Jayhawk 910VP, LLC v. WindAirWest, LLC

Filing 70

MEMORANDUM AND ORDER denying 59 Motion to Alter 54 Judgment and granting 59 Motion to Amend 29 Pretrial Order. Signed by Magistrate Judge Kenneth G. Gale on 6/17/2020. (df)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
JAYHAWK 910VP, LLC,

)
)
Plaintiff,
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v.
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WindAirWest, LLC,
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)
Defendant. )
_______________________________)

No. 18-1153-KGG

MEMORANDUM & ORDER DENYING MOTION TO
ALTER OR AMEND JUDGMENT AND
GRANTING MOTION TO AMEND PRETRIAL ORDER
Defendant WindAirWest, LLC (“Defendant” or “WAW”) brings the present
Motion to Alter or Amend Judgment Pursuant to Fed.R.Civ.P. 59(e) and to Amend
the Pretrial Order” (Doc. 59) asking the Court to revisit the holdings in the
Memorandum & Order (Doc. 54) partially granting and partially denying the
Motion For Summary Judgment filed by Plaintiff Jayhawk 910VP, LLC
(“Plaintiff” or “Jayhawk”). WAW asks the Court to amend the determination that
an oral agreement was not preserved in the Pretrial Order or, in the alternative, to
allow it to amend the Pretrial Order to add this counterclaim. WAW also asks the
Court to amend its ruling granting summary judgment to Jayhawk on WAW’s
counterclaim of unjust enrichment.
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For the reasons set forth below, the Court GRANTS WAW’s motion to
amend the Pretrial Order regarding the alleged oral contract. The remainder of
WAW’s motion is DENIED.
FACTUAL BACKGROUND
The facts of this case were extensively summarized in the Court’s prior
Order. (See Doc. 54, at 2-13.) Those facts are incorporated herein by reference.
In that prior Order, the Court held that “the claim for breach of an oral
contract is not plead in the pretrial order as part of WAW’s counter claim.” (Id., at
18.) The Court also held that “because this alleged oral agreement is not disclosed
or identified in any pleadings or the Pretrial Order, WAW is precluded from now
asserting it.” (Id., at 31.) Further, the Court granted summary judgment as to
WAW’s counterclaim for unjust enrichment, holding that Kansas law does not
allow a claim for unjust enrichment where contractual remedies exist. (Id., at 30.)
Rather, any remedies are controlled by the parties’ rights and obligations under the
existing contract. (Id., at 30-31.)
LEGAL STANDARD
Defendant’s motion to reconsider or amend the granting of summary
judgment is controlled by Fed.R.Civ.P. 59(e).
Motions to alter or amend a judgment are
appropriate where they involve reconsideration of
matters properly encompassed in the decision on the
merits. White v. N.H. Dep’t of Employment Sec., 455
U.S. 445, 451, 102 S.Ct. 1162, 71 L.Ed.2d 325 (1982). A
Rule 59(e) motion to alter or amend judgment is
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essentially a motion for reconsideration. Henry v. Office
of Thrift Supervision, 1993 WL 545195, at *1 (D. Kan.
Dec. 28, 1993) (citing Hilst v. Bowen, 874 F.2d 725, 726
(10th Cir.1989)), aff'd, 43 F.3d 507 (10th Cir.1994).
“Grounds warranting a motion to reconsider include (1)
an intervening change in the controlling law, (2) new
evidence previously unavailable, and (3) the need to
correct clear error or prevent manifest injustice.”
Servants of the Paraclete v. Does, 204 F.3d 1005, 1012
(10th Cir.2000) (citing Brumark Corp. v. Samson Res.
Corp., 57 F.3d 941, 948 (10th Cir.1995)). Moreover, a
party cannot invoke Rule 59(e) to raise arguments or
present evidence that should have been set forth in the
first instance or to rehash arguments previously
considered and rejected by the court. Federated Mut.
Ins. Co. v. Botkin Grain Co., 856 F.Supp. 607, 609
(D.Kan.1994).
Pound v. Airosol Co. Inc., 368 F.Supp.2d 1158, 1159 (D. Kan. 2004). WAW’s
arguments find their basis in correcting error or preventing manifest injustice. The
decision of whether to grant a Rule 59(e) motion is within the sound discretion of
the district court. Phelps v. Hamilton, 122 F.3d 1309, 1324 (10th Cir.1997).
ANALYSIS
I.

