Opinion
CASE NO. 02-21062-CIV-ALTONAGA/Bandstra
October 14, 2003
FINDINGS OF FACT AND CONCLUSIONS OF LAW
Pursuant to the requirements of Rule 52 of the Federal Rules of Civil Procedure, the following findings of facts and conclusions of law are made. Plaintiff, Pinnacle Aircraft Parts, Inc. ("Pinnacle"), sued Defendant, Luxury Air, LLC ("Luxury"), for breach of an agreement covering the lease of an aircraft engine by Luxury. On July 1, 2003, the Honorable Federico A. Moreno found that Luxury breached the lease agreement and entered partial summary judgment in favor of Pinnacle as to liability. This Court then heard the evidence, considered the applicable law and the arguments before it on the issue of the amount of damages to which Pinnacle was entitled. The Court finds that Luxury is liable to Pinnacle in the amount of $1,681,400, in Pinnacle's favor for the reasons set forth in the following Findings of Fact and Conclusions of Law.
FINDINGS OF FACT
Pinnacle is a Florida corporation engaged in the lease and sale of aircraft parts and engines. Luxury is a foreign limited partnership engaged in the transportation of sports teams and other charter clients on a luxury 757 jet. In the late spring of 2001, an engine on the plane used by Luxury had mechanical trouble and it was incumbent upon Luxury to find a replacement engine quickly. After a search, it was determined by Luxury that the only engine available for a short term lease was a Rolls Royce engine owned by Pinnacle.
On June 11, 2001, Pinnacle and Luxury entered into an Engine Lease which incorporates by reference a General Terms Engine Lease Agreement ("GTA"), for the three-month lease of an engine. The Engine, which was manufactured in 1982, had over 7,000 hours of registered flight time when the Lease was executed. The Lease provided that the Engine was to be delivered to Luxury at Heathrow Airport in England, and it was so delivered on June 12, 2001 (the Delivery Date). The three month lease period commenced on the Delivery Date.
Pursuant to the terms of the GTA, Luxury is obligated to pay Pinnacle rent in the amount of $4,400.00 per day, or a fraction thereof ("Daily Rent"), during the term of the Engine Lease "commencing with the Delivery Date specified in the [Engine] Lease and continuing until the return of the [Engine] in accordance with the terms of [the] GTA and the [Engine] Lease." GTA ¶ 4(a)(I). (emphasis added). The Lease also provides for the payment of certain usage fees and other charges. The GTA also obligates Luxury to pay Pinnacle for a monthly minimum of fifty (50) hours of Engine usage during the lease term at a rate of $257.00 per hour or a fraction thereof ("Minimum Monthly Usage Fee"). Pursuant to Section VII of the Engine Lease, Luxury is similarly required to pay Pinnacle the Minimum Monthly Usage Fee "through the date of the return of the Engine." (emphasis added).
On June 19, 2001 Luxury acknowledged its receipt and acceptance of the leased Rolls Royce RB21 1.535C-37/11A engine, serial number 30069, and installed it on a Luxury Boeing 757-236 aircraft. Luxury installed the Engine on its aircraft and operated the Engine without difficulty for the term of the Engine Lease. Specifically, Luxury used the Engine for two months, with a total of 163 hours and 63 "cycles," a term of art in the industry. This is considered low utilization of an aircraft engine. There was no report of any incident with the Engine during its brief period of usage.
In paragraph 3(a) of the GTA, Pinnacle warrants to Luxury that the Engine "shall be in a serviceable condition" at the time of delivery to Luxury. Pinnacle delivered the Engine with a serviceable tag as required by the GTA.
Luxury had been given a reasonable time for inspection of the Engine. The GTA provides that Luxury only has the right to perform a "visual (including borescope) inspection of the engine . . . to determine whether the engine is acceptable." A borescope examination took place on June 16, 2001. Cracking was found in the combustion liner but was considered to be within the specified limits. Evidence developed at trial showed that cracking in this part of the engine is caused by thermal wear and tear, and is not uncommon. Based upon the passing evaluation of a specialist employed by Luxury, Luxury accepted the Engine in "as is" condition.
