Haimberg v. R & M Aviation

Yossi Haimberg (plaintiff) lived in Florida but was interested in buying an airplane in Illinois. The seller recommended that Haimberg hire local mechanic R & M Aviation, Inc. (R&M) (defendant) to conduct a prepurchase inspection of the airplane in Illinois. Even though R&M frequently worked on the seller’s airplanes, R&M falsely represented to Haimberg that it had no business relationship with the seller. Relying on this misrepresentation, Haimberg hired R&M. R&M later gave Haimberg an inspection report noting a few issues with the airplane but stating that its overall condition was good. Based on the report, Haimberg asked the seller to make a few repairs and purchased the airplane. Haimberg then discovered that the airplane had significant issues that had not been identified in R&M’s report. Haimberg was forced to ground the airplane and spent $75,000 to fix the issues. Haimberg learned that a different inspector had conducted a prepurchase inspection on the airplane two weeks before R&M performed its inspection. This earlier inspector found such numerous and significant problems that it declared the airplane not airworthy. Although the parties disputed what and when R&M knew about this earlier inspection, it was undisputed that some of the inspection information was in the airplane’s logbook and that R&M knew most of the remaining information while the airplane was still in its possession. It was also undisputed that R&M never disclosed the prior-inspection information to Haimberg. Haimberg sued R&M. At trial, the jury returned a verdict reimbursing Haimberg the $670 he had spent on R&M’s inspection and awarding Haimberg $50,000 in compensatory damages for R&M’s negligent misrepresentations about the airplane’s condition. R&M appealed, arguing that (1) it could not be held liable for purely economic damages caused by a negligent misrepresentation and (2) there was no evidence that R&M had made a false material statement in its prepurchase inspection report.