To: 12022671293 From: 16147981620 Date: 08/06/15 Time: 1:06 PM Page: 02/11**E!Cf~IENBERGER** &_ASSOCIATES

Federal Aviation Administration 800 Independence Avenue, S.W. Washington, DC 20591 Attn: HearingDocket Clerk AGC-430, WilberWright Building Suite 2Wl000

To the fiearing Docket Clerk, August 6, 2015

Re: Respondent's Reply to FAAResponse**DocketNo~:** FAA-2014-0119 Case No.: 2012-GL-07-0056



### Please find the 

### enclosed Reply to the FAA's 

### Response. A 

### copy of

### the samehas also b<Oen served by facsimile to the FAA

### attorney and Judge Sullivan. Ifyou have any questions,please do not 

### hesitate to contactme 

### at the number below.

Enclosures CC: 

### Kate Barber, Esq. Judge J.E. Sullivan

6037

### Frantz Road, Suite 107 

### i Dublin, Ohio 43017! 

### T/ 614-798-1600! 

### F/ 614-798-16oo 

### Iwww.ehlawyers.comTo: 12022671293 From: 16147981620 Date: 08/06/15 Time: 1:06 PM Page: 03/11



### Inthe Matter Of: U.S. DEPARTMENT OF TRANSPORTATION OFFICE OFHEARINGS

WASHINGTON, D.C.
DocketNo. .FAA-2014-0119 SpiritAvionics, LTD., Case No. 2012-GL-07-0056 Respondent. ) ) ) ) )


### RESPONDENT'S REPLY TO COMPLAIN ANT'S RESPONSE .FILED JULY 1, 2015 Respondent, Spirit Avionics, LTD., files this Reply to Complainant's Response and herebystates as follows: The ultimate issue in this matter is whether the transaction between Respondent and its sub-contractor, LaneAviation, constitutes a sale offabricated parts. As a preliminary matter, it is important to note that Respondent, pursuant to its operations certificate, has the authority to manufacturereplacementormodification articles for installation on typece1iificated aircraft. In support of its theory that Respondent sold the parts in question to Lane Aviation, Complainant ultimately relies upon its "smoking gun," an invoice from Respondent to Lane Aviation, which states as follows: "Lane Aviation Portion of Purchase and Assembly of Headliner Installation Kits. Kits supplied to be used for the 3rd FAA Aircraft through the 181 h aircraft." In its Motion for Decision, Respondent explains that it worked exclusively with two subcontractors to complete all the work contemplated under the contract with the FAA. The subcontractors were necessary because Respondent could not complete every task required by the contract under its current operations certificate, so it enlisted the services oftwo reputable serviceproviders (LaneAviation andTritex).To: 12022671293 From: 16147981620 Date: 08/06/15 Time: 1:06 PM Page: 04/11



### The contract negotiations with the FAAwere lengthy and endured several revisions. As a result, Respondent, Tritex. and Lane Aviation miscalculated their costs; specifically, those costs related to the headliner installation kits for the FAA aircraft. 1 

### Rather tha11 frustrate the progress of the work under the contract and potentially compromise the business of an important customer, Respondent, Lane Aviation, and Tritex agreed to share the loss 2 

### This fact explains why the invoices to Tritex and Lane Aviation are identical in both price and description. The invoices do not represent a 

### sale from one entity to the other; they represent reimbursement payments made by Tritex and Lane Aviation to Respondent for a specific portion of a large contract.

A. The Transaction BetweenRespondentandLaneAviation WasNota Sale UnderPart21 UndertheApplicable Common Definition of a "Sale." 

### In its Response, Complainant first asserts that the transaction between Lane Aviation and Respondent was a sale under Part 21 

### as perthe applicable common definition ofthe term "sale." In support ofthis assertion, Complainant cites themost recent version ofBlack's Law Dictionary which defines the term sale as: "the transfer ofproperty or title for a price." Complainant also cites two other sources for the definition, but essentially suggests that a "sale''wouldinvolvetwo elements: 1) 

### an exchange ofgoods or services, and 2) 

### money. This definition, however, is overly simplistic and inapplicable to this situation as there was no "exchange'' Arguably, when there is
an exchange ofgoods or services the buyer would get something ofvalue in retum (the goods or services). The "buyer"in this instance, Lane Aviation, got nothing ofvalue in retum because the parts in question were always the property ofthe FAA and were installed in the eighteen aircraft listedin the contract.

