Signature Flight Support Corp. v. Landow Aviation Ltd. P'ship

• Decision Date: 17 March 2010
• Docket Number: No. 1:08cv955 (JCC/TRJ).,1:08cv955 (JCC/TRJ).
• Citation: 698 F.Supp.2d 602
• Parties: SIGNATURE FLIGHT SUPPORT CORPORATION, Plaintiff,v.LANDOW AVIATION LIMITED PARTNERSHIP, Defendant.
• Court: U.S. District Court — Eastern District of Virginia

698 F.Supp.2d 602

SIGNATURE FLIGHT SUPPORT CORPORATION, Plaintiff,v.LANDOW AVIATION LIMITED PARTNERSHIP, Defendant.

No. 1:08cv955 (JCC/TRJ).

United States District Court,

E.D. Virginia,

Alexandria Division.

March 17, 2010.

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Louis Edward Dolan, Jr., Nixon Peabody LLP, Washington, DC, for Plaintiff.

John Daniel Victor Ferman, Drinker, Biddle & Reath LLP, Washington, DC, for Defendant.

MEMORANDUM OPINION

JAMES C. CACHERIS, District Judge.

This matter is before the Court on a bench trial which took place pursuant Plaintiff's Amended Complaint alleging a Breach of Contract (Count II) by Defendant. Plaintiff further requests a Declaratory Judgment (Count I), an Accounting and Disgorgement (Count IV), and a Permanent Injunction (Count V) in the Amended Complaint. Defendant counterclaimed for a Declaratory Judgment (Counts I and III) regarding inter alia, fuel service standard, location of the taxilane centerline and permit issues.¹

After thoroughly reviewing and considering the relevant records and evidence including exhibits, deposition summaries, and observing and evaluating witness testimony at trial, the Court makes the following findings of fact and conclusions of law.

I. Findings of Fact ²

1. Plaintiff Signature Flight Support Corporation (“Signature” or “Plaintiff”) is a Delaware corporation and is one of the two authorized Fixed Base Operator (“FBO”) concessions located at Washington Dulles International Airport (“Dulles” or “Airport”). (Pl.'s Tr. Ex. (“PTE”) 1.) Landmark Aviation (“Landmark”), formerly known as Piedmont Hawthorne, is the other FBO located at Dulles. Signature operates a network of more than 100 FBOs at a number of airports within the United States and internationally.

2. Defendant Landow Aviation Limited Partnership (“Landow” or “Defendant”) is a Virginia limited partnership formed to design, construct, own, and operate a service facility named the Dulles Jet Center (the “Dulles Jet Center” or “DJC”).

3. Landow Aviation, Inc., a Maryland Corporation, is a general partner of Landow. Landow Aviation, Inc. has two principals: Nathan Landow and his son, David Landow. Both the Landows are Maryland residents. David Landow's duties for the Landow entities include, among others, handling real estate development and various contract matters. (Landow at 173:3-21, Sept. 15, 2009.)

4. In order to operate as an FBO and provide the services as an FBO at Dulles, the Metropolitan Washington Airports Authority (“MWAA”) conducts a competitive public procurement process. Signature and its predecessors have been authorized to be an FBO since the 1960s pursuant to various FBO concession contracts with MWAA. These contracts are of finite nature and prior to their extension, MWAA solicits competitive bids for the follow-on contracts.

5. In 1997, after winning the public procurement process, Signature entered into a concession contract for the management and operation of an FBO concession at Dulles (“Concession Contract”) with MWAA. (PTE 1.) As part of the Concession Contract, Signature renewed its leasehold interest from MWAA for general aviation terminal facilities, hangars, and ramp space at Dulles to provide its FBO services there. (PTE 1.)

6. The Concession Contract sets forth the rights, duties and obligations of Signature as an FBO at Dulles. Under the Concession Contract, Signature is required to provide various products and services as specified therein as an FBO at Dulles.

7. For example, Section 3.02 of the Concession Contract grants Signature “[t]he right to establish, conduct and operate a full service FBO concession.” Further it states that Signature “shall have the exclusive right ... to provide the services authorized by” the Concession Contract. (PTE 1 at § 3.02.)

8. Under Section 3.03(a)(2) of the Concession Contract, Signature must provide “the sale of ramp assistance [to those] desiring to utilize the Premises including, but not limited to, hangaring of based and transient aircraft, aircraft lead-in, lead-out and repositioning services, loading and unloading passengers, baggage and cargo; aircraft parking including protective storage and tie-down of based and transient aircraft....” (PTE 1 at § 3.03(a)(2).)

9. Transient aircraft are those that are not permanently based at Dulles but are traveling through Dulles between the beginning and end point of their trip. (Farmer at 55:15-23, Aug. 31, 2009 A.M.) An FBO provides a number of services to the transient aircraft market.

