of the mutually agreed upon settlement date;

provided, however, that if we can’t come to an acceptable settlement of

the matter by February 28, 2013, we will engage in mediation within

thirty (30) days with a Mediator with experience in the nature of the

dispute, i.e. diminution of the value of the aircraft. 

Gosiger paid the $438,843.21. Elliott returned the aircraft. Gosiger, however,

rejected the $9,000 settlement offer. Instead, Gosiger had the aircraft appraised to

determine the diminution in fair market value from the damaged wing spar. 

According to the appraisal, the diminished value of the aircraft was $310,000. 

Gosiger demanded $310,000; Elliott refused to pay. Elliott then obtained another

-3-

Appellate Case: 15-2235 Page: 3 Date Filed: 05/23/2016 Entry ID: 4401352 
appraisal, which set the diminished value at $41,908. Elliott offered $41,908;

Gosiger rejected the offer. 

After unsuccessful mediation, Gosiger sued. Elliott moved for summary

judgment. The district court granted the motion, finding that neither the Specification

Agreement nor the Return to Service Agreement authorized diminution damages. 

Gosiger appeals.

II.

This court reviews de novo a grant of summary judgment. Torgerson v. City

of Rochester, 643 F.3d 1031, 1042 (8th Cir. 2011) (en banc). Summary judgment is

appropriate “if the movant shows that there is no genuine dispute as to any material

fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). 

Both parties agree Iowa law applies.

Gosiger argues that the Specification Agreement is ambiguous whether it

excludes diminution damages. Gosiger emphasizesthe “Responsibilities” section of

the Specification Agreement: “Elliott Aviation is responsible for all claims, demands,

suits, judgments, losses, damages, costs and expenses which arise on the ground out

of Elliott Aviation’s negligence. . . .” (Emphasis added). Gosiger believes that this

language—especially the word “all”—directly conflicts with the “Limitations of

Liability” section’s express exclusion of diminution damages. 

A court “generally review[s] the construction and interpretation of a contract

as a matter of law. . . . The question whether an ambiguity exists is also one of law.” 

Hartig Drug Co. v. Hartig, 602 N.W.2d 794, 797 (Iowa 1999). “It is a fundamental

and well-settled rule that when a contract is not ambiguous, [the court] must simply

interpret it as written.” Smidt v. Porter, 695 N.W.2d 9, 21 (Iowa 2005). A contract

“is not ambiguous merely because the parties disagree over its meaning,” rather “an

-4-

Appellate Case: 15-2235 Page: 4 Date Filed: 05/23/2016 Entry ID: 4401352 
ambiguity occurs in a contract when a genuine uncertainty exists concerning which

of two reasonable interpretations is proper.” Hartig Drug Co., 602 N.W.2d at 797. 

A “contract is to be interpreted as a whole . . . an interpretation which gives a

reasonable, lawful, and effective meaning to all terms is preferred to an interpretation

which leaves a part unreasonable, unlawful, or of no effect.” Iowa Fuel & Minerals,

Inc. v. Iowa State Bd. of Regents, 471 N.W.2d 859, 863 (Iowa 1991). 

The provisions of the Specification Agreement, interpreted as a whole, do not

conflict. The “Responsibilities” section does describe the parties’ responsibilities. 

But, the “Limitations of Liability” section immediately limits the remedies available,

specifically limiting Elliott’s liability to “repair or replacement” and expressly

disallowing “DIMINUTION IN VALUE” damages orlosses. See JohnsonControls,

Inc. v. City of Cedar Rapids, 713 F.2d 370, 374 (8th Cir. 1983) (stating that “if two

clauses of a contract appear to be in conflict, the preferred interpretation is the one

that gives a ‘harmonious interpretation’ to the clauses in order to avoid rendering

either one nugatory.”). This case is not like Gosiger’s main case, where a “series of

contradictory statements creates what appears to be an ambiguity which should have

survived a Rule 12(b)(6) motion to dismiss.” Denton Constr. Co. v. Missouri

Portland Cement Co., 659 F.2d 873, 875 (8th Cir. 1981). Here—at the summary

judgment stage—the contract has no contradictory statements and no ambiguity.

