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Dudley Flying Service, Inc. v. Ag Air Maintenance Services, Inc.

United States District Court, E.D. Arkansas, Jonesboro Division

April 17, 2015

DUDLEY FLYING SERVICE, INC., Plaintiff,
v.
AG AIR MAINTENANCE SERVICES, INC., Defendant.

ORDER

KRISTINE G. BAKER, District Judge.

Plaintiff Dudley Flying Service, Inc. ("Dudley"), brings this action against defendant Ag Air Maintenance Services, Inc. ("Ag Air"), alleging claims of negligence; violations of the Arkansas Deceptive Trade Practices Act ("ADTPA"), Ark. Code Ann. § 4-88-107; and a claim for punitive damages (Dkt. No. 26). Trial is set for the week of April 20, 2015.

The Court held a pretrial hearing in this matter on Monday, April 13, 2015. Counsel for Dudley and counsel for Ag Air were present. The Court heard argument from counsel on Dudley's amended motion in limine (Dkt. No. 50); Dudley's motion for reconsideration (Dkt. No. 56); Dudley's objections to Ag Air's pretrial disclosures (Dkt. No. 51); and Ag Air's objections to Dudley's deposition designations, along with Dudley's objections to Ag Air's deposition cross-designations (Dkt. Nos. 46, 47, 48, 49, 59, 60, 61, 62, 63, 64, 65). Counsel raised additional issues for this Court's consideration at the pretrial hearing. For reasons stated on the record and in this Order, the Court rules as follows.

I. Amended Motion In Limine

The Court grants in part, denies in part, and takes under advisement in part Dudley's amended motion in limine (Dkt. No. 50). As to those matters about which the Court grants an in limine motion, all parties, their counsel, and witnesses are directed to refrain from making any mention through interrogation, voir dire examination, opening statement, arguments or otherwise, either directly or indirectly, concerning the matters about which the Court grants an in limine motion, without first approaching the bench and obtaining a ruling from the Court outside the presence of all prospective jurors and the jurors ultimately selected to try this case. Further, all counsel are required to communicate this Court's rulings to their clients and witnesses who may be called to testify in this matter.

1. Dudley moves in limine to exclude any testimony, evidence, and argument that the manufacturer of the engine at issue in this litigation, Pratt and Whitney Canada ("PWC"), is at fault. As an initial matter, the Court rejects Dudley's argument that, as a matter of law, the agreement Bruce Benthien signed with PWC for a Limited Cost Overhaul of Dudley's engine does not constitute a settlement. The case cited by Dudley in support of this proposition, Williams v. Davis, 659 S.W.2d 514, 515 (Ark. Ct. App. 1983), is distinguishable from the case at bar. In Williams, there was no written document memorializing any agreement. Here, there is a written agreement executed by Mr. Benthien and that agreement includes a release.

Under Arkansas law, settlement agreements are treated as contracts. See Williams, 659 S.W.2d at 515. "[T]he first rule of interpretation of a contract is to give to the language employed the meaning which the parties intended." First Nat'l Bank of Crossett v. Griffin, 832 S.W.2d 816, 819 (Ark. 1992). "When contracting parties express their intention in a written instrument in clear and unambiguous language, it is our duty to construe the written agreement according to the plain meaning of the language employed." C. & A. Constr. Co. v. Benning Constr. Co., 509 S.W.2d 302, 303 (Ark. 1974). Based on the language of the agreement, the Court cannot state, as a matter of law, that the agreement was not intended as a settlement agreement (Dkt. No. 50-1).

The agreement at the top states in bold letters that are underlined, "FOR SETTLEMENT PURPOSES ONLY." The agreement itself recites in pertinent part:

For this engine event [August 10, 2010], the Pratt & Whitney Canada Corp. ("P&WC") Investigation Report has determined that the PT Blade fracture was initiated in fatigue at a TSN of 4995 hours. The cause of the fatigue was found to be related to material embrittlement originating from the presence of thin lead rich layer. It is important to mention that the source of the contaminant remains unknown and a quality investigation will be made to determine its origin. Unfortunately, since that no overhaul was perform on this engine, the PT Blade set was not NDT inspected and therefore the opportunity to capture the facture initiation was missed.
However, in the interest of good business relationship and without any acknowledgment of liability on P&WC's part and is not renegotiable in whole or in part after acceptance, P&WC would like to offer Dudley Flying Services a commercial support concession to overhaul the engine S/N RD0028 to a serviceable condition in the same line of what is defined in the terms and conditions stated in the Extended Engine Service Policy (EESP) - Limited Cost Overhaul (LCO).
...
The parties agree that this commercial support offer is made in full and final settlement of any and all claims regarding the subject event and that it is made on the express condition that it shall at all times, before and after acceptance, remain confidential between P&WC, Covington, AG Air Maintenance Service and Dudley Flying Services who agree not to disclose it to any third party, without the express prior written approval of the other parties.
...
This offer is valid for 15 days and is conditional upon the work being performed during this shop visit at Covington Aircraft or any other P&WC shop where P&WC will apply all the credit discount on new parts. By signing and returning this offer, Dudley Flying Services, acknowledges having read and understood the offer.

