United States District Court, S.D. Indiana, Indianapolis Division
K. LaRue United States Magistrate Judge.
OF FACT and CONCLUSIONS OF LAW
Cause came before the Court for a bench trial on Monday,
August 29, 2016.
were plaintiff Harold Loyd Woodward, proceeding pro
se; defendants David Algie and Linda Algie; and Matthew
B. Barr and Alexander Pape Orlowski, attorneys representing
Defendants. Plaintiff and Defendants testified and
evidentiary exhibits were admitted. At the trial, Dr.
Woodward dismissed all of his claims against Linda Algie, and
Linda Algie dismissed her counterclaim for promissory
estoppel. Therefore, the Court dismissed Linda Algie from
following claims were tried:
Woodward's claim for breach of contract.
Woodward proceeded to trial on the following alleged breaches
of contract by David Algie: (a) Mr.
Algie's failure to complete the LP1 prototype airplane to
the point of flight certification by the contract deadline;
(b) Mr. Algie's interference with Dr.
Woodward's exclusive rights to market and sell LP1 kits;
(c) Mr. Algie's refusal to pay sales
commissions to Dr. Woodward; and (d) Mr.
Algies' refusal to surrender LP1 properties to be
commercially marketed by Dr. Woodward. Pretrial
Order [doc. 243], § A.1.; Verified Amended
Complaint for Damages and Injunctive and other Equitable
Relief [doc. 118] (“Amended
Complaint”), Count 1, ¶¶ 66-73.
Woodward's claim for deception and conversion.
Woodward alleges that, through deceptive practices,
misrepresentations, improper conduct, bad faith, fraudulent
conveyances, and misappropriation of funds, Mr. Algie
conveyed, encumbered, took, and misappropriated assets and
funds belonging to his and Dr. Woodward's partnership, to
the detriment of the partnership and Dr. Woodward. Dr.
Woodward asserts that these acts constitute deception and
conversion under Indiana Code § 35-43-4-3, in that Mr.
Algie knowingly or intentionally exerted unauthorized control
over the partnership assets. Pretrial Order, §
A.2.; Amended Complaint [doc. 118], Count 4,
Algie's counterclaim for promissory estoppel.
Algie alleges that Dr. Woodward's promise to fly the LP1
prototype to airshows for marketing purposes and to fly it
for the number of miles required by the Federal Aviation
Administration for final flight certification (“mile
logging”), without compensation and paying for all
costs and expenses thereof, was the dispositive inducement
for Mr. Algie to execute the contract, leave his lucrative
career in the Indy-car field, and devote his full-time
efforts to finalizing the LP1 prototype. Mr. Algie alleges
that Dr. Woodward's repudiation of his promise in October
2012 injured him by causing him to lose his Indy-car salary
since early 2010 and by rendering it unlikely that he can
return to that field of work. Pretrial Order, §
A.3.; Counter Complaint . . . and Temporary
Injunction [doc. 122] (“Counter
Complaint”), First Cause of Action,
Defendant David Algie was born in New Zealand in 1963. After
graduating from high school at the age of fifteen, he started
training as an apprentice panel beater.About two and
one-half years later, he moved to the United States and began
working successively for various IndyCar racing teams as a
fabricator, mechanic, and body man, until the end of 2009. He
has no formal education or degrees beyond high school and
developed his knowledge and skills through private study and
on-the-job training. Much of his career involved designing
and constructing parts and car-body components from
composites including carbon fiber and epoxy resin
compounds. He also obtained experience working with
engines and other components of IndyCar racing cars.
Some time before 1993, Mr. Algie began thinking about
applying his expertise with composites and his knowledge of
engines and other racing-car technologies to the development
of a kit airplane. He believed that he could design and
produce a kit aircraft that would be better than kits
currently on the market. The chief advantages he foresaw were
lighter weight and easier assembly, permitting a kit buyer to
assemble the aircraft himself, without hiring a skilled kit
engineer. Mr. Algie started in 1993 with studying, designing,
and drawing, and he started cutting parts for the prototype
in 1995. He named the airplane the “LP1, ” for
“light plane one.”
Plaintiff Harold Loyd Woodward is a resident of Texas. He
testified to the following biographical facts. He is a
physician certified in emergency-room medicine (currently
practicing as a part-time emergency-room doctor). He has an
M.B.A. from Ohio State University. He is part owner of
Woodward Aerospace, a limited-liability corporation that he
formed with his son, which is involved in selling kit
aircraft in the United States and the world. He received his
pilot's license in 1977 and has been an aviation
enthusiast for forty years. He has accumulated over 10, 000
hours of flight time and has received ratings in
single-engine, mutliengine, complex-aircraft instrument, and
other ratings. He built his first kit aircraft in 1978 and
has participated in over six builds of kit aircraft. He has
designed over six concept aircraft. He has over two hundred
flight hours in an aircraft with the same engine that is in
Dr. Woodward first became aware of the LP1 and Mr. Algie in
2008, through the internet, and he initiated contact with Mr.
