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Ex parte The Maintenance Group, Inc.

Supreme Court of Alabama

November 22, 2017

Ex Parte The Maintenance Group, Inc.
v.
The Aviation Department, LLC, et al. In re: MARC Transport LLC

         Madison Circuit Court, CV-15-901973

          PETITION FOR WRIT OF MANDAMUS

          MAIN, Justice.

         The Maintenance Group, Inc. ("Maintenance"), petitions this Court for a writ of mandamus directing the Madison Circuit Court to enter an order dismissing the claims against it based on lack of personal jurisdiction. We grant the petition and issue the writ.

         I. Factual Background and Procedural History

         This case arises from the sale of an aircraft. In February 2014, MARC Transport LLC ("MARC"), a Delaware limited-liability company with its principal place of business in Georgia, entered into an agreement to purchase a Hawker Beechjet aircraft ("the aircraft") from Pelican Bay Equipment Leasing, LLC ("Pelican Bay"), a Nevada limited-liability company with its principal place of business in Florida. MARC was assisted in its purchase of the aircraft by The Aviation Department, LLC ("TAD"), a Delaware limited-liability company with its principal place of business in Georgia, and TAD's principal, Timothy Fitch, a resident of Georgia. TAD is an aircraft-management and flight-services company, and TAD and MARC had entered into an agreement pursuant to which TAD was to supply the maintenance, pilot services, flight scheduling, and storage of an aircraft once one was purchased by MARC. TAD and Fitch located the aircraft in Fort Myers, Florida, and undertook to broker the purchase of the aircraft on MARC's behalf. Pelican Bay retained JetBrokers, Inc. ("JetBrokers"), a Nevada corporation, to represent it in the sale of the aircraft.

         The purchase agreement gave MARC the right to conduct a pre-purchase inspection of the aircraft, which the parties agreed would be performed by Maintenance at its facility in Georgia. The inspection identified a list of maintenance issues, known in the industry as "discrepancies." Maintenance estimated that it would cost approximately $170, 000 to correct all the discrepancies. Pelican Bay agreed to correct the discrepancies.

         The purchase of the aircraft was closed on March 27, 2014, in Delaware. Pelican Bay flew the aircraft from Florida to Delaware for delivery. Fitch accepted delivery in Delaware on MARC's behalf and flew the aircraft to Georgia. Fitch and TAD then arranged for the aircraft to fly to Huntsville, Alabama, to transport MARC's officers as the first passengers following the purchase of the aircraft. The aircraft has been routinely flown to and from Huntsville since its purchase.

         On November 4, 2015, MARC sued Maintenance, TAD, Fitch, and Pelican Bay in the Madison Circuit Court. The lawsuit alleged that the discrepancies discovered in the pre-purchase inspection had not been corrected by Pelican Bay before closing. MARC asserted claims of breach of contract against TAD and Pelican Bay and asserted claims of negligence, fraud, and civil conspiracy against all defendants. The complaint included the following specific factual allegations:

