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Textron Aviation Inc. v. Superior Air Charter, LLC

United States District Court, D. Kansas

April 30, 2019

TEXTRON AVIATION, INC., Plaintiff,
v.
SUPERIOR AIR CHARTER, LLC, Defendants.

          MEMORANDUM AND ORDER

          JOHN W. BROOMES, UNITED STATES DISTRICT JUDGE

         This matter is before the court on Defendant Superior Air Charter's (“SAC”) motion to dismiss and compel arbitration. (Doc. 15.) The matter has been fully briefed and is ripe for decision. (Docs. 16, 17, 18.) For the reasons stated herein, SAC's motion is DENIED.

         I. Background

         On June 26, 2018, Plaintiff Textron Aviation, Inc., (“Textron”) filed this action against SAC. Textron alleges that it is a successor in interest to Cessna after a merger. Cessna and SAC entered into eight ProAdvantage agreements concerning eight different aircraft from 2012 to 2014. The ProAdvantage agreements provided price protection for maintenance costs and the ability to purchase parts directly. Pursuant to the terms, upon early termination, SAC must essentially pay any negative balance. The ProAdvantage agreements were allegedly terminated early. Textron seeks the amounts owed due to the early termination. In SAC's motion to dismiss, SAC asserts that the parties also entered into Right of Assignment agreements (“assignment agreements”) at a later date regarding each ProAdvantage agreement. These assignment agreements gave the “Right Holder, ” Cessna Finance Corporation, the right to request assignment of the ProAdvantage agreement under certain circumstances.[1] The complaint does not refer to the assignment agreements or any term therein.

         Textron also seeks the amounts owed on an open account which was utilized for maintenance, inspection services, parts, and/or supplies. Textron also brings a claim for breach of a consignment agreement. The consignment agreement has not been attached as an exhibit to the complaint or to SAC's motion to dismiss. The complaint alleges that SAC removed parts from the consignment inventory without notifying Textron in breach of the consignment agreement. Finally, Textron has alleged a claim for conversion on the basis that SAC failed to follow procedures in the consignment agreement and has therefore converted Textron's property.

         Textron seeks monetary damages, return of the consignment parts, attorney fees and interest. SAC has moved to dismiss and compel arbitration on the basis that the arbitration clause in the assignment agreements or the arbitration clause in the ProAdvantage agreements mandates that this matter be arbitrated. Textron asserts that this type of action, to collect amounts owed, is excluded from the arbitration provision in the ProAdvantage agreements and that this dispute does not arise out of the assignment agreements.

         Relevant Arbitration Provisions.

         SAC included an “exemplar” for both the ProAdvantage agreements and the assignment agreements as exhibits to its memorandum. (Doc. 16, Exhs. A, B.) SAC represents that the exemplars are representative of both agreements in that all ProAdvantage agreements have the same arbitration provision and all the assignment agreements have the same arbitration provision.

         Textron does not appear to dispute this assertion. The arbitration provision in the assignment agreements is as follows:

14.0 Dispute Resolution. The parties shall strive to settle amicably, in good faith, and with due diligence any dispute arising from or relating to this Right of Assignment. The Parties agree if such attempts to resolve a dispute are unsuccessful, then any Party may avail itself of this Right of Assignment's stipulation for arbitration as the only binding formal proceeding or action allowed for dispute resolution. Binding arbitration conducted before a panel of three independent arbitrators in accordance with the rules of the American Arbitration Association is the only authorized formal proceeding or action for dispute resolution (with the exception of third-party claims in litigation). The venue for any proceeding or action arising from or relating to the Right of Assignment is Wichita, Kansas U.S.A. Arbitration shall be conducted in the English Language.

(Doc. 16, Exh. B at 6.)

         The arbitration provision in the ProAdvantage agreements is as follows:

11.7 Dispute Resolution. The Parties shall strive to settle amicably, in good faith, and with due diligence any dispute arising from or relating to this Agreement. The Parties agree if such attempts to resolve a dispute are unsuccessful, then any Party may avail itself of formal proceeding or action allowed for dispute resolution except as otherwise expressly stated in this Agreement. All controversies and claims arising from or relating to this Agreement with the exception of third-party claims in litigation and Cessna-initiated collection agency actions or civil litigation for amounts owed by Customer are to be resolved by binding arbitration in accordance with all applicable rules of the American Arbitration Association.
The arbitration or, as applicable, civil litigation will be held in Wichita, Kansas. The arbitration will be conducted in English. Any award, order, or judgment pursuant to the arbitration is final and may be entered and enforced in any court of competent jurisdiction. Except as otherwise agreed to herein, each Party shall bear its own arbitration costs and expenses and an equal share of the arbitration fees. No. arbitrator or panel has the right or authority to award punitive damages against any Party to this Agreement. No. arbitrator or panel has the right or authority to make any ruling, finding, or award that does not conform to the provisions of this Agreement and any such purported ruling, finding, or award is void. Except as required by law or to enforce an arbitration award, order, or judgment, no Party, arbitrator, or panel may disclose the existence, content, or result of any ...

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