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Aeros Aeronautical Systems Corp. v. United States

United States District Court, C.D. California

November 20, 2017

AEROS AERONAUTICAL SYSTEMS CORP., Plaintiff,
v.
UNITED STATES OF AMERICA, Defendant.

          FINDINGS OF FACT AND CONCLUSIONS OF LAW

          PATRICK J. WALSH UNITED STATES MAGISTRATE JUDGE

         I. INTRODUCTION

         This is a Federal Tort Claims Act (“FTCA”) case in which Plaintiff Aeros Aeronautical Systems Corporation is suing the United States for damages for the loss of a unique, blimp-like aircraft known as the RAVB (pictured below). Aeros was housing the RAVB in a government hangar in Tustin, California, when the roof collapsed. The Court has already determined that the government was negligent in maintaining the hangar and is, therefore, liable for the loss. The issue that remains is damages. Plaintiff claims that the RAVB was a state-of-the-art, one-of-a-kind airship and seeks damages in the amount of $65 million dollars. The government contends that the aircraft was worthless at the time of the roof collapse and that, as a result, Aeros is not entitled to any damages. For the reasons set forth below, the Court concludes that Aeros is entitled to $6, 882, 918 for the loss of the aircraft and the consequential damages that flowed from the loss.

         (Image Omitted)

         A picture of the RAVB during flight testing in August 2013.

         II. FINDINGS OF FACT

         1. Plaintiff Aeros is incorporated under the laws of the state of California and has its principal place of business in Montebello, California.

         2. Defendant is the United States government, acting through the Department of the Navy and its employees, officers, and agents.

         Development of the RAVB

         3. In 2008, the government sought to determine the feasability of a rigid-aeroshell, variable-buoyancy aircraft to carry troops and equipment around the world. Exh. 565 at 1-2. The goal of the project was to design, construct, and test Aeros's proprietary Control of Static Heaviness or “COSH” system. Exh. 565 at 4. The COSH system allows a heavier-than-air aircraft, similar to a blimp, to become buoyant by releasing compressed helium (stored in canisters inside the aircraft) into bladders inside the aircraft until the aircraft becomes buoyant. The aircraft can then be flown to the intended destination and descend to the landing site by compressing a sufficient amount of helium to make the aircraft heavier than air. After unloading people and/or equipment, the crew can then release the helium back into the aircraft, causing it to become lighter than air again, allowing it to be flown away. Reporter's Transcript (“RT”) 4/11/17 a.m. at 39:8-21.[1]

         4. In 2008, the government and Aeros began negotiations for the development of an aircraft to test the COSH system. RT 4/11/17 a.m. at 43:10-44:20, 132:14-23. The government was not interested in having Aeros develop a working prototype. It was, instead, interested in having Aeros build a demonstrator model so that the COSH system could be tested inside a hangar to see if it would work. The proposed contract did not require nor did it contemplate that the RAVB would be flown outside the hangar.[2] RT 4/14/17 a.m. at 14:12-16.

         5. NASA was selected as the contracting agency for the government. Exh. 565 at 1. It was tasked with providing technical and project assistance to Aeros as well as contract management. RT 4/14/17 a.m. at 6:2-4.

         6. During negotiations, Aeros offered to perform the contract for $50.9 million. RT 4/12/17 p.m. at 67:25-68:24; Exh. 548; Joint Stipulated Facts (Doc. No. 195-1) (“JSF”) ¶ 2. NASA rejected this offer. JSF ¶ 3.

         7. Through a series of negotiations, Aeros and the government ultimately agreed to a firm, fixed-price contract of $38.2 million dollars to build and test the RAVB. RT 4/12/17 p.m. at 72:3-25. The evidence established that during the negotiations the government and Aeros recognized that it would cost Aeros slightly more than $43 million to build the RAVB and perform the tests anticipated under the contract, about $5 million more than the government was willing to pay. RT 4/12/17 p.m. at 70:12-71:24. Further, that $5 million shortfall was premised on Aeros performing the contract for the estimated price. Were the costs to exceed the estimates, under the contract, Aeros would have to absorb those costs. The contract also provided, however, that the government was limited in how it could use the data developed by Aeros and, importantly, that Aeros could keep the RAVB at the end of the contract. RT 4/14/17 a.m. at 16:6-20, 12:10-18; RT 4/12/17 p.m. at 70:12-15; Exh. 38 at 7.

         8. Over the next four years, there were a total of 39 modifications to the contract for various changes and additional testing. Exh. 575; JSF ¶ 1. Ultimately, the contract price swelled to $54.5 million.

         9. Aeros leased a hangar from the Navy at the former Marine Corps Air Station in Tustin, California to construct the RAVB.

         10. Aeros developed and built the RAVB using a rapid prototyping process called “Iterative - Prototyping Development.” This was not the way the government normally developed aircraft. Typically, the government would come up with engineering requirements, create a design, analyze the feasibility of such an aircraft, and build a prototype to verify and validate the design. RT 4/14/17 p.m. at 5:6-17, 17:11-20; Exh. 155 at 24. The build-out of the RAVB, however, was accomplished through trial and error. As one NASA engineer observed, Aeros's philosophy was to build and test, and, if it failed, to redesign, rebuild, and retest. RT 4/14/17 p.m. at 15:6-13. This trial and error process resulted in considerable inefficiencies. For example, Aeros used several different materials for the skin of the RAVB, trying one, abandoning it, and then trying another. RT 4/14/17 p.m. at 13:15-14:14.

