Gatx/Airlog Co. v. Evergreen International Airlines Inc.

MEMORANDUM **

I. Negligence

The district court erred in granting summary judgment to Central Texas Airborne Systems, Inc. (“CTAS”) on Kalitta Air’s negligence claim. Because GATX fraudulently induced American International Airways (“ALA”) to enter the Modification Agreements, ALA was entitled to rescind those Agreements. See Ron Greenspan Volkswagen, Inc. v. Ford Motor Land Dev. Corp., 32 Cal.App.4th 985 , 38 Cal.Rptr.2d 783, 789 (Cal.Ct.App.1995). Therefore, the limitation of remedies provisions in the Modification Agreements did not preclude Kalitta Air’s claim for negligence against CTAS. See PWS, Inc. v. Ban, 234 Cal.App.3d 223 , 285 Cal.Rptr. 598, 600 (Cal.Ct.App.1991) (“The effect of a rescission is to void the contract ab initio.”).

Because of GATX’s fraudulent inducement, ALA’s failure to rescind the Modification Agreements immediately after the issuance of the Airworthiness Directive (“AD”) by the Federal Aviation Administration (“FAA”) did not constitute waiver of its right to rescission. See Lunardi v. Great-West Life Assur. Co., 37 Cal.App.4th 807 , 44 Cal.Rptr.2d 56, 65 (Cal.Ct.App.1995) (finding that a party does not waive its right to rescind a contract on the…