Blue Sky Avgroup, LLC v. Epic Air, LLC
Filing
206
OPINION AND ORDER - Defendants' Motion 185 to Dismiss Pursuant to Rule 12(b)(6) is GRANTED and counts VI, VII, and X are dismissed without prejudice. Plaintiff's request for leave to amend the complaint pursuant to Rule 15 is GRANTED. Plaintiff is directed to file an amended complaint in accordance with this court's decision on or before 12/12/12. IT IS SO ORDERED. DATED this 29th day of November, 2012, by United States Magistrate Judge John V. Acosta. (peg)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
PORTLAND DIVISION
BLUE SKY A VGROUP, LLC, a Florida
Limited Liability Company, and JOHAN
CHARL BRINK, jointly and severally,
Civ. No. 3:09-CV-628-AC
OPINION AND ORDER
Plaintiffs,
v.
EPIC AIR LLC, a Delaware Limited
Liability Company; AIRCRAFT
COMPLETION SERVICES, LLC, a
Delaware Limited Liability Company;
RICHARD SCHRAMECK; JEFF
SANDERS; MICHAEL SHEALY;
DOUGLAS KING; DARYL INGALSBE;
STEVEN FINDLEY; AND MICHEL
LAHAIE,
•...
Defendants.
ACOSTA, Magistrate Judge:
Page 1 - OPINION AND ORDER
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Introduction
Plaintiff Johan Chari Brink ("Plaintiff') brought, as part of a ten-count multi-party suit,
claims for conversion and conspiracy to commit conversion against defendants Steven Findley
("Findley") and Daryl Ingalsbe ("'ngalsbe") (collectively "Defendants") arising out of an
agreement to purchase and construct experimental airplanes.
Plaintiff and Defendants all
purchased "kit" experimental airplanes from Epic Air, LLC ("Epic").
Plaintiff alleges
Defendants converted parts from the kit airplane Plaintiff purchased from Epic and the parts are
now in Defendants' planes.
Counts VI and VIII of Plaintiffs Fourth Amended Complaint
("Complaint") are claims for conversion against Defendants Ingalsbe and Findley, respectively;
and Count X alleges Defendants, along with Richard Schrameck ("Scln·ameck"), another named
defendant, conspired to commit conversion. 1
(hereinafter "Fourth Am. Compl."),
~
(Plaintiffs Fourth Amended Complaint
74-77, 82-85, 89-93 (Docket No. 148).) On the claims at
issue in this matter, Plaintiff is seeking monetary damages, pre- and post-judgment interest, and
litigation costs.
,
Before the court now is Defendants' Motion to Dismiss Pursuant to FED. R. C!V. P.
12(b)(6). Defendants seek to dismiss Counts VI, VIII, and X of the Complaint. According to
Defendants, Plaintiff never owned the airplane parts he alleges Defendants converted.
Conversely, Plaintiff contends Defendants are both judicially and collaterally estopped from
bringing their motion for dismissal.
Additionally, Plaintiff requests leave to amend his
1
On January 17, 2012, this court issued a Consent Final Judgment in Plaintiffs favor as to
Counts I, II, III, V, and X against Schrameck. As to these counts, Schrameck was ordered to pay
Plaintiff $1,383, 716.38. Defendants consented to entry of judgment, against Scln·ameck only
and not against Findley or Ingalsbe. Schrameck, tln·ough business entities he owned and
controlled, had a membership interest of approximately 42% both in Epic and Aircraft
Completion Services, LLC, until approximately July of2009. He was·a managing member of
both companies.
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Complaint to allege he acknowledged completion of the airplane and thus did own the parts at
issue in this matter. Plaintiff has not alleged that the parts were included in his airplane. In fact,
the contracts attached to his Complaint do not show the parts were ever included in the airplane
kit. Even if Plaintiff did allege this fact, the terms of the contract set fmih conditions under
which Plaintiff would have established legal ownership of the patis. Plaintiff has not alleged he
met the explicit terms of the contract that would have given him title and ownership of the parts.
Oral argument on Defendant's motion was heard on October 9, 2012. For these reasons
as set fmih below, Defendants' Motion to Dismiss Pmsuant to FED. R. CIV. P. 12(b)(6) is
granted. 2
Background
The following facts are not in dispute. In January of 2007, Plaintiff entered into an
Airframe Pmchase Agreement ("Purchase Agreement") with Epic to purchase an airframe kit
from the company. (Pl.'s Fourth Am. Compl.