Section 6 of the GTA governs Luxury's duties with respect to use and maintenance of the Engine. Section 6 states, in relevant part:
During a Lease Term, Lessee shall repair and maintain the Engine in accordance with applicable requirements of all governmental agencies, including without limitation . . . the requirements and recommendations of the manufacturers of the Engine. . . . Lessee shall keep the Engine in as good operating condition as when delivered to Lessee, reasonable wear and tear from ordinary use excepted; provided however, notwithstanding the foregoing, that each Engine shall be returned to Lessor in serviceable condition at the end of its Lease Term and in accordance with Section 18. . . . Such maintenance shall include all unscheduled maintenance, line maintenance, and replacement of components and parts as may be required (except that Lessee shall not be responsible for replacing life-limited parts which are due for replacement solely as the result of life expiration). In addition, Lessee shall replace or repair any loss or damage to the Equipment, regardless of cause.
GTA ¶ 6(b).
The GTA, which, as stated previously, is incorporated in the Engine Lease, requires that upon the expiration of the Engine Lease, Luxury return the Engine to Pinnacle in full compliance with various return conditions set forth in Section 18 of the GTA ("Return Conditions"). Pursuant to paragraph 18 of the GTA, Luxury is obligated to redeliver the Engine "in a serviceable condition" and to "have affixed an FAA approved (Part 145) return to service maintenance release tag and comparable JAA tag." Further, Luxury is required by the same paragraph of the GTA to redeliver the Engine "in the same condition as when delivered to Lessee, less reasonable wear and tear, however in serviceable condition and in accordance with Manufacturer's Maintenance Manual."
FAA tags are airworthiness approval tags issued if requirements set forth by the Federal Aviation Administration are met and after completion of an authorized release certificate or FAA Form 8130-3. See e.g., 14 C.F.R. § 21.271. JAA tags are the European equivalent to FAA tags. It is unclear why Luxury was required to supply both tags.
Paragraph 18(c) of the GTA sets forth the conditions that the Engine has to satisfy upon its return by Luxury. In particular, Luxury is required to have three tests performed to demonstrate the serviceability of the Engine. First, Luxury is required to perform a video borescope inspection, which would confirm that the Engine was serviceable for unrestricted use. Second, Luxury is required to perform an on-wing take-off power run to confirm that the Engine is serviceable and that the EGT Margin falls within the acceptable range pursuant to the Manufacturer's Maintenance Manual, in this case, the Rolls Royce manual. Finally, the GTA requires Luxury to perform a Spike Test to demonstrate serviceability of the Engine and that it can "pass 1200 pounds per hour."
While the term "EGT Margin" was not defined in the Lease or the GTA, the Court understands it to be a recognized standard for evaluating the condition of an aircraft engine.
More specifically, the GTA provides that:
The EGT Margin and Spike Test data provided upon redelivery shall reflect the as received condition minus normal wear and tear per the Maintenance Manual for the Engine. The type of power run (on-or off-wing) used for redelivery testing must be consistent with the type of power run used prior to Delivery of the Engine to Lessee, which established the as delivered EGT Margin and Spike Test data. The EGT Margin and Spike Test data shall be included in the Lease Agreement.
GTA ¶ 18(c). (emphasis added). The Engine Lease states that the power run test type used to determine the EGT Margin and Spike Test at delivery is to be on-wing. Engine Lease § XVIII. Thus, pursuant to the terms of the GTA, Luxury is required to perform an on-wing power run at redelivery to determine the EGT Margin and Spike Test results.
On August 13, 2001, the Engine passed a power run test as judged against on-wing criteria. Luxury failed to perform this on-wing power run test in the presence of Pinnacle or Pinnacle's representative as required by paragraph 18(c) of the GTA. On August 16, 2001, the borescope test was repeated and the results were virtually identical to those at delivery: the Engine passed the test. The Spike Test, however, could not be performed in the United States due to a lack of equipment, and the parties agreed that the test would take place at a General Electric Aircraft Engine Services, Ltd. ("GE") facility in Wales, United Kingdom.
Thus, in August of 2001, Luxury removed the Engine from the aircraft upon which it had been installed and shipped it to GE for completion of the testing required under the Lease. In November of 2001, the Engine passed the Spike Test.
