AG v. Honeywell International Incorporated

          ORDER

          G. MURRAY ENOW CHIEF UNITED STATES DISTRICT JUDGE

         Pending before the Court is Defendant Honeywell International Incorporated (“Honeywell's”) Motion to Dismiss for Failure to State a Claim (Doc. 19). For the following reasons, the Motion is denied.

         BACKGROUND

         Sky Jet AG (“Sky Jet”) owned and operated a Hawker Model 125-8000 Aircraft. (Doc. 13 at ¶ 5). In 1993, Sky Jet purchased this aircraft. (Id. at ¶ 6). To ensure the aircraft was properly maintained, Sky Jet has continuously contracted with Honeywell for support services. (Doc. 13 at ¶ 8). Two of these maintenance service plans are at issue here: the 2006 MSP Contract, and the 2013 MSP Contract. (Doc 13 at ¶ 14; Doc. 13-1). The 2013 MSP Contract contains a limited liability provision, which provides that “IN NO EVENT SHALL HONEYWELL BE LIABLE FOR CONSEQUENTIAL OR INCIDENTAL DAMAGES.” (Doc. 13-1 at 13).

         In 2006, Honeywell replaced the aircraft's electronic engine controller with a digital engine controller. (Doc. 13 at ¶ 14). Following this upgrade, the aircraft began to experience issues that prevented it from operating properly. (Doc. 13 at ¶ 15). These issues became significantly worse in 2015, when the aircraft experienced many days on the ground. (Doc. 13 at ¶ 16). After trying several different methods to fix the ongoing issues, Honeywell and Sky Jet agreed to downgrade the digital engine controller back to the electric engine controller that was replaced in 2006. (Doc. 13 at ¶ 27). This ultimately fixed the issues that Sky Jet was having with the aircraft. (Doc. 13 at ¶ 28).

         In 2017, Sky Jet submitted a formal claim to Honeywell that sought damages for the malfunctions of the aircraft from 2006 to 2016. (Doc. 13 at ¶ 40). Honeywell rejected Sky Jet's request, so Sky Jet filed this lawsuit. In its First Amended Complaint (“FAC”), Sky Jet raises four grounds for relief: breach of contract, breach of the covenant of good faith and fair dealing, negligence, and unjust enrichment. (Doc. 13 at 1).

         There are two issues raised by Honeywell in its Motion to Dismiss (Doc. 19): (1) whether Sky Jet's claim for consequential and incidental damages is barred by the limitation-of-loss language in the 2013 MSP Contract, and (2) whether Sky Jet's breach of contract claim as to Honeywell's 2006 conduct is barred by the Arizona statute of limitations.

         DISCUSSION

         I. Legal Standard

         To survive dismissal for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6), a complaint must contain more than Alabels and conclusions'' or a ''formulaic recitation of the elements of a cause of action''; it must contain factual allegations sufficient to Araise a right to relief above the speculative level.'' Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). While Aa complaint need not contain detailed factual allegations . . . it must plead >enough facts to state a claim to relief that is plausible on its face.''' Clemens v. DaimlerChrysler Corp., 534 F.3d 1017, 1022 (9th Cir. 2008) (quoting Twombly, 550 U.S. at 570). AA claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.'' Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556). The plausibility standard Aasks for more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are >merely consistent with'a defendant's liability, it 'stops short of the line between possibility and plausibility of entitlement to relief.''' Id. (internal citations omitted) (quoting Twombly, 550 U.S. at 557).

         When analyzing a complaint for failure to state a claim under Rule 12(b)(6), A[a]ll allegations of material fact are taken as true and construed in the light most favorable to the nonmoving party.'' Smith v. Jackson, 84 F.3d 1213, 1217 (9th Cir. 1996). However, legal conclusions couched as factual allegations are not given a presumption of truthfulness, and Aconclusory allegations of law and unwarranted inferences are not sufficient to defeat a motion to dismiss.'' Pareto v. FDIC, 139 F.3d 696, 699 (9th Cir. 1998).

         II. Analysis

         A. Whether the Liability Limitation in the MPC is Enforceable

         In Arizona, limitation of liability clauses can be held unenforceable if one party acted fraudulently or in bad faith. Airfreight Inc. Ltd v. Evergreen Air Center Inc., 215 Ariz. 103, 110-111, 158 P.3d 232, 239-240 (Az. Ct. App. 2007). “As a matter of public policy, a party ...