Fabas Consulting International, Inc. v. Jet Midwest, Inc.

Filing 72

ORDER granting 58 motion for summary judgment; granting 62 motion for partial summary judgment. Signed on 8/22/16 by Magistrate Judge John T. Maughmer. (Alexander, Pam)

IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MISSOURI
WESTERN DIVISION
Fabas Consulting Int’l, Inc.,
Plaintiff,
v.
Jet Midwest, Inc.,
Defendants.

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Civil Action Number
14-00907-CV-W-JTM

ORDER
On October 17, 2014, plaintiff Fabas Consulting International, Inc. (“Fabas”) filed the
present federal litigation against defendant Jet Midwest, Inc. (“Jet Midwest”). According to the
COMPLAINT, Fabas, a Florida corporation, is in the business of dealing in new and used
commercial aircraft parts for resale and lease to scheduled and regional commercial airlines in
Latin America. Conversely, Jet Midwest is a supplier of used commercial aircraft parts and
components, including aircraft engines, landing gear, wheels, brakes, auxiliary power units,
windshields and thrust reversers. In May of 2014, Fabas paid $150,000 for an auxiliary power
unit 1 for one of its customers in Mexico. The COMPLAINT alleges that the auxiliary power unit
delivered to Mexico “was unserviceable and otherwise defective due to extensive contamination
with sulfation, oxide, fungus and corrosion, and that the [auxiliary power unit] otherwise failed
to meet the requirements of [Aviation Suppliers Association Quality System Standard] ASA100
and [Federal Aviation Administration Advisory Circular] FAA AC005.” Consequently, Fabas
brought this suit against Jet Midwest alleging:

1

Essentially a used airplane engine.

(a)

fraudulent misrepresentation,

(b)

negligent misrepresentation,

(c)

breach of contract, and

(d)

breach of the Florida Deceptive and Unfair Trade Practices Act
[FLA. STAT. §§ 501.201, et seq.].

In a prior order, the Court dismissed Fabas’ two misrepresentation claims as well as the claim for
a violation of the Florida Deceptive and Unfair Trade Practices Act. Accordingly, Fabas’ breach
of contract claim is the only viable claim remaining in this case.
Following the completion of discovery and with trial approaching, the parties have filed
motions for summary judgment with the Court. Specifically, Fabas seeks summary judgment in
its favor on its remaining breach of contract claim [Doc. 58], while Jet Midwest seeks partial
summary judgment as to any claim that Fabas may assert for lost profits [Doc. 62]. The Court
will address each motion in turn.
The underpinnings of Fabas’ motion for summary judgment are both simple and
straightforward:
[T]he parties entered into a valid contract under which Fabas was
required to pay the sum of $150,020.00 to [Jet] for the purchase of
a working auxiliary power unit. Fabas complied with its obligation
to pay under the contract and paid [Jet Midwest] in full. However,
[Jet] failed to deliver a working [auxiliary power unit] to Fabas.
Jet Midwest does not dispute those basic facts, but notes that following the above-described
events “Fabas and Jet Midwest subsequently agreed Fabas would return the [auxiliary power
unit] in exchange for a full refund rather than for in-house credit as provided in Jet Midwest’s
standard return policy.”

