United States District Court, E.D. Kentucky, Central Division, Lexington
KAMPS, INC., et al. Plaintiffs / Counter Defendants,
MUSTANG AVIATION, INC., Defendant / Counter Claimant.
OPINION & ORDER
E. Wier, United States District Judge
Aviation, Inc., moved to dismiss Counts 2, 3, and 4 of
Plaintiffs' Complaint. DE #9 (Motion). Kamps, Inc., and
Kamps Air, LLC (collectively, Kamps), moved to dismiss
Mustang's Counterclaim. DE #11 (Motion). The matters are
fully briefed, see DE ##10, 12, 16, 17, and ripe for
consideration. For the following reasons, the Court
GRANTS IN PART and DENIES IN
PART Mustang's motion (DE #9) and wholly
GRANTS Kamps's (DE #11). The Court
dismisses Complaint Count 2 and the totality of the
Counterclaim, but permits Complaint Counts 3 and 4 to
MUSTANG'S MOTION TO DISMISS
case arises from a disputed aircraft inspection. In late 2017
/ early 2018, Kamps became interested in purchasing an
aircraft for business purposes. DE #1, at ¶ 9. As part
of the procurement process, Kamps engaged Mustang to conduct
“a pre-purchase inspection” of a particular
aircraft. See Id. at ¶¶ 10-18. Mustang
ultimately did an inspection, invoiced Kamps $2, 258.04, and
provided a “Pre-Purchase Examination Report.”
Id. at ¶¶ 19-20. Kamps paid the bill,
id. at ¶ 22, and “in reliance on”
the Pre-Purchase Examination Report, bought the aircraft.
Id. at ¶ 23. So far, so good.
alleges, however, that after the purchase, “the
Aircraft was examined, and it was discovered that there are
more than one-hundred and thirty (130) Discrepancies on the
Aircraft totaling approximately One Hundred Thousand Dollars
($100, 000) in parts and labor that should have been
discovered during the course of any reasonable pre-purchase
inspection.” DE #1, at ¶ 24. Kamps alleges that it
“relied on Mustang's Pre-Purchase Examination
Report and inspection in completing the purchase of the
Aircraft at a price of $348, 000.00, ” and that had it
“known about the Discrepancies, Kamps would not have
proceeded with the purchase of the Aircraft at that
price.” Id. at ¶¶ 27-28. Kamps also
claims other damages-namely, that it “employ[ed] a
local aircraft maintenance facility to repair the Aircraft to
airworthy standards” and “charter[ed] another
aircraft to fulfill pre-planned, scheduled company
flights” during the time “the Aircraft [was] in
maintenance.” Id. at ¶¶ 29-30.
on these allegations, Kamps asserted four causes of action
against Mustang: (1) breach of contract, (2) promissory
estoppel, (3) fraud, and (4) negligent misrepresentation.
Mustang seeks dismissal of Counts 2-4.
Fed.R.Civ.P. 12(b)(6), a party may seek dismissal based on an
alleged “failure to state a claim upon which relief can
be granted.” Faced with such a motion, the Court views
the relevant assertions in the light most favorable to the
non-moving party, accepts as true all well-pleaded factual
allegations, and draws all reasonable inferences in the
non-moving party's favor. Ashcroft v. Iqbal, 129
S.Ct. 1937, 1949-50 (2009) (citing Bell Atlantic Corp. v.
Twombly, 127 S.Ct. 1955 (2007)); Brent v. Wayne
Cnty. Dep't of Human Servs., 901 F.3d 656, 675-76
(6th Cir. 2018). “To survive a motion to dismiss, a
complaint must contain sufficient factual matter, accepted as
true, to ‘state a claim to relief that is plausible on
its face.'” Iqbal, 129 S.Ct. at 1949
(citing Twombly, 127 S.Ct. at 1974). “A claim
has facial plausibility when the plaintiff pleads factual
content that allows the court to draw reasonable inferences
that the defendant is liable for the misconduct
alleged.” Id. A “formulaic recitation of
the elements of a cause of action will not do.”
Twombly, 127 S.Ct. at 1965. The Court need not
accept the verity of legal conclusions. Id.
estoppel. Mustang's argument that promissory estoppel is
unavailable in the presence “of an otherwise
enforceable contract” is correct. See, e.g.,
Derby City Capital, LLC v. Trinity HR Servs., 949
F.Supp.2d 712, 729-30 (W.D. Ky. 2013) (collecting
cases). Kamps, noting Mustang's concessions on
relevant contract topics, does not protest Count 2 dismissal.
See DE #10, at 4. Accordingly, the Court dismisses
Complaint Count 2.
and negligent misrepresentation. Mustang seeks dismissal of
Counts 3 and 4 based (solely) on application of the economic
loss rule. DE #9-1, at 7-12. Kamps opposes. DE #10, at 5-9;
see also DE #12, at 3-11.
economic loss rule “prevents the commercial purchaser
of a product from suing in tort to recover for economic
losses arising from the malfunction of the product itself,
recognizing that such damages must be recovered, if at all,
pursuant to contract law.” Giddings & Lewis,
Inc. v. Indus. Risk Insurers, 348 S.W.3d 729, 733 (Ky.
2011). The “rule recognizes that economic losses, in
essence, deprive the purchaser of the benefit of his bargain
and that such losses are best addressed by the parties'
contract and relevant provisions of Article 2 of the Uniform
Commercial Code.” Id. at 738. “Three
policies support applying the economic loss doctrine to
commercial transactions: (1) it maintains the historical
distinction between tort and contract law; (2) it protects
parties' freedom to allocate economic risk by contract;
and (3) it encourages the party best situated to assess the
risk of economic loss, usually the purchaser, to assume,
allocate, or insure against that risk.” Id. at
739 (quoting Mt. Lebanon Pers. Care Home, Inc. v. Hoover
Universal, Inc., 276 F.3d 845, 848 (6th Cir. 2002)).
Court, on full consideration of the parties' arguments,
joins the unanimous chorus of judicial voices forecasting
that the Kentucky Supreme Court would not likely expand the
economic loss rule to service contracts, as Kamps
had with Mustang, for the reasons cogently stated in the
cases cited below.
thirteen years ago, the late Judge Heyburn reasoned:
Virtually every classic description of the economic loss rule
pertains to and often limits its application to the sale of
products. The cases make this distinction in order to
preserve the distinction between the remedies available under
the U.C.C. and those available in tort. Such a distinction
would be immaterial here because the U.C.C. does not govern
services. In the context of selling a product, the economic
loss rule can limit its application to those circumstances in
which the damage is solely to the product. Where services are
involved, the rule could not be so easily or clearly limited.
In addition, one providing a negligent service that damages
related property appears to have breached a duty, rather than
having breached a warranty. In such circumstances, the
injured party has not suffered purely economic losses, but
property damage recoverable in tort. All of these reasons
suggest the conceptual difficulty of applying the economic
loss rule to services.
None of the existing cases suggest that an expansion of the
rule is likely. . . . This Court believes that it is on sound
ground in predicting that Kentucky courts would apply the