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Mansfield Heliflight, Inc. v. Freestream Aircraft USA, Ltd.

United States District Court, D. Vermont

August 4, 2017

MANSFIELD HELIFLIGHT, INC, Plaintiff, Counter-Defendant,
FREESTREAM AIRCRAFT USA, LTD, Defendant, Cross-Plaintiff, Counter-Plaintiff, and RUDOLPH MELK, JR., Defendant, Cross-Defendant. FREESTREAM AIRCRAFT USA, LTD, Third-Party Plaintiff,
ERIC D. CHASE, Third-Party Defendant.



         Mansfield Heliflight, Inc. ("Mansfield") initially brought this action against Freestream Aircraft USA, Ltd. ("Freestream") and Rudolph Melk, Jr. ("Mr. Melk") alleging six state-law causes of action arising out of the disputed purchase and sale of a Gulfstream IV jet ("the Aircraft"). On December 7, 2016, the court denied Freestream's motion to dismiss. See Mansfield Heliflight, Inc. v. Freestream Aircraft USA, Ltd., 2016 WL 7176586 (D. Vt. Dec. 7, 2016) ("Mansfield Heliflight F). Freestream thereafter served an Answer, Counterclaims, Crossclaim, and Third-Party Complaint in Response to the Complaint ("Counterclaims") (Doc. 35) against Mansfield and Eric D. Chase (collectively, the "Mansfield Defendants"). The Counterclaims allege the following causes of action: tortious interference with contract, tortious interference with a prospective business relationship, promissory estoppel, and defamation. Freestream also seeks common law indemnification from Mr. Melk.

         Pending before the court is the Mansfield Defendants' March 6, 2017 motion to dismiss for failure to state a claim. (Doc. 41.) Freestream opposes the motion and requests leave to amend in the event the court grants any part of the motion. Following oral argument on June 30, 2017, the court took the pending motion under advisement.

         The Mansfield Defendants are represented by Benjamin H. Klein, Esq. Freestream is represented by Patrick J. Rohan, Esq., Jonathan R. Voegele, Esq., Richard B. Drubel, Esq., and Courtney R. Rockett, Esq.

         I. Factual Background and Procedural History.

         The following facts are derived from the allegations in Freestream's Counterclaims. Freestream is a New Jersey corporation with its principal place of business in Teterboro, New Jersey. Mansfield is a Vermont corporation with its principal place of business in Milton, Vermont. Mr. Chase is Mansfield's President and resides in Burlington, Vermont.

         On or about July 21, 2015, an entity allegedly affiliated with Mr. Melk known as Lima Mike Bravo, LLC ("LMB") agreed to purchase the Aircraft from Punj Lloyd Limited ("PLL"), an India-based aircraft seller (the "LMB Purchase Agreement"). A second contract provided for the Aircraft's resale (the "Resale Agreement") by LMB to an unnamed buyer represented by Freestream (the "resale buyer"). A third contract provided that the resale buyer would pay Freestream a commission in exchange for securing its right to purchase the Aircraft (the "Commission Agreement"). At the time, the Mansfield Defendants had knowledge of all three agreements because an Indian broker in New Delhi had kept them apprised of the status of any deal involving the Aircraft. Thereafter, the Mansfield Defendants allegedly "concocted various schemes with [Mr.] Melk" to purchase the Aircraft and resell it to a buyer other than Freestream's resale buyer. (Doc. 35 at 31, ¶ 249.)

         On or about August 2, 2015, Mansfield entered into an agreement to purchase the Aircraft from PLL (the "Mansfield Purchase Agreement")- Two days later, Mr. Melk filed a Federal Aviation Administration ("FAA") lien against the Aircraft for over $400, 000 related to repairs, expenses, and inspections he purportedly performed. Freestream was allegedly unaware of Mr. Melk's intention to file the FAA lien and took no part in the decision to file it.

         Sometime in early August 2015, Freestream's Executive Vice President, Connie Marrero, was informed by the escrow agent holding the resale buyer's non-refundable deposit on the Aircraft that there was an open file on the Aircraft by Leda Francis, an escrow agent with Jetstream Escrow & Title Service, Inc. ("Jetstream"). On or about August 14, 2015, Ms. Marrero contacted Ms. Francis, who stated that Jetstream held a refundable deposit for the purchase of the Aircraft. Ms. Francis did not disclose the identity of the parties to the deal. Ms. Marrero told Ms. Francis that if Ms. Francis's buyer wanted to contact her to discuss the matter, the buyer could do so.

         On August 19, 2015, Mansfield's Chief Financial Officer and Director of Sales, Tina Lindberg, contacted Ms. Marrero and was "dismayed to learn" that Freestream and the resale buyer had entered into a "pre-buy" deal, that the resale buyer's deposit was non-refundable, and that the deal was nearer to closing than Mansfield's deal. Id. at 33, ¶ 261. Ms. Lindberg stated to Ms. Marrero that the deposit in Mansfield's deal was refundable, and confirmed that "the deal was not even close to closing." Id. Ms. Lindberg then attempted to persuade Ms. Marrero to pay Mansfield to "walk away" from its planned purchase of the Aircraft. Id. at 33, ¶ 262. Ms. Marrero refused and referred Ms. Lindberg to Mr. Melk because Freestream was merely representing the resale buyer. Ms. Lindberg then informed Ms. Marrero that Mansfield would terminate its deal if Mr. Melk agreed to pay Mansfield. On or about the following day, after negotiating with Mr. Melk, the Mansfield Defendants promised to terminate the Mansfield Purchase Agreement. However, they did not fulfill that promise.

