Boston Helicopter Charter, Inc. v. Augusta Aviation Corporation

Boston Helicopter Charter, Inc. (Boston Charter) (plaintiff) purchased a used helicopter from Hydroplanes, Inc. (defendant), which initially purchased it from Augusta Aviation Corporation (Augusta) (defendant). The helicopter was manufactured by an Italian company, Costruzioni Aeronautiche Giovanni Agusta S.p.A (CAGA) (defendant), which operated through Augusta, its subsidiary responsible for sales and marketing in North America. Hydroplanes purchased the helicopter from Augusta in May 1984 for a price of $1,000,000. The purchase agreement contained a warranty clause, which set out pro rata reimbursement rates for part replacements based on the usage and age of the helicopter. The warranty expired after either 1,000 hours of operation or one year, whichever occurred first. This was consistent with industry standards. The purchase agreement limited Augusta’s obligations to providing replacement parts, expressly disclaiming all other warranties and excluding liability for incidental and consequential damages, including any damage to the helicopter from use. Under the terms of the agreement, the warranty was transferable. More than one year after purchasing the helicopter, Hydroplanes sold it to Boston Charter. The sales agreement contained a provision transferring the warranty to Boston Charter. Boston Helicopter had legal representation to review the contract and negotiate the transfer of the warranty. The helicopter was damaged in an accident that occurred in January 1987, at which time the helicopter had accumulated more than 500 hours of operation time. The accident was caused by a defect in a rotor blade. An estimate prepared by Boston Charter listed the cost of repair at over $1,000,000. Boston Charter filed suit against Hydroplanes, CAGA, and Augusta for damages, arguing that the warranty limitation was unconscionable. CAGA and Augusta filed motions for partial summary judgment.