American Jet Leasing v. Flight America, Inc., Misc. No. 81-0002-L. Civ. A. No. 81-0073-L.

• Decision Date: 15 April 1982
• Docket Number: Misc. No. 81-0002-L. Civ. A. No. 81-0073-L.
• Citation: 537 F. Supp. 745
• Court: U.S. District Court — Western District of Virginia
• Parties: AMERICAN JET LEASING, Plaintiff, v. FLIGHT AMERICA, INC., d/b/a Cardinal Air Virginia, Defendant.

537 F. Supp. 745

AMERICAN JET LEASING, Plaintiff, v. FLIGHT AMERICA, INC., d/b/a Cardinal Air Virginia, Defendant.

Misc. No. 81-0002-L. Civ. A. No. 81-0073-L.

United States District Court, W. D. Virginia, Lynchburg Division.

April 15, 1982.

Harold A. Black, Lynchburg, Va., for plaintiff.

Curtis M. Coward, Lynchburg, Va., for defendant.

MEMORANDUM OPINION

MICHAEL, District Judge.

The instant action is presently before the court on defendant's motion to dismiss the plaintiff's suggestion of garnishment and the writ of execution issued by this court on April 15, 1981. Evidence was taken and oral argument heard on defendant's motion on both May 26, 1981, and October 13, 1981. Jurisdiction is conferred upon this court by the fact that plaintiff is attempting to enforce a consent judgment entered in its favor, and against the defendant, by the United States District Court of the Eastern District of Missouri. Said judgment was properly docketed in the Western District of Virginia on February 23, 1981.

SUMMARY OF FACTS

American Jet Leasing, Inc., d.b.a. American Jet Aviation, filed an action in the United States District Court for the Eastern District of Missouri on or about March 27, 1980, against Flight America, Inc., d.b.a. Air Virginia, seeking $125,000.00 in damages due to an alleged breach of a lease agreement covering a Lear Jet and associated equipment. Subsequently, the parties agreed upon a stipulation and settlement of all claims on August 15, 1980, (Plaintiff's Exhibit # 1) and judgment was entered upon this stipulation on September 15, 1980 (Plaintiff's Exhibit # 2). Pursuant to the terms of the stipulation and settlement agreement, Flight America paid the plaintiff $15,000.00 and executed a note, by the terms of which it agreed to pay $45,000.00 in sixty monthly installments of $750.00 plus interest at the higher of either nine percent (9%) or one percent (1%) over the "prime rate" as set from time to time by the Mercantile Trust Bank Company, N.A., of St. Louis, Missouri, beginning on October 5, 1980. In addition, Rodney H. Jaeger, President of Flight America, Inc., and David Peel, its former Vice President, executed personal notes in a like amount as security for Flight America's note. The stipulation and settlement agreement further provided that if the corporate defendant made payments toward the judgment amount plus interest, as set out above, the plaintiff would refrain from seeking a writ of execution or from attempting to enforce the judgment through other legal process. The agreement also set forth that all payments made by the corporate defendant would be credited to the amount due under the terms of the notes executed personally by Jaeger and Peel.

Flight America subsequently fell in arrears on the required monthly payments on December 5, 1980, with respect to interest due, and on January 6, 1981, with respect to principal due. As a result of the defendant's failure to make timely payments, the plaintiff's counsel, Andrew Rimmel, wrote Flight America's counsel, J. Michael Gamble, on February 9, 1981. (Plaintiff's Exhibit # 3). Mr. Rimmel's letter represents that the defendant's arrearages amount to $1,247.66 and that if this amount is not paid within seven (7) days of the date of the letter, "we shall take all such action as we deem advisable to protect our client's interest". Plaintiff received no payment within the seven (7) days.

On February 23, 1981, plaintiff caused its judgment from the U. S. District Court for the Eastern District of Missouri to be docketed in the U. S. District Court for the Western District of Virginia and in the Circuit Court of the County of Campbell, Virginia. On April 11, 1981, Mr. Jaeger received by certified mail a letter from plaintiff's counsel (Plaintiff's Exhibit # 5) advising him that on the 21st day of April, 1981, in the Circuit Court of the City of Lynchburg, Virginia, he would confess judgment on the note Jaeger had personally endorsed to secure the debt of Flight America. No such action was in fact taken nor were any documents filed in the Circuit Court of the City of Lynchburg, Virginia, in pursuit of such remedy.

On April 14, 1981, plaintiff received a non-recourse cashier's check in the amount of $5,283.66 from the defendant, being the amount the defendant calculated was required to bring payments current. The amount actually due and owing according to plaintiff, as of April 14, 1981, was $6,142.38. On April 15, 1981, plaintiff filed a suggestion of garnishment in this court and had a writ of execution and garnishments issued against three bank accounts of the defendant, Flight America, Inc.

On April 20, 1981, Flight America issued its check No. 2894 in the amount of $2,231.00, representing it to be an additional payment in advance for the months of May and June, 1981, on the said $45,000.00 note, and mailed this check to the plaintiff. Plaintiff acknowledges being in receipt of defendant's check on April 22, 1981, but has not presented it for payment.

ARGUMENT

Plaintiff takes three positions in response to defendant's motion to dismiss. Initially, plaintiff argues that the acceleration clause contained in the stipulation and settlement agreement is automatic, rather than optional, and therefore, not requiring an affirmative act by it in order to accelerate the entire indebtedness. Thus, plaintiff argues, the entire note automatically became due and payable on January 6, 1981.

Plaintiff's second position is that, if an affirmative act is required to place the note in default, they have in fact performed for such affirmative acts, to wit: 1) The February 9, 1981, letter from Rimmel to Gamble demanding payment in seven days, 2) Docketing of judgment in the U. S. District Court, 3) Docketing of judgment in the Circuit Court of the County of Campbell, Virginia, and 4) The letter received April 4, 1981, from plaintiff to Jaeger, advising him that the note he personally endorsed to guarantee payment was in default and that judgment was to be confessed in favor of the plaintiff on April 21, 1981.

Plaintiff's final position is that if an affirmative act is required to place the note in default, and if the four events enumerated above do not constitute such an affirmative act, then the payment of $5,283.66 is insufficient to cure Flight America's debt of $6,142.38.

Flight America's position, quite naturally, differs materially on all points. First, defendant argues that the plain language of the stipulation and settlement agreement, as well as the course of conduct between the parties during the prolonged period of default subsequent to December of 1980, make it clear that the acceleration provision in the agreement requires an affirmative act on the part of the noteholder. Defendant submits that none of the acts enumerated by the plaintiff amount to what the law requires to be a clear, unequivocal signal of acceleration. As to the final question, whether the defendant's payment received April 14, 1981, was sufficient to cure, defendant submits that the evidence will show that the interest calculations were made retroactively, during the course of payments, on information provided by the plaintiff. Thus, defendant asserts, they took what they understood to be the outstanding balance in March, and not having received from plaintiff what the amount of interest would be for the month, they made an estimated payment for April in the amount of $1,000.00. This payment, defendant submits, turned out to be only $48.60 short of what they actually owed. Flight America states that, in light of plaintiff's failure to communicate the April interest figures...