~
21.) The Purchase Agreement provided for the
delivery of an Epic experimental kit airplane frame to Plaintiff, an amateur airplane builder.
Exhibit B of the Purchase Agreement provided that the airplane frame consisted of the fuselage,
'
wings, landing gear, engine mount, controls, windshield and side glass, wheels, brakes, seat
frames, machine parts, and assembly materials. (Pl.'s Fomih Am. Compl. Ex. C, at 8.)
A second contract, the Completion Assistance Agreement ("Completion Agreement"),
was executed contemporaneous to the Purchase Agreement. (Pl.'s Fomth Am. Compl.
~
21.)
The Completion Agreement provided that Aircraft Completion Services, LLC ("ACS") would
assist Plaintiff with completion of the kit airplane. The Completion Agreement specifically
2
The parties have consented to jurisdiction by magistrate in accordance with 28 U.S.C. §
636(c)(l).
Page 3 - OPINION AND ORDER
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called for completion, certification of airworthiness, and delivery of the airplane from Epic to
Plaintiff in Bend, Oregon.
Together, the Purchase Agreement and Completion Agreement
required Plaintiff to pay a total of $1,383,716.38 to Epic prior to the airplane being completed
and delivered. Plaintiff made prepayments totaling the required amount.
Defendants in this matter each also entered into a Purchase Agreement with Epic and a
Completion Agreement with ACS for the completion and delivery of similar kit airplanes. Each
party expected his contracts would result in the purchase of a kit airplane frame, mechanical
parts to turn the frame into a functioning aircraft, and assistance from ACS to complete the kit
airplane.
Plaintiffs claims against Defendants arise out of his contractual relationship with ACS.
To date, Plaintiff has not received a completed Epic kit aircraft from ACS. Plaintiff alleges
Defendants converted pmis from his airplane when they removed the parts from Plaintiffs plane
and installed them in their own airplanes. (Pl.'s Fourth Am. Compl.
~
91.) Plaintiff alleges that
in April or May of 2009, Defendants convetied pmis belonging to Plaintiffs airplane;
specifically, a Pratt Whitney PT6-67 A ("Pratt Whitney") engine, tach generators, and avionics.
f
Plaintiff alleges that his airplane was "looted" following completion and prior to delivery to
Plaintiff. (Pl.'s Fomth Am. Compl.
~
29.) Plaintiff contends the parts at issue were initially
installed in his airplane, removed when his airplane was looted, and are now in Defendants'
planes. Plaintiff alleges Ingalsbe conve1ted to his own use the Pratt Whitney engine and that the
engine is now in Ingalsbe's plane. Plaintiff alleges Findley converted to his own use the tach
generators and avionics and those parts are now in Findley's plane. Plaintiff further alleges
Defendants conspired with Schrameck to divCli Plaintiffs airplane parts to Defendants' planes.
(Pl.'s Fomth Am. Compl.
~
90.)
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Legal Standard
I.
FED. R. CIV. P. 12(b)(6)
Rule 8(a) govems pleadings, and provides that a claim for relief must contain "a short
and plain statement of the claim showing that the pleader is entitled to relief."
8(a) (2009).
FED.
R. C!V. P.
The Supreme Court addressed this pleading standard in Bell Atlantic C01p. v.
Twombly, 550 U.S. 544 (2007). The Court explained the need for including sufficient facts in
the pleading in order to provide proper notice of the claim and the basis on which it rests:
"While a complaint attacked by a Rule 12(b)( 6) motion to dismiss does not need detailed factual
allegations, a plaintiffs obligation to provide the 'grounds' of his 'entitlement to relief requires
more than labels and conclusions, and a formulaic recitation of the elements of a cause of action
will not do." !d. at 545 (brackets omitted). Still, the Court explained, "a well-pleaded complaint
may proceed even if it strikes a savvy judge that actual proof of those facts is improbable, and
that 'a recovery is very remote and unlikely."' Id. at 556 (quoting Scheuer v. Rhodes, 416 U.S.