         11. Because the RAVB was a demonstrator model, not a production-line aircraft, Aeros did not have in place policies and procedures necessary to develop any of the specialized engineering plans or drawings which would allow for the recreation of the RAVB. RT 4/11/17 a.m. at 70:16-18. In fact, no production drawings or work instructions were created for the RAVB. RT 4/11/17 a.m. at 70:21-71:7, 106:15-20, 108:8-10, 108:16-109:4. Aeros possessed conceptual designs for the RAVB but the adjustments made during the actual construction, such as altering the placement or type of a bolt used, were not marked in production drawings because no such drawings were made. RT 4/11/17 a.m. at 72:2-4, 108:8-109:4.

         12. The RAVB was built by hand. RT 4/11/17 a.m. at 54:5-8. It had a three-dimensional frame composed of trusses. The trusses were made of aluminum and carbon or carbon with aluminum ends. RT 4/11/17 a.m. at 53:16-23. Aeros built the internal frame system like a “house of cards” from the bottom up. RT 4/11/17 a.m. at 54:1-8.

         13. Aeros did document changes to the conceptual design learned from the in-process testing and construction it carried out on what it called “red line” or “red pen” drawings. RT 4/11/17 a.m. at 72:15-21; RT 4/12/17 p.m. at 12:3-13. Engineers made notes on drawings of the structure which were hung up on the wall at the hangar. RT 4/12/17 p.m. at 12:19-13:7. Those drawings were lost after the roof collapsed.

         14. As part of the contract, the government made NASA engineers available to Aeros for consultation on design, engineering, and construction. NASA assigned the Systems Analysis Group to work with Aeros on the NASA Contract. Dr. John Melton served as the technical liaison between Aeros and NASA. Dr. Melton was a senior aerodynamic engineer in the Systems Analysis Group and had been an engineer with NASA since 1985. RT 4/14/17 a.m. at 47:2-19. Michael Ospring was another NASA engineer who provided technical assistance to Aeros for the RAVB project. RT 4/14/17 p.m. at 5:15-9:1. He worked for NASA for 41 years. RT 4/14/17 p.m. at 6:5-9.

         15. Aeros had its own engineers working on the project as well. Ultimately, Timothy Kenny became the lead engineer and later the director of engineering at Aeros. RT 4/12/17 a.m. at 35-36. In 2007, he earned his undergraduate degree in engineering. RT 4/12/17 a.m. at 62:25-63:1. In 2009, he started working for Aeros. RT 4/12/17 a.m. at 35. He had no training in aerodynamics and had never worked on an aircraft before coming to Aeros. RT 4/12/17 a.m. at 64:3-66:23. The NASA engineers found the Aeros engineers young, inexperienced, and overwhelmed. RT 4/14/17 p.m. at 17:24-18:5.

         16. The NASA engineers were deeply troubled by Aeros's design, engineering, and construction practices. They regularly questioned Aeros's methods in developing and constructing the RAVB. During the course of the project, the structural design of the RAVB changed continually. RT 4/14/17 p.m. at 13:15-14:12. The engineering approach taken by Aeros in the design and construction of the RAVB was a significant contributor to the constant changes to the RAVB.

         17. As part of the contract, Aeros performed a number of tests. JSF ¶ 18. The most significant test was a test of the COSH system and of the RAVB's ability to remain heavier than air and become lighter than air while carrying a weighted load. This test occurred in January 2013 inside the Tustin hangar with the hangar doors closed. RT 4/14/17 p.m. at 35:20-37:8; Exh. 486 at 5-6. Five hundred pounds of lead shot were loaded into the cockpit of the RAVB. RT 4/14/17 p.m. at 36:3-24. Helium was released from canisters inside the RAVB into bladders inside the RAVB and the RAVB floated off the Tustin hangar floor to a height of approximately 10 feet. RT 4/14/17 p.m. at 36:3-24. The COSH system was then engaged, compressing the helium and the RAVB descended to the hangar floor. The lead shot was then unloaded and the RAVB remained on the ground, proving that it was heavier than air. RT 4/14/17 p.m. at 36:3-24. Helium was then released back into the RAVB and the RAVB became lighter than air. RT 4/14/17 p.m. at 36:3-24. The helium was then compressed again and the RAVB descended to the hangar floor. RT 4/14/17 p.m. at 36:3-24.

         18. Four trusses of the RAVB suffered near-catastrophic failure during this test as a result of the force acting on the RAVB from lifting off the ground and floating to a height of ten feet. RT 4/14/17 p.m. at 37:1-17. Those trusses had broken cores and experienced local buckling. RT 4/14/17 p.m. at 37:1-17. NASA engineers found that multiple end fittings had failed and several bolts holding the end fittings together were bent. RT 4/14/17 p.m. at 37:1-17. They also observed that several bays inside the trusses had buckled and that several of the cords on a number of trusses had broken. RT 4/14/17 p.m. at 38:4-38:10. In short, as a result of the in-hangar static hover test the RAVB suffered “significant structural damage inside the internal air frame.”[3] RT 4/14/17 p.m. at 37:6-8.

