BLB Aviation S.C., LLC v. Jet Linx Aviation LLC
| Decision Date | 27 September 2012 |
| Docket Number | No. 8:10CV42.,8:10CV42. |
| Citation | 900 F.Supp.2d 972 |
| Parties | BLB AVIATION SOUTH CAROLINA, LLC, Plaintiff, v. JET LINX AVIATION LLC, Jet Linx Aviation Corporation, Jet Linx Management Company, LLC, and Jamie Walker, Defendants. |
| Court | U.S. District Court — District of Nebraska |
OPINION TEXT STARTS HERE
James M. Bausch, Megan S. Wright, Cline, Williams Law Firm, Omaha, NE, Jonathan J. Papik, Cline, Williams Law Firm, Lincoln, NE, for Plaintiff.
Diana J. Vogt, Sherrets, Bruno Law Firm, Omaha, NE, for Plaintiff/Defendants.
James D. Sherrets, Sherrets, Bruno Law Firm, Omaha, NE, for Defendants.
This is an action to determine the parties' rights and responsibilities related to agreements involving the lease, maintenance, and management of aircraft. The court has subject matter jurisdiction pursuant to 28 U.S.C. § 1332, as the parties are citizens of different states and the amount in controversy exceeds $75,000. Pursuant to 28 U.S.C. § 636 and the consent of the parties,1 the matter was tried to the undersigned magistrate judge February 6–8, 2012. The parties submitted closing arguments in writing, whereupon the case was deemed submitted for decision.
The parties' dispute arises from their business relationship entered to allow the defendants' aircraft charter flight services operation to use the plaintiff's aircraft. The plaintiff BLB Aviation South Carolina, LLC (BLB), an aviation company based in Baton Rouge, Louisiana, owned aircraft. See Filing No. 148—Pretrial Order (PTO) ¶ B(9). The defendants operate an aircraft charter business. Id. ¶ B(12). After the defendant Jamie Walker (Walker) contacted BLB, BLB and the defendants Jet Linx Aviation, LLC, Jet Linx Aviation Corporation, and Jet Linx Management Company, LLC (collectively Jet Linx) entered into two contracts that allowed Jet Linx to use two aircraft owned by BLB for charter flight services. Id. ¶¶ B(10), B(16), B(24). BLB alleges the defendants fraudulently and negligently induced BLB to purchase an aircraft, breached both contracts between the parties, and breached the covenant of good faith and fair dealing by charging unwarranted maintenance charges. Id. ¶ B(38). The defendants deny liability to BLB, arguing the parties entered into an accord and satisfaction on BLB's claims, and assert a claim against BLB for unpaid maintenance charges. Id. ¶¶ B(39), C(18).
Before trial, BLB filed a trial brief (Filing No. 155) and proposed findings of fact and conclusions of law (Filing No. 154). The defendants filed a trial brief (Filing No. 157) and proposed findings of fact and conclusions of law (Filing No. 156). At the conclusion of BLB's case-in-chief, the defendants made an oral motion for judgment as a matter of law, which the court took under advisement. See Filing No. 173 (court minutes); Trial Transcript (TR.) 564–568. After the trial transcript (Filing Nos. 184, 185, and 186) was completed, the parties simultaneously filed written closing arguments, then replies. BLB filed a brief (Filing No. 189) and a reply brief (Filing No. 192). The defendants filed a brief (Filing No. 190) and a reply brief (Filing No. 191). At the conclusion of briefing, the matter was deemed submitted.
Based on the evidence presented and pursuant to Fed.R.Civ.P. 52(a)(1), the court makes the following findings of fact:
BLB is a South Carolina limited liability company with its principal place of business in Baton Rouge, Louisiana. See Filing No. 148—PTO ¶ B(1). The members of BLB are Barry L. Bellue, Sr. (Barry Bellue) and Barry L. Bellue, Jr. (Lee Bellue), both of whom are citizens of the State of Louisiana. Id. Jet Linx Aviation, LLC is a Delaware limited liability company with its principal place of business in Omaha, Nebraska. Id. ¶ B(2). Jet Linx Aviation Corporation and Jet Linx Management Company, LLC are Delaware corporations with their principal place of business in Omaha, Nebraska. Id. ¶¶ B(3), B(4). Walker, an individual, is a resident and citizen of the State of Nebraska. Id. ¶ B(5). There is no dispute the court has personal jurisdiction over the parties and subject matter jurisdiction, pursuant to 28 U.S.C. § 1332(a)(1). Id. ¶¶ B(6), B(7). The parties also agree venue is proper. Id. ¶ B(8).
BLB is an aviation company based in Baton Rouge, Louisiana. Id. ¶ B(9). BLB owned and owns aircraft that have, from time to time, been used for aircraft charter flight services. Id. On or about March 29, 2007, Walker, the president of Jet Linx Management Company, contacted BLB regarding the possibility of entering into a dry lease or charter agreement for a Diamond 1A airplane. Id. ¶ B(10); TR. 597. In response, Lee Bellue called Walker during the first week of April 2007 regarding Jet Linx's proposal to use BLB's existing aircraft in Jet Linx's charter operations. See Filing No. 148—PTO ¶ B(10). In addition to discussions regarding Jet Linx's management of BLB's existing aircraft, Walker and Lee Bellue discussed the possibility of entering into a dry lease agreement if BLB purchased another aircraft. Id. ¶ B(12). Walker explained the terms and procedures for a dry lease under which Jet Linx would lease an additional plane from BLB. Id.
