In re Jet 1 Center, Inc.

• Decision Date: 15 February 2005
• Docket Number: Adversary No. 04-110.,Bankruptcy No. 9:03-BK-26514-ALP.
• Citation: 322 B.R. 182
• Parties: In re JET 1 CENTER, INC., Debtor. Jet 1 Center, Inc., a Florida Corporation, Plaintiff/Counterdefendant, v. City of Naples Airport Authority, Defendant/Counter-plaintiff And Third-Party Plaintiff, v. Jet 1 Center, Inc., et al., Counterdefendant and Third-Party Defendants.
• Court: U.S. Bankruptcy Court — Middle District of Florida

322 B.R. 182

In re JET 1 CENTER, INC., Debtor.

Jet 1 Center, Inc., a Florida Corporation, Plaintiff/Counterdefendant, v. City of Naples Airport Authority, Defendant/Counter-plaintiff And Third-Party Plaintiff, v. Jet 1 Center, Inc., et al., Counterdefendant and Third-Party Defendants.

Bankruptcy No. 9:03-BK-26514-ALP. Adversary No. 04-110.

United States Bankruptcy Court, M.D. Florida, Ft. Myers Division.

February 15, 2005.

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Lori V. Vaughan, Foley & Lardner, Tampa, FL, for Debtor.

T. Patrick Tinker, Office of the U.S. Trustee, Tampa, FL, for Trustee.

ORDER GRANTING IN PART AND DNYING IN PART MOTION FOR SUMMARY JUDGMENT AND JUDGMENT ON THE PLEADINGS WITH RESPECT TO SECOND AMENDED COMPLAINT

(Doc. No. 66)

ALEXANDER PASKAY, Bankruptcy Judge.

THE MATTER under consideration in this yet to be confirmed Chapter 11 case of Jet 1 Center, Inc. is a Motion for Summary Judgment and Judgment on the Pleadings with Respect to Second Amended Complaint (Doc. No. 66), filed by the City of Naples Airport Authority, Theodore D. Soliday and Commissioner Eric West, the Defendants named in the abovecaptioned Adversary Proceeding. The Motion for Summary Judgment is filed pursuant to Federal Rules of Bankruptcy Procedure, Rule 7056 and the Judgment on the Pleadings is filed pursuant to F.R.B.P. 7012(c), and is directed to each and every Count of the Second Amended Complaint filed by the Debtor.

In order to place the issues raised by the Motion in an understandable posture, a brief recap of the pre-filing litigations between the parties should be helpful.

Prior to the initiation of this Chapter 11 case, Jet 1 Center, Inc. (the "Debtor") and the City of Naples Airport Authority (the "Authority") were involved in two separate state court actions. The first case was filed in August of 2000 in the Twentieth Judicial Circuit Court in and for Collier County, Florida, (the "Circuit Court") and was filed by the Debtor against the Authority. In this suit, the Debtor sought declaratory relief regarding its rights under certain leases it had with the Authority. This litigation has been referred to as the "Eviction Action," most likely because the Authority counterclaimed and sought to evict the Debtor and its subtenants from the airport operated by the Authority.

On December 9, 2002, the Authority initiated the second action in the Circuit Court against the Debtor and sought an injunction against the Debtor to conduct any fueling operations at the airport. This action has been referred to as the "Injunction Action."

In response to the suit for injunction, the Debtor filed an Answer and Affirmative Defenses. Later, the Debtor filed Amended Affirmative Defenses, including, waiver, estoppel, and illegal regulations based on the retaliation of Bill of Attainder.

On the eve of the trial of the Injunction Action, the Debtor moved to file Second Amended Affirmative Defenses and a new Counterclaim. The Debtor also filed a Motion to Continue the trial, urging the Circuit Court to allow the Debtor to serve additional defenses, including, unconstitutional illegal impairment of contract rights and violations of State Antitrust Statutes. The Circuit Court denied the Debtor's Motion to Continue the trial and denied the Debtor's Motion to add additional affirmative defenses and the counterclaim. The Circuit Court concluded that the Debtor had waited too long to assert these known defenses for the first time and was barred from raising them that late in the litigation. (Tr., Vol.1, p. 30-32).¹

After a three-day bench trial, the Circuit Court orally announced its decision in favor of the Authority in the Injunction Action. In its ruling, the Circuit Court held the following:

1. The Authority reserved to itself the exclusive right to be the purveyor of fuel and the Authority never waived that right (Tr., Vol. III, p. 568).

2. The action of the Authority in creating the November 8, 2002, aviation fuel regulation were not discriminatory or retaliatory to the Debtor. The November 8, 2002 aviation fuel regulations applied to all Airport users (Tr., Vol. III, p. 568).

3. The Authority's action in revoking the Debtor's Fuel Permit was a proper use of governmental police power (Tr., Vol. III, P. 568).

4. The Authority has an obligation to protect its fueling resources to pay for the operation of the airport (Tr., Vol. III, p. 568).

