TWC Aviation, Inc. v. World Tech Aviation, LLC

• Court: Texas Court of Appeals
• Writing for the Court: Julie Countiss, Justice
• Citation: TWC Aviation, Inc. v. World Tech Aviation, LLC, 714 S.W.3d 688 (Tex. App. 2024)
• Docket Number: 01-23-00079-CV
• Decision Date: 31 December 2024
• Parties: TWC AVIATION, INC. d/b/a Landmark Aircraft Management & Charter – SJC, Appellant v. WORLD TECH AVIATION, LLC, Appellee

714 S.W.3d 688

TWC AVIATION, INC. d/b/a Landmark Aircraft Management & Charter – SJC, Appellant

v.WORLD TECH AVIATION, LLC, Appellee

NO. 01-23-00079-CV

Court of Appeals of Texas, Houston (1st Dist.).

Opinion issued December 31, 2024

On Appeal from the 215th District Court, Harris County, Texas, Trial Court Case No. 2017-33283-7

Robert Joseph Kruckemeyer, Grant Martinez, Houston, Constance H. Pfeiffer, Shayna Goldblatt Proler, for Appellant.

Derrick Hahn, Coyt Randy Johnston, Dallas, Matthew Hahn, Charles Chad Baruch, for Appellee.

Panel consists of Chief Justice Adams and Justices Hightower and Countiss.

OPINION

Julie Countiss, Justice

Appellant, TWC Aviation, Inc., doing business as Landmark Aircraft Management & Charter - SJC (“Manager”),¹ challenges the trial court’s judgment, entered after a bench trial, in favor of appellee, World Tech Aviation, LLC (“World Tech”), in World Tech’s suit against Manager for breach of contract, conversion, and violation of the fraudulent lien statute and Manager’s countersuit against World Tech for breach of contract and foreclosure of its lien. In four issues, Manager contends that trial court erred in granting World Tech’s motion for partial summary judgment and declaring that Manager did not possess a valid lien on the aircraft; the evidence is legally insufficient to support the trial court’s findings that Manager’s actions caused World Tech actual damages and that Manager was liable for conversion and violation of the fraudulent lien statute; and the evidence conclusively established that Manager was entitled to recover on its breach-of-contract counterclaim against World Tech.

We affirm in part, reverse in part, render in part, and remand in part.

Background

World Tech entered an aircraft services agreement (the “services agreement”) with Manager in April 2016, under which Manager agreed to manage certain maintenance tasks on World Tech’s aircraft in exchange for World Tech’s payment of a management fee and reimbursement of maintenance’, fuel, and other operational costs. Manager agreed to send World Tech a monthly “itemized statement of [its] account,” showing the fees that World Tech had incurred “through the end” of the “prior calendar month.” World Tech, in turn, was required “pay to [Manager] an amount equal” to any “net debit balance” reflected on the account “Within thirty (30) days” of its receipt of an “itemized statement.” If World Tech disputed “any of the charges listed on a particular statement,” it was required to:

(i) promptly notify [Manager] of such dispute; (ii) pay undisputed amounts within thirty (30) days of receipt of such itemized statement; and (ii[i]) negotiate a resolution of the dispute with [Manager] as soon as possible, but no later than ten (10) [b]usiness [d]ays after the expiration of the thirty (30) day period in which to pay undisputed amounts.

If any payment owed on World Tech’s account was past due, Manager “reserve[d] the right, upon notice to client, to temporarily suspend any and all services” that it owed World Tech under the services agreement.

In a separate paragraph, entitled “Breach of Payment Obligations,” the services agreement further declared that:

[F]ailure to pay any sum due to [Manager] within ten (10) days of the due date shall be a breach of contract. In the event of such breach, [Manager] shall not be obligated to provide more than one (1) notice of breach during any twelve (12) month period for any instance of [World Tech] failing to pay any amount, when due, to [Manager]. All sums past due will bear interest of (1.5%) per month (or the maximum amount allowed by applicable law), plus [World Tech] shall be liable for all reasonable attorney fees, and other costs of collection.

If the parties otherwise terminated the services agreement, Manager was to send World Tech “a final itemized accounting statement of all [c]harter fees, [c]osts and [e]xpenses, [o]perating [c]osts, [i]ncidental [e]xpenses, and [h]angar [f]ees” within sixty days after termination. “Payment of any net balance or net credit balance indicated in such final statement [was to] be paid by the owing party to the other party within ten (10) days of the date of the final itemized accounting statement.” World Tech was also entitled to a refund of its deposit at termination, “[s]o long as (i) no event of default exist[ed], (ii) Manager [was] paid in full, and (iii) such [d]eposit ha[d] not already been applied to amounts due from [World Tech] under th[e] [services] [a]greement.”