(Dkt. No. 50-1, at 1-3). Mr. Benthien executed this agreement on behalf of Dudley.

Further, at this point in the proceeding, this Court cannot conclude that PWC is not a potentially liable joint tortfeasor. Ag Air's expert witness Dr. Arun Kumar offered the following opinion, along with several other opinions, in his report disclosed in this matter:

The surface of the S/N 26 blade contains a high amount of lead (Pb) which was also present in the fatigue crack origin areas and had smeared all over the fracture surface during the crack propagation process. This lead is a residue left from the manufacturing process of the blade by Pratt & Whitney that caused liquid metal embrittlement cracks that became the fatigue crack origins. Therefore, blade S/N 26 failed due to a manufacturing defect.

(Dkt. No. 37-14).

For these reasons, this Court cannot conclude that the agreement was not intended as a settlement agreement of a potentially liable joint tortfeasor. The Court determines that this is a circumstance in which the Court may exercise its discretion to admit evidence as to the settlement and the amount of the settlement, depending on the proof at trial. See Howard W. Brill & Christian H. Brill, Arkansas Law of Damages § 7.5 (5th ed. 2014) (citing St. Vincent Infirmary Medical Center v. Shelton, 425 S.W.3d 761, 769 (Ark. 2013) (Hart, J., dissenting), superseded by statute, 2013 Ark. Acts 1116, as recognized by J-McDaniel Const. Co. v. Dale E. Peters Plumbing Ltd., 436 S.W.3d 458 (Ark. 2014); Ark. Kraft Corp. v. Johnson, 519 S.W.2d 74 (Ark. 1975)). In doing so, the Court acknowledges that the general approach is for the settlement not to be introduced into evidence at trial because doing so informs the jury that one defendant, or in this case a potentially liable joint tortfeasor, has admitted liability and might permit the jury to use the amount of the settlement as compensation for the injuries. Brill, supra. Generally, the preferable approach is for the court to credit the compromise payment upon the final judgment, but that is difficult to do here given the anticipated evidence, the disputed issues of fact regarding proximate cause, and the damages Dudley has represented it seeks.

If Ag Air seeks and is permitted by this Court to inform the jury of both the fact and amount of the settlement, Ag Air does so at its own peril in regard to seeking later a credit or offset from a judgment in favor of Dudley, should the jury render a verdict in Dudley's favor. See Ark. Kraft Corp., 519 S.W.2d at 78-79; Giem v. Williams, 222 S.W.2d 800, 804-05 (Ark. 1949). See also Sloan v. Motorists Mut. Ins. Co., 368 F.3d 853, 855 (8th Cir. 2004) (discussing Ark. Kraft Corp. and Giem ).

Even if the agreement between Dudley, as executed by Mr. Benthien, and PWC is a collateral source, as Dudley suggests, the Arkansas Supreme Court has recognized in the context of personal injury that a collateral source of recovery may be introduced (1) to rebut the plaintiff's testimony that he or she was compelled by financial necessity to return to work prematurely or to forego additional medical; (2) to show that the plaintiff had attributed his condition to some other cause, such as sickness; (3) to impeach the plaintiff's testimony that he or she had paid his medical expenses himself; (4) to show that the plaintiff had actually continued to work instead of being out of work, as claimed. Montgomery Ward & Co. v. Anderson, 976 S.W.2d 382, 384-85 (Ark. 1998) (citing Evans v. Wilson, 650 S.W.2d 569, 570 (Ark. 1983)). The Court determines the reasoning behind one or more of these exceptions may be applicable here, depending on the proof at trial, thereby making even collateral source evidence admissible.

For these reasons, the Court denies Dudley's motion in limine. The Court will rule on contemporaneous ...


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