1 The parts in que-stion involve kits ofhardware used to m-ount the interior panels within the cabin ofthe aircraft to the 

### airframe. 2 Respondent's CEO declares this fact inhis Declaration attached as EXHIBIT C to its Motion for Decision filed on June 1, 2015. 2To: 12022671293 From: 16147981620 Date: 08/06/15 Time: 1:06PM Page: 05/11

As further support, Complainant lists several analogies that are wholly inapplicable and unsupported by law. For example, a real estate agent does not sell a house. Rather, a real estate agent is just that, an agent, which facilitates the sale of real prope1ty on the seller's behalf. Complainant also states that one can sell stolen goods without title. While one could sell stolen goods, it does not mean the sale is valid because such a sale is illegal. Lastly,Complainant cites the example of a consignment shop. Again, this is an agency relationship where one is selling something on behalf ofanother. Simply transferring physical possession ofsomething does not make it a sale. Otherwise, everyinstance ofa bailment, loan ofgoods, orlease ofpropertywould constitute a sale ifone were to take Complainant's argument to its logical conclusion. Thus, this argumentmust fail. Finally, Complainant insists that a sale exists based upon the fact that Respondent prepared an invoice and received $7,416.90 for the "purchase and assembly ofheadliner install kits." Conveniently, Complainant omits the entire description on the invoice which specifically states that it was "Lane Aviation's portion" ofthe cost to purchase and install headliner install kits. The headliner kits and subsequent installation ofthe same actually cost $22,250.003 This amount is that which was tmintentionally omitted from the bid on the contract and subsequent negotiation ofthe same. Since the parties had an expected profit on the entire contract, the fhtee parties were able to determinethe total loss fi·om the omission ofthe headliner install kit and had agreed to shareit. Complainant is usingvaguegeneralizations and a broad definition oftheterm "sale"to fit
a square peg into a round hole. That is, Complainant is advancing the logic that because an invoice was paid, and because that invoice contains the word "purchase" it must therefore be a sale. Complainant's proposed definition omits one critical component; that where goods are

3 $7,416.90 represents 1/3 ofthe total cost of$22,500.70.3To: 12022671293 From: 16147981620 Date: OB/06/15 Time: 1:06 PM Page: 06/11

exchanged for money, the buyer would retain a benefit. Respondent argues that benefit is the passing oftitle, and the right to have complete and total control ofthe parts in question, which is not present. Therefore, Complainant's proposed applicablecommondefinition ofthe term "sale" must fail. 

### B. The Plain Language of the Respondent's Invoice Is Irrelevant Because it is Not a Contract. Complainant's second argument that the transactionwith LaneAviation constituted a sale w1der any definition ofthe term must faiL Complainant attempts to treat the invoice issued to Lane Aviation as an unambiguous contract, and as such, argues that parol evidence cannot be introduced to contradict theplain meaning ofa contract. The invoice issued to LaneAviation is not a contract. An invoice is neither a bill ofsale
nor evidence of a sale, and, standing alone, furnishes no proof of title. Dows v. National Exchange Bank OfMilwaukee, 91 U.S. 618 (1875). Complainant, however, maintains that there is nothing ambiguous about the parties' "agreement" and that the invoice clearly states it was for the purchase of specific items and shows consideration was given in exchange for those items. Again, Complainant is completely ignoring the factual basis ofthe transaction a11d providing absolutely no evidence ofits own to
come to its desired outcome. Lru1e Aviation did not purchase anything from Respondent. Respondent purchased materials onbehalfofits customer, the FAA, which is clearlythe proper procedure outlinedin theFAA contract. Respondent even usedits customer's money to purchase said materials. Lane Aviation reimbursed Respondent for the shared loss relating miscalculation oftheparts cost. Further, by seekingto use the invoice in question (which is not a contract) as evidence to prove the terms of a contract between Respondent and Lane Aviation, Complainant is using
4To: 12022671293 From: 16147981620 Date: 08/06/15 Time: 1:06 PM Page: 07/11

parol evidence, which it had specifically stated in subheading B ofits Response to Respondent's Motion for Decision, is prohibited. The unambiguous contract is not the invoice, but rather the agreement between the parties to reimburse Respondent for its share ofthe loss onthe contract. The invoice, which specifically and unequivocally states that the amount is representative of Lane Aviation's share, 