While the Engine was still in Wales, Luxury also authorized GE to conduct another video borescope, engine health check and engine performance check. The Engine was deemed unserviceable pursuant to the Engine Manufacturer's Manual, and therefore, not in compliance with the Return Conditions. GE also performed a power run which yielded an EGT Margin that did not comply with the Return Conditions of the Engine Lease. GE performed all of its tests on the Engine off-wing, not as required of Luxury in the Lease, and evaluated the performance of the Engine against the standards supplied by the Engine Manufacturer's Manual, After its borescope inspection, GE determined that cracks in the combustion liner exceeded the amount allowed by the Engine Manufacturer's Manual. A small nick in a turbine blade, whose origins are unknown, was also discovered.
Pinnacle refused to take re-delivery of the Engine because of the EGT Margin result obtained following the off-wing test authorized by Luxury, but not required by the parties' Lease. Facing the continued accrual of $4,400 daily rent, Luxury offered to replace the combustion liner and the nicked blade to resolve the impasse. A workscope was prepared for GE to perform the task and in November, 2001, Luxury committed its gravest error by directing GE to disassemble the Engine. When the Engine was opened, significant corrosion was discovered.
The corrosion found on the base of the discs was not visible by borescope inspection when the Engine was fully assembled, as the Lease required it be prior to acceptance by Luxury and during any pre-acceptance testing by Luxury. More importantly, according to an expert witness retained by Luxury, Maurice Travers, the corrosion could not have been caused by Luxury in the short time period it leased the Engine. No evidence was presented that Luxury misused the Engine while it was in its possession, prior to its regrettable disassembly at Lease end.
The parties were unable to agree upon who was responsible to pay for the additional damage discovered. By August, 2002, no work to restore the Engine to the condition required by the Lease had been performed, and Luxury still had not returned the Engine to Pinnacle. In fact, at the time of the trial, the Engine remained disassembled at the GE facility.
Under Section 18(a) of the Engine Lease, Luxury had the option of supplying Pinnacle with a replacement engine of equivalent utility and value to that of the original Engine, in lieu of complying with the Return Conditions. Luxury did not supply a replacement engine in lieu of returning the Engine in compliance with the Return Conditions. Consequently, Pinnacle demanded that Luxury instruct GE to release the Engine to Pinnacle. On September 18, 2002, Luxury so instructed GE in Wales. On that date, Luxury still had not authorized GE to perform work on the Engine to meet the Return Conditions of the GTA and Engine Lease.
Luxury returned the Engine to Pinnacle when it directed GE to release the Engine in response to Pinnacle's demand of return. Although the Engine was returned to Pinnacle, it was returned without FAA or JAA unrestricted serviceable tags. GE prepared an estimate for the work needed to refurbish the Engine on December 17, 2002, and the estimated cost was many times the original work scope for replacing the combustion liner and damaged turbine blade.
GE has estimated that it will cost $866,612.00 to refurbish the Engine. This estimate is for a partial overhaul of the Engine. Indeed, Maurice Travers has opined, and the undersigned finds highly persuasive, that many of the items included in his estimate for a partial overhaul of the Engine were not caused by Luxury. If an overhaul of the Engine is now required to bring the Engine back to a serviceable condition, then such overhaul is due, in part, to the corrosion that has not been shown to be attributable to Luxury's use of the Engine. The only other repair estimate presented in evidence was the one prepared by Maurice Travers, He estimated that for labor and parts to replace the combustion liner and a nicked blade discovered at Lease end, the cost would be $150,000.00.
Luxury has not paid the Daily Rent since November 8, 2001, and has not paid the Minimum Monthly Usage Fee since September 10, 2001.
CONCLUSIONS OF LAW
Luxury has already been found to be in breach of the Engine Lease; the only remaining issue is the amount of damages recoverable by Pinnacle. There are two categories of damages Pinnacle seeks to recover following the breach by Luxury. One category, according to Pinnacle, consists of the cost to repair the engine as estimated by GE. According to Luxury, this estimate includes work on the Engine that Luxury never agreed to be responsible for under the Lease. The second category consists of the Daily Rent and Minimum Monthly Usage Fees past the three-month duration of the Lease. Luxury maintains these amounts are tantamount to a penalty, and thus are not recoverable as liquidated damages, or alternatively, are unenforceable because they are unconscionable. Recovery of both categories of damages is circumscribed by the terms of the parties' Lease and applicable law.
