United States District Court, D. Kansas
MEMORANDUM AND ORDER
W. BROOMES, UNITED STATES DISTRICT JUDGE
matter is before the court on Counterclaim Defendants'
Motions to Dismiss (Docs. 51, 66.) The motions have been
fully briefed and are ripe for decision. (Docs. 52, 64, 67,
69, 77, 82.) For the reasons stated herein, Counterclaim
Defendants' motions are GRANTED.
26, 2018, Plaintiff Textron Aviation, Inc.,
(“Textron”) filed this action against Superior
Air Charter, LLC (“SAC”). Plaintiff alleges that
it is a successor in interest to Cessna Aircraft Company
(“Cessna”) after a merger. Cessna and SAC entered
into eight ProAdvantage agreements concerning eight different
aircraft during 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 also asserts that SAC breached a
consignment agreement concerning aircraft parts and failed to
pay on an open account. Textron seeks monetary damages,
return of the consignment parts, attorney fees and interest.
SAC previously moved to dismiss and compel arbitration. (Doc.
15.) This court denied SAC's motion. (Doc. 21.)
24, 2019, SAC filed an answer and asserted counterclaims
against Textron, Cessna, Cessna Finance Corporation
(“CFC”), and Donald Beverlin (collectively
referred to as “Counterclaim Defendants”). (Doc.
30.) In essence, SAC contends that Counterclaim Defendants
fraudulently induced SAC and related entities into entering
the agreements concerning the sale of the aircraft. Textron
and CFC are Kansas corporations. Beverlin is a California
resident. SAC is a limited liability company organized in
alleges that JetSuite, Inc., is a private jet charter airline
that provides transportation services throughout the United
States. JetSuite, Inc., formed JS CJ3, LLC to own the
aircraft purchased from Textron and it formed SAC to operate
the aircraft. (Doc. 30 at 9.) SAC referred to itself and
these entities as “JetSuite” throughout the
allegations in the counterclaims. (Doc. 30 at 5.) According to
the allegations, Beverlin was an agent of Textron and
coordinated the purchase and financing of the eight CJ3
aircraft. Discussions to purchase the aircraft began in 2012.
Beverlin, Textron, and CFC allegedly made representations
regarding the aircraft's exceptional performance.
Allegedly, Beverlin made these representations during his
visits to California. (Doc. 30 at 12.) However, there were
widespread problems that involved lavatory chemicals leaking
from the toilet onto the aircraft's fuselage and other
parts of the aircraft. This resulted in corrosion on the
fuselage. This problem was due to an alleged flaw in the
aircraft's design. SAC alleges that the corrosion
problems in the CJ3 were known by Beverlin, Textron, and CFC.
(Doc. 30 at 14.) Beverlin, Textron, and CFC failed to inform
JetSuite about the corrosion problems.
September 2012, JetSuite entered into a Letter Agreement for
the purchase of fifteen CJ3 aircraft. For each aircraft, JS
CJ3 was required to execute a promissory note, security
agreement, and a cross-default agreement. (Doc. 30 at 16.)
JetSuite was to execute a guaranty.(Id.) Moreover,
Textron required SAC to enter into the ProAdvantage
agreements. SAC alleges that it was induced into entering the
ProAdvantage agreements and that none of the agreements would
have been entered into had the JetSuite entities known of the
corrosion problems. SAC further alleges that JetSuite was
also induced into entering the related agreements regarding
the purchases of the aircraft.
March 23, 2017, JetSuite discovered corrosion on one of the
aircraft. As a result, that aircraft needed extensive
repairs. (Doc. 30 at 22-24.) The estimated cost of repair was
$1, 215, 000 and the aircraft would not be ready to return to
service for 395 days. The lavatory-related corrosion problems
have resulted in four additional aircraft being out of
service. The second aircraft was out of service around April
23, 2017. The third aircraft was out of service around
December 1, 2017, and the fourth was out of service around
December 15, 2017. (Id. at 24.) The remaining four
aircraft have also required significant repairs.
(Id. at 25.)
filed its answer and counterclaims against Counterclaim
Defendants on June 24, 2019. SAC asserts the following
counterclaims against Counterclaim Defendants: fraudulent
inducement; fraudulent concealment; civil conspiracy; and
fraudulent business acts under Cal. Bus. & Prof. Code
§ 17200, California's Unfair Competition Law
(“UCL”). Counterclaim Defendants move for
dismissal on various grounds.
Motion to Dismiss Standards
order to withstand a motion to dismiss for failure to state a
claim, a complaint must contain enough allegations of fact to
state a claim to relief that is plausible on its face.
Robbins v. Oklahoma, 519 F.3d 1242, 1247 (10th Cir.
2008) (citing Bell Atl. Corp. v. Twombly, 550 U.S.
544, 127 S.Ct. 1955, 1974 (2007)). All well-pleaded facts and
the reasonable inferences derived from those facts are viewed
in the light most favorable to SAC. Archuleta v.
Wagner, 523 F.3d 1278, 1283 (10th Cir. 2008). Conclusory
allegations, however, have no bearing upon the court's
consideration. Shero v. City of Grove, Okla., 510
F.3d 1196, 1200 (10th Cir. 2007). Rule 12(b)(6) requires SAC
to allege “enough factual allegations in the complaint
to set forth a plausible claim.” Pueblo of Jemez v.
United States, 790 F.3d 1143, 1171-72 (10th Cir. 2015)
(internal citations omitted). In the end, the issue is not
whether SAC will ultimately prevail, but whether SAC is
entitled to offer evidence to support its claims. Beedle
v. Wilson, 422 F.3d 1059, 1063 (10th Cir. 2005).
Choice of Law
federal court sitting in diversity jurisdiction must apply
the substantive law of the state in which it sits, including
that state's choice-of-law rules.” Hayden
Outdoors, Inc. v. Niebur, 994 F.Supp.2d 1206, 1208 (D.
Kan. 2014) (quoting Vazirani & Assoc's Fin., LLC
v. Heitz, No. 11- 1032-MLB, 2011 WL 2295027, at *2 (D.
Kan. June 8, 2011) (internal citation omitted)). In this
case, the ProAdvantage agreements have a choice of law
provision. “Federal courts in Kansas routinely enforce
the parties' contractual choice-of-law provisions under
Kansas choice-of-law rules.” Altrutech, Inc. v.
Hooper Holmes, Inc., 6 F.Supp.2d 1269, 1273 (D. Kan.
1998); seeBrenner v. Oppenheimer &
Co., 273 Kan. 525, 539, 44 P.3d 364, 375 (2002)
(“Where the parties to a contract have entered an