BLB Aviation South Carolina, LLC v. Jet Linx Aviation Corporation et al
Filing
122
MEMORANDUM AND ORDER - The defendants' motion for summary judgment (Filing No. 87 ) is denied in part and granted in part in accordance with this Memorandum and Order. The plaintiff's claim for breach of fiduciary duty is dismissed; the motion for summary judgment is denied in all other respects. Ordered by Chief Judge Joseph F. Bataillon. (GJG)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
BLB AVIATION SOUTH CAROLINA, LLC,
Plaintiff/ Counterdefendant,
v.
JET LINX AVIATION CORPORATION,
JAMIE WALKER, JET LINX AVIATION
LLC, and JET LINX MANAGEMENT
COMPANY, LLC,
Defendants.
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8:10CV42
MEMORANDUM AND ORDER
This matter is before the court on a motion for summary judgment filed by
defendants Jet Linx Aviation Corporation and Jamie Walker (collectively, “Jet Linx”), Filing
No. 87.1 The plaintiff, BLB Aviation South Carolina, LLC (“BLB Aviation”) alleges fraudulent
misrepresentation, negligent misrepresentation, breach of contract, breach of covenant of
good faith and fair dealing, and breach of fiduciary duty, in connection with an Aircraft Dry
Lease Agreement and an Aircraft Management Services Agreement involving aircraft
owned by BLB Aviation. See Filing No. 99, Second Amended Complaint. Jet Linx
generally denies BLB Aviation’s allegations and asserts the affirmative defenses of
anticipatory breach, setoff, waiver, failure to mitigate damages, performance, equitable
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Finding that the plaintiff’s proposed am endm ents were closely related to the current claim s and would
not significantly delay the case or affect discovery requirem ents, the m agistrate judge granted the plaintiff
leave, over the defendants’ objection, to file a second am ended com plaint in order to add allegations that the
defendants failed to keep accurate m aintenance records in violation of the Federal Aviation Regulations and
the contracts governing the parties’ relationship. Filing No. 98, Order. Those allegations provide additional
factual support for the claim s of breach of contract and breach of fiduciary duty that had already been asserted
by the plaintiff. See Filing No. 99, Second Am ended com plaint. BLB also added allegations that the
defendants m arked up the price of m aintenance work perform ed by third parties, thereby clarifying allegations
in the Am ended Com plaint. Id. These am endm ents will conform the pleadings to the facts. The filing of the
second am ended com plaint does not affect the issues presented in the m otion for sum m ary judgm ent.
estoppel, failure of conditions precedent, bar by integration, accord and satisfaction and
preemption by FAA regulations. See Filing No. 100, Answer. Jet Linx has also asserted
a counterclaim seeking damages for breach of contract, maintenance costs owed, and
costs. Id. Jurisdiction is based on diversity of citizenship under 28 U.S.C. § 1332.
In its motion, Jet Linx essentially asserts that it is entitled to judgment in its favor on
BLB Aviation’s claims because all disputes raised in plaintiff’s complaint were fully resolved
through an accord and satisfaction. Alternatively, Jet Linx contends that undisputed
evidence shows, as a matter of law, that BLB Aviation cannot prove its claims. It argues
that an August 6, 2008, letter demonstrates the parties’ intent to enter into an agreement
to terminate the relationship and constitutes an accord and satisfaction. It further argues
that BLB Aviation’s remaining claims are not valid under Nebraska law. It argues that the
alleged misrepresentation predate the contract and are barred under the parol evidence
rule. Further, it argues that the contract at issue creates no fiduciary duty on its part. In
opposition, BLB Aviation argues that there are genuine issues of material fact with respect
to the parties’ intent, that the parol evidence rule is inapplicable to a claim of fraud in the
inducement, and that the contract is in the nature of an agency agreement, under which
a fiduciary duty can arise.
I. FACTS
The parties agree to the following facts. See Filing No. 91, Brief at 2-5: Filing No.