232, 236 (1974).). Although Twombly was an antitrust case, the Conti has since made clear the
pleading standard set fmih in Twombly is generally applicable to all cases govemed by the
I
Federal Rules of Civil Procedure. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
The Court in Ashcroft v. Iqbal discussed two principles central to the Twombly decision.
First, although the couti must assume all facts assetied in a pleading are true, it need not accept
as true any legal conclusions set fmih in a pleading. Second, the complaint must set fmih a
plausible claim for relief, rather than merely a possible claim.
On that point, the Court
explained: "[d]etermining whether a complaint states a plausible claim for relief will ... be a
context-specific task that requires the reviewing court to draw on its judicial experience and
common sense." Iqbal, 556 U.S. at 679. The Court concluded that, "[w]hile legal conclusions
Page 5 - OPINION AND ORDER
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can provide the framework of a complaint, they must be supported by factual allegations. When
there are well-pleaded factual allegations, a court should assume their veracity and then
determine whether they plausibly give rise to an entitlement to relief." Id. at 664. Under FED. R.
CIV. P. 12(b)(6), dismissal for failure to state a claim is proper only when it appears to a certainty
Plaintiff can prove no set of facts in support of his claim that would entitle him to relief.
Litchjieldv. Spielberg, 736 F.2d 1352, 1357 (9th Cir. 1984)
In this case, Plaintiff attached the Purchase Agreement and the Completion Agreement as
exhibits to the Complaint. When documents are attached to a complaint, the court can consider
the attachments as pati of the complaint itself when detem1ining whether the nonmovant can
prove facts to support his claim that would be sufficient to defeat a 12(b)( 6) motion for
dismissal. "If a complaint is accompanied by attached documents, the court is not limited by the
allegations contained in the complaint. These documents are part of the complaint and may be
considered in determining whether the plaintiff can prove any set of facts in support of the
claim." Durning v. First Boston Corp., 815 F.2d 1265, 1267 (9th Cir. 1987) (internal citation
omitted).
II.
Leave to Amend
Rule 15 governs amendments to pleadings, and states, in relevant part, that where a party
has already been served with a responsive pleading, "a pmiy may amend its pleading only with
the opposing pmiy's written consent or the court's leave. The comi should freely give leave
when justice so requires." FED. R. CIV. P. 15(a)(l )-(2) (20 12). The standard applied to motions
for leave to amend is a liberal one. Amerisource Bergen Co. v. Dialysis West, Inc., 465 F.3d 946,
951 (9th Cir. 2006).
Even so, "a district court need not gra11t leave to amend where the
amendment: (1) prejudices the opposing pmiy; (2) is sought in bad faith; (3) produces an undue
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delay in litigation; or (4) is futile." I d. Furthermore, "[w]here the plaintiff has previously filed
an amended complaint ... the district court's discretion to deny leave to amend is 'particularly
broad."' },;filler v. Yokohama Tire Corp., 358 F.3d 616, 622 (9th Cir. 2004) (citing Chodos v.
West Publishing Co., 292 F.3d 992, 1003 (9th Cir. 2002) (citation omitted)).
Discussion
Before reaching the merits of the motion to dismiss, there are two preliminary matters the
court must address.
First, Defendant requests judicial notice of the prior bankruptcy
proceedings. Second, Plaintiff argues Defendants are collaterally and judicially estopped from
bringing the motion for dismissal on the conversion claims.
I.
Judicial Notice
FED. R. EVID. 201(b) provides the court may judicially notice two categories of facts that
are "not subject to reasonable dispute." A fact may be judicially noticed if it "(1) is generally
known within the trial court's territorial jurisdiction; or (2) can be accurately and readily
determined from sources whose accuracy cannot reasonably be questioned." FED. R. EVID.
201 (b)(1 )-(2) (20 11 ). The subject documents meet these requirements:
l
they are pmi of an
official court file kept by the Bankruptcy Court in this District and their accuracy cannot
reasonably be questioned- and in fact has not been here. Thus, the court takes judicial notice of
the three filings and the Order from the prior bankruptcy proceeding. (Han·is Dec!. Ex. 1-4, June
12, 2012.)
II.