### is simply a standard businesspractice (particularly

### in the context ofa joint venture) memorializing that fact that money had been paid to reimburse a loss. Therefore, Complainant's argument must fail because it simply misapplies basic contract and business principles to cometo itsownfaulty conclusion. C. TheTransaction Was Not a SaleUnde1· the lJ.C.C.'s Definition. Complainant's assertion that the transaction in question constitutes a sale under the U.C.C. is without merit. U.C.C. § 2-106(1) defines a "sale" as consisting ofthe passing oftitle from the sellerto thebuyerfor a price. Complainantmaintains that since Lane Aviation used the parts in question to complete part of the work OTder, it had "possession" and thus a legally protectedpropertyinterest. Complainant misconstrues the meaning of actual possession and legal possession. For example, one can be in possession of something, but not have the right to possess it. Lane Aviation had possession ofthe parts which were consumed in the course ofproviding the labor to install them. Lane Aviation had no property interest in the parts because the parts were the sole property of the FAA As was made abundantly clear in the FAA contract, everything purchasedto completethe contractistheproperty oftheFAA: CLIN 004
. Materials Acquired by the Contractor for the Govemmcnt

- all materials and equipment acquired with govemment funding are properiy ofthe FAA and shall be maintainec1 TAW Government Furnished Property (GFP) provisions ofthe contract4

4 See pages 3, ii, 8, I0, and 12 ofthe FAA Contract. This clause is also referenced in Footnote 18 ofRespondent's MotionforDecision. 5To: 12022671293 From: 16147981620 Date: 08/06/15 Time: 1:06 PM Page: 08/11

Finally, Complainant asserts that Lane Aviation possessed the parts, had the right to use those parts to complete its work, paid a significant sum ofmoney for the parts, and had an agreement setting forth those rights. This is purely conjecture and Complainant offers no evidence to prove any ofits asse11ions. Lane Aviation had a duty, not a right to use the parts. Lane Aviation did not pay a significant sum ofmoney for parts; Respondentpurchased theparts with funds from theFAA. Further, there was no agreement setting forth those rights because, as stated above, an invoiceis not a contract. The U.C.C. requires thepassing oftitle to create a valid sale. Lane Aviation did not have title to theparts in question because the parts belonged to the FAA. Therefore, thetransaction in question did not constitute a saleunder the U.C.C. D. TheActivity ComplainedofIs NotWithin the Scope of14 C.F.R. § 21.9. Complainant asserts tlmt any discussion following the regulation itselfmay be used to interpret the intentofa regulation, butit is notthe law and in no way limits the plain language of the regulation. Respondent agrees that while it may not be controlling, it is certainly helpful to understand how and whythis specificregulation cameinto existence. Section 21.9 was enacted to protect unsuspecting consumers from the sale of nonconfon11ing parts in the marketplace. This regulation is a safety measure enacted to protect consumers from purchasingnon-conformingparts for installationontype certificated aircraft and is therefore inapplicable to the facts and circumstances underlyingthe instantmatter. Under this same section, Complainant also argues the requirement that title pass to a buyer under a U.C.C. contract is contradictory to the plain language ofthe invoice. The "plain language" oftheinvoiceis irrelevantbecause it is not a contract.