10. MWAA's Minimum Fixed Base Operator Standards (“Minimum Standards”), Exhibit F to the Concession Contract, further expounds Signature's obligation as an FBO at Dulles. It requires that Signature, as a Class I FBO at Dulles, provide certain Basic Aeronautical Services to transient aircraft at Dulles such as fuel sales, ground handling and customer services, and aircraft and powerplants maintenance. (PTE 1; Ex. F.) The Minimum Standards define “ground handling and customer services” to include “aircraft lead-in/lead-out services; aircraft parking guidance; aircraft tie down and hangar storage; chock management and monitoring engine start-up safety; aircraft repositioning; ground power and oxygen service; de-icing; on-Airport transportation of passengers, crews, and baggage; assistance with the ground transportation and accommodation; landing fee collection....” (PTE 1, Ex. F at 6-7.)

11. Signature, as an authorized FBO at Dulles, must comply with a set of rules and regulations overseen by MWAA and the Federal Aviation Administration (“FAA”). For example, MWAA requires Signature meet certain operations, security, and safety requirements, such as remaining open 24 hours a day, 7 days per week, with a sufficient number of trained and skilled personnel to provide required services to general aviation aircraft. (PTE 1; Ex. A at §§ 3.08, 3.10.)

12. Signature must not delegate the authority MWAA granted to it absent MWAA's approval. Signature has no authority to create another FBO at Dulles. (PTE 1 at § 3.05(a).)

13. Signature assesses various fees and charges to transient aircraft using its FBO at Dulles such as overnight parking fees, handling fees if such aircraft do not purchase fuel, and other additional fees for ancillary services. (Farmer at 62:1-63:12, Aug. 31, 2009, A.M.)

14. For the right to be an FBO at Dulles, Signature pays significant amount of concession fees to MWAA. For example, in 2008, Signature paid over $9 million to MWAA in concession fees including fees on fuel sales, aircraft parking, and other ancillary services. (Farmer at 73:15-17, Aug. 31, 2009, A.M.)

15. Under Section 3.03(b)(7) of the Concession Contract, Signature was granted the option to develop a 19-acre parcel abutting its premises at Dulles for “additional ramp and/or general aviation hangars” in the future. (PTE 1 at § 3.03(b)(7).)

16. Due to the temporary closing of the Ronald Reagan Nation Airport to general aviation following the events of September 11, 2001, general aviation traffic and business dramatically increased at Dulles. Due to this fact, Signature decided to exercise its option to develop the parcel at Dulles. (Farmer at 74:1-22; 75:21-76:16, Aug. 31, 2009, A.M.) This parcel is later referred to as the “Corporate Hanger Premises” under the Supplemental Agreement executed between MWAA and Signature. (PTE 9.)

17. In 2002, Signature was approached by Nathan Landow about the possibility of developing the parcel for corporate hanger facilities. In the same year, Signature and Landow executed a Letter of Intent to develop corporate hanger facilities and related facilities. These facilities are later referred to as the “Dulles Jet Center” or “DJC.” (Farmer at 74:14-76:16, Aug. 31, 2009 A.M.)

18. On October 7, 2004, Signature signed a “Supplemental Agreement Between MWAA and Signature for the Development of Corporate Hanger Facilities at Washington Dulles International Airport” (“Supplemental Agreement” or the “SA”). (PTE 9.) The Supplemental Agreement was negotiated mainly between MWAA and David and Nathan Landow with Signature's input from John Cy Farmer (“Farmer”) who was then-Signature's Vice President and Signature's general counsel, Claire Margaret Groover. (Cameron at 95:6-96:3, Sep. 1, 2009; Landow at 174:4-12, Sep. 15, 2009 P.M.) On behalf of MWAA, Rochelle Cameron (“Cameron”) negotiated, executed and ratified the Supplemental Agreement.

19. With MWAA's approval, Signature and Landow entered into a Ground Sublease Agreement (“GSA”) dated April 15, 2004 under which Signature sublet the Corporate Hangar Premises to Landow. Even though the GSA was executed before the execution of the Supplemental Agreement, the GSA did not become effective until the full ratification of the Supplemental Agreement. The GSA was signed by Elizabeth Haskins (“Haskins”), the former President of Signature, and Nathan Landow. (PTE 7.) Signature's purpose in executing the GSA was to increase its fuel sales and to alleviate the overflow of transient aircraft situation that it was experiencing. (Farmer at 75:18-76:16, Aug. 31, 2009 A.M.)

20. During these contract negotiations in early 2004, according to Farmer's unrebutted testimony, in a meeting that took place in a Signature's conference room Nathan Landow requested that DJC be allowed to service and solicit transient aircraft. Farmer informed Nathan Landow that Signature's intent was never to allow Landow to do so. (Farmer at 87:3-19, Aug. 31, 2009 A.M.).³

21. Importantly, Nathan Landow's own handwritten memorandum, written on memorandum paper “from the Desk of David Landow” specifically stated, among other things, “no transient will be considered a Landow customer,” and “Hangar and ramp based customers under lease are Landow customers.” (PTE 213.)

22. In early October 2004, Signature management and Nathan Landow attended a dinner meeting at the NBAA convention in Las Vegas. At that dinner...