Collateral Estoppel
Plaintiff contends collateral estoppel bars Defendants from litigating ownership of the
airplane parts because the issue was decided in the bankruptcy proceeding. Plaintiff argues
because Defendants were creditors in the consolidated bankruptcy proceedings, they previously
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litigated the issue on which they now move to dismiss: Whether ACS or the purchasers of the
airplanes, including Plaintiff and Defendants, owned "the partially completed ahplanes, the parts
on those planes and the parts needed to complete those planes." (Pl.'s Opp'n. Mot. Dismiss 8).
Plaintifi explains a motion was filed by the tmstee during the bankruptcy proceeding to approve
an auction of most of the companies' assets, including airplane parts and accessories that the
creditors claimed were actually theirs. The bankruptcy court agreed the creditors did own the
airplanes and the ahplane parts.
Plaintiff contends because the creditors had objected to the motion to auction off the
airplanes and the parts on the ground, the parts belonged to the creditors rather than to the
airplane company debtors, and Defendants cannot now argue the parts at issue here did not
belong to Plaintiff. Plaintiffs argument is not supported by the bankruptcy proceeding record.
The doctrine of collateral estoppel, alternatively known as issue preclusion, bars pmiies from relitigating issues already decided "in previous litigation between the same pmiies." Clark v. Bear
Stearns & Co., Inc., 966 F.2d 1318, 1320 (9th Cir. 1992). For re-litigation of an issue to be
precluded und1er this doctrine, three elements must be met:
(1) the issue at stake must be identical to the one alleged in the prior litigation; (2)
the issue must have been actually litigated in the prior litigation; and (3) the
detmmination of the issue in the prior litigation must have been a critical and
necessary part of the judgment in the earlier action."
I d.
Plaintiffs Complaint does not allege facts sufficient to meet the first element.
The
creditors argued in. the bankruptcy proceeding the airplanes and airplane parts as a whole
belonged to the creditors rather than to the debtors. At no time in the bankruptcy proceeding did
Defendants allege the parts at issue in this case belonged to Plaintiff. The bankruptcy comi did
not reach the issue of who owned specific airplane parts, and for the airplane parts specific to this
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conversion action, ownership is of central importance. The bankruptcy court allowed creditors
to tag airplanes and pmis that remained on Epic's premises, therein asserting ownership to the
airplanes and parts. The judge then resolved that the creditors, not Epic, owned the tagged items.
Plaintiffs parts were not on the property and did not go through the tagging process. The
bankruptcy couti never reached the issue of who owned Brink's airframe kit, any pmis currently
or formerly installed on his airplane, or any airplane parts specified in the Completion
Agreement. The issue in this matter is not identical to any issue litigated during the bankruptcy
proceeding, and collateral estoppel does not apply to bar Defendants' arguments here.
III.
Judicial Estoppel
Plaintiff also contends judicial estopped bars Defendants from asserting the airplane parts
in question do not belong to him. The United States Supreme Court has held certain factors may
trigger judicial estoppel, though the court noted the factors "do not establish inflexible
prerequisites or an exhaustive formula for determining the applicability of judicial estoppel.
Additional considerations may inform the doctrine's application in specific factual contexts."
New Hampshire v. lvfaine, 532 U.S. 742,751 (2001).
The Comi nevertheless set fmth three factors that "typically inform the decision whether
to apply the doctrine." Id.
The factors are: (1) the party's later position must be "clearly
inconsistent with its earlier position"; (2) "whether the party has succeeded in persuading a comt
to accept that pmty's earlier position, so that judicial acceptance of an inconsistent position in a
later proceeding would create the perception that either the first or the second court was misled";
and (3) "whether the party seeking to assert an inconsistent position would derive an unfair
advantage or impose an unfair detriment on the opposing party if not estopped." Id. at 750-1
(internal quotations omitted).
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With respect to the first factor, Plaintiff challenges Defendants' argument that Plaintiff
does not own the parts because he never received a Completion Notice. Plaintiff contends
Defendants argued in the bankruptcy proceeding that the amateur builders owned the pmiially
completed planes and the parts needed to complete them, and they cannot now argue he did not
own all the parts to his airplane. In suppmi of his request for judicial estoppel, Plaintiff offers
pmiions of "The Certain Creditors' Objection to Trustee's Motion for Orders Authorizing
Auction, Approving Bidding Procedures, Approving Purchase Agreement or Overbid, and for
Related Relief, Consolidated Bankruptcy Proceeding Docket No. 269." (Elken Decl. Ex. 1, June
29, 2012.)