95, Brief at 1-16. In or around March 2007, Jamie Walker approached Barry and Lee
Bellue (members or owners of BLB Aviation) about the possibility of Jet Linx managing its
aircraft. The 789 DJ was owned by BLB Aviation and/or Barry Bellue at that time and the
400GK was acquired by Lee Bellue after Walker’s initial contact with the Bellues. The
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parties came to an agreement that the 400GK would be leased to Jet Linx under the terms
of a Dry Lease Agreement and the 789DJ would be managed by Jet Linx under the terms
of a Management Services Agreement. On or about August 1, 2008, Jet Linx notified the
FAA that both aircraft should be placed on Jet Linx “certificate.” Jet Linx has demanded
that BLB Aviation pay outstanding maintenance charges.
From almost the beginning of the contractual relationship between the parties,
disputes arose regarding lease payments from Jet Linx to BLB Aviation and maintenance
charges made by Jet Linx for which BLB Aviation was required to pay. In May and June
of 2008, the disputes between the parties became increasingly hostile, resulting in BLB
Aviation taking over management of the 789DJ and moving it to Baton Rouge. Jet Linx
then informed BLB Aviation that it was not interested in continuing the Dry Lease
Agreement under the existing terms and proposed to BLB Aviation that the 400GK
continue to be leased to Jet Linx under a Dry Lease Agreement with terms different from
the original Dry Lease Agreement.
Subsequently, there arose a dispute involving an outstanding insurance claim for
payment of the cost of an engine tear-down and inspection of an engine. Most of the facts
surrounding the incident are disputed, though the parties agree that ultimately Jet Linx
contested the insurer’s decision and the insurance carrier gave a more detailed response
discussing its reasons for refusing to cover the claim but maintained its position denying
coverage. In November 2008, Barry Bellue contacted Jet Linx and suggested that Jet Linx
buy the 400GK for $1.2 million. Jet Linx indicated it had no interest in purchasing the
aircraft. Jet Linx admits it has assessed maintenance charges against BLB Aviation in
connection with N789DJ and N400GK, but denies that those maintenance charges were
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incurred in accordance with the BLB Aviation agreements. BLB Aviation denies that such
charges were proper. BLB Aviation admits that it refuses to pay improper maintenance
charges. In December 2008, after its insurance carrier’s final decision on coverage for the
engine tear-down on the 789DJ, Jet Linx sent an invoice for that charge to BLB Aviation.
Both parties have submitted voluminous evidence in support of their respective
positions. See Filing No. 104, Index of Evid., Filing No. 88, Index of Evid.; Filing No. 89,
Affidavit of Jamie Barrett; Filing No. 90, Affidavit of Jamie Walker; Filing No. 92, Index of
Evid., Attachments (continued). In opposition to the motion, BLB Aviation has submitted
evidence that shows that on or about August 8, 2008, BLB Aviation received a letter from
Jet Linx dated August 6, 2008, describing a purported “agreement” between the parties
and enclosing a check. Filing No. 104, Index of Evid., Ex. 1, Decl. of Barry Bellue, Sr. at
7-8. The check did not contain a statement that it was a full settlement of all claims
between the parties. Id. at 8. Barry Bellue disputes that he agreed to the terms of the
letter. Id.
II. Discussion
A. Law
1. Summary Judgment Standards
Summary judgment is appropriate when, viewing the facts and inferences in the light
most favorable to the nonmoving party, “the pleadings, the discovery and disclosure
materials on file, and any affidavits show that there is no genuine issue as to any material
fact and that the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c).
The plain language of Rule 56(c) mandates the entry of summary judgment, after adequate
time for discovery and upon motion, against a party who fails to make a showing sufficient
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to establish the existence of an element essential to that party’s case, and on which that
party will bear the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322
(1986). “A party seeking summary judgment always bears the initial responsibility of
informing the district court of the basis for its motion, and identifying those portions of ‘the
pleadings, depositions, answers to interrogatories, and admissions on file, together with
the affidavits, if any,’ which it believes demonstrate the absence of a genuine issue of
material fact.” Id. at 323. If the moving party meets the initial burden, the burden then
shifts to the opposing party to produce evidence of the existence of a genuine issue for
trial. Id. at 324.