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Summary judgment in favor of a plaintiff is “rare.” Doud v. Toy Box Development Co.,
LLC, 2014 WL 11309685, op. at *17 (S.D. Iowa Mar. 31, 2014). Nonetheless, the legal standard
under Rule 56 does not distinguish between plaintiffs and defendants:
A party may move for summary judgment, identifying each claim
or defense – or the part of each claim or defense – on which
summary judgment is sought. The court shall grant summary
judgment if the movant shows that there is no genuine dispute as to
any material fact and the movant is entitled to judgment as a matter
of law.
Fed. R. Civ. P. 56(a) (emphasis added). In this case, the Court concludes that Fabas has
adequately and sufficiently established that there are no genuine disputes as to the material facts
showing: (1) the existence and terms of a contract; (2) that Fabas performed or tendered
performance pursuant to the contract; (3) breach of the contract by Jet Midwest. These are three
of the four elements for a breach of contract claim under Missouri law. Keveney v. Missouri
Military Academy, 304 S.W.3d 98, 104 (Mo. 2010) (en banc).
The fourth element is a showing that “damages [were] suffered by the plaintiff.” Id.
Essentially, Jet Midwest’s argument is that genuine disputes exist between the parties about the
amount of damages sustained and recoverable by Fabas. The Court agrees that such disputes
exist, but concludes that such a finding does not preclude summary judgment. A breach of
contract claim only requires proof that damages were suffered, not the value of such damages.
Thus, in Monarch Fire Protection District of St. Louis County, Missouri v. Freedom Consulting
& Auditing Services, Inc., 678 F. Supp. 2d 927 (E.D. Mo. 2009), aff'd, 644 F.3d 633 (8th Cir.
2011), the district court could find disputes as to the amount of damages sustained by a plaintiff,
but still grant summary judgment on the plaintiff’s breach of contract claim, noting:
The [breach of contract] element requiring proof of damage does
not refer to proof of actual damages; in Missouri a party may

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recover nominal damages if a breach is established and no actual
damages are proven.
Id. at 935 (citing Carter v. St. John’s Regional Medical Center, 88 S.W.3d 1, 12 (Mo. [S.D.]
App. 2002)).
The Court concludes that summary judgment should be granted to Fabas on Count III of
its COMPLAINT alleging a breach of contract. To be clear, however, the Court does not make any
determination of the amount of damages sustained by Fabas or the impact, if any, of any alleged
post-breach agreement between Fabas and Jet Midwest on the reasonable amount of such
damages. The reasonable amount of Fabas’ recoverable damages for the breach of contract (as
limited by the Court’s ruling on Jet Midwest’s motion for summary judgment infra) will be a
matter for a factfinder to determine at trial.
In its motion for summary judgment, Jet Midwest argues that partial summary judgment
should be granted with regard to any claim by Fabas for lost profits. The parties are in basic
agreement as to the law in Missouri. In a breach of contract case, lost profits cannot be
recovered unless they are “made reasonably certain by proof of actual facts, with present data for
a rational estimate of their amount.” BMK Corp. v. Clayton Corp., 226 S.W.3d 179, 195 (Mo.
[E.D.] App. 2007). Under Missouri law then, the plaintiff must first establish the defendant’s
conduct actually caused some loss of profit. Id. If the plaintiff establishes the fact of lost
profits, the plaintiff must establish the amount with “reasonable certainty.” Id. Although not
requiring exact calculations, Missouri law nonetheless requires “exacting proof” to sustain lost
profits – i.e., there must be a substantial basis for an award and speculation is prohibited. Cole v.
Homier Distribution Co., 599 F.3d 856, 866 (8th Cir. 2010); Tipton v. Mill Creek Gravel, Inc.,
373 F.3d 913, 918 (8th Cir. 2004); Ameristar Jet Charter, Inc. v. Dodson International Parts,
Inc., 155 S.W.3d 50, 54 (Mo. 2005) (en banc) (“In evaluating the sufficiency of evidence to
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sustain awards of damages for loss of business profits the appellate courts of this state have made
stringent requirements, refusing to permit speculation as to probable or expected profits, and
requiring a substantial basis for such awards.”). In sum:
Under Missouri law, lost or anticipated profits of a commercial
business are generally deemed too remote, speculative, and too
dependent upon changing circumstances to warrant a judgment for
their recovery. Lost profits may be recovered only when they are
made reasonably certain by proof of actual facts, with present data
for a rational estimate of their amount.
