## Facts

- Yossi Haimberg, a Florida resident, was interested in buying a used airplane located in Illinois.
- The seller recommended that Haimberg hire R & M Aviation, Inc. (R&M), a local aircraft mechanic, to conduct a prepurchase inspection in Illinois.
- R&M frequently performed work on the seller’s airplanes but falsely told Haimberg it had no business relationship with the seller.
- Relying on that statement, Haimberg hired R&M to inspect the aircraft.
- R&M provided Haimberg with an inspection report that noted a few problems but stated the airplane’s overall condition was “good.”
- Based on the report, Haimberg asked the seller to make certain repairs and then purchased the airplane.
- After the purchase, Haimberg discovered significant problems that were not identified in R&M’s report, grounded the airplane, and spent about $75,000 on repairs.
- Haimberg later learned another inspector had performed a prepurchase inspection roughly two weeks before R&M’s inspection and had found so many serious problems that the airplane was declared not airworthy.
- The parties disputed what R&M knew and when, but it was undisputed that some information about the prior inspection was in the airplane’s logbook, that R&M learned most of the remaining information while the airplane was still in its possession, and that R&M never disclosed the prior-inspection information to Haimberg.
- Haimberg sued R&M. A jury reimbursed Haimberg $670 (the inspection fee) and awarded $50,000 in compensatory damages for negligent misrepresentation.
- R&M appealed, arguing (1) it could not be liable in tort for purely economic losses based on negligent misrepresentation and (2) there was no evidence it made a false material statement in the inspection report.

## Issues

1. Whether Illinois’s economic-loss doctrine bars recovery of purely economic damages for negligent misrepresentation arising from a prepurchase aircraft inspection.
2. Whether the evidence supported the jury’s finding that R&M made a false material statement (or misleading representation) in its inspection report about the airplane’s condition.

## Decision

- The Seventh Circuit affirmed the judgment for Haimberg.
- The court rejected R&M’s argument that negligent misrepresentation cannot support recovery of purely economic losses under the circumstances.
- The court also concluded the record contained sufficient evidence for a reasonable jury to find that R&M’s representations about the aircraft’s condition were materially false or misleading and caused Haimberg’s loss.

## Legal Principles

- Illinois’s economic-loss doctrine generally prevents tort recovery for purely economic loss, but negligent-misrepresentation claims may proceed when the defendant is in the business of supplying information for others’ guidance in business transactions.
- A service engaged to provide a prepurchase inspection report for a buyer’s decision may be treated as supplying information for that purpose.
- Negligent misrepresentation can be shown through inaccurate statements and, in appropriate circumstances, by nondisclosure that makes an affirmative report misleading to the recipient.
- On review of a jury verdict, an appellate court asks whether the evidence permits a reasonable jury to find the elements of the claim, rather than reweighing credibility or choosing among competing inferences.

## Conclusion

In *Haimberg v. R & M Aviation*, the Seventh Circuit upheld a jury’s award of economic damages to an aircraft buyer who relied on a prepurchase inspection report that described the plane as being in “good” overall condition while adverse prior-inspection information was not disclosed. The court concluded that Illinois law allowed the buyer’s negligent-misrepresentation claim despite the economic-loss doctrine and that the trial evidence was sufficient to support the jury’s finding of liability and causation.


Haimberg v. R & M Aviation, 5 F. App’x. 543 (2001)