Heidi Aviation, LLC v. Jetcraft Corp.
| Decision Date | 15 November 2021 |
| Docket Number | Civil Action No. 20-1773 (CKK) |
| Parties | HEIDI AVIATION, LLC, Plaintiff v. JETCRAFT CORPORATION, Defendant |
| Court | U.S. District Court — District of Columbia |
Jason Stuart Rubinstein, Wellford Hunter Winstead, Pro Hac Vice, Stuart C. Schmadeke, Pro Hac Vice, Gilbert LLP, Washington, DC, for Plaintiff.
Michael Joseph Ciatti, King & Spalding, Washington, DC, for Defendant.
Plaintiff Heidi Aviation LLC ("Heidi") brings this action against Defendant Jetcraft Corporation ("Jetcraft"). After an airplane sold by Jetcraft to Heidi sustained damage in a crash landing, Heidi's insurer declined to cover Heidi's loss and sued Heidi to rescind the applicable insurance policy. Heidi attributes its insurer's failure to pay for its loss to incorrect or false information allegedly provided by Jetcraft to the insurer regarding the use and base airport of the airplane. Heidi now asserts claims for breach contract, negligence, negligent misrepresentation, fraudulent misrepresentation, and breach of fiduciary duty against Jetcraft.
Pending before the Court is Jetcraft's [22] Motion to Dismiss the Complaint, in which Jetcraft contends that Heidi fails to state a plausible claim for relief. Upon review of the pleadings,1 the relevant legal authority, and the record as a whole, the Court GRANTS-IN-PART and DENIES-IN-PART Jetcraft's Motion to Dismiss. Specifically, the Court GRANTS Jetcraft's motion to dismiss regarding Heidi's breach of contract claim (Count 1), but DENIES Jetcraft's motion with respect to all other claims.
For the purposes of the present motion to dismiss, the Court accepts as true the well-pleaded allegations in Heidi's Complaint. The Court does "not accept as true, however, the plaintiff's legal conclusions or inferences that are unsupported by the facts alleged." Ralls Corp. v. Comm. on Foreign Inv. in U.S. , 758 F.3d 296, 315 (D.C. Cir. 2014) (citation omitted).
Plaintiff Heidi Aviation LLC ("Heidi") is a Delaware holding company that operates on behalf of Bancroft, a "management and development company" headquartered in Washington, D.C. Compl. ¶ 4. Bancroft is owned by Bancroft Global Development, LLC and Bancroft Global Investments, both Delaware entities. Id. Bancroft functions "in part, as a not-for-profit non-government organization that works to provide stability in conflict areas throughout the world," manages "complex projects across the world, including in Afghanistan, Kenya, Libya, Somalia, Uganda, and the United Arab Emirates," and uses several aircraft "owned and operated by Heidi" to support those projects. Id. ¶¶ 4, 13.
Defendant Jetcraft Corporation ("Jetcraft") is a North Carolina corporation that serves as a "broker" to "facilitat[e] the acquisition of private aircraft." Id. ¶ 5. As detailed below, Jetcraft provided Heidi "aircraft selection and acquisition services" to assist its efforts to procure a "Mid Size Turbine Corporate Aircraft" in 2015, and ultimately sold to Heidi a 2001 Dornier 328-300 (the "Dornier") from its own inventory in early 2016. Id. ¶¶ 10, 14–17. Before this sale, Jetcraft had "previously worked with Heidi's principals to acquire other aircraft owned by Heidi ... which were operated predominantly in Africa." Id. ¶ 11.
Defendant Wings Insurance Agency, Inc. ("Wings"), a Minnesota corporation, is an insurance broker specializing in "placing aviation insurance coverage." Id. ¶ 6. Pursuant to an oral agreement, Wings served as Heidi's insurance broker to obtain coverage for the Dornier. Id. ¶ 20. Wings is no longer a party in this action, having been dismissed from the case pursuant to a Stipulation of Dismissal with Heidi. See Stip., ECF No. 34; Order, ECF No. 35.
This action arises from Heidi's claim that Jetcraft and Wings supplied incorrect information to XL Specialty Insurance Company ("XL"), which provided the insurance policy for the Dornier. Based on that incorrect information, XL did not pay Heidi for damage sustained by the Dornier after it made a crash landing and sued Heidi to rescind the policy. The Court shall next recount in greater detail the factual allegations underlying Heidi's claims in this case.
On August 3, 2015, Heidi and Jetcraft entered into an Acquisition Services Agreement ("ASA"), pursuant to which Jetcraft agreed to assist Heidi in procuring a "Mid Size ... Corporate Aircraft." Id. ¶ 10; Def.’s Mot. Ex. 1, ASA at 1, ECF No. 22-3.2 In its role as an "independent contractor," ASA § 1.4, Jetcraft agreed to "use its best efforts to evaluate the marketplace, assess aircraft," and provide Heidi with "verbal and/or written evaluations and recommendations for such aircraft," id. § 1.1. Jetcraft's "services" under the ASA "shall include, but are not limited to, negotiations with third-parties on behalf and with the direction of [Heidi], coordinating and supervising demonstration flights, conducting or facilitating pre-purchase due diligence, and assisting [Heidi] in completing and filing documentation necessary [to] implement a lease or purchase of an identified aircraft." Id. Jetcraft further promised to "act in a manner consistent with [Heidi's] bests interests." Id. The parties agreed that the ASA would remain in effect "until an Aircraft is acquired," unless sooner terminated by the parties. Id. § 2.1.
