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AAL Group Inc. v. Black Hall Aerospace Inc.

United States District Court, N.D. Alabama, Southern Division

July 10, 2018

AAL USA, INC., Plaintiff,
v.
BLACK HALL AEROSPACE, INC., et al., Defendants.

          MEMORANDUM OPINION

          KARON OWEN BOWDRE CHIEF UNITED STATES DISTRICT JUDGE.

         This matter is before the court on Defendant Keith Woolford's motion to dismiss Plaintiff AAL Group's amended complaint. (Doc. 226).

         AAL Group alleges that for years it conducted business with a separate, but similarly-named, company called AAL USA. AAL USA's Chief Financial Officer at the time was Defendant Keith Woolford. AAL USA-which is not a party to this case, but is a party to a related case before this court (AAL USA, Inc. v. Black Hall Aerospace, Inc., 2:16-cv-02090-KOB)-entered an Asset Purchase Agreement with Black Hall Aerospace, a company controlled by Mr. Woolford and other AAL USA executives. The Asset Purchase Agreement assigned a number of AAL USA's contracts with AAL Group to Black Hall Aerospace.

         AAL Group alleges that, before, during, and after the Asset Purchase Agreement, Mr. Woolford and other executives who worked for AAL USA and Black Hall Aerospace stole funds owed to AAL Group for their personal use. As a result, AAL Group sued Black Hall Aerospace, Mr. Woolford, and another executive, Paul Daigle. AAL Group has settled with Black Hall Aerospace and Mr. Daigle, leaving only Mr. Woolford as a defendant in this case. AAL Group asserts the following claims against Mr. Woolford: (1) unjust enrichment/money had and received[1] (“Count Two”); (2) promissory estoppel (“Count Three”); (3) equitable estoppel (“Count Four”); (4) fraud (“Count Five”); (5) conversion (“Count Six”); (6) tortious interference (“Count Seven”); and (7) conspiracy (“Count Eight”). (Doc. 182 at 15-21).

         The court WILL GRANT IN PART AND DENY IN PART Mr. Woolford's motion to dismiss the amended complaint. The court WILL NOT DISMISS Count Two for failure to state an unjust enrichment claim because AAL Group has adequately alleged that Mr. Woolford was unjustly enriched at its expense, and the court cannot conclude from the face of the complaint that the statute of limitations bars the claim. The court WILL DISMISS WITHOUT PREJUDICE Counts Three and Four because AAL Group has not alleged facts showing that Mr. Woolford made a promise to AAL Group. The court WILL DISMISS WITHOUT PREJUDICE Count Five for failure to plead with particularity.

         The court WILL NOT DISMISS the part of Count Six relating to the conversion of a check that Science & Engineering Services made out to AAL Group, but the court WILL DISMISS WITHOUT PREJUDICE the remainder of the count for failure to state a conversion claim because AAL Group fails to allege that the other funds were specific and identifiable. The court WILL DISMISS WITHOUT PREJUDICE Count Seven for failure to state a tortious interference claim because AAL Group has not alleged facts showing what Mr. Woolford did to interfere in its business relations. The court WILL DISMISS WITH PREJUDICE the entirety of Count Eight for failure to state a conspiracy claim because the intracorporate conspiracy doctrine bars that claim.

         I. BACKGROUND

         1. Procedural History

         In March 2017, AAL Group filed suit against Black Hall Aerospace, Mr. Woolford, and Mr. Daigle. (Doc. 1). The initial complaint raised only claims of breach of contract and unjust enrichment. Defendants filed a motion to dismiss, which the court granted in part and dismissed in part. (Doc. 170).

         AAL Group filed an amended complaint, again naming Black Hall Aerospace, Mr. Woolford, and Mr. Daigle. (Doc. 182). The amended complaint raised the same breach of contract and unjust enrichment claims, but also added claims for promissory and equitable estoppel, fraud, conversion, tortious interference, and conspiracy. Mr. Woolford moved to dismiss the amended complaint, and while the parties were briefing that motion, Black Hall Aerospace and Mr. Daigle settled with AAL Group. (See Doc. 245). As a result, the court dismissed Black Hall Aerospace and Mr. Daigle as defendants, and dismissed all of AAL Group's claims against them. (Doc. 250). The only defendant remaining is Mr. Woolford, and the only claims remaining are those asserted against him.

         2. Factual Allegations

         At this stage, the court must accept as true the allegations in the complaint and construe them in the light most favorable to the plaintiff. Butler v. Sheriff of Palm Beach Cty., 685 F.3d 1261, 1265 (11th Cir. 2012). “A court's review on a motion to dismiss is limited to the four corners of the complaint. A court may consider only the complaint itself and any documents referred to in the complaint which are central to the claims.” Wilchombe v. TeeVee Toons, Inc., 555 F.3d 949, 959 (11th Cir. 2009) (citation and quotation marks omitted).

         AAL Group is a contractor that provides aviation services to governments and prime contractors. In 2011 it formed a subsidiary, the similarly-named AAL USA, to support some of its contracts. In early 2014, AAL Group and AAL USA became independent companies, but they continued to work together on various contracts. For some unspecified period of time, Mr. Daigle was the CEO of AAL USA and Mr. Woolford was its CFO. (Doc. 182 at 3-5).