Matters that bear upon the execution, validity, interpretation and obligations of a contract are determined, in Florida, by the law of the place where the contract was made; matters connected with performance are regulated by the law of the place where the contract by its terms may have been provided. Hammett v. American Bankers Insurance Co. of Florida, 203 F.R.D. 690, 700 (S.D. Fla. 2001). Here, the parties concede that it is Florida law that governs the issues raised concerning the interpretation and obligations of the Lease and its performance.
It is axiomatic under Florida law that "a court cannot rewrite the clear and unambiguous terms of a voluntary contract." Pol v. Pol, 705 So.2d 51, 53 (Fla. 3d DCA 1997). Accord Wood/Fay Realty Group, Inc. v. New Aquarius Corp., 842 So.2d 914 (Fla. 3d DCA 2003). Thus, "`when the terms of a voluntary contract are clear and unambiguous, . . . the contracting parties are bound by those terms, and a court is powerless to rewrite the contract to make it more reasonable or advantageous for one of the contracting parties.'" Ernie Hare Ford, Inc. v. Ford Motor Co., 260 F.3d 1285, 1290-91 (11th Cir. 2001) (quoting Emergency Assocs. of Tampa, P.A. v. Sassano, 664 So.2d 1000, 1003 (Fla. 2d DCA 1995)). To determine if a contract is ambiguous, the court is required to look first to the words used as those words are the best evidence of the intent of the parties and the plain meaning of that language controls. Rose v. M/V "Gulf Stream Falcon", 186 F.3d 1345, 1350 (11th Cir. 1999). Every provision of a contract must be given effect and the Court must reconcile any inconsistencies if possible. Stevens v. Zakrzweski, 826 So.2d 520, 521 (Fla. 4th DCA 2002).
The underlying purpose of breach of contract damages is to place the non-breaching party in the same position it would have been in but for the breach. Allapattah Services, Inc. v. Exxon Corp., 61 F. Supp.2d 1326, 1328 (S.D. Fla. 1999). Thus, "`Florida follows the general rule that to be recoverable, damages for breach of contract `must arise naturally from the breach, or have been in contemplation of both parties at the time they made the contract, as the probable result of a breach.'" Bland v. Freightliner LLC, 206 F. Supp.2d 1202, 1211(M.D. Fla. 2002) (quoting T.D.S., Inc. v. Shelby Mut. Ins. Co., 760 F.2d 1520, 1532 n. 11 (11th Cir. 1985). See also Scott v. Rolling Hills Place Inc., 688 So.2d 937, 940 (Fla. 5th DCA 1997) (on rehearing, citing the long-established rule of Hadley v. Baxendale, 156 Eng.Rep. 145, 151 (Ex. 1854) that "[d]amages which flow naturally from the breach, and were foreseeable by the breaching party at the time the contract was entered, are recoverable,") Under contract law, an injured party may look to the legal system to place it in the position it would have been in had the bargain been performed as agreed to; in other words, to achieve its expectation interest. MCA Television Limited v. Public Interest Corporation, 171 F.3d 1265, 1271 (11th Cir. 1999). Nonetheless, "a party cannot recover damages for breach of contract unless it can prove that the damages were approximately caused by the breach." Crowley American Transp., Inc. v. Richard Sewing Mach. Co., 172 F.3d 781, 784 (11th Cir. 1999). Recoverable damages are limited to those which "could have been reasonably expected to flow from the breach." Bland, 206 F. Supp.2d at 1211.
Damages to Cover Repair to the Engine So it is in the Same Condition as at Lease Inception
Luxury was obligated under the terms of the Engine Lease to return the Engine in compliance with the Return Conditions, which are that it be "in the same condition as when delivered to Lessee, less reasonable wear and tear, however in serviceable condition," and failed to do so. When it failed to do so, through no fault of Pinnacle, Luxury became obligated to pay as damages an amount that would restore Pinnacle to the position Pinnacle would have been in had Luxury properly performed. In other words, Pinnacle is entitled to recover the cost of restoring the Engine to a condition that complies with the Return Conditions.