The creditors, who included Defendants/ presented this document during the bankruptcy
proceeding, and Plaintiff contends it is clearly inconsistent with Defendants' current position.
The relevant portion of the motion reads: "The Trustee Should Not Be Permitted to Sell Assets
that Are Not Property of the Estate under the APA ... Upon information and belief, a substantial
part of all the personal property, pmis, aircraft accessories, etc., currently located in the facility,
belon?s to the builders." (Pl.'s Opp'n. Mot. Dismiss 12.) This language refutes Plaintiffs
argument that Defendants are taking an inconsistent position. As the bankruptcy motion shows,
the collective creditors argued a substantial amount of the airplanes and parts on ACS's and
Epic's prope1iy belonged to the amateur kit airplane builders. Defendants, as part of this larger
collective, did not at any point attempt to argue Plaintiff owned all of the parts he is now
claiming, nor that any of Plaintiffs airframe kit or airplane parts were included in that
"substantial amount."
Defendants' position in the bankruptcy proceeding was general and
3
Defendant Ingalsbe participated in the bankruptcy proceeding through his company
Independent Technologies Inc.
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nonspecific, and did not include the issue in dispute here, namely, ownership of these identified
parts. Accordingly, Plaintiff is unable to satisfy the first prong of judicial estoppel by showing
Defendants previously took a clearly inconsistent position.
Because Plaintiff has failed to establish the first factor for judicial estoppel, the court
need not reach the second and third requirements, but briefly references them here to fully
explain the denial of judicial estoppel to these claims. As no prior court found Plaintiff to have
ownership or possessory interest in these airplane parts, there is no misleading of either this court
or the bankruptcy court. Additionally, the coUlt does not find Plaintiff is seeking to assert an
inconsistent position here. Accordingly, Plaintiffs request for the court to invoke the doctrine of
judicial estoppel is denied.
IV.
Counts VI and VII: Conversion Claims
Plaintiff alleges Ingalsbe converted Plaintiffs engine and the engine is now in Ingalsbe's
airplane. Plaintiff alleges Findley convetted his plane's tach generator and the avionics, and the
parts are claimed now to be in Findley's airplane. To maintain a plausible claim for conversion
4
against each Defendant under Oregon law, Plaintiff mu~t plead he had actual possession or the
right to possession of the airplane pmts and Defendants intentionally exercised control over the
parts, which resulted in a substantial interference with Plaintiffs right to the parts. See Oregon
Bankv. Fox, 73 Or. App. 612,615 (1985).
Plaintiff argues the allegations in the Complaint are sufficient, because a plaintiff who
brings a conversion action need not allege actual ownership of the chattel; rather, "at least a
possessory interest" at the time of the alleged conversion is sufficient. Genova v. Johnson, 213
Or. 47, 52 (1958). The comt agrees that a possessory interest in the airplane parts would be
4
There is no dispute that Oregon law applies to Plaintiffs claims in this case.
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sufficient here. However, Plaintiffs documentation attached to the Complaint shows Plaintiff
had no legal possessory interest in the contested parts.
Plaintiff need not plead absolute ownership of the airplane pmis in order to prevail on his
conversion claim, but he must have had possession or a right to possession of these chattels at the
time of the conversion. Hunt v. First Nat'/ Bank, 102 Or. 398, 399 (1921). The issue in this
matter, then, is whether Plaintiff had actual possession, or a right to such possession, of the
engine, tach generators, and avionics at the time Defendants took possession of the parts.
Whether Plaintiff can show a right to possession of the parts hinges on the contracts that govem
the sale and completion of the kit airplane:
the Purchase Agreement and the Completion
Agreement.
Although Plaintiffs conversion allegation is a tort claim, the court also looks to contract
law here, as the Purchase Agreement and Completion Agreement are the contracts that govern
the sale of the kit aitplane from Epic to Plaintiff, and the completion of the plane by ACS. To
state a claim for the conversion tort, Plaintiff must show that he had possession or a right to
1
possession of the airplane parts at issue in this case. Hunt, 102 Or. at 399.
