Press v. AGC Aviation LLC

818 S.E.2d 365, 260 N.C. App. 556
Court of Appeals of North Carolina·Decided August 7, 2018·No. COA 17-9·Published·Cited by 1 cases

Opinion

STROUD, Judge.

*557 This case started when the music stopped, in an aviatic version of the game of musical chairs-or musical engines-Avantair was playing with its airplanes. The music stopped when Avantair was forced into bankruptcy, and at that moment, defendants' airplane had no engines, while plaintiffs' airplane had two engines that were originally on defendants' airplane. Plaintiffs filed this declaratory judgment action to resolve the parties' dispute over who gets to keep the engines. Because the controlling contracts allowed Avantair to play musical chairs, plaintiffs get to keep the engines, so we affirm the trial court's order granting summary judgment in plaintiffs' favor and denying defendants' request for summary judgment.

Background

Plaintiff Clifford Press is an authorized representative for the 14 other plaintiffs; the 15 plaintiffs are the fractional owners of a certain Piaggio Avanti P-180 aircraft ("Plaintiffs' Airplane"). 1 The plaintiffs acquired their interests in Plaintiffs' Airplane by purchasing a fractional interest from Avantair, Inc. ("Avantair"), as part of its "Fractional Aircraft Ownership Program" ("the Avantair Program"). The plaintiffs were all parties to Ownership Agreements for their aircraft, although the individual plaintiffs each purchased their fractional interests in Plaintiffs' Airplane on different dates. Under the Avantair Program, each plaintiff was the owner of an undivided interest in Plaintiffs' Airplane, and *558 the plaintiffs were registered with the Federal Aviation Administration ("FAA") as the owners.

Defendants are the fractional owners of another airplane, a Piaggo P-180 aircraft bearing the tail number N106SL ("Defendants' Airplane"). Defendants each purchased fractional interests in Defendants' Airplane from Avantair in the same manner and under the same terms as plaintiffs did for Plaintiffs' Airplane.

Plaintiffs and defendants participated in the Avantair Program. The parties all signed and "executed in substantially the same form and substance" an Aircraft Interest Purchase Agreement ("Purchase Agreement") and a Management & Dry Lease Exchange Agreement (the "MDLA") with Avantair. Under the MDLA, Avantair was engaged as the "Manager" of the Avantair Program. Avantair leased both Plaintiffs' and Defendants' Airplanes (as well as other airplanes owned by other owners) from their respective owners and was obligated to "provide or procure certain administrative and aviation support services with respect to each Program Aircraft, including, without limitation, scheduling, maintenance, insurance, record keeping, flight crew training and scheduling, and fuel for or with respect to any Program Aircraft."

In In re Avantair, Inc. , 638 F. App'x 970 (11th Cir. 2016) (unpublished) ( per curiam ), the Eleventh Circuit explained what happened next:

When Avantair began experiencing financial troubles, the quality of its maintenance operations took a nose dive. To keep as *368 many planes as possible flying, Avantair cannibalized parts from other planes in the fleet, effectively grounding the donor planes. In addition, Avantair failed to keep adequate safety records of the part transfers. When the Federal Aviation Administration caught wind of Avantair's activities, it grounded Avantair's fleet, forcing the company to cease operations and eventually enter bankruptcy.

Id. at 971 .

On 25 July 2013, creditors forced Avantair into involuntary Chapter 7 bankruptcy, which was still pending in the United States Bankruptcy Court for the Middle District of Florida, Tampa Division when this declaratory judgment action was filed. 2 During the bankruptcy proceedings, *559 the parties learned that Avantair had removed the engines originally installed on Defendants' Airplane and installed those engines on Plaintiffs' Airplane, leaving Defendants' Airplane with no engines as of the bankruptcy. 3 A dispute developed between plaintiffs and defendants regarding the ownership of the engines. Defendants claimed that they never consented to the removal of the engines from Defendants' Airplane and that plaintiffs had no ownership interest in the engines, so plaintiffs should return the engines to defendants.

The specific engines installed as original equipment as of 2003 on Defendants' Airplane bore serial numbers PCE-RK0088 on Engine A and PCE-RK0087 on Engine B 4 . In addition, maintenance records for Defendants' Airplane showed both Engines A and B were removed in 2007 to be overhauled because they had used up almost all of the flying hours allowed by FAA regulations. In November 2007, the refurbished Engine A was installed on one Avantair Program aircraft and refurbished Engine B was installed on another; the engines were not on either Plaintiffs' Airplane or Defendants' Airplane. The engines were again removed and refurbished in 2011, and both Engines A and B were installed on Plaintiffs' Airplane in February 2012.

On 4 November 2014, plaintiffs filed a complaint seeking a "declaratory judgment pursuant to N.C. Gen. Stat. § 1-253 , et seq. , ... granting them possession of, control over, and marketable title to [Plaintiffs' Airplane][.]" In the alternative, plaintiffs sought "a declaration, pursuant to the Court's equitable power to quiet title to personal property, granting them possession of, control over, and marketable title to [Plaintiffs' Airplane]." Defendants filed an amended counterclaim on 20 May 2016 for conversion, trespass to chattel, and unjust enrichment, to which plaintiffs filed an answer on 31 May 2016.

On or about 24 June 2016, plaintiffs moved for summary judgment, arguing the court should enter a declaratory judgment that plaintiffs "are entitled to possession and control of, and marketable title to [Plaintiffs' Airplane], including all engines presently affixed to the aircraft[,]" and should dismiss defendants' counterclaims. Plaintiffs asserted there was no genuine issue of material fact and that they are entitled to judgment as a matter of law both on their affirmative claim and on defendants' counterclaims.

*560 Defendants also moved for summary judgment on 24 June 2016 with an incorporated memorandum.

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Press v. AGC Aviation LLC, 818 S.E.2d 365, 260 N.C. App. 556 (N.C. Ct. App. 2018).

818 S.E.2d 365 (Press v. AGC Aviation LLC) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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