Manager and World Tech also executed a charter and lease agreement, under which World Tech agreed to “[d]ry [l]ease² the aircraft to Manager and Manager agreed to [d]ry [l]ease the [a]ircraft from [World Tech].” Under the charter and lease agreement, Manager had the right to “use and operate the [a]ircraft to conduct [charter] [o]perations from time to time when the [a]ircraft [wa]s not otherwise in use by [World Tech].” The arrangement contemplated that World Tech would schedule its own use of the aircraft, and Manager would schedule use of the aircraft for charter flights so that the times scheduled for use did not conflict. The charter and lease agreement also provided that World Tech would be paid “$3,570[] per actual flight hour” of a charter operation, a fee that could be adjusted by Manager, with World Tech’s approval, “based upon market conditions.”

The charter and lease agreement also specified other financial conditions. As to charter flights, the agreement made clear that World Tech was not involved in, and Manager was “solely responsible for[,] billing and collecting payment from [c]harter [customers” as well was for handling charges and reimbursements “for catering, customs, ground transportation,” and other fees associated with the charter flights. As to World Tech’s use of the aircraft, the charter and lease agreement specified that “[a]ll [o]perating [c]osts and [i]ncidental [e]xpenses incurred by [Manager]” on behalf of World Tech would be “charged to [World Tech’s] account.” The services agreement and the charter and lease agreement both contained choice-of-law provisions reciting that the agreements were “negotiated and delivered in the State of Texas” and would “in all respects be governed by, and construed in accordance with, the laws of the State of Texas, including all matters of construction, validity, and performance, without giving effect to its conflict of laws provisions.” Both agreements also contained “no waiver” provisions stating that:

No delay or omission in the exercise or enforcement of any right or remedy hereunder by either party shall be construed as a waiver of such right or remedy. All remedies, rights, undertakings, obligations, and agreements contained herein shall be cumulative and not mutually exclusive, and in addition to all other rights and remedies which either party possesses at law or in equity.

In its amended petition, World Tech alleged that under its agreements with Manager, it “was to receive a portion of the charter revenue and would also reimburse [Manager] for maintenance, fuel, and other operational costs paid by [Manager].” Pursuant to the agreements, “[Manager] had possession of both the [a]ircraft and [its] maintenance records.” According to World Tech, “[Manager] failed to timely and accurately provide monthly accounting” and records of the aircraft’s operation. Further, Manager “failed to properly maintain the [a]ircraft” or “generate charter revenue” as promised.

World Tech alleged that the agreements terminated on April 13, 2017, when Manager “took possession of the [a]ircraft.” When World Tech “requested that Manager return the [a]ircraft maintenance records” at the time, Manager refused to do so. Manager also refused to “allow [Manager] to inspect and/or copy those records as provided for in the [a]greement[s].” In June 2017, Manager filed “a lien against the [a]ircraft with the Federal Aviation Administration” (“FAA”) and claimed an aircraft mechanic’s lien under the Texas Property Code, alleging “that it [wa]s owed for expenses” that it had “incurred or paid on behalf of [World Tech] pursuant to the [a]greement[s].”

World Tech brought a claim against Manager for breach of contract, asserting that Manager’s “non-performance constitute[d] a breach of contract,” as did its with-holding of the aircraft maintenance records, which prevented World Tech from chartering the aircraft. Those breaches caused World Tech to “incur[] damages, including consequential damages and lost profits.” World Tech also alleged a claim for conversion based on Manager’s “withholding of the [a]ircraft maintenance records.” Further, World Tech brought a claim for violation of the fraudulent lien statute, and it requested that the trial court “declare the lien claimed by [Manager] void,” arguing that Manager’s lien asserted was invalid because Manager did not qualify … as a provider of fuel or repairs and thus [wa]s not entitled to a mechanic’s lien” under the Texas Property Code.

As to damages, World Tech sought “consequential damages and lost profits.” It also sought exemplary damages based on its conversion claim, alleging that Manager’s “conversion of the property … was malicious in that [Manager] specifically intended to cause substantial injury to [World Tech].”

Manager answered, generally denying the allegations in World Tech’s petition. Manager also brought counterclaims against World Tech for breach of contract and foreclosure of its lien. Manager alleged that it had “provided the services set forth in the [a]greement[s] to World Tech” until “[t]he [a]greement[s] w[ere] terminated on April 13, 2017.” On that date, “World Tech owed [Manager] $135,043.19 for fuel, $70,549.72 for maintenance, and $38,400 for storage,” making “[t]he cumulative balance due including interest minus a credit for the unused portion of the [operating [d]eposit paid to [Manager] $249,249.90,” an amount that World Tech had “failed to pay.” As to damages for its...