In the present case, the parties explicitly and unambiguously agreed that at Engine return, Luxury had to have three tests performed, allowing Pinnacle to be present, and that these three tests were to be performed on-wing. The on-wing tests had to meet the conditions of the Engine Manufacturer's Maintenance Manual. The Engine, or an equivalent, was to be returned to Pinnacle at the end of the three-month lease in serviceable condition, with FAA and comparable JAA tags. Thus, what Pinnacle could expect to receive was a serviceable engine meeting these requirements. This, it was not given.
A proper measure of damages to compensate Pinnacle is that amount of money required to perform the necessary repairs to make the Engine serviceable, consistent with the Lease requirements. Pinnacle is not entitled to an engine free of corrosion, when there has been no evidence presented that corrosion occurred during the two months of its use by Luxury. Section 6 of the GTA only requires the lessee to repair or replace any damage, regardless of cause, during the lease term. This construction comports with the lessee's obligation to maintain and return the Engine in as good a condition as when the Engine was delivered, and with serviceable tags.
The corrosion likely existed when Luxury accepted the Engine based on the amount present and Luxury's minimal usage time. While the GTA obligates Luxury to return the Engine in serviceable condition, it also expressly requires Luxury to keep the Engine "in as good operating condition as when delivered to Lessee." GTA § 6. Although in serviceable condition, Pinnacle delivered to Luxury a decades-old Engine with significant corrosion. Pinnacle has not proven that it is entitled to a refurbished engine under the provisions of the GTA and Engine Lease. Indeed, the choice to supply Pinnacle a different, refurbished engine is a choice Luxury could make under the GTA, not one that Pinnacle could insist upon.
The only evidence presented at trial on this component of the damages to Pinnacle consists of a $866,612 estimate from GE to perform services to the Engine which exceed the obligation assumed by Luxury in its two-part agreement to return a serviceable Engine "in the same condition" as when it was received. There has been no showing that the entire amount listed in the GE estimate is necessary to rectify the breach by Luxury of its obligations regarding re-delivery of the Engine. See Burger King Corporation v. Hinton, Inc., 203 F. Supp.2d 1357, 1366 (S.D. Fla. 2002) (although plaintiff had shown that defendants committed a breach of contract, it had not "demonstrated that its total requested award of lost profits resulted from Defendants' breach."). Pinnacle relied on this estimate to determine the repairs necessary to return the Engine to the condition required by the Return Conditions set forth in the Engine Lease. However, the estimate, on its face, indicates that it is a cost estimate for a complete refurbishment of the Engine. GE's estimate is also not a fixed price quotation and is subject to further variation. Indeed, no evidence was presented on the proper measure of damages; i.e., the amount of money required to make repairs to the Engine had on-wing test data been utilized, rather than the results of off-wing testing not required by the Lease. That is the true measure of damages to which Pinnacle is entitled.
To allow recovery by Pinnacle of the GE estimate would place Pinnacle in a better position than it would have been had the contract been properly performed by Luxury and would result in a windfall that Pinnacle is not entitled to, nor one that the parties clearly contemplated. See Koplowitz v. Girard, 658 So.2d 1183, 1184 (Fla. 4th DCA 1995) ("A party can neither receive more than it bargained for nor should it be put in a better position than it would have been in had the contract been properly performed"). A correct measure of damages is that amount that would make the "work performed or article furnished conform to the contract." Id.
In addition to the absence of a proper measure of damages to bring the Engine into conformance with the Lease requirements, Pinnacle failed to take reasonable steps to minimize its loss, as it was required to do. See Tampa Pipeline Transport Company v. Chase Manhattan Service Corp., 928 F. Supp. 1568, 1579 (M.D. Fla. 1995). Pinnacle could have obtained an estimate for work necessary to address defects in the Engine which predated the brief lease arrangement, and taken affirmative steps to cover the costs for those repairs, while leaving Luxury to those items for which Luxury was responsible, and which Luxury in fact offered to pay for. No progress was made and no resolution was achieved to reduce the loss exposure.
