October 12, 2016

Release of “All Other Entities” For Aircraft Incident Included Unnamed Maintenance Provider

Holland & Knight Aviation Law Blog
Marc L. Antonecchia

An Illinois appellate court, applying New York law, has held that a release of "all other entities" from liability arising out of, or related to, an aircraft incident included an aircraft maintenance provider that was not expressly named in the release.1 The litigation was commenced by a Turkish aircraft operator, which alleged that the aircraft maintenance provider was liable for damages incurred by the operator when the aircraft suffered a control failure during a landing attempt in June 2009.  A post-incident inspection revealed a small metal roller embedded between the left power-control-unit input crank and the manifold stops, which are part of the aircraft's elevator-control system. 

In January 2010, several months after the incident, the operator and the lessor had renegotiated the terms of the lease governing the aircraft at issue due to changing market conditions.  In partial consideration for the lease renegotiation, the operator released all claims "arising out of or in any way related to or resulting from the accident/incident which occurred on June 14, 2009," against lessor, its related entities, and "all other persons, firms, companies, corporation and other entities not specifically identified in this Waiver and Release Agreement." 

The operator's claims against the maintenance provider, set forth in an amended complaint filed in September 2011, were premised on the allegation that the incident was due to the negligence of the maintenance provider in leaving debris in the aircraft while performing the  maintenance in January 2009.  This maintenance occurred while the aircraft was on lease to a prior operator, and was five months prior to the incident and one month before the plaintiff operator leased the aircraft. 

The maintenance provider moved for summary judgment to dismiss the operator's claims based on the language of the Release.  The operator opposed on the grounds that the maintenance provider was not within the scope of the Release because it was not expressly named and, alternatively, that the Release was ambiguous.  The trial court granted summary judgment, finding that the intention of the parties to the Release was to eliminate any litigation arising from the incident.

The Illinois Appellate Court reviewed the summary judgment order de novo.  As part of its analysis, the court considered the operator's argument that an unexecuted draft of the Release had specifically released the maintenance provider, the manufacturer of the aircraft, and the prior lessee, but that at the operator's insistence those named entities were deleted from the final draft of the Release.  The operator contended that the parties to the Release did not intend the phrase "all other persons, firms, companies, corporations and other entities not specifically identified in this Waiver and Release Agreement" to release the named entities that had been removed. 

Applying New York law, which the parties agreed governed the Release, the court determined that the Release need not specifically name or identify every discharged party because it limited its scope to entities that were connected in some way with the incident.  The court distinguished New York cases holding that the law will not infer an intent to release all persons, known and unknown, from all claims because here the operator had expressly released all persons from very specific claims.

The court cited the New York Court of Appeals2 in finding that it would be an "inflexible rule" that a release must invariably specify every party to be discharged.  But the court's analysis suggests that the application of a release to entities not expressly named in the release is not a blanket rule.  Instead, there are several important factors, including the language of the release as a whole and the degree to which the release is negotiated.  For instance, the court noted that the Release did not include boilerplate language found in preprinted releases, but was rather a "tailor-made document" that was negotiated by parties represented by counsel.  Further, the description of the discharged parties, when read with provisions of the Release expressing a "full and complete settlement of liability claimed," made it clear that the parties intended to end all claims related to the incident.    

1 Havayollari v. AAR Aircraft Services, Inc., __ N.E.3d __, 2016 WL 4917075 (Ill. App. Ct. Sept. 15, 2016).

2 The court relied primarily on Wells v. Shearson Lehman/American Express, Inc., 72 N.Y.2d 11, 530 N.Y.S.2d 517  (1998) (enforcing release as to unnamed entities of "all claims . . . that have been or could have been asserted by plaintiffs herein or any members of the Class against any defendant, . . . or against anyone else in connection with or that arise now or hereafter out of the Action.")

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