Gosiger next assertsthatElliott waived the “Limitations of Liability” provision

by its conduct: by purchasing insurance that may cover diminution damages, and by

offering to settle Gosiger’s diminution claims. Iowa law defines waiver as “the

intentional relinquishment of a known right . . . . It is consensual in its nature; the

intention may be inferred from conduct, and the knowledge may be actual or

constructive, but both knowledge and intent are essential elements.” United Forest

Prods. Co. v. Baxter, 452 F.2d 11, 16 (8th Cir. 1971) (applying Iowa law).

First, potential insurance coverage of diminution damages does not waive an

express section in the Specification Agreement. The “words of an integrated

-5-

Appellate Case: 15-2235 Page: 5 Date Filed: 05/23/2016 Entry ID: 4401352 
agreement remain the most important evidence of intention.” Walsh v. Nelson, 622

N.W.2d 499, 503 (Iowa 2001), quoting Restatement (Second) of Contracts § 212

cmt. b (1981). Potential insurance coverage is not an “intentional relinquishment of

a known right.” Second, Elliott’s offers are not waivers. Under Iowa law, an offer

to compromise a claim is not the “foundation of a waiver” unless it has a statement

that indicates waiver. Houdeck v. Merchants & Bankers Ins. Co., 71 N.W. 354, 355

(Iowa 1897). Elliott’s offers had no statement of waiver. And, the Specification

Agreement has a “Non-Waiver of Rights and Remedies” clause. 

Gosiger last contends that the Return to Service Agreement obliges Elliott to

pay diminution in value. An “original contract generally remains in force except as

modified or superseded by the new agreement.” Recker v. Gustafson, 279 N.W.2d

744, 754 (Iowa 1979). “Settlement agreements are essentially contracts” and courts

“look to contract principles when interpreting settlement agreements.” Rick v.

Sprague, 706 N.W.2d 717, 723 (Iowa 2005). “To be bound, the contracting parties

must manifest a mutual assent to the terms of the contract.” Id. at 724. Mutual assent

is usually “given through the offer and acceptance” and “the acceptance must

conform strictly to the offer in all its conditions, without any deviation or condition

whatever.” Id. Interpreting contracts, courts may look to extrinsic evidence,

including “the situation and relations of the parties, the subject matter of the

transaction, preliminary negotiations and statements made therein, usages of trade,

and the course of dealing between the parties.” Peak v. Adams, 799 N.W.2d 535, 544

(Iowa 2011). Yet, the “most important evidence of the parties’ intentions at the time

of contracting is the words of the contract.” Id. 

The Return to Service Agreement says: 

To allow Gosiger Inc. to accept delivery and utilize their aircraft while

at the same time giving Gosiger, Inc. time to evaluate the $9,000.00

diminution settlement offer for BB1488, Elliott Aviation is offering to

-6-

Appellate Case: 15-2235 Page: 6 Date Filed: 05/23/2016 Entry ID: 4401352 
allow Gosiger Inc. to pay their existing invoice down to an outstanding

balance of $60,000.00 USD. 

Gosiger urges that this amended the Specification Agreement to allow for diminution

damages. To the contrary, the reference to “diminution” is conditioned on “time to

evaluate” it. The Return to Service Agreement requires payment of the “remaining

60,000.00 USD (less settlement amount)” only if the parties “come to an acceptable

settlement.” Because the Return to Service Agreement is clear, the negotiations are

irrelevant. See Peak, 799 N.W.2d at 544 (holding “extrinsic evidence cannot alter the

legal effect of the unambiguous contract language”). Gosiger and Elliott never

mutually agreed to modify the Specification Agreement to allow for diminution-invalue damages. 

* * * * * * *

The judgment is affirmed.

______________________________

-7-

Appellate Case: 15-2235 Page: 7 Date Filed: 05/23/2016 Entry ID: 4401352