“The inquiry performed is the threshold inquiry of determining whether there is the
need for a trial—whether, in other words, there are any genuine factual issues that properly
can be resolved only by a finder of fact because they may reasonably be resolved in favor
of either party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). A “genuine”
issue of material fact exists “when there is sufficient evidence favoring the party opposing
the motion for a jury to return a verdict for that party.” Id. at 251-52 (1986) (noting the
inquiry is whether the evidence presents a sufficient disagreement to require submission
to a jury or whether it is so one-sided that one party must prevail as a matter of law). If
“reasonable minds could differ as to the import of the evidence,” summary judgment should
not be granted. Id. at 251.
The evidence must be viewed in the light most favorable to the nonmoving party,
giving the nonmoving party the benefit of all reasonable inferences. Kenney v. Swift
Transp., Inc., 347 F.3d 1041, 1044 (8th Cir. 2003). “In ruling on a motion for summary
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judgment, a court must not weigh evidence or make credibility determinations.” Id. “Where
the unresolved issues are primarily legal rather than factual, summary judgment is
particularly appropriate.” Koehn v. Indian Hills Cmty. Coll., 371 F.3d 394, 396 (8th Cir.
2004).
2. Accord and Satisfaction
An accord and satisfaction is an agreement to discharge an existing indebtedness
by the rendering of some performance different from that which was claimed due.
Peterson v. Kellner, 513 N.W.2d 517, 519 (Neb. 1994). The burden of proof to maintain
an alleged accord and satisfaction is on the party seeking to enforce it. Lone Cedar
Ranches, Inc. v. D.B. Jandebeur, 523 N.W.2d 364, 369 (Neb. 1994). To establish accord
and satisfaction, that party must prove (1) the existence of a bona fide dispute between the
parties, (2) substitute performance was tendered in full satisfaction of the claim, and (3)
BLB Aviation accepted the tendered performance.
Peterson, 513 N.W.2d at 519.
Defendants also must show that the parties had a meeting of the minds to the putative
accord and satisfaction. Lone Cedar Ranches, 523 N.W.2d at 369. This intent requirement
is the “key element” of accord and satisfaction and is a question of fact. Id.; Lone Cedar
Ranches, 523 N.W.2d at 369. Only when the evidence “creates no conflict as to intent” is
a court allowed to determine that the parties had the requisite intent as a matter of law.
Id. Moreover, “the mere cashing of a check for partial payment sent by a debtor will not
bring about an accord and satisfaction absent an intent to settle the claim.” Journal
Broadcast Group, Inc. v. Spaghetti Works Restaurants, 2000 WL 1375541 (Neb. App.
Sept. 26, 2000).
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3. Breach of Contract/Parol Evidence Rule
Under Nebraska law, the meaning of a contract and whether a contract is
ambiguous are questions of law. Kluver v. Deaver, 714 N.W.2d 1, 5 (Neb. 2006). A
contract written in clear and unambiguous language is not subject to interpretation or
construction and must be enforced according to its terms. Lexington Ins. Co. v. Entrex
Commc’n Servs., 749 N.W.2d 124, 132 (2008). Proof of prior or contemporaneous oral
agreements that alter, vary, or contradict the terms of a written agreement are generally
inadmissible under the parol evidence rule; however, the parol evidence rule does not
prevent reception or consideration of evidence to prove promissory fraud. Abbott v. Abbott,
195 N.W.2d 204, 208 (Neb.1972). A merger clause or disclaimer in a contract is ineffective
to preclude a trier of fact from considering whether fraud induced formation of the bargain.
Camfield v. Olsen, 164 N.W.2d 431 (Neb.1969).
4. Fraudulent and Negligent Misrepresentation
To succeed on a claim of fraudulent misrepresentation, a plaintiff must prove: (1)
that a representation was made; (2) that the representation was false; (3) that when made,
the representation was known to be false or made recklessly without knowledge of its truth
and as a positive assertion; (4) that the representation was made with the intention that the
plaintiff should rely on it; (5) that the plaintiff did so rely on it; and (6) that the plaintiff
suffered damage as a result. Knights of Columbus Council v. KFS BD, Inc., 791 N.W.2d
317, 331 (Neb. 2010).