Oral Contract.
Defendant WAW asks the Court to reconsider its ruling that it failed to

sufficiently plead the existence of an oral agreement in the Pretrial Order as to the
membership interest transfer. (Doc. 54, at 18; Doc. 60, at 2.) According to WAW,
“[i]t would be consistent with Tenth Circuit law to recognize that it was part of the
Pretrial Order.” (Doc. 60, at 2-3.) WAW is correct that pretrial orders are to be
“‘liberally construed to cover any of the legal or factual theories that might be
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embraced by their language.’” (Id., at 3 (citing Zenith Petroleum Corp. v.
Steerman, 656 F. App’x 885, 887 (10th Cir. 2016) (internal citation omitted)).
As stated in the Court’s underly Order on summary judgment, the existence
of an oral agreement, while not plead as a counterclaim, is referenced in WAW’s
Factual Contentions in the Pretrial Order. (Doc. 54, at 17.) The Pretrial Order
states that “WAW further asserts that the April 27, 2016[,] Agreement was
modified by oral agreement, actions of the parties and substantial performance by
the parties of the modified terms.” (Doc. 29, at 9.) WAW’s factual contentions in
the Pretrial Order also indicate that “[o]nce Jayhawk began flying N910VP on
WAW’s Charter Certificate, the Parties’ deal was consummated other than the final
contractual paperwork.” (Id., at 11). The oral agreement is also mentioned in the
defenses to Jayhawk’s claim for the remaining charter free, wherein WAW
references discussions between the parties. (Doc. 29, at 14).
That stated, the Court noted that the claim for breach of an oral contract is
not plead in Pretrial Order as part of WAW’s counterclaim. (Doc. 54, at 17-18.)
As such, the undersigned Magistrate Judge held that an oral agreement cannot be
the basis for a breach of contract counterclaim by WAW. (Id., at 18.)
In its present motion, WAW contends that adding a claim for breach of an
oral contact does not prejudice Jayhawk. “This is not a situation where WAW’s
oral agreement claim comprises an entirely new claim or theory of recovery or
unfair surprise, or changes the scope of the damages sought.” (Doc. 60, at 5 (citing
Theno v. Tonganoxie Unified Sch. Dist. No. 464, 394 F. Supp. 2d 1299, 1303 (D.
Kan. 2005).) As held by the Tenth Circuit, courts “must liberally construe the
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pretrial order to include ‘all the legal and factual theories inherent in the issues
defined therein.’” Whalley v. Sakura, 804 F.2d 580, 582-83 (10th Cir. 1986)
(citation omitted). WAW thus asks the Court to take “into account [its] factual
contentions and legal claims and defenses in their entirety” and reconsider its
ruling in order to “allow WAW to argue a breach of that portion of the parties’
agreement that was oral and not yet ‘papered.’” (Doc. 60, at 5.)
While the Court declines WAW’s request to reconsider – and overturn – its
prior Order, it will allow WAW to amend the Pretrial Order to include a
counterclaim relating to the breach of an oral contract. The five factors applicable
to a court’s determination as to the appropriateness of a requested modification to
the Pretrial Order are as follows: (1) prejudice or surprise to the party opposing
trial of the issue; (2) the ability of that party to cure any prejudice; (3) disruption
by inclusion of the new issue; (4) bad faith by the party seeking to modify the
pretrial order; and (5) the timeliness of the movant’s motion to amend the order.
Davey v. Lockheed Martin Corp., 301 F.3d 1204, 1210 (10th Cir. 2002) (citation
omitted).
Jayhawk contends that the proposed amendment “causes Jayhawk surprise
or prejudice,” such prejudice to Jayhawk cannot be cured, and the case will be
disrupted by adding this new claim. (Doc. 67, at 12.) The Court finds that
Jayhawk has not adequately established surprise, undue prejudice, or undue
disruption to the case. Rather, the Court agrees with WAW that, on balance, these
factors weigh in favor of amending the Pretrial Order. Given the language
contained in the Pretrial Order, as well topics addressed during the discovery phase
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of this case (see Doc. 60, at 7), Jayhawk will not be prejudiced or surprised by the
inclusion of a claim for breach of an oral contract. The timing of the present
motion, being made well before trial of this matter, makes disruption a non-factor.
Finally, there is no evidence of bad faith on the part of WAW.
The Court thus GRANTS the portion of WAW’s seeking amend the
“Counterclaims of Defendant” portion of the Pretrial Order.1 WAW is allowed to
include the following paragraph:
v. The original April 27, 2016 Dry Lease Agreement was
modified by oral agreement, actions of the parties, and
substantial performance by the parties of the modified
terms. The Parties agreed to let Jayhawk acquire a
majority membership interest in WAW and use WAW’s
Charter Certificate to operate N910VP’s charter
operations for forgiveness of half of the disputed
$250,000 guaranteed charter fee, and that WAW would
pay $125,000 to Jayhawk in cash to satisfy the remaining
½ of the guaranteed charter fee. The Parties worked
towards papering their deal. Once Jayhawk began flying
N910VP on WAW’s Charter Certificate, the Parties’ deal
was consummated other than the final contractual
paperwork.
(See Doc. 60, at 6.)
II.