6To: 12022671293 From: 16147981620 Date: OB/06/15 Time: 1:06 PM Page: 09/11

Finally, Complainant also argues that there is no evidence regarding any subcontract between the companies and respondent. This is untrue. Respondent directs Complainant's attention to 

### EXHIBIT A, specifically page 

### 17 of the contract which explicitly states Lane Aviation therein. Therefore, to say that there is no evidence of Lane Aviation's involvement under this contract is patentlyfalse. Respondent also cites Exhibit C t!led with the Motion which contains a Declaration from Eric C. Ochs, the CEO ofRespondent, SpiritAvionics. Specifically, inParagraph 5, Mr. Ochs declares as follows: 5. Due to a combination ofboth limitations of the certificate belonging to Spirit Avionics, Ltd. and lack of equipment and/or specialization needed to perfom1 every task contemplated under the tenns ofthe contract with 

### the FAA, Spirit Avionics utilized the experience and expertise oftwo highlyrespected and qualified sub-contractors: Lane Aviation Corporation ("Lane Aviation") and Tritext Corporation ("Tritex") in carrying out the work contemplated by the contract. Respondentmaintains that Section 21.9 does not applyto the instantmatter and reiterates the fact that Respondent did not sell thepatisinquestion to Lane Aviation or Tritex. The invoice in question simplyrepresents reimbursement ofthe portion ofthe loss the parties agreed to share due to a mutual mistake. Therefore, Respondentdid notviolate Section21.9. E, Conclusion Complainant has the burden to show that the respondent produced a replacement part or modification article for sale <md represented that the part was suitable for installation on a type certificated aircraft. Notwithstanding the invoice submitted to Lane Aviation regarding its share of the reimbursement of the loss, which Complainant prefers to incorrectly view as a valid, binding, and unambiguous contract, Complainant has no evidence to demonstrate that Respondent soldthe pmis in question in violation ofSection 21.9 because that evidence does not exist. 

### 7To: 12022671293 From: 16147981620 Date: 08/06/15 Time: 1:06 PM Page: 10/11



### Respondent does not dispute that it fabricated the parts in question. It

### has every right to produce such parts under its operations specifications. What Respondent categorically denies, based on the foregoing, is that it sold said parts to its subcontractor, Lane Aviation. Therefore, Respondent submits that there are no genuine issues ofmaterial fact and that it is entitled to judgment as a matter of law on the grounds that the transaction between Respondent and its subcontractor wasnot a "sale"and therefore did notviolate 14 C.P.R. §21.9.
Respectfullysubmitted,

.

### ----"""' i -1" 

## / _/./

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**.P~trick t.":rvfo~;-**  **==~-----** 

### JerryA. 

### Eichenberger Eichenberger & 

### Associates, Co. LPA 6037Frantz Road, Suite 107 Dublin, Ohio 43017 Phone: 614-798-1600 Facsimile: 614-798-1620 Counsel forRespondent

8To: 12022671293 From: 16147981620 Date: 08/06/15 Time: 1:06 PM Page: 11/11



### CERTIFICATE OFSERVICE I hereby certify that a copy ofthe foregoing was served upon the following parties by facsimile this 6111 

### dayofAugust, 2015. FAAHearingDocket 800 Independence Ave, S.W. Washington, D.C. 20591 Attn: HearingDocket Clerk ACJCc430;WilbefW!ight

### Building Suite2Wl000 Fax:202-267-1293 TheHonorableJ.E. Sullivan U.S. AdministrativeLawJudge Office ofHearings, M-20 U.S. Department ofTransportation 1200New JerseyAve, S.E. (Ell-310) Washington, D.C. 20590 Fax: 202-366-7536 KateBarber Federal AviationAdministration Office ofRegional Counsel, AGL-7B 2300East DevonAvenue DesPlaines, Illinois 60018 Fax: 847-294-7862

9To: 12022671293 From: 16147981620 Date: 08/06/15 Time: 1:06 PM Page: 01/11

Date: Thu Aug 06 16:04 EDT 2015 

### TO Fax Number: 12022671293 Name: FAA Hearing Docket Clerk

... 

### FROM ······ UCHEN>IERCICR I!JJ

**•~r,·'rA:f~S.** -,,\\ {l.i7i;ii.li Fax Number: 16147981620 Name: Patrick Moro Company: Eichenberger & Associates Subject: FAA-2014-0119 Reply to FAA Response Pages: 11
Notes: Dear Clerk, Please file the attached Reply. If you have any questions, please contact me directly. Thank you for your assistance in this matter.

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