The comi agrees with Defendants that OR. REV. STAT. Chapter 72, "Sales," governs this
contract issue. While it is true the Purchase Agreement and Completion Agreement provide for
both goods and services, the Oregon Supreme Court views the sale of an aitplane as "goods"
even though included as part of the sale is a service, such as an inspection to ensure
airworthiness as provided in the Completion Agreement. See Lanners v. Whitney, 247 Or. 223,
232-33 (1967). Hence, the detenninative issue with respect to Plaintiffs possessory interest in
the pmis is governed by the Purchase Agreement and Completion Agreement, and by OR. REV.
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STAT. Chapter 72, which Plaintiff attached to his Complaint. The court now considers these
contracts in tandem with the Complaint itself.
The Completion Agreement governs Plaintiffs possessory interest in the parts, because
that contract specifically defines when Plaintiff acquires a possessory interest. Plaintiff executed
the Purchase Agreement with Epic and, as did all other purchasers, agreed to complete
construction of the kit (making it a functioning airplane) via the Completion Agreement with
ACS. Defendants entered into similar agreements, and all patiies expected to receive completed
airplanes as a result of the agreements each entered into with Epic and ACS. Plaintiffs Purchase
Agreement is accompanied by an attached Completion List which appears as "Exhibit B to
Airframe Purchase Agreement." (Pl.'s Fmnih Am. Compl. Ex. C, at 8.) Defendants each also
have a Completion List attached to their agreements with Epic, though there are material
differences between Plaintiffs and Defendants' Completion Lists.
Each Defendant's List is attached to his Completion Agreement, rather than to his
Purchase Agreement, and appears as "Exhibit B to Aircraft Completion Agreement." (Defs.'
Reply Ex. A, at 11, 19.) Each Defendant's List, specifically contains a Pratt Whitney PT6-67A
engine, and an avionics package. 5 These, of course, are the same types of parts Plaintiff claims
were converted from his own aircraft.
Plaintiffs Completion List itemizes the main components of his EPIC Airframe Kit.
Missing from that list are the key pmis which are disputed in this case - a Pratt Whitney engine
and avionics.
Some of the items on each of the three patiies' Lists are the same, such as
windows, windshield, brakes, wheels, and a six-seat interior setup. However, Defendants' Lists
5
Co-Plaintiff Blue Sky, LLC's Completion List also explicitly provides for these parts. Blue
Sky, LLC is not included in the claims at issue on this motion for dismissal..
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quite notably include the engine and the avionics, while these parts are absent from Plaintiffs
List. Plaintiff alleges in the Complaint that he did own these items and Defendants converted
them to their own use, but the Complaint - via the attached Agreements - fails to show
Plaintiffs kit airplane ever included a Pratt Whitney Engine or avionics. In sum, Plaintiffs
Agreements, in stark contrast to Defendants' Agreements, do not include either the Pratt
Whitney engine or any other engine, nor does it include avionics.
Even assuming Plaintiff can show he pmticipated in some other transaction with Epic or
ACS through which he purchased the Pratt Whitney engine, the tach generators, and the
avionics, the Complaint still fails to show Plaintiff had sufficient possessory interest over the
pmts to recover those parts in a conversion action. On this point, the comt first looks at the
relevant portion of Chapter 72. Oregon law provides, in part:
Where a third party so deals with goods which have been identified to a contract
for sale as to cause actionable injury to a party to that contract [a] right of action
against the third party is in either party to the contract for sale who has Iitle to ...
the goods; and if the goods have been ... converted a right of action is also in the
party who either bore the risk of loss under the contract for sale or has since the
injury assumed that risk as against the other."
OR. REV. STAT.§ 72.7220(1) (emphasis added).
Section 5( c) of Plaintiffs Completion Agreement provides:
"Title to the EPIC Airframe Kit shall remain at all times with AB. 6 Title to all
equipment and parts installed into the EA Airframe Kit and the risk of loss or
damage regarding same, shall pass from ACS to AB when AB acknowledges that
the EPIC is complete, and simultaneously AB shall take possession of AB's
EPIC."
(Pl.'s Fourth Am. Compl. Ex. D, at 3.)
6
AB is the term used throughout the Completion Agreement to refer to "Amateur Builder,"
which refers to the purchaser of the kit aircraft. The Amateur Builder in Plaintiffs agreement is,
of course, Plaintiff.
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Here, the Completion Agreement provides that title and risk of loss to the parts remained
with ACS and would not pass to Plaintiff until the airplane was completed; acknowledged
completed by Plaintiff; and Plaintiff had taken possession of the airplane. Under § 5(c) of the
Completion Agreement, Plaintiff always had title to the airframe kit, but title to all equipment &
parts installed into the airframe kit - such as an engine, tach generator, or avionics - as well as
the risk of loss regarding the equipment and these parts will pass to Plaintiff only if he
acknowledges completion.
The court next addresses the completion prong.
Section 5(b) of the Completion
Agreement specifies how completion occurs: After the kit airplane is completed, ACS delivers a
written "Completion Notice" to Plaintiff. (Pl.'s Fomih Am. Compl. Ex D, at 3.) Plaintiff then
has fifteen business days to do one of three things: inspect the plane for completion and notify
ACS in writing he agrees the aircraft is complete; inspect the plane for completion and provide
ACS with a "punch list" identifying items that need to be added or replaced before the aircraft is
airwmihy; or do nothing, and after the fifteen business-day period tolled is deemed to have
acknowledged completion.
Thus,
Pl~intiff
has a cause of action for conversion against
Defendants if he has title to the parts or if he bore the risk of loss under his Agreements.
Plaintiff does not allege he ever received a written Completion Notice. Plaintiff attached the
Purchase Agreement and the Completion Agreement to his Complaint, but he has not provided
the comi with any documentation to show the pmis at issue in this matter were part of the plane
he contracted to have built, nor any documentation showing he ever received a Completion
Notice, an instrument by which title and risk of loss - the propetiies requisite to having
contractual possessory interest in the pmis - ever passed to him.
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Plaintiff alleged at oral argument he has a legally cognizable possessory interest in the
parts because he fmmerly had actual possession: Plaintiff alleges the parts were first installed in
Plaintiffs plane before they were subsequently installed in Defendants' planes. However, actual
possession is not legal possession under Plaintiffs Completion Agreement which, explained
above, provides how Plaintiff secures sufficient possessory interest to bring a conversion action.
Title and risk of loss must pass from Epic to Plaintiff as specified in Sections 5(b) and 5( c) of the
Completion Agreement. Plaintiff did not acquire a possessory interest in any airplane parts that
were installed on his plane and then removed prior to his receiving a Completion Notice fi·om
ACS.
It is worth restating that each party to this suit entered into a separate agreement with
Epic and with ACS. Had Plaintiff entered into an agreement similar to Findley's, his argument
that he acquired possessory interest in the parts because they were installed on his plane would
be more compelling. Section 5(c) of Findley's Completion Agreement reads:
"Title to all
equipment and parts installed into the EA Airframe Kit, and the risk of loss or damage regarding
same, shall pass from ACS to AB when said parts and components are purchased, installfd or
applied."
(Russillo Dec!. Ex. A at 6, July 16, 2012.)
Plaintiff has failed to allege he
acknowledged completion of the airplane per the requirement found in his own binding
Completion Agreement, which does not provide for possessory interest through installation of
parts.
Plaintiff conectly points out that under Rule 8(a)(2) and Twombly a complaint "need not
include 'detailed factual allegations' and rather it need allege 'enough facts to state a claim for
relief that is plausible on its face."' (Pl.'s Opp'n. Mot. Dismiss 2) (quoting T·wombly, 550 U.S. at
555, 570.) The court finds the Complaint fails to meet this standard. Plaintiff has not presented
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facts in his Complaint to support a facially plausible claim that he had a legally cognizable
possessory interest in the parts. His Completion Agreement sets forth the requirements for
transferring possessory interest of Plaintiffs completed aircraft to him from ACS. Plaintiff has
not alleged his contracts with ACS and Epic provide that the parts were included in his finished
airplane, that he received a Completion Notice for the aircraft, nor that he has supporting
documentation to these effects. For the reasons set forth above, Plaintiff cannot prevail on a
conversion action for chattels in which he had no possessory interest in the first place.
Accordingly, Defendants' Motion to Dismiss Counts VI and VIII of the Complaint is granted.
V.
Count X: Conspiracy Claim
The Complaint also fails to state a claim for civil conspiracy. The elements of that tort
are: "(1) Two or more persons, and for this purpose a corporation is a person; (2) an object to be
accomplished; (3) a meeting of minds on the object or course of action; (4) one or more unlawful
overt acts; and (5) damages as the proximate result thereof." Bonds v. Landers, 279 Or. 169, 174
(1977).
