© 2013 The Texas Lawbook.
By Mark Curriden, JD
Senior Writer for The Texas Lawbook
(September 6) – Multibillionaires are seldom the little guy in lawsuits, but Texas oilman Ray L. Hunt is claiming that status in a product defect case pending trial in Dallas County.
Hunt is suing Honeywell International claiming that the multi-national conglomerate sold him two defective engines for his corporate Learjet – defects, he claims, that could have led to disastrous results and lives lost.
Honeywell says it doesn’t owe Hunt a dime because the engines were covered by warranty for several years – years in which the planes operated without any problems – and that Hunt allowed the warranty to expire before bringing any problems to the company’s attention.
The trial had been scheduled to start trial on Monday, but due to an illness by a key witness, it has been postponed for several months.
The case pits Hunt, who Forbes says is worth about $5.3 billion and is the CEO of one of the largest independent oil companies in the U.S., against Honeywell, a New Jersey-based global corporation that generates about $37 billion in annual revenues.
Lawyers familiar with the case say it is a dispute that could have settled easily and relatively cheaply early on because the amount of money in question is only $1.1 million, which does not even qualify as a rounding error in either the plaintiff’s or defendant’s monthly budget.
In fact, Hunt and Honeywell – both major supporters of tort reform and anti-lawsuit abuse efforts – are likely to end up spending more on legal fees than the jury is likely to award in actual damages.
“This case is not about the money but it is very personal for Ray Hunt,” says Michael Hurst, a partner at Gruber Hurst Johansen Hail Shank in Dallas, who is representing Hunt. “Ray declines to file lawsuits on much bigger dollar value disputes all the time.
“But this lawsuit is about safety – the safety of Ray Hunt, his family and the people he works with who he considers his family,” says Hurst, who has represented Hunt and his companies in various litigation matters for about a decade.
Hurst says that Hunt also wants the owners and operators of 3,000 other private jets with these particular Honeywell engines to know about the potential risks they may unknowingly be facing.
The dispute involves Hunt’s purchase of a new Learjet 40 in 2004 for $7 million. The plane was equipped with two Honeywell turbofan engines, which were covered under a five-year Honeywell warranty.
In April 2008, Honeywell sent a “service bulletin” notice to Hunt and other owners and operators of the engines that the company had developed a “more robust” rotor assembly blade retainer that would substantially improve the engine’s reliability. The memo stated that the company would install the improved blade retainers at the jet’s next maintenance inspection.
Hunt’s plane wasn’t due for its next maintenance inspection for several hundred miles or well past the expiration of the warranty agreement.
Nearly three years later, in January 2011, Hunt’s crew was preparing for a flight from Dallas to Austin when the plane’s second engine during pre-flight failed to rotate or start. Court documents state that during the visual inspection, mechanics discovered shrapnel in the engine’s tail pipe and widespread failure of the blade retainers, which caused internal damage to the engine.
Mechanics then inspected the plane’s first engine, which also showed widespread damage to the blade retainers, according to the court documents.
Hunt’s lawsuit, which is actually Hunt Consolidated v. Honeywell International, states that an engineer for Honeywell witnessed the inspection of the engines and that his immediate reaction was “that he had seen similar damage many times before and was not shocked to see it in the Honeywell engines.”
When Honeywell refused to pay $1.1 million to have the plane fixed, Hunt sued, claiming that Honeywell knew its equipment was flawed for years but kept the information secret for the sake of profits. He is seeking $2.3 million in damages, which includes the diminished value of Hunt’s plane, the cost of renting a substitute jet, as well as interest charges.
“Honeywell was aware at all material times that the blade retainers were seriously defective and might separate and cause an engine malfunction at any time,” Hunt states in court records. “Given the horrendous potential consequences of an in-flight malfunction of the Honeywell engines, it is incredible that Honeywell failed to provide Hunt and other owners of the same model of engines with complete and honest information.
“By the Grace of God, the jet engines malfunctioned during pre-flight preparations, rather than while the Learjet was in flight,” Hunt says in court documents. “Otherwise, this might have been a wrongful death action.”
Lawyers for Hunt are asking the jury to find that Honeywell fraudulently concealed the dangers. Hurst says they plan to seek punitive damages, but that Hunt would donate the money to charity if he wins.
Hogwash, responds Honeywell.
The engine maker says it doesn’t owe Hunt a dime because Hunt reported no problems to Honeywell while the engine was under warranty. They also argue that Hunt’s then-mechanic should have known about the risks and had the blade retainers inspected before the warranty expired.
“When two sophisticated parties agree to an allocation of risk for possible losses arising from defects in goods, Texas courts enforce the terms of that bargain,” Honeywell lawyers state in legal briefs to Dallas District Judge Martin Hoffman, who is handling the case.
“That is precisely what happened here,” Honeywell said.
Lawyers for Honeywell say that Hunt declined its offer to purchase an additional maintenance service plan, which would have provided him the coverage he now seeks.
While Hurst and fellow Gruber Hurst partner Shonn Brown are representing Hunt, Honeywell is being defended by Seattle-based Perkins Coie, with Dallas partner Tanya Henderson as local counsel.
In addition, Honeywell has hired Monica Latin, a prominent litigation partner at Carrington, Coleman, Sloman & Blumental, to join the litigation.
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