Columbia Aircraft Business Interruption Litigation

Ball Janik LLP represented the estate of Columbia Aircraft Manufacturing Company ("Columbia") in an action against Affiliated FM Insurance Company for breach of an insurance contract, bad faith and to recover punitive damages. Columbia, a leading manufacturer of single-engine high-performance composite aircraft, was forced into bankruptcy following a freak hail storm in mid-2006 that damaged 66 of its aircraft worth more than $30 million. The physical damage to the aircraft prevented their imminent delivery and deprived the company of much needed cash at a critical point in its development, precipitating a downward spiral of inability to respond to existing aircraft owners, new customers, vendors and its own sales force that ultimately forced the company into bankruptcy and a sale to Cessna Aircraft at less than fair market value. The United States Bankruptcy Court appointed our firm as special counsel to pursue the insurance coverage litigation. Plaintiff sought business interruption damages of more than $9 million, consequential damages (caused by the below fair value sale) in excess of $10 million, and punitive damages for bad faith.

After successful motion practice, in which the Federal Court denied the insurer’s attempts to dismiss Columbia’s bad faith claims, the case was settled on favorable terms.

James T. McDermott and Richard J. Stone (litigation partners) represented Columbia.

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