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Flightsafety International Inc. v. Flight Options

December 8, 2005

FLIGHTSAFETY INTERNATIONAL INC., PLAINTIFF,
v.
FLIGHT OPTIONS, LLC, DEFENDANT.



The opinion of the court was delivered by: Glasser, United States District Judge

MEMORANDUM AND ORDER

INTRODUCTION

Defendant Flight Options, LLC ("Flight Options" or "defendant") has filed a motion to dismiss the complaint pursuant to Fed. R. Civ. P. 12(b)(6). In this diversity case, defendant argues that plaintiff Flightsafety International Inc. ("FlightSafety" or "plaintiff") has failed to plead the essential element of damages in its breach of contract claims arising out of two different agreements between the parties. Further, defendant asserts that any claim for damages resulting from one of the agreements is barred by an integration clause.

For the reasons set forth below, the Court grants the motion in its entirety.

BACKGROUND

The facts as set forth below are drawn from the complaint, the allegations of which the Court accepts as true solely for purposes of this motion to dismiss. FlightSafety is a New York corporation with its principal place of business at the Marine Air Terminal at LaGuardia Airport in Flushing, New York. (Compl. ¶ 3). It provides aviation services, including the training of pilots, technicians and flight attendants. (Id.). Flight Options is a Delaware limited liability company with its principal place of business in Ohio and has business operations in New York. (Id. ¶ 4). It provides fractional jet ownership services through which customers share the use of airplanes that it operates. (Id.).

In or about March 1999, FlightSafety and Flight Options, then doing business as Corporate Wings/Flight Options, entered into a contract effective as of January 1, 1999, pursuant to which FlightSafety agreed to serve as Flight Options' exclusive pilot training provider at least twice a year for a five-year term ending December 31, 2003. (Compl. ¶ 7). In return for Flight Options' commitment to enroll at least fifty percent of its pilots in the full service training program involving 26 different types of aircraft, FlightSafety provided Flight Options discounted rates for the training sessions. (Id. ¶¶ 9, 10, Exh. B ¶ 1). The aircrafts which were the subject of the 1999 contract included, but were not limited to, the Beechjet 400A, Hawker 800XP, CitationJet and King Air 200. (Id. Exh. A ¶ C, Exh. B, Rev. App. C). FlightSafety offered Flight Options a discount from its standard prices based on Flight Options' commitment to use FlightSafety exclusively as its training provider for at least fifty percent of its pilots. (Id. ¶ 11, Exh. A, ¶ H.8).

It was agreed that Flight Options would be in default of the agreement if it failed "to comply with the exclusivity requirement." (Compl. Exh. A,¶ L(1)). "Upon the occurrence of any Event of Default, and at any time thereafter, so long as the same shall be continuing, either party may terminate this Agreement with notice to the other party." (Id. Exh. A, ¶ M).

After the 1999 contract was executed, Flight Options requested that the prices be lowered, which caused the parties to enter into an amendment to that contract. (Id. ¶ 13). In the amended contract, FlightSafety reduced its rates further from those set forth in the original agreement (the agreement effective as of January 1, 1999, as amended, is referred to herein as the "1999 Contract"). (Id. ¶ 14).

Flight Options allegedly failed to meet its obligations under the 1999 Contract. (Compl. ¶ 18). As a result, by notice dated January 29, 2001, FlightSafety informed Flight Options of its belief that it was in default of the 1999 Contract. (Id. ¶ 25 & Exh. C). Flight Options failed to remedy the alleged breach. (Id. ¶ 26).

In April 2002, the parties entered into a five-year Agreement for Training, which was effective as of April 1, 2002 (the "2002 Contract"). (Compl. ¶ 27). Pursuant to that contract, Flight Options agreed in return for discounted rates to use FlightSafety exclusively for its entire pilot training requirements for four specified aircraft, which were also the subject of the 1999 Contract. (Id. ¶¶ 28, 29). Those aircrafts were the "New" Beechjet 400A, Hawker 800 XP, CitationJet and King Air 200. (Compare id. Exh. B, Rev. App. C with Exh. D, App. A). Therefore, the subject matter of the 2002 Contract was identical to the 1999 Contract, the only difference between the two being the number of airplanes that were the subject of each contract.

"Default" is defined in the 2002 Contract as follows: "If Flight Options trains with another company, except in the event of a Force Majeure or as otherwise set forth in Paragraph 5, the discounts set forth in Paragraph 3 shall terminate with immediate effect. Additionally, FlightSafety shall be entitled to recover any legal and other reasonable expenses incurred in the collection of past due accounts." (Compl. Exh. D, ¶ 9). Neither party could recover for "loss of profits, special, incidental, or consequential damages" as a result of a breach by the other party. (Id. ¶ 14). The 2002 Contract contains a standard integration clause which states that "[t]his Agreement constitutes the entire Agreement between the parties and supersedes all previous negotiations, representations, undertakings and agreements heretofore made between the parties with respect to its subject matter." (Compl. Exh. D, ¶ 19). Both the 1999 Contract and 2002 Contract are to be governed by New York law. (Id. ¶¶ 27, 32).

Between April 2002 and December 2003, FlightSafety provided pilot training for Flight Options pilots pursuant to the 2002 Contract. (Compl. ¶ 33). As part of the services it offered, FlightSafety built two multi million dollar simulators and hired seven additional instructors to meet Flight Options' training requirements. (Id.). In December 2003, Flight Options notified FlightSafety that effective January 1, 2004, it would be using another company to provide pilot training for three aircrafts -- Hawker 800 XP, Beechjet 400A and CitationJet -- which were the subject of the 2002 Contract. (Id. ¶ 34 & Exh. E). In a letter from the CEO of Flight Options to Flight Safety's President, Flight Options stated that its decision resulted from "an arduous process of examining [its] alternatives" based on "pricing and [the company's] duty to [its] shareholders, not by dissatisfaction with FlightSafety." (Id.). At that time, Flight Options entered into a three-year agreement, with an option for two additional years, with CAE SimuFlite ("CAE"), a competitor of FlightSafety's, pursuant to which Flight Options would train all of its pilots at CAE's Dallas-Forth Worth center. (Id. ¶ 37).

Consequently, by letter dated January 26, 2004, FlightSafety sent Flight Options written notice of its belief that it had breached the 2002 Contract, and demanded damages arising from the alleged breach. (Compl. ΒΆ 40). In that same letter, FlightSafety reiterated its belief that Flight Options was also in breach of the 1999 Contract. (Id. ...


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