Eclipse wins Aviace suit

 - December 6, 2006, 9:17 AM

Eclipse Aviation has scored a first-round knockout in a lawsuit filed against it this September by PA Aviace, following U.S. District Judge Christina Armijo’s November 10 denial of Aviace’s motion for a preliminary injunction against the Albuquerque manufacturer of the Eclipse 500 very light jet (VLJ). Aviace filed for voluntary dismissal of its suit three days later.

Aviace sought to have Eclipse barred from refusing to deliver the first Aviace aircraft in a 112-airplane order, to refrain from reassigning delivery positions held by Aviace or expending any of Aviace’s initial deposit. Aviace, a Swiss firm that placed the order in March 2002, alleged that Eclipse violated the sales contract by wrongfully requiring a “six-month production deposit” on the first airplane in the order, then canceling delivery of that aircraft for non-payment of the deposit, which Eclipse in its response to the suit stated is due for every aircraft on the order book when its assembly is about to begin.

Aviace also claimed that Eclipse had promised that the first aircraft would be production S/N 31 and had arbitrarily moved the delivery position back to S/N 47. The company formerly known as Aviace AG also claimed that Eclipse had increased the price of the first 12 aircraft in the order more than allowed under the purchase agreement.

In her finding of fact supporting the denial, the judge stated that Aviace had not established “that it is substantially likely to succeed on the merits” (of its allegations). She also noted that evidence presented during a full day of hearings on November 6 showed that the agreement between Aviace and Eclipse was “for the express purpose of launching a fractional ownership program in Europe.” However, the judge noted that Eclipse subsequently denied repeated requests by Aviace to become a dealer or distributor of Eclipse jets, and that when Aviace made clear its intent to resell some or all of the aircraft it had ordered it was acting outside the terms of the purchase agreement. Her finding of fact seemed to support Eclipse’s contention that “Aviace’s attempt to resell Eclipse aircraft is a material breach of the agreement.”

Judge Armijo added that Eclipse had shown no intent to cancel the entire 112-airplane order, and that it appeared still willing to deliver the other 111 for which six-month production deposits were not yet due.

Thus, she found, Aviace had no basis to claim that it had been or would be damaged by being denied delivery of the first jet in its order. Judge Armijo admitted into evidence, over an objection from Aviace’s counsel, the transcript of a statement on Aviace’s Web site offering to sell 20 “early delivery” positions even though, according to Eclipse, “Aviace had the right to purchase only 12 aircraft in the first 24 months of Eclipse deliveries.”

The judge’s finding also echoed Eclipse’s statement that “Aviace’s only business presence [is] the now-defunct Web site. It has no offices, employees, advertising, past business deals or previously satisfied customers.”