In June 2007, BLB contacted an aircraft broker to purchase a type of aircraft Jet Linx had indicated would be suitable for management under a dry lease agreement. Id. ¶ B(13). Ultimately, the broker identified a Mitsubishi MU300 Diamond 1A jet aircraft, bearing aircraft registration number N400GK (N400GK). Id. Tony Boatwright(Boatwright), the Jet Linx head of maintenance, met Lee Bellue in Little Rock, Arkansas, to evaluate N400GK's suitability for use in Jet Linx's charter flights services. Id. ¶ B(14). N400GK was acceptable to Jet Linx, if BLB refurbished the interior. Id. On or about August 10, 2007, BLB purchased N400GK. Id. ¶ B(15). BLB invested $1,350,000 to purchase and upgrade N400GK, including approximately $50,000 for the new interior. Id. As part of the purchase agreement, the aircraft underwent equipment inspection and maintenance by Central Flying Service beginning in June, 2007. Id.
On or about June 20, 2007, BLB and Jet Linx executed an Aircraft Dry Lease Agreement for N400GK (the Dry Lease Agreement). Id. ¶ B(16); Ex. 20. The Dry Lease Agreement provides, “[t]his Lease of aircraft is made effective as of August 1, 2007.” Ex. 20 p. 1. The Dry Lease Agreement states, “[Jet Linx] guarantees [BLB] a minimum monthly lease payment of $47,100 per month, no matter the number of actual hours flown.” Ex. 20 § 1 and Sched. A. The $47,100 amount is equal to 50 hours of flight time multiplied by a $942 hourly rate. Id. Sched. A. The Dry Lease Agreement anticipated flight time in excess of the initial 50 hours would be paid based on an hourly rate. Id. With the exception of maintenance costs, Jet Linx agreed to pay for all costs associated with N400GK during the term of the lease, including fuel, pilots, training, hangar, and insurance. See Filing No. 148—PTO ¶ B(16); Ex. 20 Sched. A.
Under the Dry Lease Agreement, certain maintenance charges were to be passed through to BLB at Jet Linx's cost. See Filing No. 148—PTO ¶ B(17); Ex. 20 § 7 and Sched. A. The Dry Lease Agreement states:
Lessor will pay for:
—maintenance .
The Dry Lease Agreement further provides: All “inspections, repairs, modifications, maintenance, and overhaul work” would be performed “in accordance with the standards set by Federal Aviation Regulations.” Ex. 20 § 7. Jet Linx agreed to “maintain log books and records accurately reflecting the completion of such maintenance work during the term of the Lease in accordance with the Federal Aviation Regulations.” Filing No. 148—PTO ¶ B(18); see Ex. 20 § 7.
BLB delivered N400GK to Jet Linx in Omaha, Nebraska, on approximately August 24, 2007. See Filing No. 148—PTO ¶ B(20); TR. 602. N400GK underwent additional maintenance and was available for its first revenue producing flight in October 2007. See TR. 602–603. In certain months during the term of the Dry Lease Agreement, Jet Linx paid BLB less than the $47,100 minimum monthly payment under the Dry Lease Agreement. See Filing No. 148—PTO ¶ B(21). Jet Linx sent BLB monthly statements deducting maintenance expenses incurred on the N400GK from the amounts due BLB under the Dry Lease Agreement. Id. ¶ B(22).
During the time the parties negotiated the Dry Lease Agreement, the parties negotiated an arrangement for BLB's existing aircraft (N789DJ) to be available for Jet Linx to charter out of Baton Rouge, Louisiana. See Filing No. 148—PTO ¶ B(23). On or about August 16 or 17, 2007, BLB and Jet Linx executed an Aircraft Management Services Agreement (MSA), effective August 26, 2007, for BLB's existing aircraft, N789DJ, based in Baton Rouge, Louisiana. Id.; Ex. 48 p. 1, 11, 13. Under the MSA, the parties agreed “BLB would make the aircraft available for a certain number of charter hours each month” and Jet Linx would remit a $12,000 annual Aircraft Management Fee paid in installments of $1,000 each month. See Filing No. 148—PTO ¶ B(23); Ex. 48—MSA Ex. 1. The parties agreed BLB would receive 85% of charter revenue Jet Linx generated per hour with a minimum of $1,572.50 per flight hour plus a fuel surcharge. See Filing No. 148—PTO ¶ B(23); Ex. 48—MSA Attach. 1.
Under the MSA, “Jet Linx agreed to ensure that all maintenance and repair work on N789DJ was performed in accordance with the standards set out in the Federal Aviation Regulations and to ensure that all such maintenance work was accurately recorded in accordance with the Federal Aviation Regulations applicable to Jet Linx's operation.” See Filing No....
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