Southwest, Wells Fargo, Fight Over Jet Planes

DALLAS (CN) - Southwest Airlines sued Wells Fargo Bank in Federal Court, claiming the bank refuses to accept the return of two leased aircraft.

The Dallas-based airline says it entered into two lease agreements in 1994, each for a Boeing 737 and two CFM International CFM56-3B1 engines.

"At the conclusion of the lease period for the first aircraft, Southwest tendered the aircraft to Wells Fargo as required by the lease," the complaint states.

"Wells Fargo refused to accept the aircraft, asserting that Southwest had replaced the aircraft's engines with noncompliant engines, and instead demanded that Southwest pay it a penalty to accept the allegedly noncompliant engines."

Southwest claims that after the bank rejected the first aircraft, in September, Wells Fargo demanded payment of $3.3 million, in addition to the return of the plane and its old engines. It says Wells Fargo indicated it would refuse to accept the second aircraft for the same reasons.

Southwest seeks declaratory judgments that it doesn't owe the $6.6 million the bank is demanding.

It says the new engines are identical to the old ones, with greater average remaining cycles and fewer engine flight hours. It says they are free of liens and are in as good condition as the old ones.

"Leases A and B give Southwest the right to return Aircraft A and B with an engine not owned by lessor so long as the engine is free of all liens and in as good an operating condition as the engine being substituted," the complaint states. "Additionally, Leases A and B and the amendments thereto give Southwest the right to return Aircraft A and B with new engines without any further payment so long as the new engines have greater average remaining cycles for all LLPs and a lower number of engine flight hours elapsed since the last engine refurbishment than stated in the 2006 Amendment."

Southwest seeks declaratory relief for breach of contract.

It is represented by Eric Pinker with Lynn Tillotson of Dallas.

Follow @davejourno

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit