White Stag Aircraft Leasing (US), LLC v Aircraft Purch. Co. I, LLC

[*1] White Stag Aircraft Leasing (US), LLC v Aircraft Purch. Co. I, LLC 2018 NY Slip Op 50631(U) Decided on May 1, 2018 Supreme Court, New York County Reed, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on May 1, 2018
Supreme Court, New York County

White Stag Aircraft Leasing (US), LLC, Plaintiff,

against

Aircraft Purchasing Company I, LLC; AIRCRAFT PURCHASING COMPANY II, LLC; and WILDCAT AVIATION, LLC, Defendants.



652258/17



For Plaintiff

Dilworth Paxson LLP

99 Park Avenue

New York, NY 10016

By: Ira N. Glauber, Esq.

For Defendants

Law Office of Judd R. Spray

450 Seventh Avenue

New York, NY 10123

By: Judd R. Spray, Esq.
Robert R. Reed, J.

Defendants, Aircraft Purchasing Company I, LLC (Aircraft I), Aircraft Purchasing Company II, LLC (Aircraft II) and Wildcat Aviation, LLC (Wildcat), move pursuant to CPLR 3211 (a) (1) and (7), to dismiss the complaint. The plaintiff, White Stag Aircraft Leasing (US), LLC, opposes the motion, and the defendants submit a reply.

BACKGROUND

On or about January 2017, plaintiff, by its president, John C. Green (Green) and Wildcat, by its Chairman and CEO, Eric G. Nicolaides, (Nicolaides) entered into a Finance Lease Proposal (the Proposal) for the lease of two pre-owned LearJet aircrafts (complaint, ¶ 5).[FN1] The [*2]Proposal contained provisions setting forth certain recoverable expenses that the plaintiff would be incurring on behalf of Wildcat, including but not limited to, travel expenditures, aircraft appraisal/inspection, legal costs and accounting fees (Proposal at 2). In addition, the Proposal set forth conditions for the termination of the lease, which included, an early lease termination fee and an inception fee. The Proposal also required Wildcat to pay a security deposit in the sum of $95,000.00 to cover any and all recoverable expenses and fees (id. at 5). The proposal also included a provision which stated that the lease document will supersede the Proposal and that the Proposal shall be governed by New York law (id. at 12).

Subsequently, the plaintiff alleges that, on February 28, 2017, it entered into an Aircraft Lease Agreement (Lease Agreement I) with Aircraft I for the lease of a 1997 LearJet and a Lease Agreement with Aircraft II (Lease Agreement II) for the lease of a 2002 LearJet (complaint, ¶s 8, 9, 10, 11). Although the defendants insist that they did not sign the agreements on February 28, 2017, they admit to signing, executing and delivering the lease agreements to their escrow agents on March 9, 2017 (defendants' memo of law at 5). Following receipt of the executed lease agreements, the plaintiff alleges that Green executed both lease agreements on its behalf (see Green Aff. dated 8/10/17).

The defendants claim that they executed the lease agreements in anticipation of closing on the transaction, which purportedly included the acquisition of the aircrafts, and they expected the lease agreements to be held in escrow until then (id. at 6). The plaintiff disputes this assertion. The defendants assert that it was understood between the parties that further negotiations were needed to finalize additional terms of the lease agreements and that various transaction documents remained outstanding. Therefore, the lease agreements would not be executed until the closing (id. at 11). Moreover, the defendants argue that, while the parties were negotiating terms of the various transaction documents, the plaintiff backed out of the deal, the closing never took place and the LearJets were never delivered to the defendants. The plaintiff argues that their alleged repudiation followed defendants' breach of their contractual duties, in that they failed to pay the security deposit and additional fees purportedly required by the Proposal and the lease agreements (complaint, ¶s 23, 24 and plaintiff's memo of law at 6). Upon receiving the plaintiff's written repudiation, the defendants allege that they informed the escrow agent that they were revoking all signatures given by their authorized representative, Nicolaides.

Plaintiff filed the instant lawsuit asserting a first cause of action for breach of contract [*3]claiming the defendants breached the terms of the Proposal and lease agreements prior to any repudiation by the Plaintiff and a second cause of action for an account stated. The plaintiff also seeks a money judgment in the sum of approximately $382,092.00, consisting of $94,092.00 for the security deposit, $26,000.00 for lease inception fees, $104,000.00 for termination fees and $156,000.00 for a credit default swap fee (id. at ¶s 31, 32), with interest from April 2017, plus costs, expenses and attorneys' fees.

DISCUSSION

The defendants now move, for an order, dismissing the complaint, pursuant to CPLR 3211 (a) (1), (7), based on documentary evidence and failure to state a cause of action.

