Orders Company to Pay $96 Million
A jury in Grimes County, Texas has
found Textron Lycoming liable for fraud, and ordered the company to
pay approximately $96 million to Navasota, Texas-based Interstate
Southwest Ltd. The verdict came Tuesday following seven weeks of
trial in State District Judge Jerry Sandel's 278th Judicial
District Court in Anderson, TX.
The jury's award includes $9,725,650 in actual damages and
another $86,394,763 in punitive damages. In addition, the verdict
effectively precludes Lycoming from pursuing a $173 million
indemnity claim against Interstate, which it had previously filed
in a Pennsylvania court.
"This is a total victory for our side," says attorney Marty
Rose, who represents Interstate Southwest. "Between the verdict and
its impact on the indemnity claim -– we couldn't have hoped
for a better result."
The case revolves around a number of small airplane engine
failures that occurred when the airplanes' crankshafts broke in
flight. Between 2000 and 2002, there were 24 failures and 12 deaths
in Cessnas, Pipers and other airplanes with Lycoming aircraft
engines. Interstate Southwest supplied Lycoming with the crankshaft
forgings for those engines.
Following the failures, Lycoming launched an investigation aimed
at determining the cause. Its conclusion was that Interstate
Southwest had overheated the forgings, weakening the steel.
But attorneys for Interstate, Rose and Hal Walker, found a
different cause. Their experts were able to determine that
Lycoming's design for the crankshafts, which dates back to smaller,
lower horsepower engines built 40 years ago, was inadequate for the
larger, higher horsepower engines that failed.
They also found that by adding Vanadium to the steel -–
something Lycoming decided to do just before the failures began
-– the company further limited the amount of stress the
crankshafts could withstand. Lycoming had added Vanadium to make
the steel harder and reduce the number of machining operations,
ultimately saving the company money.
Ultimately, jurors agreed with lawyers for Interstate, and found
that even Lycoming's investigation of the crankshaft failures was
fraudulent.
"The jurors found the combination of poor design and Vanadium
pushed these crankshafts beyond their limits," says Hal Walker.
"That's why these planes crashed, and not, as Lycoming claimed,
because Interstate overheated the forgings."