Unjust Enrichment.
WAW also asks the Court to amend its ruling granting Jayhawk summary

judgment on WAW’s unjust enrichment counterclaim. (See Doc. 60, at 1, 9-10.)
1 The Court acknowledges Jayhawk’s concerns regarding the factual basis for WAW’s
breach of an oral contract claim. For purposes of this motion, these concerns do not,
however, preclude the Court from granting the request to amend the Pretrial Order given
how intertwined this issue is with the overall breach of contract issue, which remains
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WAW’s claim for unjust enrichment alleges that Jayhawk used the WAW 135 air
carrier certificates to operate its charter business “while negotiating the final terms
of [its] purchase of WAW,” resulting in a benefit to Jayhawk in the form of charter
revenue. (Doc. 8, at ¶¶ 65-68). WAW contends that there is a valid, existing
agreement controlling the charter operations of N910VP under the 135 air
certificate, the August 2017 Dry Lease, Side Letter No. 1, and Side Letter No. 2.
(See Doc. 54, at 31.)
The essential elements of a claim for unjust enrichment under Kansas law
are: (1) WAW conferred a benefit upon Jayhawk, (2) Jayhawk was aware, or had
an appreciation of, the benefits, (3) under circumstances making it inequitable for
Jayhawk to retain the benefit without payment of its value. T.R. Inc. of Ashland v.
Brandon, 32 Kan. App. 2d 649, Syl. 4, 655, 87 P. 3d 331 (2004).) Also under
Kansas law, it is well-established that “[u]njust enrichment falls under the category
of quantum meruit and restitution, and these ‘are not available theories of recovery
when a valid, written contract addressing the issue exists.’” Swimwear Solution,
Inc. v. Orlando Bathing Suit, LLC, 309 F.Supp.3d 1022, 1037 (D. Kan. 2018)
(citations omitted). In other words, “Kansas does not allow an unjust enrichment
claim where contractual remedies are available.” Id., at 1039 (citation omitted).
WAW asks that “[t]o the extent, if at all, that the presence of WAW’s oral
agreement claim in the Pretrial Order would have made a substantive difference in
the Court’s granting of summary judgment against WAW on the unjust enrichment
claim,” the Court should now “reverse such order and allow the unjust enrichment
pending after the Court’s summary judgment ruling. (Doc. 54.)
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claim as an alternative to WAW’s breach of contract claims.” (Id., at 2 (emphasis
in original).) The Court finds that the parties’ relationship is clearly defined by the
parties’ existing contract. Simply stated, a party may not bring a claim for unjust
enrichment on a matter covered by an agreement. As such, whether the matter is
covered by a written or an oral contract does not change the fact that summary
judgment on this claim is appropriate where a contract exists. As such, the Court
DENIES this portion of WAW’s motion.

IT IS THEREFORE ORDERED that WAW’s “Motion to Alter or Amend
Judgment Pursuant to Fed.R.Civ.P. 59(e) and to Amend the Pretrial Order” (Doc.
59) is GRANTED in part, as to the requested amendment of the Pretrial Order
regarding the existence of an oral contract, and DENIED in part, as to the
remainder of the motion.
IT IS SO ORDERED.
Dated this 17th day of June, 2020.
S/ KENNETH G. GALE

KENNETH G. GALE
United States Magistrate Judge

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