July 31--GREENSBORO -- A hefty judgment was entered this week in favor of an airline that had its headquarters here.
Judge Ben Tennille ordered C.S. Aviation to pay TradeWinds Airlines and its two former parent companies, TradeWinds Holdings and Coreolis Holdings, more than $80 million for knowingly leasing faulty engines to the airline.
TradeWinds leased both planes and engines from C.S. Aviation.
TradeWinds filed for bankruptcy two years ago. Its bankruptcy estate will receive more than $48 million.
A New York law firm is handling recoupment of the funds, said attorney Nathan Duggins of the Greensboro firm Tuggle, Duggins & Meschan, which represented the bankruptcy estate.
TradeWinds provided the only overseas flights out of Piedmont Triad International Airport for a period in the 1980s.
The airline's problems with C.S. Aviation started in 2001, when TradeWinds said the first A-300 engine it leased from the company failed, according to court documents and lawyers involved in the case.
C.S. Aviation assured TradeWinds that its engines met certain criteria, including that they could operate for 1,700 takeoffs and landings before needing any significant repairs.
TradeWinds charged that C.S. Aviation "failed to properly overhaul the engines and "used substandard and inferior parts" during repair of the engines.
The premature failure of the engines wreaked havoc on TradeWinds' finances. The company paid to have the first two engines repaired but eventually had to lease replacement engines from another company.
The company also accused C.S. Aviation of not paying interest on money TradeWinds deposited in its maintenance reserves, the money set aside to maintain the planes.
"It created a major cash drain on the business," said Vaughn Ramsey, a partner in Tuggle, Duggins & Meschan, who assisted Duggins with the case.
A German bank assumed ownership of the aircraft when an affiliate of C.S. Aviation defaulted on the note.
The bank, Deutsche, sued TradeWinds for back lease payments. TradeWinds in turn filed a lawsuit against C.S. Aviation, but the company never responded.
On Aug. 19, 2004, the court granted TradeWinds' motion for default entry, a ruling made when a defendant fails to respond or appear in court. TradeWinds and its corporate parents settled with Deutsche Bank for back lease and the purchase of the aircraft.
In April 2008, TradeWinds filed for a motion for default judgment against C.S. Aviation. Because the company again failed to respond, a judge awarded more than $54 million to TradeWinds.
C.S. Aviation later asked the court to set aside both the default ruling and judgment. The judge set aside the judgment but ordered a hearing to determine damages. That trial was held in May.
Contact Jonnelle Davis at 373-7080 or jonnelle.davis@news-record.com
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