AH Aero Servs., LLC v. Heber City
| Decision Date | 28 April 2022 |
| Docket Number | Case No. 2:17-cv-1118 |
| Parties | AH AERO SERVICES, LLC, Plaintiff, v. HEBER CITY, et al., Defendants. |
| Court | U.S. District Court — District of Utah |
Craig A. Hoggan, Jonathan W. Gold, Joelle S. Kesler, Dart Adamson & Donovan, Salt Lake City, UT, for Plaintiff.
J. Mark Smedley, Heber City, UT, Peter J. Kirsch, Kaplan Kirsch & Rockwell LLP, Denver, CO, W. Eric Pilsk, Pro Hac Vice, Steven L. Osit, Pro Hac Vice, Kaplan Kirsch & Rockwell LLP, Washington, DC, for Defendants Denis Godfrey.
Gary G. Sackett, Jones Waldo Holbrook & McDonough, Salt Lake City, UT, for Defendant Barry Hancock.
Plaintiff AH Aero Services, LLC, the Fixed Based Operator at Heber City Municipal Airport, brings this action against Defendants Heber City and two of its former Airport Managers, Paul Boyer and Denis Godfrey. Aero asserts a claim for retaliation in violation of the First Amendment as well as various state-law claims. Mr. Boyer and Mr. Godfrey assert state-law counterclaims against Aero. All three Defendants move for summary judgment on all of Aero's claims against them and Aero moves for summary judgment on some of its state-law claims against the City and on Mr. Boyer and Mr. Godfrey's counterclaims.
For the reasons that follow, the court grants Heber City's and Mr. Boyer's motions for summary judgment on Aero's First Amendment claim and grants in part and denies in part Mr. Godfrey's motion for summary judgment on this claim. And in light of its disposition of Aero's sole federal claim, the court declines to exercise supplemental jurisdiction over the various state law claims and counterclaims.1
As a full-service, Fixed Based Operator ("FBO"), Aero provides aircraft maintenance, ramp parking, fueling, de-icing, overnight hangar rentals, and other services at the Heber City Municipal Airport, which is owned by the City. Since 1999, Aero has leased space at the Airport and provided services pursuant to a long-term Ground Lease Agreement. This agreement remains in force until at least 2041. Among other things, Aero is required to "undertake the maintenance of the leased grounds, buildings, and utilities" and to "make a complete inspection at least once a week of all facilities at the airport and report immediately any hazardous or dangerous condition to the City." Dkt. No. 18-1 at 4. "The maintenance of the runway, taxiway, beacon lights, etc.," however, "remain the responsibility of Heber City." Id. The agreement also requires Aero to comply with all federal, state, county, and local laws and ordinances that pertain to the flying and operation of aircraft and the conduct and operation of airports, except for "those minimum requirements of the existing Aviation Ordinance that specifically conflict with the provisions of this Agreement." Id. at 3.
The Airport is governed by FAA regulations and contracts—compliance with at least some of which is essential to maintain federal funding—as well as by documents adopted by the City. Those municipal documents include the Minimum Standards and Requirements of the Conduct of Commercial Aeronautical Services and Activities at the Heber City Municipal Airport, the Airport Rules and Regulations, and the Lease/Rates and Charges Policy.
The Minimum Standards establish requirements that apply to all commercial operators at the Airport, and they are incorporated into Aero's Ground Lease Agreement with the City. Aero's lease provides that the Minimum Standards may be "amended or changed by mutual consent between Heber City and [Aero] or ... amended when deemed reasonable and necessary by the City Council for safety reasons or in order to comply with State and Federal rules and regulations or in order to assure reasonable and competent service at said airport." Id. at 3–4.
The Airport is operated under the general direction of the Heber City Council, with its day-to-day operations conducted by the City's Airport Manager, who reports directly to the City Council. Because the Council meets only bimonthly to act on Airport-related matters, much of the Council's supervision over the Airport Manager is done through informal correspondence between the Airport Manager and individual members of the Council. The Council has also created an Airport Advisory Board to advise it on issues related to the Airport.
For many years, Aero and the City maintained a cooperative relationship. More recently, however, Aero and the City have repeatedly found themselves on opposite sides of various policy disputes relating to the Airport, and their relationship has grown increasingly strained.