EnerJex Res., Inc. v. Haughey, 453 S.W.3d 830, 835 (Mo. [W.D.] App. 2014).
Fabas purchased the auxiliary power unit from Jet Midwest in order to lease it to another
company, ABC Aerolineas S.A. DE C.V. (“Interjet”). The core of Fabas’ lost profits claim
relates to the lease agreement it had with Interjet. Specifically, Fabas alleges that it would have
earned over $150,000 by leasing the auxiliary power unit to Interjet for six months. Fabas also
claims that it would have made $350,000 in income from “exchange/lease of rotables” with
Interjet.
The lease agreement between Fabas and Interjet provided for the minimum number of
lease days to be “30 days from the date of shipment” of the auxiliary power unit. Moreover, the
lease agreement obligated Interjet to pay a “minimum lease fee” of $20,000. At the time of
entering into the lease with Fabas, Interjet was undertaking to have its own auxiliary power unit
repaired. To that end, Fabas’ corporate representative, produced pursuant to FED. R. CIV, P.
30(b)(6), testified that Interjet was “leasing [the auxiliary power unit from Fabas] until they were
able to get their own unit repaired.” Fabas’ corporate representative further testified that he did
not know when Interjet completed repairs on its own auxiliary power unit.
Based on the foregoing, the Court concludes that Fabas’ damage claim based on a six
month lease with Interjet and 1,200 hours of use of the auxiliary power unit by Interjet is too
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speculative. The Court acknowledges that Fabas has produced a declaration from “Israel PatinoFernandez” that describes Interjet’s use of an auxiliary power unit it allegedly had to obtain after
it concluded that the Jet Midwest auxiliary power unit was defective. However, the declaration
gives no indication of the declarant’s bases for this statement. Given the admissions of Fabas’
corporate representative, this declaration does not cure the speculative nature of Fabas’ damage
claim regarding the loss of profits from a six-month lease. 2
Fabas also claims damages based on its belief that the defective auxiliary power unit
provided to Interjet resulted in Fabas losing out on future income from an exchange/lease
business relationship with Interjet. Prior to the lease agreement involving the auxiliary power
unit, however, Fabas had never done a rotable 3 sale or lease with Interjet. On February 5, 2015,
though, Fabas received an email from Interjet indicating that Fabas “ha[d] been selected as the
best option” to have a 2015 rotable exchange program with Interjet regarding 27 designated
airplane component parts. In this lawsuit, Fabas claims that Interjet subsequently terminated this
proposed exchange program (although there apparently are no documents reflecting such a
termination by Interjet). Moreover, Fabas claims the termination was due to the defective
auxiliary power unit obtained from Jet Midwest and provided to Interjet. However, the subject
auxiliary power unit was found to be defective and rejected by Interjet on June 3, 2014.
It simply defies common sense (and reasonable inference) to conclude that Fabas lost out
on the rotable exchange program because of the defective auxiliary power unit provided to
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This includes any claim by Fabas for the “average repair costs” for auxiliary
power unit had it been leased for six months by Interjet.
3

In broad strokes, “rotables” are component or inventory items that can be
repeatedly and economically restored to a fully serviceable condition. In the aviation industry,
this can provide for a servicing method in which an already-repaired equipment is exchanged for
a failed equipment, which in turn is repaired and kept for another exchange.
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Interjet in June of 2014, when Interjet did not even select Fabas for the rotable exchange
program until February of 2015. The only way Fabas could even begin to satisfy its required
causal showing would be to resort to the sort of speculation and conjecture prohibited under
Missouri law.
The Court grants Jet Midwest’s motion to summary judgment to the extent it seeks to bar
Fabas from making any damage claim based on a lease agreement with Interjet continuing for six
months and for any damage claims based on Fabas’ alleged lost opportunity to participate in a
rotable exchange program with Interjet.
In accordance with the foregoing discussion, it is
ORDERED that the Fabas’ summary judgment motion on its remaining breach of
contract claim [Doc. 58] is GRANTED. It is further
ORDERED that Jet Midwest’s motion for partial summary judgment as to the claims
asserted by Fabas for lost profits [Doc. 62] is GRANTED.

/s/ John T. Maughmer

John T. Maughmer
United States Magistrate Judge

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