         19. In response to the structural failures from the January 2013 test, Aeros undertook repairs that NASA engineers believed were less than ideal and which were completed without conducting an analysis of the reasons for the failures. RT 4/14/17 p.m. at 38:13-39:9. NASA engineers wanted to determine the root cause of the failures but Aeros did not want to do so. RT 4/14/17 p.m. at 38:13-39:9. Instead, Aeros repaired or replaced the broken structural components with the same materials that had failed in the hangar test. RT 4/12/17 a.m. at 68:13-19; RT 4/14/17 p.m. at 38:13-39:9. In several locations, Aeros simply taped the structures together. RT 4/14/17 p.m. At 38:13-39:1. None of these repairs allayed NASA's concerns about the structural defects of the RAVB.

         20. Aeros subsequently decided that it had to take the RAVB almost completely (70%) apart and rebuild it, a process that took four months at a cost of $5.5 million. RT 4/12/17 a.m. at 37:3-14; RT 4/17/17 a.m. at 88:14-90:8. The aircraft was “disassembled down to its bare structure” and it was reassembled. RT 4/12/17 a.m. at 37:3-21.

         21. Additional in-hangar testing, including a repeat of the January 2013 test, was conducted during the summer of 2013. This was the final test for the RAVB under the contract and the test was successful. JSF ¶ 18.

         22. In the spring of 2013, NASA learned that Aeros was planning to conduct an outdoor flight test of the RAVB. RT 4/14/17 p.m. at 39:13-17. Upon learning this, NASA engineers working on the project became very concerned. RT 4/14/17 p.m. at 39:18-40:21. They knew that an outdoor flight test would subject the RAVB to considerably more load than the in-hangar tests and they were worried that the RAVB's structure could not handle the load. RT 4/14/17 p.m. at 40:21-24.

         23. Accordingly, NASA engineers performed a computer analysis to determine the structural integrity of the RAVB under a rational set of outdoor loads, using a modest forward flight speed and modest wind speeds. RT 4/14/17 p.m. at 41:2-5. NASA also asked two computational fluid dynamics experts, one from NASA and one from outside NASA, to devise a series of pressure distributions based on loads for the RAVB. RT 4/14/17 p.m. at 41:5-9. That load case assumed a 30-knot forward speed and a 20-knot gust of wind. RT 4/14/17 p.m. at 41:10-14. These experts determined that, under those conditions, there was a strong possibility of structural failure throughout the RAVB. It was only when the forward speed was reduced to 10 knots and the wind speed reduced to 10 knots that failure could be avoided and then only barely. RT 4/14/17 p.m. at 41:17-23, 42:8-24; Exh. 497 at 4-5. Ultimately, the engineers concluded that “unless they flew [the RAVB] at very, very low speeds and encountered, really, no gust loads, ” the RAVB structure would likely be damaged. RT 4/14/17 p.m. at 42:19-24.

         24. This analysis caused NASA engineers grave concern. RT 4/14/17 p.m. at 42:19-24. In May 2013, they drafted a report for NASA management, warning that an outdoor flight of the RAVB demonstrator could be catastrophic. Exh. 497. In an August 2013 report, they described the RAVB and Aeros's engineering approach and presented the results of the analysis, concluding: “[f]rom a structural perspective, the lack of design requirements, loads and load cases, verification approach, complete engineering analysis and overall configuration management resulted in a RAVB structure that is thought by NASA to have been at the very limit of its structural ability in rising, in a level altitude, in still air.” Exh. 486 at 17; RT 4/14/17 p.m. at 69:20-70:17. They concluded that the RAVB, “as currently designed, cannot sustain any combination of buoyancy, forward speed, rational gust speed, intertial force and nominal angle of attack without inducing negative margins in structural elements.” Exh. 497 at 5. In response to the warnings, NASA management attempted to persuade Aeros not to conduct an outdoor flight. RT 4/14/17 p.m. at 44:16-25.

         25. Aeros disagreed with the government's analysis and elected to go forward with flight tests outside the hangar. It obtained a 60-day Experimental Research & Development Airworthiness Certificate from the FAA. Exh. 512 at 7. The FAA safety inspector who was involved in certifying the RAVB for outdoor flight testing did not know that NASA had advised Aeros not to fly the RAVB outside when he approved the flight testing. RT 4/14/17 p.m. at 144:16-18. Nevertheless, he limited Aeros to altitudes of 50, then 100, feet. Exh. 512 at 7-8.

         26. On August 30, 2013, the RAVB was flown outside the hangar for the first time. Ex. 736 at 3. Over the next 12 days it was flown outside four more times. Exh. 736.

         27. A History Channel crew was on site at the Tustin hangar for three months in the summer of 2013, videotaping many aspects of the flight testing, including the outdoor flight tests. RT 4/12/17 a.m. at 16:16-17:1. The final flight of the RAVB was ...


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