In support of its claims, the defendants rely on the Proposal and the lease agreements. A review of these documents reflects that the Proposal and the lease agreements are, respectively, governed by New York and Delaware law (the last page of the Proposal; the lease agreements, ¶ 26.1.1). "Under New York choice-of-law rules, matters of procedure are governed by the law of the forum" (Lerner v Prince, 119 AD3d 122, 127-128 [1st Dept 2014]). Because New York is the forum state, this court shall apply New York's procedural law in determining plaintiff's dismissal motion.

LEGAL STANDARD

"On a motion to dismiss, pursuant to CPLR 3211, the court's task is to determine only whether the facts as alleged, accepting them as true and according plaintiff every possible favorable inference, fit within any cognizable legal theory" (Landenburg Thalmann & Co. v Tim's Amusements, 275 AD2d 243, 246 [1st Dept 2000]). Affidavits and other evidence submitted by plaintiffs may be considered for the limited purpose of remedying any defects in the complaint, thus preserving inartfully pleaded, but potentially meritorious, claims (Rovello v Orofino Realty Co., 40 NY2d 633,636 [1976]).

CPLR 3211 (a) (1) provides that one or more causes of action may be dismissed on the ground that a defense is founded on documentary evidence. A CPLR 3211 (a) (1) "motion may be appropriately granted only where the documentary evidence utterly refutes plaintiff's factual allegations, conclusively establishing a defense as a matter of law" (Goshen v Mutual Life Ins. Co. of NY, 98 NY2d 314, 326 [2002] [citation omitted]; Kolchins v Evolution Mkts., Inc. 128 AD3d 47, 58 [1st Dept 2015] [citation omitted]).

ANALYSIS

Defendants argue that the plaintiff's first cause of action for breach of contract claim should be dismissed, pursuant to CPLR 3211 (a) (7), for failing to state a cause of action, i.e., the existence of a contract and damages.

In support thereof, the defendants claim that the lease agreements are not valid, binding contracts because: (1) the parties did not intend to be bound by the lease agreements prior to closing; (2) the plaintiff failed to deliver fully executed lease agreements to the defendants, and (3) the plaintiff repudiated the lease agreements prior to returning fully executed copies of the same to the defendants (defendants' memo of law dated 1/30/17 at 2). Moreover, the defendants claim that they revoked their signatures before the plaintiff returned fully executed copies of the agreements (defendants' memo law dated 1/30/17 at 11,12). In the alternative, the defendants [*4]argue that, even if the court finds the lease agreements are enforceable, the plaintiff's causes of action cannot be maintained because the plaintiff is not entitled to the damages set forth in the complaint. Specifically, the defendants claim that, if the agreements are declared valid and enforceable against the defendant, the Proposal would be superseded by the provisions of the lease agreements, which the defendants argue, limit the plaintiff's potential remedies to damages which occur from a pre-delivery breach.

In opposition, the plaintiff argues that the defendants executed and breached the Proposal and the two subsequent lease agreements (Plaintiff's opposition dated 8/11/17 at 2). Specifically, the plaintiff alleges that the Proposal was fully executed on or about January 2017, and the lease agreements were signed on February 28, 2017. The plaintiff further claims that the defendants breached the terms of the Proposal and lease agreements by failing to pay deposits and additional fees, including, but not limited to, a lease inception fee of 1%, a non-refundable lease deposit of $95,000, and a termination fee of 4 %. The plaintiff claims the deposits and fees were due and owing upon execution of the Proposal and the lease agreements. The plaintiff concedes that the Proposal and lease agreements provide for post delivery remedies. However, the plaintiff argues that the mere existence of post delivery remedies does not negate the remedies with respect to the pre-delivery breaches.

Here, the plaintiff sufficiently alleges a breach of contract claim. Since the issues related to the breach of contract claim are substantive, the court is required to apply the substantive laws of New York and Delaware, respectively, to the Proposal and the lease agreements (Lerner v Prince, III, 119 AD3d 122, supra at 127-128). However, the court notes, and the parties agree, that no conflict exists between New York and Delaware contract law.

Under Delaware law, the elements of a breach of contract claim are: (1) a contractual obligation; (2) a breach of that obligation, and (3) resulting damages (H-M Wexford LLC v Encorp, Inc., 832 A2d 129, 144 [Del Ch 2003]). In New York, the elements of a breach of contract claim "include the existence of a contract, the plaintiff's performance thereunder, the defendant's breach thereof, and resulting damages" (Harris v Seward Park Hous. Corp., 79 AD3d 425, 426 [1st Dept 2010]).

On the basis of the foregoing principles, the court concludes, in the instant case, that the complaint and supporting affidavit of Green, adequately allege, for pleading purposes, a breach of contract cause of action. The first cause of action is sufficiently particular as to facts and details relating to the alleged fully executed Proposal and the two lease agreements, which contain the signature of the defendants' authorized representative, Nicolaides. The plaintiff alleges details and terms of the Proposal and lease agreements and the breach of the provisions thereof, to wit, that the defendants failed to pay the security deposit and additional fees. The plaintiff further sets forth the resulting damages due and owning from the defendants under the contracts.

