## Facts

- Turbines Ltd. (Turbines) was a Nebraska helicopter sales and maintenance company with an office in Singapore.
- Transupport, Inc. (Transupport) was a New Hampshire company selling spare parts for turbine engines; the parties had done business for years.
- A Singapore customer, Monarch Aviation (Monarch), asked Turbines to obtain a “first stage” turbine nozzle and ship it to Malaysia.
- Turbines did not have the obsolete part and ordered a nozzle from Transupport for $30,000.
- Transupport shipped the nozzle to Turbines, and Turbines paid the $30,000 purchase price.
- When Turbines attempted to export the nozzle to Malaysia, U.S. Customs seized it on the view that an export license was required.
- After extended dealings, the U.S. Department of State determined no license was required, and Customs ultimately returned the nozzle to Turbines (after Turbines met Customs’ requirements, including paying storage fees).
- While the nozzle was detained, Turbines learned Monarch was illegally rerouting goods to Iran; Turbines believed shipping the nozzle to Monarch could expose Turbines to criminal penalties.
- Turbines returned the nozzle to Transupport and demanded a refund; Transupport rejected the return and sent the nozzle back to Turbines.
- Turbines sued Transupport seeking rescission of the purchase contract and return of the $30,000. The district court entered judgment for Turbines after Transupport failed to appear (default).
- The Nebraska Court of Appeals reversed and directed dismissal. Turbines sought further review in the Nebraska Supreme Court.

## Issues

1. Whether the district court abused its discretion by entering a default judgment granting rescission when Transupport failed to appear.
2. Whether, taking Turbines’ allegations and proof as true, the facts stated a legally sufficient basis to rescind a fully performed sales contract under theories such as supervening impracticability (including UCC § 2-615), frustration of purpose, or failure of a contractual condition.

## Decision

- The Nebraska Supreme Court affirmed the Court of Appeals’ disposition reversing the default judgment and ordering dismissal of Turbines’ complaint.
- The court treated the transaction between Turbines and Transupport as a fully performed sales contract: Transupport delivered the nozzle and Turbines paid the price.
- Even accepting the post-sale events (Customs seizure, later release, and Turbines’ decision not to ship to Monarch), those events did not supply a recognized legal ground to rescind the completed Turbines–Transupport contract.
- Because the complaint and the uncontroverted proof did not establish a valid cause of action for rescission, entering a default judgment for Turbines was an abuse of discretion.

## Legal Principles

- On appeal from entry of a default judgment, the appellate court reviews for abuse of discretion.
- A default admits well-pleaded factual allegations (except value and damages), but a plaintiff is not entitled to default judgment unless those admitted facts state a valid cause of action.
- Rescission is generally available only on recognized grounds such as fraud, duress, unilateral or mutual mistake, or inadequacy/failure of consideration.
- The doctrines of discharge by supervening impracticability (Restatement (Second) of Contracts § 261; UCC § 2-615 in sales settings) and supervening frustration (Restatement (Second) of Contracts § 265) may excuse future performance duties, but they do not provide a basis to rescind a contract that has already been fully performed.
- A party may seek rescission when a condition to its duty fails to occur, but the condition must be part of the contract at issue; downstream problems with a separate resale transaction do not convert a completed sale into a rescindable agreement.

## Conclusion

Because the Turbines–Transupport sale was complete upon delivery and payment, Turbines’ later export detention and its fear of liability in dealing with Monarch affected only Turbines’ separate dealings, not Transupport’s performance; without a recognized rescission ground, the default rescission judgment could not stand and dismissal was required.


Turbines Ltd. v. Transupport, Inc., 825 N.W.2d 767 (2013)