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BLB Aviation South Carolina, LLC v. Jet Linx Aviation, LLC

United States Court of Appeals, Eighth Circuit

May 9, 2014

BLB Aviation South Carolina, LLC, Plaintiff - Appellee
v.
Jet Linx Aviation, LLC; Jet Linx Aviation Corporation; Jet Linx Management Company, LLC, Defendants - Appellants, Jamie Walker, Defendant; BLB Aviation South Carolina, LLC, Plaintiff - Appellant
v.
Jet Linx Aviation, LLC; Jet Linx Aviation Corporation; Jet Linx Management Company, LLC, Defendants - Appellees, Jamie Walker, Defendant

Submitted, November 19, 2013

Page 830

[Copyrighted Material Omitted]

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[Copyrighted Material Omitted]

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Appeal from United States District Court for the District of Nebraska - Omaha.

For BLB Aviation South Carolina, LLC, Plaintiff - Appellee (12-3461): James M. Bausch, Jonathan J. Papik, Megan S. Wright, CLINE & WILLIAMS, Omaha, NE.

For Jet Linx Aviation, LLC, Jet Linx Aviation Corporation, Jet Linx Management Company, LLC, Defendants - Appellants (12-3461): James David Sherrets, Diana Vogt, SHERRETS & BRUNO, Omaha, NE.

For BLB Aviation South Carolina, LLC, Plaintiff - Appellant (12-3508): James M. Bausch, Jonathan J. Papik, Megan S. Wright, Cline & Williams, Omaha, NE.

For Jet Linx Aviation, LLC, Jet Linx Aviation Corporation, Jet Linx Management Company, LLC, Defendants - Appellees (12-3508): James David Sherrets, Diana Vogt, Sherrets & Bruno, Omaha, NE.

Before WOLLMAN, COLLOTON, and GRUENDER, Circuit Judges.

OPINION

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GRUENDER, Circuit Judge.

BLB Aviation South Carolina, LLC (" BLB" ) brought this action against Jet Linx Aviation Corporation; Jet Linx Aviation, LLC; Jet Linx Management Company, LLC (collectively, " Jet Linx" [1]); and Jamie Walker. Jet Linx then counterclaimed. After a bench trial, the district court awarded $163,953.17 in damages to BLB and $158,014.98 in damages to Jet Linx due to the parties' breaches of their agreements. Having ended trial almost where they began it, both parties appeal. We affirm in part and reverse and remand in part.

I. Background

BLB is an aviation company that owns airplanes, some of which are leased for charter flights. BLB is owned by Barry L. Bellue, Sr. (" Barry Bellue" ) and his son Barry L. Bellue, Jr. (" Lee Bellue" ). Jet Linx operates an aircraft charter business. Jamie Walker was an employee of Jet Linx at all relevant times.

In March 2007, Walker sent BLB a letter about the possibility of leasing one or more of BLB's airplanes for Jet Linx's charter services. Shortly thereafter, Lee Bellue and Walker discussed the possibility of BLB purchasing an airplane and leasing it to Jet Linx. To explore this prospect, BLB contacted an aircraft broker about purchasing the type of aircraft that Jet Linx had indicated would be suitable for such a lease. The broker identified such an aircraft, which had a registration number of N400GK (" N400GK" ).

Prior to purchasing the N400GK, on or about June 20, 2007, BLB and Jet Linx entered into a dry lease agreement for the N400GK (" DLA" ). In the DLA, which became effective on August 1, 2007, Jet Linx " guarantee[d] [BLB] a minimum monthly lease payment of $47,100 per month, no matter the number of actual hours flown." Jet Linx, which was responsible for maintenance of the N400GK under the DLA, further agreed that " [a]ll inspections, repairs, modifications, maintenance, and overhaul work . . . will be performed

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in accordance with the standards set by the Federal Aviation Regulations" and agreed to " maintain all log books and records . . . in accordance with the Federal Aviation Regulations." While Jet Linx was responsible for maintaining the N400GK, BLB was responsible for paying for the maintenance performed on the airplane. On or about August 10, 2007, BLB purchased the N400GK for approximately $1,300,000. BLB also spent approximately $50,000 to refurbish the airplane's interior.

BLB delivered the N400GK to Jet Linx on or about August 24, 2007. However, due to unexpected maintenance issues, the N400GK did not make a charter flight until October 2007. That October, Lee Bellue contacted Walker because BLB had not received any lease payments for the N400GK from Jet Linx. Lee Bellue explained that he was required to make monthly payments of $15,000 to his bank. Jet Linx then paid BLB $15,000. Jet Linx claims that BLB agreed to accept this amount as the full lease payment for August and September 2007.

In addition to the DLA, BLB and Jet Linx also negotiated a lease agreement for Jet Linx to charter one of BLB's existing airplanes, which had a registration number of N789DJ (" N789DJ" ). In August 2007, the parties signed a management services agreement for the N789DJ (" MSA" ). Pursuant to the MSA, BLB agreed to reimburse Jet Linx for certain expenses for the N789DJ. As with the DLA, Jet Linx agreed in the MSA to " maintain the [N789DJ] in compliance with all applicable Federal Aviation Regulations" and " ensur[e] [that] the aircraft complies with FAA maintenance requirements for accurate record entries." The MSA also provided that Jet Linx " does not assume any liability for damages caused by or resulting from, directly or indirectly, wholly or in part, any failure or fault other than its negligence."

On February 19, 2008, two Jet Linx pilots--James Clark and Shannon Montanye--flew the N789DJ from Omaha, Nebraska to Sioux Falls, South Dakota. Upon arrival in Sioux Falls, Clark performed a post-flight inspection of the airplane. Clark reported that he " pulled the cap on the port engine to find the oil in acceptable levels and replaced the cap and pushed the cap closing trigger in the down position and proceeded to the starboard engine and repeated the process." After Clark's inspection, the airplane was stored in a hangar overnight. Early the next morning, Clark and Montanye prepared the airplane for another flight. However, neither pilot performed a pre-flight inspection. After the plane taxied and was cleared for takeoff, Montanye noticed that the oil-pressure light was illuminated and that the oil-pressure gauge read zero. Montanye alerted an individual in the flight-control tower of this issue, who suggested that the aircraft taxi off of the active runway. Montanye also called Tony Boatwright, the head of maintenance at Jet Linx, who instructed the pilots to shut down the engine, which they did. Because the oil level in the engine had dropped below the minimum level specified in the airplane's maintenance manual, a mechanic performed a teardown inspection of the N789DJ's engine and then performed necessary maintenance, resulting in significant expenses. The mechanic found a crack in the oil cap, which Boatwright subsequently observed when the oil cap was returned to Jet Linx.

Shortly after the oil-loss incident, Clark and Montanye submitted statements describing the incident to Mike Kopp, Jet Linx's chief pilot. Kopp placed a disciplinary report in Clark's employee ...


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