In the absence of a true measure of loss to Pinnacle, caused by breach of contract by Luxury, the undersigned is unable to award the full amount of damages sought by Pinnacle. As noted above, however, Luxury did concede at one point to replace the combustion liner and damaged turbine blade. Luxury's expert, Maurice Travers, estimated the cost to replace these items to be $150,000, including labor. Indeed, Pinnacle's representative, hired to be the site representative when the Engine was sent to GE in Wales, wrote in an internal e-mail correspondence: "It seems reasonable that replacing the combustion chamber and the defective compressor blade will restore the engine to a condition equivalent to the start of SportsJets [sic] lease." This is the only reasonable estimate presented in evidence of the damages recoverable by Pinnacle to restore the Engine to the condition required by the Lease.
Plaintiff's expert, Walter Andrushenko, did not present any opinion as to what repairs were necessary to bring the Engine back to a serviceable condition, as his testimony related primarily to the tests that were conducted on the Engine.
Recovery of Daily Rent and Minimum Monthly Usage Fee
Turning to the second element of damages sought, Daily Rent and the Minimum Monthly Usage Fee, "[i]t is well settled that in Florida the parties to a contract may stipulate in advance to an amount to be paid or retained as liquidated damages in the event of a breach." Lefemine v. Baron, 573 So.2d 326, 328 (Fla. 1991) (citation omitted). However, to be a valid liquidated damages clause,
[T]he court must find, first, that "the damages consequent upon a breach must not be readily ascertainable, and [second, that] the sum stipulated to be forfeited must not be so grossly disproportionate to any damages that might reasonably be expected to follow from a breach as to show that the parties could have intended only to induce full performance, rather than to liquidate their damages."MCA Television Limited, 171 F.3d at 1271(quoting Lefemine, 573 So.2d at 327). Under this standard, the stipulated Daily Rent and Minimum Monthly Usage Fee amounts clearly would not satisfy the criterion that damages not be capable of ascertainment, and thus would fail if they were, indeed, liquidated damages provisions.
The Daily Rent and Minimum Monthly Usage Fee, however, are simply amounts due under the GTA and Engine Lease and are not liquidated damages. Indeed, the contract fails to specify an agreed upon amount to pay as a consequence of Luxury's failure to meet the return conditions of the Lease. Because these amounts were applicable since initiation of the Lease, and not dependent upon a breach of that Lease, they fall outside the purview of a definition of a liquidated damages clause. See Glover v. F.T.D.K., Inc., 816 So.2d 1207, 1210 (Fla. 5th DCA 2002) (finding that rent pro vision in dispute was not a liquidated damages clause because it was applicable since initiation of the lease and thus not dependent upon subsequent breach); see also Bayshore Royal Co. v. Doran Jason Co. of Tampa 480 So.2d 651, 654-655 (Fla. 2d DCA 1986) (finding that provision in question did not provide for damages as a consequence of breach and so was not a liquidated damages provision).
Under the clear and unambiguous terms of the Engine Lease, in exchange for Pinnacle's agreement to lease the Engine to Luxury, Luxury agreed to pay Pinnacle the Daily Rent and Minimum Monthly Usage Fee set forth in the Engine Lease until Luxury returned the Engine to Pinnacle in compliance with the Return Conditions. The Daily Rent and Minimum Monthly Usage Fee constitute the consideration that Luxury agreed to provide in exchange for Pinnacle's agreement to lease the Engine to Luxury, the adequacy or reasonableness of which is not subject to examination by this Court. Bayshore Royalty, 480 So.2d at 656; Diaz v. Rood, 851 So.2d 843, 846 (Fla. 2d DCA 2003).
Luxury argues that applying rental fees into perpetuity, or until the Engine is brought to serviceable condition, is unconscionable. However, Luxury's argument that application of this clause to the time period when the Engine sat disassembled in Wales would be unconscionable is not supported by the facts. Luxury cannot meet the legal standard of unconscionability, which requires a showing that the contract is procedurally and substantively unconscionable. The procedural component "relates to the manner in which the contract was entered and it involves consideration of such issues as the relative bargaining power of the parties and their ability to know and understand the disputed contract terms." Powertel, Inc. v. Bexley, 743 So.2d 570, 574 (Fla. 1st DCA 1999). Here, the parties were of equal bargaining power and Luxury had the ability to understand the Lease terms. Indeed, the GTA states that it was negotiated between the parties, with each having had the benefit of legal counsel. GTA ¶ 24(b).