         AAL Group and AAL USA had entered into a number of contracts with each other. AAL Group's amended complaint describes five of those contracts in detail. In four of those contracts-which AAL Group calls the Airbus Iraqi MILDS® contract; the F2AST Certified Logistics Support contract; the MAG DS Helicopter contract; and the KN53 Aviation Equipment contract-either AAL USA or AAL Group contracted to provide the other with supplies, labor, or leased equipment. In the fifth, which AAL Group calls the Northrop Grumman contract, AAL USA contracted with Northrop Grumman to provide technical maintenance of helicopters, then subcontracted certain work to AAL Group. (Doc. 182 at 7-13).

         While AAL USA and AAL Group were doing business with each other, AAL USA's then-CEO, Mr. Daigle, incorporated Black Hall Aerospace. Mr. Daigle and Mr. Woolford own shares of that company and also served, for an unspecified period of time, as its CEO and CFO, respectively. On September 29, 2016, AAL USA and Black Hall Aerospace entered into an Asset Purchase Agreement, under which AAL USA transferred to Black Hall Aerospace all of its assets, including all of its cash and its contracts with AAL Group. (Doc. 189 at 4-5; Doc. 1-2). In a related case before this court, AAL USA contests the validity of the Asset Purchase Agreement, but the court will not delve into the details of that dispute because, now that Black Hall Aerospace has been dismissed from this case, the Agreement is only marginally related to AAL Group's lawsuit against Mr. Woolford.

         According to AAL Group, by the time AAL USA and Black Hall Aerospace entered into the Asset Purchase Agreement in September 2016, AAL Group had either performed its obligations under those contracts, or made advance payments to AAL USA, but AAL USA had not yet performed its obligations under the contracts. (Doc. 182 at 10-13). In addition to its contracts with AAL USA, AAL Group performed work for a company called Science & Engineering Services, LLC (SES), which issued a $146, 556.24 check to AAL Group c/o AAL USA. Mr. Woolford deposited the check but, instead of transferring the funds to AAL Group, he and the other former defendants “took the proceeds for their own use.” Finally, at some point before September 2016, AAL Group had transferred money to AAL USA for payments to suppliers, including Airbus and BIRD Aero. Mr. Woolford took that money but did not pay the suppliers, causing AAL Group “even greater losses.” (Doc. 182 at 10-14.).

         AAL Group alleges that before, during, and after AAL USA and Black Hall Aerospace entered the Asset Purchase Agreement, Mr. Woolford, Mr. Daigle, and Black Hall Aerospace were involved in a conspiracy to steal AAL Group's money. AAL Group does not provide any details about how Mr. Woolford stole the money relating to the Airbus Iraqi contract, the F2AST contract, the MAG contract, or the KN53 contract. But it alleges that, at some point before March 2015, Mr. Woolford began “factoring” AAL USA's accounts receivable under the Northrop Grumman contract through a company called Versant Funding. Factoring is a process whereby a company sells its accounts receivable to another company at a discount in exchange for a lump sum payment. (Doc. 182 at 8 & n.3).

         Under Mr. Woolford's direction, AAL USA factored at least $3, 580, 257.20 of Northrop Grumman receivables-an amount that, according to AAL Group, represents “solely AAL Group's share, excluding interest.” In August 2016, AAL Group's CEO, Oleg Sirbu, met with Mr. Daigle, Mr. Woolford, and another AAL USA employee, Randy Munger. At that meeting, Mr. Sirbu asked about the overdue payments on the Northrop Grumman purchase orders. Mr. Woolford misrepresented to him that Northrop Grumman had not yet paid what it owed to AAL USA, so AAL USA could not yet pay AAL Group. Mr. Sirbu instructed Mr. Munger to seek a status update from Northrop Grumman, but after the meeting, Mr. Woolford told Mr. Munger not to contact Northrop Grumman because Northrop Grumman had, in fact, already paid the amounts it owed. (Doc. 182 at 8-10).

         Instead of paying AAL Group for the work it had performed, Mr. Woolford “spent the money in some other way, leaving AAL Group without proper compensation under the Northrop contract.” AAL Group alleges that Mr. Daigle and Mr. Woolford “factored the invoices and diverted the funds to their personal gain and the use of [Black Hall Aerospace].” (Doc. 182 at 9).

         II. DISCUSSION

         Mr. Woolford moves to dismiss the amended complaint. (Doc. 226). Federal Rule of Civil Procedure 8(a) requires “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). A Rule 12(b)(6) motion to dismiss attacks the legal sufficiency of the complaint. “To survive a motion to dismiss, the plaintiff must plead ‘a claim to relief that is plausible on its face.'” Butler, 685 F.3d at 1265 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)).

         The court must accept as true the factual allegations in the complaint and construe them in the light most favorable to the plaintiff, making all reasonable inferences in favor of the plaintiff. Id. But the court need not accept as true the plaintiff's legal conclusions. Mamani v. Berzain, 654 F.3d 1148, 1153 (11th Cir. 2011). Accordingly, the court must distinguish between the complaint's well-pleaded factual allegations and the complaint's legal conclusions made without adequate factual support. Id. A complaint that provides only “labels and conclusions” or “a formulaic recitation of the elements of a cause of action” does not state a claim sufficient to survive a Rule 12(b)(6) motion. Twombly, 550 U.S. at 555.

         In addition, the Federal Rules of Civil Procedure provide that, for claims involving fraud, “a party must state with particularity the circumstances constituting fraud.” Fed.R.Civ.P. 9(b). “Particularity means that a plaintiff must plead facts as to time, place, and substance of the defendant's alleged fraud, specifically the details of the defendant['s] allegedly fraudulent acts, when they occurred, ...


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