The first element is
sati~fied
in this case as Plaintiff alleges three individuals; Ingalsbe,
Findley, and Schrameck, conspired to convert his airplane parts. Tuming to the second element,
though Plaintiff alleges few facts as to this Count, he does provide some factual support for his
conclusion that Defendants conspired with Schrameck to convert the parts: Plaintiff alleges
"Ingalsbe [and] Findley . . . removed these parts from the airframe belonging to Plaintiff for
which it had refitted, and, thereafter, placed such equipment on their own aircraft." (Pl.'s Fourth
Am. Compl.
~
91.)
The second element is satisfied. As to the third element, Plaintiff does
allege facts to indicate Defendants took his airplane parts. Still, Plaintiff does not allege an
implicit or explicit agreement between Schrameck, Findley, and Ingalsbe, or that such an
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{PES}
agreement existed for the purpose of converting Plaintiffs airplane parts.
Consequently,
Plaintiffs Complaint fails to establish a meeting of the minds necessary to state a claim for civil
conspiracy. Although Plaintiff alleges an unlawful act, the comi finds no meeting of the minds
pleaded. Consequently, the court need not address the last two elements.
Finally, "the primary purpose of a conspiracy must be to cause injury to another." Bonds,
279 Or. at 174. Plaintiff fails to allege Defendants acted for the purpose of causing injury to
Plaintiff. Count X of Plaintiffs Complaint is dismissed.
VI.
Leave to Amend the Complaint
At oral argument on Defendants' Motion to Dismiss, Plaintiffs counsel stated that if
allowed the oppmiunity to amend, Plaintiff would plead the precedent condition. Specifically,
Plaintiffs attorney Mmjorie Elken stated:
Your Honor, defendants say we can't allege facts saying that we got the notice
and that we sent written acknowledgment before 15 days passed. I don't
understand where they're getting the idea that we can't do that. Not only can we,
but we said in our documents that we would if allowed to amend.
(Rough Draft Tr. 30:5-10, October 9, 2012.) Because the court has determined receipt of
a Completion Notice from ACS is necessary to establish a claim for conv~rsion,
Plaintiffs Fifth Amended Complaint should allege he did in fact receive the Completion
Notice. Accordingly, the court grants Plaintiffs request for leave to amend his Complaint
to allege he received the requisite Completion Notice as required by the express terms of
Section 5(c) of the contract.
The couti reiterates it has determined Section 5(c) of the contract expressly
requires Plaintiff must have received the Completion Notice before the process of
acknowledging completion can begin. In fact, the comi concluded Plaintiffs receipt of
the Completion Notice from ACS is a condition precedent to taking title and acquiring a
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{PES}
possessory interest in the airplane parts. Without such an interest in the pmis, Plaintiff is
unable to state a claim for conversion arising out of his contract with ACS.
Thus,
Plaintiffs Fifth Amended Complaint should comport with the pleading requirements of
Rule 9(c). 1 See FED. R. CIV. P. 9(c) ("In pleading conditions precedent, it suffices to
allege generally that all conditions precedent have occurred or been performed .... ").
Conclusion
Defendants' Motion to Dismiss Pursuant to Rule 12(b)(6) is GRANTED and counts VI,
VII, and X are dismissed without prejudice. Plaintiffs request to for leave to amend the
Complaint Pursuant to Rule 15 is GRANTED. Plaintiff is directed to file an amended Complaint
in accordance with this court's decision on or before December 12, 2012.
IT IS SO ORDERED.
DATED this 29th day of November, 2012.
/-·~·¥
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(__ (LJ!---\1PHN V. ACOSTA
Unite\J States Magistrate Judge
1
The court is aware the pleading requirements of Rule 9(c) are not mandatory. See, e.g, Kiernan
v. Zurich Co., 150 F.3d 1120, 1124 (9th Cir. 1998) ("But Rule 9(c) does not expressly require
that performance of conditions be pled, it merely sets forth the manner in which such pleadings
should be made."). Neve1iheless, under the circumstances of this case, an allegation by Plaintiff
that he received the Completion Notice is required in order to avoid another dismissal under Rule
12(b)(6) for failure to state a claim.
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