Homfeld II, L.L.C. v. Comair Holdings, Inc.

53 F. App'x 731
CourtCourt of Appeals for the Sixth Circuit
DecidedDecember 3, 2002
DocketNo. 01-1151
StatusPublished
Cited by47 cases

This text of 53 F. App'x 731 (Homfeld II, L.L.C. v. Comair Holdings, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Homfeld II, L.L.C. v. Comair Holdings, Inc., 53 F. App'x 731 (6th Cir. 2002).

Opinion

BATCHELDER, Circuit Judge.

Plaintiffs-Appellants Homfeld II, L.L.C., Jonathan Capital Resources, L.L.C., and Spirit Aircraft I Trust (collectively, “the Leasing Companies”) appeal the district court’s dismissal of their complaint under Fed.R.Civ.P. 12(b)(6). The Leasing Companies argue that the district court erred in concluding that their third-party contractual claims are barred. Finding no merit to their arguments, we will affirm the judgment of the district court.

Statement of Facts

Spirit Airlines, Inc. (“Spirit”) is a certified air carrier that provides low-fare air transportation to numerous cities; at the time in question it was operating ten airplanes, four of which it leased from the Leasing Companies. Comair Holdings, Inc. (“Comair”) is a holding company whose principal subsidiary and operating company, Comair, Inc., is a certified air carrier providing scheduled air transportation to many cities. In 1996 Spirit, Spirit’s owner Edward Homfeld, and Comair entered into an agreement (“Acquisition Agreement”) by which Comair would acquire most of Spirit’s assets and assume most of Spirit’s Labilities. The Leasing Companies were not a party to this agreement.

The Acquisition Agreement provided, among many other things, that Spirit’s obligations on the Leasing Companies’ four airplanes would pass to Comair. Under federal law, however, the airplanes had to meet “stage 3” noise levels by December 31, 1999, or they would not be aLowed to fly. See 49 U.S.C. § 47528(a). To comply with this requirement they needed noise mufflers called “hushkits,” which would cost over $2 million per plane. The Acquisition Agreement required Spirit to add a paragraph to its leases on the four Leasing Company airplanes, establishing that the Leasing Companies would install the hushkits at their own expense, that if the cost exceeded $2.2 milLon then “the excess shall be payable by the Lessee or reflected in the Basic Rent under the Lease.” and that the Leasing Companies would recover the cost via increased rent once the hushkits were installed. The Acquisition Agreement additionaLy estabLshed that the terms of the leases with the Leasing Companies would be extended.

Spirit fulfiUed its obligations under the Acquisition Agreement, but Comair backed out. In 1997 Spirit filed a breach of contract suit — a suit in which the Leasing Companies did not join — against Comair. Spirit obtained a summary judgment on the issue of Lability, and Comair settled on the issue of damages. In 2000 the Leasing Companies filed this action against Comair. claiming to be aggrieved third-party beneficiaries to the Acquisition Agreement. The district court granted Comair’s motion to dismiss, and the Leasing Companies now appeal.

Analysis

There is a preliminary jurisdictional matter in this case. The Leasing Companies — which comprise two limited liabiLty companies and a business trust — alleged in their complaint only their personal places of business and the states in which they have citizenship, but failed to allege the citizenship of their members and trustees. The latter is required in order to establish diversity jurisdiction because a Lmited liabihty company is not treated as a corporation and has the citizenship of its members, and a business trust has the citizenship of its trustees. See Cosgrove v. Bartolotta, 150 F.3d 729, 731 (7th Cir. 1998); Navarro Sav. Ass’n v. Lee, 446 U.S. 458, 464, 100 S.Ct. 1779, 64 L.Ed.2d 425 (1980). The Leasing Companies have as[733]*733serted in their briefs on appeal that there are “no Ohio or Kentucky citizens among the plaintiffs’ constituents and that there [is] therefore complete diversity.” Comair does not contest the matter. This defect easily may be cured under the authority of 28 U.S.C. § 1653, which provides: “Defective allegations of jurisdiction may be amended, upon terms, in the trial or appellate courts.” Because there is no dispute about the fact of our jurisdiction, but merely a defective allegation, we will proceed to the merits of the case, but we order the Leasing Companies to file, within ten days of this decision, a proper amendment in this Court setting forth the facts demonstrating diversity jurisdiction. See Miller v. Davis, 507 F.2d 308, 311 (6th Cir.1974) (noting that Congress’s intent in enacting 28 U.S.C. § 1653 was to avoid dismissals on technical grounds, and, while proceeding to the merits of the case, ordering the appellants to file a proper amendment in the appellate court establishing diversity jurisdiction).

We review do novo a district court’s dismissal of a complaint under Fed. R. Civ. Proc. 12(b)(6). Bird v. Parsons, 289 F.3d 865, 871 (6th Cir.2002). Like the district court, we assume that all of the plaintiffs’ factual allegations are true, and we may affirm the dismissal only if “it appears beyond doubt that the plaintifffs] can prove no set of facts in support of [their] claim which would entitle [them] to relief.” Id. (quoting Buchanan v. Apfel, 249 F.3d 485, 488 (6th Cir.2001)).

Ohio allows “intended beneficiaries” to file third-party beneficiary suits, “[u]nless otherwise agreed between promisor and promisee.” Hill v. Sonitrol of Southwestern Ohio, Inc., 36 Ohio St.3d 36, 521 N.E.2d 780, 784 (1988) (quoting Restatement of the Law 2d, Contracts § 302). The first question, then, is whether the Acquisition Agreement establishes that the Leasing Companies may or may not file suit as third-party beneficiaries. If it establishes that they may file suit, then we must consider whether they have stated a claim; if it establishes that they may not, then our inquiry is ended. If the Acquisition Agreement leaves these questions open, then we must consider whether the Leasing Companies qualify as “intended beneficiaries” under Ohio law.

The district court dismissed the Leasing Companies’ claims on the grounds that the Acquisition Agreement did not allow for third party claims, and that in any event, the Leasing Companies were not intended third party beneficiaries under Ohio law. It based its contractual-bar finding on paragraph 18.1 of the Acquisition Agreement:

Assignment. This agreement and all rights hereunder shall not be assignable by any party without the prior written consent of the other party.... Subject to the foregoing, all of the terms of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties and their ... permitted assigns. Except as expressly stated, nothing herein shall be deemed to confer any benefit upon any person or business entity that is not a party to this agreement.

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53 F. App'x 731, Counsel Stack Legal Research, https://law.counselstack.com/opinion/homfeld-ii-llc-v-comair-holdings-inc-ca6-2002.