Accordingly, that branch of the defendants' motion for dismissal of the breach of contract claim, pursuant to CLR 3211 (a) (7), is denied.

With respect to that branch of defendants' application for dismissal of the breach of contract action, pursuant to CLR 3211 (a) (1), based on documentary evidence, they rely on various provisions in the lease agreements (defendants' moving papers, exhibits E and F) and certain emails between the parties (id. at exhibits B, C, D, G and H). They assert that these [*5]documents demonstrate that the plaintiff failed to provide copies of fully executed lease agreements. Defendants also argue, inter alia, that the aforementioned documents preclude the damages sought by plaintiff. In opposition, the plaintiff submits copies of the lease agreements which contain the signature of the plaintiff and the defendants (plaintiff's memo of law, exhibits B and C). Plaintiff further disputes defendants' remaining arguments (Green Aff. dated 8/10/17).

Here, the court concludes that the documentary evidence relied on by the defendants in this case fails to resolve all factual issues as a matter of law, and does not conclusively dispose of the plaintiff's claim (see Weiss v TD Waterhouse, 45 AD3d 763, 764 [2d Dept 2007], citing Teitler v Pollack & Sons, 288 AD2d 302, 302 [2d Dept 2001]). The record establishes that all parties signed the lease agreements.

Further, contrary to defendants' contentions, the documents relied on by defendants do not conclusively establish that they did not intend to be bound by the lease agreements prior to the closing, or that plaintiff repudiated the lease agreements prior to returning fully executed copies of same to defendants. Additionally, with respect to damages, the disputed facts regarding the Proposal and lease agreements raise questions of fact as to which of the remedies contained therein are applicable.

As the documents presented herein do not conclusively dispose of the claims in the matter at bar, that branch of the defendants' motion to dismiss the first cause of action, pursuant to CPLR 3211 (a) (1), is denied.

Defendants also seek dismissal of the plaintiff's second cause of action for an account stated, pursuant to CPLR 3211 (a) (1), (7).

In New York, it is well settled that "[a]n account stated is an agreement between parties as to an account and the correctness of account items and a specific balance due on them" (White Plains Cleaning Servs., Inc. v 901 Props., LLC, 94 AD3d 1108, 1109 [2d Dept 2012]). Likewise, Delaware law states that "in order to set forth a claim for account stated, the plaintiff must allege the following:

(1) an account existed between the parties; (2) the defendant stated or admitted to owing a specific sum on the account to the plaintiff, and (3) the defendant made this admission after the original account or debt was created" (Citibank (South Dakota) N.A. v Santiago, 2012 WL 592873, *2

[Del Ct Common Pleas, Feb. 23, 2012]).

Here, the complaint adequately states a cause of action for an account stated. The plaintiff alleges that three invoices were sent to the defendants setting forth the amounts due for the security deposit, which totaled $94,092.00(complaint, ¶ 38). The plaintiff further asserts that the defendants received the invoices and never objected or expressed any disagreement as to the invoices (id. at ¶37). The defendants have failed to submit any documentary evidence in reference to the account stated action. Accordingly, that branch of the defendants' motion for an order dismissing the second cause of action, pursuant to CPLR (a) (1), (7), is denied.

CONCLUSION

Accordingly, based upon the foregoing, it is hereby

ORDERED that the defendants' motion to dismiss is denied in its entirety; and it is further

ORDERED that the defendants are directed to serve an answer to the complaint within 20 days after service of a copy of this order with notice of entry; and it is further

ORDERED that counsel are directed to appear for a preliminary conference to be held at the Supreme Court, 111 Centre Street, New York, New York, Part 43, Room 581 on June 7, 2018 at 9:30 a.m.

The foregoing constitutes the Decision and Order of the Court.

DATED: May 1, 2018

ENTER:

J.S.C. Footnotes

Footnote 1:The complaint asserts that the plaintiff agreed to lease one 1997 LearJet and one 2002 LearJet to Wildcat (complaint, ¶ 7). The Proposal makes additional reference to the acquisition of the LearJets by the plaintiff from a third party seller (Proposal at 1). In support of their motion to dismiss, the defendants allege that the contemplated transaction involved the purchase of two pre-owned LearJets by Aircraft I & II from a third party (the "Seller") (defendants' memo of law at 5). The defendants also claim that Aircraft I and Aircraft II, which are wholly-owned subsidiaries of Wildcat, would then assign their rights in the aircraft to a trust owned by the plaintiff, which would in turn lease the aircrafts back to Aircraft I and II for ten years. Defendants claim that at the end of the 10 year period, the plaintiff would transfer title back to Aircraft I and II (id. 5). The plaintiff's opposition is silent on the issues of the acquisition of the aircrafts and/or the assignment of the rights to the aircrafts. During oral argument, defendants again referenced the purchase of the LearJets and the assignment of rights in the aircraft to Aircraft I and II (tr of oral argument at 3, lines 7-11).