Negligent misrepresentation has essentially the same elements as fraudulent
misrepresentation, with the exception of the defendant’s mental state. Lucky 7, L.L.C. v.
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THT Realty, L.L.C., 775 N.W.2d 671, 674 (Neb. 2009).
While a fraudulent
misrepresentation claim requires proof that the defendant knew the statement was untrue
or was reckless as to whether the statements were true or false, negligent
misrepresentation merely requires proof that the defendant failed to exercise reasonable
care or competence to obtain or communicate true information. Flamme v. Wolf Ins.
Agency, 476 N.W.2d at 809 (Neb. 1991) (Shanahan, J., concurring).
The
difference
between
fraudulent
misrepresentation
and
negligent
misrepresentation is the duty required in each claim. Gibb v. Citicorp Mortg., Inc., 518
N.W.2d 910, 921 (Neb. 1994). In fraudulent misrepresentation, one becomes liable for
breaching the general duty of good faith or honesty. Id. However, in a claim of negligent
misrepresentation, one may become liable even though acting honestly and in good faith
if one fails to exercise the level of care required under the circumstances. Id.
In a contract situation, the contractual relationship creates the duty to disclose.
Streeks, Inc. v. Diamond Hill Farms, Inc., 605 N.W.2d 110, 117 (Neb. 2000).
In
nondisclosure cases, whether a duty to speak exists is determined by all the circumstances
of the case. Id. at 118. It is consistently recognized that one party to a business
transaction is under a duty to exercise reasonable care to disclose facts basic to the
transaction, if: 1) he knows that the other is about to enter into the transaction under a
mistake as to those facts; and 2) that the other party, because of the relationship between
them, the customs of the trade or other objective circumstances, would reasonably expect
a disclosure of those facts. Id. at 120.
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5. Fiduciary Duty/Agency
A fiduciary relationship does not arise merely because parties enter into a contract.
Huffman v. Poore, 569 N.W.2d 549, 562 (Neb. App. 1997) (noting that a fiduciary duty
arises out of a confidential relation, which exists when one party gains the confidence of
another and purports to act or advise with the other’s interest in mind). Agency is the
fiduciary relation which results from the manifestation of consent by one person to another
that the other shall act on his behalf and subject to his control, and the consent of the other
to so act. Deutsche Bank Nat. Trust Co. v. Siegel, 777 N.W.2d 259, 263 (Neb. 2010).
B. Analysis
The court has reviewed the evidence submitted in favor of and against the motion
and finds that there is a genuine issue of material fact with respect to whether there was
a meeting of the minds in connection with the purported “accord and satisfaction.” Jet Linx
has not sustained its burden to show there was an agreement. Resolution of the issue will
require assessments of credibility.
Further, Jet Linx has not shown that it is entitled to judgment as a matter of law on
BLB Aviation’s breach of contract and misrepresentation claims. Jet Linx has not shown
that there are no genuine issues of material fact with respect to the elements of BLB
Aviation’s fraud and misrepresentation claims. The parol evidence rule is not applicable
to a claim of fraud. Accordingly, the court finds Jet Linx’s motion for summary judgment
should be denied with respect to those claims.
However, there generally is no fiduciary relationship between parties to a contract.
The court has reviewed the agreements at issue and finds that the agreements do not
create an agency relationship between the parties. The contracts were arms-length
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transactions between sophisticated businessmen. Accordingly, the court finds Jet Linx’s
motion for summary judgment should be granted with respect to the plaintiff’s breach of
fiduciary duty claim.
IT IS ORDERED:
1. The defendants’ motion for summary judgment (Filing No. 87) is denied in part
and granted in part in accordance with this Memorandum and Order.
2.
The plaintiff’s claim for breach of fiduciary duty is dismissed; the motion for
summary judgment is denied in all other respects.
DATED this 28th day of June, 2011.
BY THE COURT:
s/ Joseph F. Bataillon
Chief United States District Judge
*This opinion m ay contain hyperlinks to other docum ents or W eb sites. The U.S. District Court for
the District of Nebraska does not endorse, recom m end, approve, or guarantee any third parties or the services
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the opinion of the court.
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