Algie by e-mail that year. There followed further
communications and an invitation by Mr. Algie for Dr.
Woodward to visit Indianapolis to see the LP1. Dr. Woodward
visited Mr. Algie and his shop in Indianapolis twice in 2009.
Dr. Woodward and Mr. Algie discussions turned to proposals
for Dr. Woodward to provide financial support to Mr. Algie to
further his work on the LP1. Dr. Woodward drafted and sent to
Mr. Algie a proposed agreement (“Contract
Agreement”). Mr. Algie, his wife, Linda Algie, and
Dr. Woodard signed the agreement, which bears the date
December 30, 2009. The Contract Agreement reads as
The purpose of the contract is to facilitate the completion
of the David Algie's Light Plane 1 hence named the LP1.
This will simply be referred to as the Agreement.
Parties to this contract are David Algie, Linda Algie, and
Loyd Woodward a single man.
David Algie will receive from Loyd Woodward the sum of
$7000.00 per month for one year. This will be used for
support of David Algie so that he can devote his efforts to
complete the LP1 to the point of flight certification.
Loyd Woodward will receive from David Algie the right to
exclusively market the LP1 and its technology. It is
understood that David Algie may have sold up to 5 kits
already and these will not be subject to this agreement. For
an additional sum of $40, 000.00 Loyd Woodward will have
purchasing rights of an LP1 for his individual use.
Loyd Woodward will also receive the rights to commercially
market all improvements, inventions, and/or discoveries made
during the development of the LP1, whether patentable,
copyrightable or not. Loyd Woodward reserves the right to
assign these rights to a business entity. These rights shall
be joint property of David Algie and Loyd Woodward. Should
unforeseen circumstances prevent David Algie from completing
the project within 24 months then Loyd Woodward has the
obligation and right to commercially market all properties
regarding the LP1 now in custody of David Algie.
this 30th Day of December 2009
of Dr. Woodward, Mr. Algie, and Mrs. Algie] Defendant's
Dr. Woodward and Mr. Algie agree that the Contract
Agreement is a valid contract.
Before he had encountered Dr. Woodward, Mr. Algie, who is not
a pilot and does not have a pilot's license, had secured
a test pilot, Steve Flattum, who had agreed to serve as test
pilot for the LP1 prototype free-of-charge. (A test pilot
performs flight tests of a newly designed aircraft to
evaluate the design.) Mr. Flattum declined to pilot the
“mile-logging, ” or “fly off, ”
flights free-of-charge. Mile-logging refers to the forty
hours of restricted-area flying that the Federal Aviation
Administration requires before finally certifying an aircraft
as safe. Mr. Flattum also required payment to fly the
prototype to air shows and other events that would be most
advantageous for marketing the LP1. Mr. Algie testified that
Mr. Flattum was willing to serve as test pilot without
payment because it is a matter of honor and prestige among
test pilots to be the first to fly new experimental aircraft
during their development. Mr. Flattum was not interested in
flying the ordinary mile-logging and air-show flights without
Mr. Algie estimated that it would cost $15, 000 to complete
the required mile-logging hours. He estimated that it would
cost $35, 000 to promote the LP1 at air shows for one year,
including payments for space rental (thousands of dollars),
fuel to fly the prototype there and back, pilot's time
(Mr. Flattum wanted $500 per day), and pilot's
accommodations (e.g., lodging, meals).
Before the Contract Agreement was signed, Mr. Algie
expressed to Dr. Woodward his desire to find a pilot who
would fly the prototype free-of-charge for mile-logging and
air-show marketing and who also would cover the expenses of
Before the Contract Agreement was signed, Dr.
Woodward expressed to Mr. Algie his enthusiasm to fly the LP1
prototype in general and to fly it to air shows and promote
the LP1 kits.
Dr. Woodward and Mr. Algie did not agree, either before or
after the Contract Agreement was executed, to give
Dr. Woodward a sales commission of “no more than twenty
percent” of the sales price of each LP1 kit that he
sold through exercising his marketing rights under the
Dr. Woodward and Mr. Algie did not enter into a currently
enforceable agreement giving Dr. Woodward the right to a
sales commission of $5, 000 for each LP1 kit that he sold
through exercising his marketing rights under the
Contract Agreement. After the Contract
Agreement was executed, Mr. Algie asked Dr. Woodward
about the Contract Agreement not giving him much
direct financial benefit. Dr. Woodward responded that he
would take $5, 000 per kit sold. Mr. Algie agreed. This
agreement was not reduced to writing. When Mr. Algie later
asked Dr. Woodward further about the commission, Dr. Woodward
responded that he did not need that money, he just wanted to
see the LP1 fly. This abnegated their oral agreement for a
$5, 000 per-kit commission. Both Dr. Woodward and Mr. Algie
treated the earlier agreement as null and void. Dr. Woodward
has not made a claim for a $5, 000-per-kit commission.
Mr. Algie did not agree to enter into a legal ...