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RCP's Lear, LLC v. Taughannock Aviation Corp.

January 30, 2008

RCP'S LEAR, LLC, PLAINTIFF,
v.
TAUGHANNOCK AVIATION CORP. AND JET FIRST, INC., CHRIS DOSCHER, STUART CAUFF, AND MICHAEL KEISTER, DEFENDANTS.



The opinion of the court was delivered by: Neal P. McCURN, Senior District Court Judge

MEMORANDUM-DECISION AND ORDER

I. Introduction

Plaintiff RCP's Lear, LLC ("RCP") brings this breach of contract action against defendants Taughannock Aviation Corporation ("TAC"), Jet First, Inc. ("Jet First"), Chris Doscher ("Doscher"), Stuart Cauff ("Cauff"), and Michael Keister ("Keister"), alleging the defendants' breach of various agreements relating to aircraft chartering arrangements. The court has diversity jurisdiction over this matter pursuant to 28 U.S.C. § 1332(a)(1).

Default judgment has entered against defendants Jet First, Doscher, and Cauff. (Doc. Nos. 28, 29). Currently before the court is defendant Cauff's motion to dismiss TAC's cross claim against him on the basis of insufficient service of process. (Doc. No. 47).

II. Background

The facts contained in this section are taken from RCP's complaint, unless noted otherwise, and are included herein to provide context to Cauff's motion. In July of 2005, RCP, a New Jersey limited liability company with its principal place of business in Skillman, New Jersey, became owner of a Challenger 600 aircraft (the "Challenger"). RCP wished to generate revenue and profits as a result of ownership of the Challenger and sought to make arrangements with an entity which held a Federal Aviation Agency ("FAA") Part 135 Operating Certificate for charter operation in order to utilize the Challenger in that manner. RCP approached defendant Cauff, with whom he had previously made similar arrangements with respect to a different aircraft, to further RCP's goal to enter into a charter arrangement. RCP states that Cauff was associated with defendant Jet First. Cauff negotiated a charter arrangement with Taughannock Aviation Corporation ("TAC"), a New York corporation with its principal place of business in Ithaca, New York. On July 12, 2005, RCP entered into an Aviation Services Agreement ("the Agreement") with TAC (which held a valid FAA charter operating certificate) for the purpose of generating income for RCP, TAC, and Jet First.

Pursuant to the Agreement, TAC would have possession of and would operate the Challenger for a ten year period, bearing all expenses of the charter flight operations, including but not limited to maintenance costs for the Challenger. TAC agreed to pay RCP the sum of $54,275.61 per month as a lease rate. The base of operations for the charter flights would be Ithaca, New York. The parties agreed that in the event of disputes arising in connection with the agreement, "[t]his Agreement shall be governed by and construed in accordance with the laws of the State [of] New York. Any legal action arising in connection with this Agreement shall be brought in an appropriate court with jurisdiction over matters arising in and for Tompkins County, NY." (Doc. No. 1, Exh. 1, p. 11).

On July 13, 2005, TAC and Jet First and its "principal owners/shareholders severally and individually" (Cauff, Doscher, and Michael Keister), entered into an Aircraft Charter Operating Agreement (the "Charter Agreement") to guarantee the performance of TAC in regard to the Agreement signed the previous day. Cauff was a signatory to that document in his individual capacity. (Doc. No. 63-1). The Charter Agreement provided that Jet First would arrange for charter flights and retain certain revenues. In addition to monies which were to flow between Jet First and TAC, the Charter Agreement provided that Jet First would make the lease payments of $54,275.61 directly to RCP, and further provided that the cost of maintenance was to be the responsibility of Jet First, including the maintenance service plan charges from Honeywell, described below.

TAC entered into a maintenance service plan agreement with Honeywell International, Inc. ("Honeywell") to provide engine maintenance for the Challenger. As owner, RCP was required to guarantee the obligations of TAC to Honeywell. RCP alleges that the guarantee did not obviate TAC's obligation under the Agreement to bear the ultimate expense of providing all maintenance services relating to the Challenger during the term of the Agreement.

The parties performed their respective obligations under the Agreement from July through December 2005. Beginning in January 2006, RCP alleges that TAC failed to pay the obligations due Honeywell under the maintenance service plan, and beginning in April 2006, ceased making monthly lease payments to RCP pursuant to the Agreement. In order to ensure the continued proper servicing of the Challenger, RCP paid Honeywell the sum of $216,630.87 for TAC's defaulted obligations for January through April and August through November of 2006. The amount of the defaulted lease payments through January of 2007, when the action was filed in this court, is $542,760.10.

In April of 2006 TAC surrendered possession of the Challenger to Jet First, allegedly because TAC had not been paid by Jet First for various expenses TAC had incurred in connection with the operation of the Challenger. TAC received an acknowledgment letter from Jet First, which recognized Jet First's financial responsibility for payment of the accrued maintenance services, totaling $139,996.00.*fn1 RCP was also obligated to pay $13,993.32 to another provider of aircraft maintenance/fuel services who filed a lien against the Challenger for unpaid services and/or products. This sum was paid by RCP to keep the Challenger title free and to avoid being in default with RCP's own financing lender. On November 24, 2006, the Challenger was recovered by RCP from Jet First and provided to a new operator. RCP filed this action seeking a total reimbursement by defendants of $708,249.56 plus reasonable attorneys' fees.

On May 10, 2007, RCP sought an entry of default from this court as against Jet First and Doscher (Doc. No. 16). RCP filed an affidavit asserting that pursuant to § 311 (a)(1) of the New York Civil Procedure Law and Rules ("CPLR"), Jet First was properly served a copy of the summons and complaint in the present action on February 13, 2007. RCP also informed the court that pursuant to CPLR § 308, Doscher was also properly served a copy of the summons and complaint in the present action on February 13, 2007. The time for Jet First and/or Doscher to appear, or answer the complaint, expired on or about March 5, 2007, pursuant to Rule 12 of the Federal Rules of Civil Procedure. On May 17, 2007, entry of default was granted by the Clerk of the Court against Jet First and Doscher.

On June 6, 2007, RCP sought an entry of default from this court as against Cauff. (Doc. No. 22). RCP filed an affidavit asserting that pursuant to CPLR § 308(2), Cauff was properly served a copy of the summons and complaint in the present action on April 4, 2007. The time for Cauff to appear, or answer the complaint, expired on or about May 30, 2007, pursuant to Rule 12 of the Federal Rules of Civil Procedure ("Fed. R. Civ. P."). On June 8, 2007, entry of default was granted by the Clerk of the Court against Stuart Cauff. On July 18, 2007, this court entered default judgment in favor of RCP in the amount of $730,736.37 against Jet First and Doscher (Doc. No. 28) ($708,249.56 plus interest from the date of the alleged breach of the Agreement to the date of entry of default ,together with $390.00 total costs). Also on that date, default judgment in the amount of $730,736.37 entered in favor of RCP against Cauff. (Doc. No. 29).

On October 2, 2007, TAC requested leave to file an amended answer in this action with consent by RCP. The court granted same, and on October 8, 2007, TAC filed its amended answer and cross claim against Jet First, Doscher, Cauff and Keister and its counterclaim against RCP. (Doc. No. 33). On November 16, 2007, RCP filed its motion for summary judgment against TAC. (Doc. No. 38). RCP and TAC reached tentative agreement on January 25, 2008, and the court awaits a stipulation of dismissal between those parties. Now before the court is Cauff's December 23, ...


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