In early 2016, Jetcraft identified an aircraft from its own inventory, the Dornier, as a potential purchase for Heidi. Compl. ¶¶ 14–17. On January 25, 2016, Heidi and Jetcraft executed an Aircraft Purchase Agreement ("APA"), in which Heidi agreed to purchase the Dornier from Jetcraft. Id. ¶ 17; Def.’s Mot. Ex. 2, APA, ECF No. 23-3.3 The APA contains [Redacted] nor does it contain [Redacted] However, Heidi alleges that it "would not finalize a transaction to acquire the Dornier without having insurance in place," claiming that this gave Jetcraft a "pecuniary incentive to place coverage for the Dornier so that Heidi would finalize the deal." Compl. ¶ 16.
Heidi alleges that in February 2016 (after the execution of the APA), a Jetcraft employee contacted Wings "on behalf of Heidi" to request that Wings "serve as Heidi's aviation insurance broker and procure insurance coverage for the Dornier." Id. ¶ 18. Wings "orally agreed that day" to act as Heidi's insurance broker for the purpose of procuring the requested aviation insurance. Id. ¶ 20. It is unclear from the Complaint whether Wings made such an oral agreement with Heidi or with Jetcraft. See id. Heidi alleges, however, that Wings thereafter "act[ed] as Heidi's insurance broker in connection with procuring insurance coverage for the Dornier," and that Wings "would be paid a compensation upon successful placement of insurance coverage[.]" Id. ¶¶ 20–21.
According to Heidi, "Jetcraft and/or Wings" communicated directly with prospective insurers on Heidi's behalf. Id. ¶ 26. To obtain coverage for the Dornier, Wings and Jetcraft, "using information provided by Jetcraft," generated an "Aircraft Request for Quote" ("RFQ") to submit to potential insurers. Id. ¶ 28. The RFQ indicated that the Dornier's "Use" was "industrial aid" and that the Dornier's "Base" would be Dulles Airport ("IAD") in Virginia. Id. ¶ 30.
On February 4, 2016, Wings (not Jetcraft) distributed the RFQ and received inquiries from prospective insurers. Id. ¶ 29. Based on the RFQ, XL provided an insurance quote to Heidi, which Heidi accepted on March 8, 2016. Id. ¶¶ 33–34. XL issued an "Aviation Hull & Liability Policy" for the period of March 9, 2016 through March 9, 2017 (the "Initial Policy"). Id. ¶ 34.
In December 2016, anticipating the expiration of the Initial Policy, Wings requested that Heidi complete a Renewal Application for Insurance ("Renewal Application") to renew its insurance policy for the period from March 9, 2017 to March 9, 2018. Id. ¶ 40. Heidi alleges that Wings "populated" the information in the Renewal Application, which included the same information as the RFQ regarding the Dornier's "Use" (industrial aid) and "Base" (Dulles Airport). Id. Heidi signed the Renewal Application without any modification on December 13, 2016. Id. ¶ 41. Wings submitted Heidi's Renewal Application to XL on December 23, 2016. Id. ¶ 42. On February 16, 2017, Wings requested that XL bind coverage for an additional policy year, with the same terms as the Initial Policy. Id. ¶ 43. XL issued a Renewal Policy, which became effective on March 9, 2017. Id. ¶ 44.
On May 30, 2017, the Dornier experienced a landing gear malfunction, which forced the pilot to complete a "belly landing" at the Aden Adde International Airport in Mogadishu, Somalia, causing damage to the aircraft. Id. ¶ 52. Heidi, through Wings, notified XL about the incident and its claim for insurance coverage under the Renewal Policy. Id. ¶ 53. The incident was treated by Heidi and XL as a "Total Loss" under the Renewal Policy, which Heidi contends should have "resulted in, at a minimum, a $2.4 million payment." Id. ¶ 57. On June 22, 2017, XL acknowledged that the Dornier "sustained physical damage ... as defined by the Policy," but also requested additional information about "the location and use of the Aircraft during the past fourteen months." Id. ¶ 58. Heidi provided responsive information to XL. Id.
On September 8, 2017, XL advised Heidi that it was "rescinding" the Renewal Policy and denied coverage for the damage sustained by the Dornier as a result of the belly landing. Id. ¶ 59. XL filed a rescission action against Heidi in the Superior Court of the District of Columbia ("D.C. Superior Court") on September 11, 2017. Id. ¶ 61. Heidi claims that XL's denial of coverage and rescission were "based solely upon [XL's] contention that the Aircraft had not been operated as represented to XL during the procurement...
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