5. That the rules and regulation of the Authority are a proper exercise of its obligation to protect the health, safety and general welfare of the public (Tr., Vol. III. p. 569).

6. That the Debtor materially breached its agreement with the Authority (Tr., Vol. III, p. 569).

7. The Authority has a duty or an obligation to continue to fund itself through the service charges that it reasonably calculates are necessary to keep the Airport in operation. The market is going to control, to a great extent, what the Authority can do, but the control of fuel sales at the Airport is required as the Authority is a governmental agency (Tr., Vol. III, p. 578).

8. That the Debtor's privilege to pump fuel at the Airport was properly terminated by the Authority (Tr., Vol. III, p. 570).

9. The Authority has properly revoked the Debtor's Fuel Permit as the actions of Jet gave the Authority cause to terminate the Fuel Permit based on violations and the Debtor's history of subterfuge, deceit and actual admitted violations (Tr., Vol. III, pp. 580-581).

Before the oral ruling of the Circuit Court could be reduced to writing, the Debtor on December 29, 2003, filed its Petition for Relief under Chapter 11 of the Bankruptcy Code which, by virtue of operation of the automatic stay, prohibited and stayed any further actions, including the entry of a formal written order in the Injunction Action.

The Authority filed an Emergency Motion for Relief from Automatic Stay (Doc. No. 6, General Case No. 9:03-bk-26514-ALP), seeking leave to proceed and complete the Injunction Action already tried, requesting permission for the Circuit Court to enter a formal written final judgment in conformity with the oral ruling announced from the bench at the conclusion of the trial. On February 24, 2004, this Court entered its Order Granting Motion for Relief from the Automatic Stay in Favor of the City of Naples Airport Authority, Authorizing the Authority to seek the entry of a judgment based on the findings and conclusions orally announced by the Circuit Court at the conclusion of the three day bench trial. (Doc. No. 67, General Case No. 9:03-bk-26514-ALP).

On February 19, 2004, the Debtor then filed a Notice of Removal of a Civil Suit, thereby, initiating the above-captioned adversary proceeding, which is the removal of the State Eviction Action before this Court. Once the Eviction Action was removed to this Court, the Debtor on March 22, 2004, filed its Motion for Leave to File Second Amended Complaint and to Join Additional Defendants (Doc. No. 4, Adversary Proceeding No. 9:04-ap-00110-ALP)².

In due course, this Court heard argument in support of and in opposition to the Motion for Leave to Amend and ultimately entered its Order granting the Motion for Leave to File Second Amended Complaint and to Join Additional Defendants (Doc. No. 27, Adv.Pro.).

The Debtor, in its Second Amended Complaint, asserted ten claims in ten separate Counts. A brief summary of these claims are as follows:

In Count I, the Debtor seeks via declaratory relief pursuant to Title 28 of the United States Code, Section 2201 and the determination of (a) its right to continue to occupy its business premises and to conduct its business pursuant to the terms of its leases with the Authority (Debtor's Exhibits A, B, C, and D of the Second Amended Complaint); (b) its right to continue to dispense fuel and to otherwise operate pursuant to the fuel permit (Debtor's Exhibit E of Complaint the Second Amended Complaint) (the "Fuel Permit"); (c) its right to continue to participate in the Pre-Purchase Fuel Program implemented on November 10, 1999 (Debtor's Exhibit H of the Second Amended Complaint) (the "Pre-Purchase Fuel Program"); and (d) its right to an award of attorneys' fees.

In Count II, the Debtor also seeks via declaratory relief the determination of its right to participate in the Pre-Purchase Fuel Program and to pay the per gallon price specified in the Letter Agreement dated November 16, 1999 (Debtor's Exhibit H of the Second Amended Complaint).

In Count III, the Debtor seeks injunctive relief and reasonable attorneys fees pursuant to Section 16 of the Clayton Act, Title 15 of the United States Code, Section 26 for Violation of Section 1 of the Sherman Act, 15 U.S.C. § 1. Specifically, the Debtor seeks an injunction prohibiting the Authority from enforcing the termination of the Fuel Permit predicated on the fact that the Debtor dispenses fuel at prices and to a class of customers other than the prices dictated by the Authority. In addition, the Debtor also seeks an injunction prohibiting the Authority to promulgate and enforce any "Rates and Charges," to the extent that they attempt to control prices and/or eliminate the Debtor as a competitor. According to the Debtor, these actions by the Authority are a per se violation of Section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1, which is a horizontal price fixing.

In Count IV, the Debtor seeks injunctive relief and attorneys fees pursuant to Section 16 of the Clayton Act, 15 U.S.C. § 26 for violation of Section 2 of the Sherman Act, 15 U.S.C. § 2, alleging the Authority is monopolizing any part of trade or commerce by terminating the Debtor's fuel permit for the purpose of eliminating competition at the Naples Municipal Airport (the "Airport").

In Count V, the Debtor's claim is based on the Florida Antitrust Act, Section 542.18 of the Florida Statutes. The claim in this Count is based on the same factual allegations set forth in Count III of the Debtor's Second Amended Complaint,...