         On or about August 25, 2015, the Mansfield Defendants "falsely stated that Freestream had filed a fraudulent lien with the FAA on the [Aircraft]." Id. at 34, ¶ 264. These false statements took the form of written and spoken communications to PLL, to Mansfield's escrow agent, and, upon information and belief, to a prospective resale buyer the Mansfield Defendants had identified. Freestream characterizes these alleged statements as a "false, unsubstantiated, and defamatory allegation of an unlawful act perpetrated on a federal agency" which "surpasses the norms of even the most rough-and-tumble of industries." Id. Freestream alleges that the business jet market consists of "an especially tight-knit community of buyers, sellers, and interconnected service providers" and that a market participant's reputation is critical to its success. Id. at 34, ¶ 265. Freestream further asserts that while it had a longstanding good reputation in the business jet market, the Mansfield Defendants' communications to other market participants that Freestream filed a fraudulent FAA lien harmed its reputation. At some point during this time period, the LMB Purchase Agreement failed to close. The resale buyer represented by Freestream was left with "hundreds of thousands of dollars in losses" as a result. Id. at 34, ¶ 266.

         On or about September 25, 2015, the Mansfield Defendants and Mr. Melk allegedly met in Vermont and "agreed to leave Freestream and its buyer in the cold so they could resell the aircraft to some other buyer." Id. at 35, ¶ 267. However, PLL did not close a deal with the Mansfield Defendants and Mr. Melk. As a result, PLL "soured on their antics and refused to deal with either of them." Id. at 35, ¶ 269.

         In or about early October of 2015, PLL sold the Aircraft to Freestream which, in turn, resold the Aircraft to Blackjet LLC ("Blackjet") on or about October 28, 2015. Blackjet was not affiliated with any prior deal involving Mr. Melk or the Mansfield Defendants. Freestream earned a commission as a result of this sale. Mr. Melk "was paid some amount" for mechanical services and out-of-pocket expenses incurred in connection with rendering the Aircraft flightworthy and ferrying it to the United States. Id. at 10, ¶ 79.

         II. Conclusions of Law and Analysis.

         A. Standard of Review.

         Pursuant to Fed.R.Civ.P. 12(b)(6), the Mansfield Defendants move to dismiss Freestream's Counterclaims for failure to state a plausible claim for which relief can be granted. Ms. Lindberg filed a declaration in support of the motion (the "Lindberg Declaration") wherein she avers that on August 17, 2015 she was copied as a recipient of an email sent by PLL's President of Projects Monitoring which attached "a fully executed copy of the Aircraft Purchase and Sale Agreement between Punj Lloyd Limited and Lima Mike Bravo, LLC." (Doc. 41-1 at 1.) The Mansfield Defendants argue that § 1.3.1 of that document reveals that the LMB Purchase Agreement, by its terms, had not closed by the time the Mansfield Purchase Agreement was executed. They contend the court may consider the Lindberg Declaration and the document attached thereto because Freestream "refers directly to the agreement between PLL and the Melk-affiliated entity in its complaint[.]" (Doc. 41 at 14 n.4.)

         "In considering a motion under Fed.R.Civ.P. 12(b)(6) to dismiss a complaint for failure to state a claim on which relief can be granted, the district court is normally required to look only to the allegations on the face of the complaint." Roth v. Jennings, 489 F.3d 499, 509 (2d Cir. 2007). While "[d]ocuments that are attached to the complaint or incorporated in it by reference are deemed part of the pleading and may be considered[, ]" id., "[consideration of extraneous material in judging the sufficiency of a complaint is at odds with the liberal pleading standard of Fed. R Civ. P. 8(a)(2)[.]" Chambers v. Time Warner, Inc., 282 F.3d 147, 154 (2d Cir. 2002). For this reason, before a court may consider a document that is purportedly "integral" to, but not attached to or incorporated by reference in, the complaint, "it must be clear on the record that no dispute exists regarding the authenticity of the document." DiFolco v. MSNBC Cable L.L.C, 622 F.3d 104, 111 (2d Cir. 2010) (quoting Faulkner v. Beer, 463, F.3d 130, 134 (2d Cir. 2006)) (internal quotation marks omitted); see also 35B C.J.S. Federal Civil Procedure § 856 (commenting that "[i]n considering motions to dismiss a claim, primarily, the court will, for the purpose of the motion, consider the allegations in the complaint. .. and documents whose contents are alleged in the complaint and whose authenticity no party questions but which are not physically attached to the pleading").

         The standard for consideration of matters outside the Counterclaims is not satisfied in this case. Freestream does not concede the authenticity of the document attached to the Lindberg Declaration, and maintains that discovery is required to establish the precise terms of the LMB Purchase Agreement. When presented with such extraneous material, "Rule 12(b) afford[s] two options" to the court: "exclude[] the extrinsic document[]" or "convert the motion to one for summary judgment and give the parties an opportunity to conduct appropriate discovery and submit the additional supporting material contemplated by Rule 56." Chambers, 282 F.3d at 154. As this case is in a nascent phase, the court declines to convert the pending motion into a motion for summary judgment. The document attached to the Lindberg Declaration (Doc. 41-2) will therefore not be considered in determining whether dismissal is appropriate.

         In adjudicating a motion pursuant to Fed. R Civ. P. 12(b)(6), the court is "guided by '[t]wo working principles[.]'" Harris v. Mills, 572 F.3d 66, 72 (2d Cir. 2009) (quoting Ashcroft v. Iqbal,556 U.S. 662, 678 (2009)) (alteration in original). First, "a court must accept as true all of the [factual] allegations contained in a complaint[, ]" a "tenet" that is, however, "inapplicable to legal conclusions." Iqbal, 556 U.S. at 678. Second, "only a complaint that states a plausible claim for relief survives a motion to dismiss" and a claim "has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. at ...

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