Reported / Citable
Background
Summit Sky Advisory bought an FE-90-11B jet engine from Eastern Airlines for $6.3 million in a transaction facilitated by Jet Midwest. Summit alleged that the parties agreed the engine would be “serviceable,” meaning ready to enter service within applicable safety parameters, and that both defendants represented it was serviceable based in part on a 2021 borescope inspection report.
After the March 2023 purchase, Summit’s customer inspected the engine and found it unserviceable, with approximately $4 million in needed repairs. Summit initially asserted warranty and negligent-misrepresentation claims. During discovery, Eastern produced a January 2023 borescope report from another prospective buyer finding the engine unserviceable. Summit then sought leave, after the amendment deadline, to add a Texas fraud claim based on alleged knowledge and concealment of that report.
The Court’s Holding
Judge Robert Pitman granted Summit leave to file its first amended complaint. Summit established good cause under Rule 16(b)(4): it did not obtain the new inspection report until July 2024 and related subpoena materials in August, acted reasonably thereafter, and the proposed fraud claim was important to the case. Any prejudice to Eastern was minimal because discovery remained open, and the court could later extend discovery or continue trial if necessary.
The proposed fraud claim was not futile under Rule 15. The sales contract’s language disclaiming representations and selling the engine “as is, where is” but serviceable did not clearly and unequivocally disclaim reliance; indeed, it did not mention reliance and preserved the engine’s purported serviceable condition. The proposed complaint also alleged fraud with sufficient particularity by identifying the alleged statements, speakers, timing, recipients, falsity, intent, reliance, and resulting injury.
Key Takeaways
- Newly discovered discovery evidence can supply good cause to amend after a scheduling-order deadline.
- Under Texas law, a general disclaimer or merger clause does not bar fraudulent-inducement allegations absent a clear disclaimer of reliance.
- A fraud claim may satisfy Rule 9(b) when it identifies the alleged false statements and explains who made them, when, to whom, and why they were false.
Why It Matters
The order illustrates that an “as is” sale provision and a general disclaimer of representations do not automatically foreclose a fraud claim under Texas law. Contracting parties seeking to waive reliance-based fraud claims need clear, unequivocal reliance-disclaimer language.
It also shows that courts may permit late amendments when the claim rests on evidence produced during discovery and the existing schedule leaves room for targeted additional discovery.