"9. In or around October of 2013, MARC's affiliate eLab Consulting Services Inc. ('eLab') entered into a business relationship with Fitch and/or TAD, to provide charter aircraft services.
"10. Beginning in or around October of 2013, Fitch and/or TAD provided charter aircraft services to eLab, primarily utilizing a Hawker Beechjet aircraft, and many flights were coordinated between Huntsville, Alabama and Atlanta, Georgia due to the business operations of eLab and its affiliated entities.
"11. On or about December 13, 2013, eLab formed MARC for the purpose of acquiring an aircraft. At the time of this pleading, MARC is a wholly-owned subsidiary of eLab.
"12. In or around December of 2013, Fitch and/or TAD attempted to negotiate the sale of a Hawker Beechjet aircraft previously chartered by eLab for acquisition by MARC; however, the parties were ultimately unable to reach agreement on the terms of sale for the aircraft.
"13. Thereafter, Fitch and/or TAD undertook to locate another Hawker Beechjet aircraft for acquisition by MARC.
"14. Effective January 1, 2014, TAD and MARC entered into an Aircraft Maintenance Agreement, providing for the management of MARC's aircraft by TAD, including maintenance, pilot services, flight scheduling, and storage of the aircraft, among other aviation services.
"15. On or about February 6, 2014, Fitch and/or TAD located the subject N848TC [the aircraft] for possible acquisition by MARC. As of February 6, 2014, [the aircraft] was owned and operated by Pelican Bay and was purportedly based at the Page Field airport ... in Fort Myers, Florida.
"16. Upon information and belief, Pelican Bay retained JetBrokers to represent it in the sale of [the aircraft].
"17. On or about February 10, 2014, Fitch, acting under the instruction, and/or on behalf, of MARC, contacted JetBrokers with the intent to negotiate the sale of [the aircraft] and provided a draft Aircraft Purchase Agreement and proposed purchase price.
"18. On or about February 11, 2014, JetBrokers responded to MARC's initial proposal and provided Fitch with a written acceptance of the proposed purchase price and a listing of requested revisions for the draft Aircraft Purchase Agreement.
"19. On or about February 14, 2014, MARC and Pelican Bay executed the final Aircraft Purchase Agreement (the 'Agreement'). ... The terms of the Agreement included a sales price of $800, 000 and upon payment of an escrow amount of $100, 000, gave MARC the right to have [the aircraft] inspected by an aircraft maintenance organization agreed upon by both parties and listed in the Agreement.
"20. On or about February 14, 2014, MARC, through its parent corporation eLab, tendered the payment of $100, 000 in escrow per the terms of the Agreement.
"21. During the course of negotiations of the Agreement, Fitch and/or TAD recommended that MARC retain [Maintenance] to perform the pre-purchase aircraft inspection per the terms of the Agreement. As a result, [Maintenance] was listed in the Agreement as the entity which would conduct the pre-purchase inspection.
"22. MARC agreed to a payment of $19, 000 for [Maintenance] to perform the pre-purchase aircraft inspection pursuant to the terms of the Agreement. TAD later included this $19, 000 amount in an invoice dated April 1, 2014 to MARC through its parent corporation eLab, noting that it was for [Maintenance]'s performance of the pre-purchase aircraft inspection.
"23. Upon information and belief, as of February 14, 2014, [Maintenance] was an FAA-certified Repair Station and employed aircraft mechanics holding an FAA Airframe & Powerplant (A&P) certificate.
"24. On or about February 16, 2014, Fitch and/or TAD arranged for the transport of [the aircraft] from Fort Myers, Florida to the Peachtree-De[K]alb airport in Chamblee, Georgia ... to facilitate the pre-purchase aircraft inspection by [Maintenance].
"25. On or about February 17, 2014, [Maintenance] undertook to perform the pre-purchase aircraft inspection, and thereafter on February 27, 2014, provided Fitch with a pre-closing aircraft inspection report regarding [the aircraft], including a list of maintenance issues known in the industry as 'discrepancies' ('Discrepancies'). A copy of the pre-closing aircraft inspection report (the 'Pre-Closing Inspection Report') is attached hereto as Exhibit 2, and incorporated herein by reference. The Pre-Closing Inspection Report detailed approximately 49 Discrepancies, 41 of which are listed as affecting the FAA airworthiness status of the aircraft. The repair or replacement parts listed for correction of the Discrepancies were either required to maintain FAA airworthiness or recommended pursuant to the aircraft maintenance manual and accepted industry practices. [Maintenance] estimated the cost to correct all Discrepancies in the Pre-Closing Inspection Report to be approximately $170, 000.00.
"26. Fitch advised MARC of the Pre-Closing Inspection Report and the estimated cost of $170, 000.00 for repairs and replacements. Based upon the number of Discrepancies and cost to correct them, MARC instructed Fitch to advise Pelican Bay of the Discrepancies, and to propose a discount of the total sales price by the estimated $170, 000.00 cost.
"27. Fitch communicated MARC's proposal to discount the total sales price by the estimated $170, 000.00 cost to correct the Discrepancies to JetBrokers, who purportedly advised Pelican Bay.
"28. On March 4, 2014, Fitch advised MARC that Pelican Bay was unwilling to discount the sales price by the estimated $170, 000.00 cost to correct the Discrepancies, but was willing to correct all the items in the Pre-Closing Inspection Report prior to closing.
"29. In addition, the Agreement provided that Pelican Bay would be responsible for correcting airworthiness issues identified in the pre-closing aircraft inspection. As a result, each of the Discrepancies affecting FAA airworthiness were again listed as being the responsibility of Pelican Bay in the Agreement's Appendix B 'Preliminary Acceptance Certificate' signed and initialed by both parties on March 4, 2014. ...
"30. Based upon Fitch's affirmative statements to MARC that Pelican Bay was willing to correct all the noted Discrepancies in the Pre-Closing Inspection Report prior to closing, and that the maintenance required would take approximately ten (10) days to complete, MARC agreed to proceed with the acquisition of [the aircraft], including arranging for secured financing for the acquisition.
"31. Based upon statements by Fitch that the maintenance regarding all noted Discrepancies in the Pre-Closing Inspection Report had been completed, MARC proceeded with closing and consummating the acquisition of [the aircraft] on March 27, 2014, including closing of secured ...

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