Aircraft Sales of California, Inc. v. Insured Aircraft Title Service, Inc. Chase Manhattan Bank, N.A., Defendant-Third-Party-Plaintiff v. Nigerian Air Services, Ltd., Third-Party-Defendant-Appellee

Citations: 951 F.2d 1258; 1991 WL 274101Docket: 90-6125

Court: Court of Appeals for the Third Circuit; December 17, 1991; Federal Appellate Court

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Citation of unpublished opinions is now permitted if they have persuasive value on a material issue, provided a copy is attached to the citing document or, in oral arguments, copies are given to the Court and all parties. This change follows the General Order of November 29, 1993, which temporarily suspends the 10th Circuit Rule 36.3. 

In the case of Aircraft Sales of California, Inc. v. Insured Aircraft Title Service, Inc., the United States Court of Appeals for the Tenth Circuit addressed a dispute regarding a $300,000 escrow account related to aircraft lease or purchase negotiations between Aircraft Sales and Nigerian Air Services, Ltd. Aircraft Sales appealed the district court's summary judgment favoring Nigerian Air, arguing that unresolved material facts should have precluded summary judgment. 

Initially filed in state court against the escrow agent Insured Aircraft, the case was removed to federal court after Insured Aircraft counterclaimed and brought in Nigerian Airways and Chase Manhattan Bank. The latter disclaimed interest in the funds and was dismissed. The escrow funds were deposited into court, and Insured Aircraft was also dismissed from the case. 

The background involves negotiations starting in March 1986, where Nigerian Airways set up the escrow account through its attorney and indicated that the $300,000 deposit corresponded to three aircraft under negotiation, with a provision for refunds until further notice. Aircraft Sales, claiming no knowledge of the escrow agreement's terms, asserted that an oral contract for the purchase of a used Boeing 737 was made during these negotiations.

Plaintiff claims to have a "brokerage" contract with the defendant, asserting that a $300,000 escrow was established for its benefit and was non-refundable once the airplane was made available for inspection in Nigeria. Plaintiff contends it fulfilled its obligation by making the plane available, whereas the defendant denies entering into any purchase, lease, or escrow agreement and seeks the return of the deposit. In its petition filed March 6, 1989, plaintiff alleged that in April 1986, an escrow contract was formed involving Nigerian Airlines, Aircraft Sales of California, and Insured Aircraft Title Service, with the escrow amount as a non-refundable down payment contingent on inspection. However, these allegations contradict the terms of the written escrow agreement. 

Defendant moved for summary judgment, citing the Uniform Commercial Code Statute of Frauds as a barrier to plaintiff’s claims due to the lack of an enforceable agreement. In response, plaintiff submitted an affidavit from Pritchard, claiming that the Statute did not apply to their alleged brokerage contract and argued that the defendant partially performed the contract by setting up the escrow. Pritchard's affidavit detailed his involvement in brokering a contract for the sale of a used airplane, specifying that the $300,000 deposit was refundable until inspection, after which it became non-refundable if the buyer failed to inspect. 

The District Court granted summary judgment for the defendant, ruling there was no evidence of a contract due to the parties' conduct, absence of written confirmation, and no proof of a sales or brokerage contract with Skyline. Plaintiff appeals, arguing that the district court improperly decided genuine issues of material fact, referencing standards for summary judgment established in Carey v. U.S. Postal Service.

Summary judgment is granted when there are no genuine issues of material fact, allowing the moving party to obtain judgment as a matter of law, as specified in Fed. R. Civ. P. 56(c). The presence of some factual disputes does not automatically defeat a summary judgment motion; only disputes that could affect the lawsuit's outcome under governing law are relevant. The opposing party must present specific facts showing genuine issues for trial, as mere allegations are insufficient. In reviewing a summary judgment appeal, the standard applied is de novo. 

In this case, the district court determined that the plaintiff did not demonstrate a genuine issue of fact regarding the existence of a sales or brokerage contract with the defendant for aircraft. The court noted that the communication between the parties predominantly pertained to a lease, with only one telegram mentioning a sale, contradicting the assertion of a sales contract. Additionally, the absence of written confirmation of any alleged oral contract indicated that no sales agreement was made, as business transactions typically involve such documentation. The plaintiff's claim that there were two separate contracts—one for brokerage services and another between Nigerian Airways and Skyline—was not adequately supported by evidence, leading the court to conclude that the district court correctly assessed the situation and did not overlook the affidavit related to the brokerage contract.