At trial, Pinnacle abandoned its position that it should receive Daily Rent until the Engine conforms with the Lease Return Conditions.
Substantive unconscionability refers to whether "`the terms of the contract are unreasonable and unfair.'" Id. (quoting Kohl v. Bay Colony Club Condo., Inc., 398 So.2d 865, 868 (Fla. 4th DCA 1981)). Although imposition of this clause during the year the Engine sat at a warehouse in Wales may appear onerous to Luxury, it is certainly not unfair given that Pinnacle was deprived of collecting a similar sum from another lessee, had it been given the option which it likely anticipated at Lease inception, of re-leasing the Engine to another user three months after its delivery to Luxury. In short, unconscionability cannot be found as a matter of law.
As with the proper measure of damages to repair the Engine, Pinnacle is also entitled to damages that would place it in the same position it would have been had Luxury complied with the terms of the GTA and Engine Lease, and paid all amounts due through the date of return of a serviceable Engine. See Telemundo Network, Inc. v. Spanish Television Serv., Inc., 812 So.2d 461, 464 (Fla. 3d DCA 2002). Accordingly, Luxury is obligated to pay Pinnacle Daily Rent from November 9, 2001 (the last day Pinnacle paid the Daily Rent) through and including September 18, 2002 (the date the Engine was "delivered" to Pinnacle in GE Wales), in the amount of $1,377,200.
Other than the initial rejection by Pinnacle of re-delivery of a non-conforming Engine, there was no evidence that Pinnacle thwarted any earlier attempt by Luxury of returning the Engine, so as to stop the clock running on the Daily Rent and Minimum Monthly Usage Fee.
Luxury is further obligated to pay the Minimum Monthly Usage Fee from September 10, 2001 (the last day Luxury paid this Fee), through and including September 18, 2002. With respect to this Minimum Monthly Usage Fee, Luxury also maintains that there is an inconsistency between the GTA and the Engine Lease. Section 4 of the GTA provides that Lessee shall guarantee and pay to Lessor a minimum of 50 hours of usage of Engine operation per month during the term of the Lease. Neither party disputes that the term of the Lease was specified as three months. Section VII of the Engine Lease, however, provides that Luxury must pay the usage fee from the date the Engine is installed on its aircraft "through the date of the return of the Engine."
These provisions are not repugnant and the failure by Luxury to return the Engine after three months does not now make these provisions irreconcilable. "It is a cardinal principle of contract law that no term of a contract should be construed to be in conflict with another unless no other reasonable construction is possible." United States v. Pielago, 135 F.3d 703, 710(11th Cir. 1998). The provisions of the GTA and Engine Lease may be reconciled and construed together to mean that Luxury agreed to pay the Minimum Monthly Usage Fee until it returned the Engine, even if that return was delayed for a year. See Maccaferri Gabions, Inc. v. Dynateria, Inc., 91 F, 3d 1431, 1442 (11th Cir. 1996) (recognizing need to give effect to entire agreement and avoid interpretation that creates unnecessary conflict between the terms). The unassailable fact that the Engine was not returned until a year after the parties contemplated only highlights the apparent fact that Luxury made a bad bargain when it agreed to the terms contained in the Lease. It does not, however, relieve it of its responsibilities under the Lease. See Green v. Life Health of America, 704 So.2d 1386, 1391 (Fla. 1998) ("within reason, parties are free to contract even though either side may get what turns out to be a `bad bargain'").
Luxury is required to pay the Minimum Monthly Usage Fee until the date of return of the Engine on September 18, 2002. The total amount due as the Minimum Monthly Usage Fee is equal to $12,850 ($257/hr. for 50 hours) a month for twelve months, or $154,200.
Pinnacle is not entitled to an additional amount of rental fees for any period of time the engine is expected to be under repair. Pinnacle's calculation of ninety days' "turn around time" is based on an estimate that related to the Defendant's expert's "worst case scenario" analysis and did not apply to the GE estimate, which, in any event, is not relied upon here as a basis for computation of damages.
The total amount of damages for which Luxury is liable is $1,681,400, plus interest and costs. Within ten (10) days of the date of this Order, the parties are to submit proposed calculations on interest and costs, for inclusion in the final judgment. Any of the foregoing conclusions of law which may represent findings of fact are adopted as findings of fact.