Opinion ID: 2807599
Heading Depth: 2
Heading Rank: 1

Heading: The Workscope Agreement

Text: Charles Deschryver had a problem. 1 As the Logistical Assistant to Joseph Kabila, president of the DRC, Deschryver was charged to care for the president’s aircraft, including a four-engine Boeing 707-100 (the “plane” or “707”). By early 2010, the plane was due for a “C-check,” or heavy maintenance. Deschryver searched from Ethiopia to Saudi Arabia to find a shop that would do the job, but without success. Then in June 2010, Deschryver found what he thought he was looking for. At a flat in Kinshasa (the DRC’s capital), Deschryver met with Stavros Papaioannou, the CEO of Hewa Bora Airlines, and with two executives from ACG, Mario Abad and Jaime Sanchez. Papaioannou suggested that ACG could do the C-check for Kabila’s 707, and Abad agreed. Deschryver was delighted by the news, and soon after the meeting ended, Abad and Sanchez inspected the plane at the airport. Abad remarked the plane was in “good shape,” and the parties agreed that ACG would fix the 707 in Florida. Soon thereafter, Abad sent Deschryver a workscope agreement (the “Workscope” or “Agreement”). The Workscope said that ACG would perform the C-check, apply airworthiness directives (“ADs”) to the plane’s engines, and finish 1 The facts that follow represent plaintiff’s version of the evidence. See Shannon v. Bellsouth Telecomms., Inc., 292 F.3d 712, 715 (11th Cir. 2002). 3 Case: 14-11243 Date Filed: 06/11/2015 Page: 4 of 33 other tasks for a flat fee of $2,255,872.30. Deschryver signed the Agreement for the “Republic Democratic of Congo,” and he stamped the seal of the Presidency of the Republic on the signature block. ACG prepared its first invoice for the DRC on July 30, 2010. The DRC requested the invoices because “they needed some sort of documentation to be able to go to their government and get payments” from the Ministry of Finance. The DRC paid the first $1 million installment on July 12, and the plane arrived in Florida on July 31. B. Oral Agreements to Replace Engines Three and Four Unwelcome difficulties arose soon after the plane reached Miami. While doing the C-check, ACG’s “technical people discovered that one of the engines did not have appropriate paperwork and needed to be replaced.” Abad and Sanchez returned to the DRC to discuss the matter with Deschryver, and on September 10 or 11, the parties orally agreed to replace engine number three. Deschryver asked that the new engine come “with all the documents, QEC [quick engine change equipment], all the AD and all the airworthiness directives and all the service in order, a 707 engine.” The price for the engine would be $250,000. Then, when Deschryver visited Miami in late September, he learned that engine four also needed replacing. In its stead, Deschryver wanted “a 707 engine 4 Case: 14-11243 Date Filed: 06/11/2015 Page: 5 of 33 with all the service built in, all the AD, full QEC, full overhaul with all the documents.” Like engine three, engine four would cost $250,000. C. A String of Broken Promises By October 28, 2010, the DRC had paid $4 million toward the cost of repairs. Just days before, ACG’s chief financial officer Antonio Neuman had asked for more money even though the company held over $2 million in reserve, allegedly to cover future charges. Deschryver was bewilderded by the mounting costs but paid the money anyway, and Abad reassured Deschryver that the replacement engines would soon arrive from Ireland. Abad added that he would do a test flight on December 12 and deliver the plane by December 16. Yet nothing happened the way Abad said it would. When the engines arrived from Ireland, ACG learned that neither were properly documented. As a result, the engines were unusable, and ACG agreed with ABX Air, Inc. (“ABX”), to buy replacements. Antonio Neuman signed the contract with ABX, which set the price of each new engine at $49,500. The replacement engines, which carried serial numbers 645402 (“402”) and 669706 (“706”), were not serviceable upon delivery. Meanwhile, the December 16 deadline for delivery slipped past. When it did, Abad repeated that the work would finish soon, this time by January—but Abad had no personal knowledge that the project was near completion. In reliance 5 Case: 14-11243 Date Filed: 06/11/2015 Page: 6 of 33 on Abad’s statements, Jean Tshiumba from the DRC Civil Aviation Authority and technical engineer Zacharie Nakwaya departed to inspect the 707 and collect it from ACG. But when Tshiumba and Nakwaya arrived in Miami on January 10, 2011, their hopes were dashed. As he inspected the replacement engines, Nakwaya found that 402 was completely disassembled and that 706 was closed and unserviceable. Both were choked with dust and nests. Furthermore, the engines were configured for a DC8 airplane, not for a Boeing 707, which meant installation would take longer than anticipated. And Tshiumba, for his part, reported that the engines were not mounted and there was “no avionics equipment installed” on the aircraft. The plane was unfit to fly, despite Abad’s earlier assurances. D. The Liens and the Audit On April 21, Abad sent Deschryver more bad news. Bonus Tech, the company servicing the plane’s original engines, had filed a lien on the engines for $147,861.42. A few weeks later, Abad reported that Commercial Jet, Inc., which was performing the C-check, planned to file its own lien on the plane. The news irked Deschryver, because the DRC had already paid $5 million for the repairs, and Abad kept “on telling [Deschryver] that the aircraft [was] ready.” The DRC forked over another $1,381,531.64 to keep the work going. 6 Case: 14-11243 Date Filed: 06/11/2015 Page: 7 of 33 The constant pleas for money prompted Deschryver to order an audit of the project. On May 27, he asked Nakwaya and Ben Kalala, a deputy logistical assistant, to review the project’s progress and finances. Nakwaya and Kalala asked for notarized invoices from each vendor to verify the amount paid for services provided. In response, Antonio Neuman furnished a contract between ACG and ABX for engines 402 and 706. Unlike the contract signed in November 2010, however, the contract provided in May was signed by Abad, not Neuman. And while the November contract said each engine cost $49,500, the May contract said each engine cost $57,000. Apparently, ACG had given the DRC false statements to inflate actual costs. E. The Failed Flight Test and the Rejected Engines By September 2011, President Kabila’s plane was finally ready for a test flight. Or so they thought. During the test, after the plane had ascended to 24,000 feet, engine 402 stopped, or “flamed out.” Nakwaya also noticed that the plane was leaking fuel and that the generators were dead. In Nakwaya’s opinion, the 707 was in worse shape now than when the plane touched down in Florida in July 2010. After the failed test, the parties gathered to discuss next steps. At first, Abad promised to fix engine 402 at his own cost, but later, after Nakwaya found 7 Case: 14-11243 Date Filed: 06/11/2015 Page: 8 of 33 corrosion and other damage in the engine, the DRC chose to reject it. ACG kept engine 402 for its inventory. Then in December, the parties met to discuss engine 706. While moving to a new facility, the company servicing 706, the Turbine Engine Center, had misplaced the engine’s records. The DRC had requested the records since June, and they now threatened to reject 706 unless the documents turned up within 48 hours. The DRC rejected the engine when ACG failed to find the records in the time allotted. F. The Lawsuit The DRC lodged a civil complaint against ACG, Abad, and others on February 14, 2012. Six counts were alleged, including fraudulent inducement, breach of contract, fraud in the purchase and repair of engines 402 and 706, fraud in the purchase and installation of Stage III hush kits (to quiet engine noise), a violation of the FDUTPA, and replevin. The trial began over a year later on July 2, 2013. At trial, expert witness John Zappia testified about damages. As part of his testimony, he presented a chart listing twenty-six line items. In lines 4 through 23, part of 24, and 26, Zappia recounted the costs of ACG’s alleged breach of contract. The estimated damages from the breach totaled $1,175,415.04. 8 Case: 14-11243 Date Filed: 06/11/2015 Page: 9 of 33 Zappia also testified about damages from the replacement engines, comprising lines 1 through 3 and 25 of the chart. Included in this estimate were: (1) the costs of repairing engine 706 ($121,676.15); (2) the costs of repairing engine 402 ($151,691.92); (3) the cost of the failed test flight, which would need to be performed again ($85,969.66); and (4) the purchase price of engines 402 and 706, which ACG still held ($1,178,048.50).2 Zappia also recommended a recovery of $2,204,810.45 under the FDUTPA, consisting of items 1−2, 5−15, 17−23, and 25 of the damages summary. For each of these items, Zappia said he calculated the amount based on “the difference between the value of the product or service that DRC paid for and the value of the product or service that they received.” At the close of the evidence, defendants moved for judgment as a matter of law. The court denied the motion. Then, on July 31, the court instructed the jury regarding liability and damages. When addressing the FDUTPA, the court explained that the statute allowed only actual damages, or “the difference in the market value of the product or service in the condition in which it was delivered and its market value in the condition it should have been delivered according to the agreement of the parties.” The court did not instruct the jury regarding the apportionment of damages between defendants. 2 Zappia testified that the total damages from the replacement engines was $540,755.83. It is not clear where Zappia got this number, as the sum of lines 1−3 and 25 is $1,537,386.23. 9 Case: 14-11243 Date Filed: 06/11/2015 Page: 10 of 33 The jury returned a verdict on August 1, 2013. ACG was held liable for breach, and the jury awarded the entire amount Zappia recommended on that claim ($1,175,415.04). They also held ACG and Abad liable for fraud regarding the replacement engines. On the verdict sheet, the jury wrote that ACG had to pay $362,707.03, plus plaintiff could “pick up [the] engines” from ACG. The jury also found ACG and Abad liable for a FDUTPA violation, and they awarded $720,848.04 from ACG on that count. The jury exacted no monetary damages from Abad on the fraud and FDUTPA claims. Later that month, the DRC moved to alter the judgment. Plaintiff argued that although the jury demanded no damages from Abad, ACG and Abad were jointly and severally liable on the engine fraud and FDUTPA claims. Defendants filed a motion of their own, but for remittitur and renewed judgment as a matter of law. They argued that plaintiff could not recover under FDUTPA because Zappia had not established the difference between the market price of contracted-for services and the value the DRC actually received. They also claimed that the FDUTPA award constituted a double-recovery because it included line items from both the breach and fraud claims. On March 19, 2014, the court granted the DRC’s motion to amend the judgment and denied ACG’s motion for judgment as a matter of law. This appeal followed. 10 Case: 14-11243 Date Filed: 06/11/2015 Page: 11 of 33