## Facts

- Ray Houston, a Georgia resident, was a Federal Aviation Administration (FAA)–certified aircraft inspector and owned the airplane at issue.
- Houston performed the airplane’s annual inspection and recorded a logbook entry certifying that the airplane was “airworthy.”
- About 127 flight hours after the annual-inspection logbook entry, Houston sold the airplane at an auction.
- The auction catalog contained a disclaimer stating that aircraft were sold “as is, where is,” and buyers were given an opportunity to inspect aircraft for three days before the auction.
- Shortly before bidding opened, prospective buyers were again allowed a limited opportunity to inspect the airplane and its logbooks.
- Godwin Aircraft, Inc. (a Tennessee corporation engaged in aircraft sales) reviewed the logbooks during the brief pre-bidding window and relied on the recent airworthiness certification in deciding to bid.
- Godwin won the bid and took possession of the airplane. Afterward, Godwin discovered numerous significant defects that made the airplane dangerous and not airworthy.
- Evidence showed that several defects clearly existed before the annual inspection reflected in the logbook; other defects could have existed at that time.
- Godwin sued Houston in Tennessee for fraud, misrepresentation, and breach of contract. Houston argued he may have made a mistake in the logbook or that defects arose after the inspection, and he relied on the auction’s “as is, where is” language as a defense.
- The trial court found that Houston misrepresented the airplane’s condition through the logbook entry, ruled that the “as is, where is” disclaimer did not bar Godwin’s claims, and awarded Godwin approximately $51,500 in compensatory and punitive damages.
- Houston appealed, challenging liability and the damages awarded.

## Issues

1. Whether Houston’s airworthiness logbook certification and related statements constituted actionable fraudulent misrepresentation when the airplane was later shown to have serious preexisting defects.
2. Whether the auction’s “as is, where is” disclaimer and Godwin’s opportunity to inspect barred or defeated Godwin’s fraud-based claims, including the element of reasonable reliance.
3. Whether the trial court applied a proper measure of damages for fraud in the sale of personal property and whether the award should be modified.

## Decision

- The Court of Appeals held that the evidence supported the trial court’s finding of fraudulent misrepresentation against Houston based on the airworthiness certification and the airplane’s actual condition.
- The court rejected Houston’s reliance on the “as is, where is” auction language as a complete defense to fraud-based liability.
- The court concluded that Godwin’s reliance could be found reasonable despite inspection opportunities, given the nature of the representations and the defects.
- The court affirmed the judgment as to liability and entitlement to recover, but modified the damages to conform to the proper measure supported by the proof.
- Disposition: affirmed as modified and remanded for entry of a judgment consistent with the appellate court’s damage modification.

## Legal Principles

- Fraudulent misrepresentation in Tennessee requires proof of: (1) a representation of an existing or past material fact, (2) falsity, (3) knowledge of falsity or reckless disregard, (4) reasonable reliance, and (5) resulting damages.
- A specific, factual assertion about an airplane’s condition—such as an airworthiness certification recorded in an aircraft logbook—may be treated as a representation of material fact, not mere sales talk.
- “As is, where is” provisions may allocate risk for unknown defects and limit warranty-type claims, but they do not immunize a seller from liability for fraudulent or reckless misrepresentations.
- A buyer’s opportunity to inspect does not automatically defeat reasonable reliance where the misrepresented facts concern matters not readily discoverable through a limited inspection, or where the seller is in a superior position to know the truth.
- Damages for fraud in the sale of personal property must follow Tennessee’s recognized measures (including value-as-represented versus actual value, with properly proven related losses) and must be supported by the record; appellate courts may modify awards that do not match the proof or the correct measure.
- Punitive damages may be available where the defendant’s conduct reflects intentional fraud or a sufficiently reckless disregard for the truth.

## Conclusion

Godwin Aircraft v. Houston held that an FAA-certified inspector’s logbook certification of airworthiness could support a finding of fraudulent misrepresentation when substantial defects existed at or before the inspection, and that auction “as is, where is” terms and inspection opportunities did not bar fraud-based recovery; the Court of Appeals affirmed liability and recovery but modified the damages to match the proper measure and proof.


Godwin Aircraft v. Houston, 851 S.W.2d 816 (1992)