At an Airport Advisory Board meeting in March 2014, Aero's President, Nadim AbuHaidar, then a member of the Board, argued in favor of reversionary hangar leases (as opposed to renewable, nonreversionary leases). During the meeting, Mr. AbuHaidar referred to a contrary argument made by Mr. Boyer, then a hangar owner at the Airport, as "disingenuous." Dkt. No. 195-7 at 74. Four months later, the City amended the Board's bylaws in a way that disqualified Mr. AbuHaidar from continuing to serve on the Board. See Dkt. No. 164-1 at 229. Aero's relationship with the City continued to deteriorate from that point on.
In April 2015, the Wasatch County Fire Marshall determined that Aero would need to install a Group I or II fire suppression system in one of its hangars. See Dkt. No. 164-3 at 14–15. He sent a letter to Aero explaining the basis for his determination and stating that, "if an agreement cannot be reached, the next step would be to organize a meeting with the Fire District along with [Aero], Heber City Building Department, and any other parties that are involved in decision making and operation of the Russ McDonald Airfield." Id. at 26. That June, Aero's General Counsel sent a letter to the Fire Marshall disagreeing with his decision on both legal and factual grounds and requesting a meeting as the Fire Marshall had suggested. See id. at 21. The Fire Marshall did not respond either to Aero's objections or to its request for a meeting. See Dkt. No. 164-5 at 254.
Around the same time, at least some members of the City Council began questioning aspects of the Minimum Standards and the City's contractual relationship with Aero. In August 2015, the Council received a letter from the FAA stating that Aero's contractual right to veto revisions of the Minimum Standards came "dangerously close to potentially being in conflict" with one of the grant assurances necessary to maintain the Airport's federal funding. Dkt. No. 164 at 74. The following day, Councilwoman Heidi Franco sent a letter to the City Attorney expressing "concern ... that the current Minimum Standards potentially create an artificial barrier to FBO competition at the Airport and could lead to FAA complaints against the city because of (1) the veto authority of the current FBO and (2) the artificial requirements of a high level of operations for any new competing FBOs." Id. at 73.
Later that year, the City began to receive complaints from Airport users that Aero's fuel prices were too high and that its maintenance services were too expensive and difficult to schedule. See Dkt. No. 164 ¶ 4 at 9. The City also grew concerned that Airport revenues did not always cover Airport expenses and that subsidies from the City's general fund were necessary to make up the shortfall. See id.
In response to those concerns, the City sought to renegotiate its contract with Aero to increase Aero's lease rate. The City also began to consider the possibility of allowing another FBO to operate at the Airport in competition with Aero as a means of lowering the prices and improving the quality of services provided to Airport users.
In November 2015, Aero made its disagreement with the latter possibility clear in a letter to the City Council. Among other things, Aero stated that the City's consideration of a second FBO at the Airport would "jeopardize" the lease-rate renegotiations. Dkt. No. 164 at 59.
Just over four months later, on March 8, 2016, then-Airport Manager Terry Loboschefsky wrote an email to Aero explaining that, based on the Fire Marshall's April 2015 determination, Aero would no longer be allowed to park its fuel trucks inside its hangars. See Dkt. No. 164-3 at 17. Later that month, Aero responded with a letter from its General Counsel to the City Attorney disagreeing with the Fire Marshall's "interpretation" but stating that it was "still willing to meet and try to reach an agreement, as [the Fire Marshall] suggested." Id. at 20. The letter also asserted Aero's belief that, "[i]n the absence of such an agreement or a final appealable decision," "Mr. Loboschefsky's notice [was] premature." Id. The record does not reveal any further correspondence or action relating to this issue at this time.
A little over two months later, Councilwoman Franco raised concerns to the other Councilmembers that the Minimum Standards "were preventing competition at the airport," and requested approval from the City Council to begin working on amendments to the Minimum Standards. Dkt. No. 164-1 at 78. The Council approved her request. See id. at 79.
Against this increasingly contentious backdrop, the City Council approved hiring Defendant Paul Boyer as part-time Airport Manager while the City sought a full-time Manager. See Dkt. No. 164-1 at 87–89. This decision was made in a closed special session on July 6, 2016. On July 19, 2016, Aero sent the City Attorney a letter arguing that this meeting had violated Utah's Open and Public Meetings Act, and that Mr. Boyer should not have been hired because, as head of a group representing the interests of hangar owners, he had "a clear conflict of interest." Dkt. No. 209-15 at 1–2.
Two weeks later, Aero entered into a contract with Mel McQuarrie, who was leasing a large hangar at the Airport, to purchase that lease. Mr. McQuarrie's lease had taken effect on ...
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