A party cannot oppose a motion for summary judgment using a "sham" affidavit that contradicts prior deposition testimony, as this undermines the effectiveness of summary judgment in filtering out non-genuine disputes. Relevant case law, including Perma Research and Van T. Junkins, establishes that courts may disregard affidavits that conflict with earlier sworn statements, particularly when the affidavit appears to create "sham issues." The admissibility of such affidavits may depend on factors such as whether the affiant was previously cross-examined, had access to relevant evidence, and if the affidavit is based on newly discovered evidence or clarifies confusion from earlier testimony.

In the current case, the plaintiff's claim regarding a $300,000 down payment for an aircraft was examined through the deposition of Pritchard. He indicated that Aircraft Sales was acting as a broker and working on behalf of Skyline, a Norwegian investment company, to facilitate the aircraft sale. However, Pritchard could not provide definitive details on the sale contract's existence, its date, or the aircraft's price and serial number, which he suggested could be found in his notebook—an item not submitted to the court. His inability to recall specifics raises questions about the credibility of his testimony and supports the notion that the affidavit could be dismissed as a sham.

The $300,000 placed in escrow was nonrefundable and intended for the purchase of an aircraft. Pritchard indicated that a shift to leasing occurred when the buyer failed to conduct a prepurchase inspection. Negotiations continued until July 1986, but no formal agreement was reached for either the sale or lease of aircraft. The district court found the plaintiff did not prove a genuine issue of material fact, as there was no binding contract established between the parties. Evidence showed that during eight telegram exchanges, only one referenced a potential sale, while others focused on leasing arrangements.

Specific telegrams outlined various leasing terms, including a reference to two new 747-300 aircraft, with delivery anticipated within two years and an emphasis on a long-term dry lease of two 747-200B aircraft. Additional communications detailed ongoing efforts to prepare aircraft for inspection and the lease payments required. By May 6, options for leasing a 737-200 were presented, including conditions for lease guarantees and deposits. Continued discussions revealed disputes over lease prices and terms. Ultimately, on May 20, 1986, it was communicated that the clients decided to proceed with a two-year lease for a B737-200 and a one-year lease for a B747-200, setting specific monthly costs for both.

Pritchard was instructed to provide complete avionics details, inspection date and location, and a contact person within ten days, failing which the acceptance would be void by May 28. Ogbogu communicated that $3,000,000 was held in escrow in a New York bank for the lease of B737-200 aircraft. Pritchard characterized Chief Ogbogu as unpredictable, often changing the terms of negotiation once progress was made. While discussing aircraft, he noted that agreements were not finalized despite inspections being arranged. The plaintiff claimed a breach of an oral escrow agreement, asserting that the escrow was meant to be refundable until an aircraft was available for inspection. However, the telex messages did not mention such terms, and the trial court noted no objections were raised by the plaintiff regarding the escrow deposit's handling. There was ambiguity about the escrow's purpose, with conflicting claims over whether the $300,000 was for a single aircraft purchase or a brokerage fee. The plaintiff could not unilaterally change the terms of a written escrow agreement to which they were not a party. The court found that escrow deposits in property purchases are typically refundable under certain conditions, and the manner in which the funds were handled indicated a lack of binding commitment to the plaintiff. Ultimately, the court concluded there was no enforceable contract and affirmed the summary judgment in favor of Nigerian.

Nigeria Airways, Ltd. removed the case to federal court, asserting its status as an agency or instrumentality of a foreign state under 28 U.S.C. Section 1603(b). An account was established by the law firm Winthrop, Stimson, Putnam, Roberts of New York, representing Nigeria Airways, with the transmittal letter documented as Exhibit A in Volume II of the Record. The Skyline Company is not involved in this case. A telegram sent from Don Pritchard of Aircraft Sales to Nigeria Airways, addressed to Ron Greenwald in New York City, indicated that Nigeria Airways reserved the right to withdraw funds, which the court interpreted as a lack of intent to enter into a contract or make a partial payment. Consequently, the court found no genuine issue of material fact for trial, determined that no enforceable contract existed between the parties, and granted summary judgment in favor of Nigeria Airways. The summary judgment order was affirmed by Honorable Wesley E. Brown, United States Senior District Judge for the District of Kansas, sitting by designation.