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Accessory Overhaul Group, Inc. v. Mesa Airlines, Inc.

United States District Court, N.D. Georgia, Atlanta Division

January 21, 2014

ACCESSORY OVERHAUL GROUP, INC., Plaintiff,
v.
MESA AIRLINES, INC. and MESA AIR GROUP, INC., Defendants

Page 1297

For Accessory Overhaul Group, Inc., Plaintiff, Counter Defendant: Charles K. McKnight, Jr., Gary James Toman, LEAD ATTORNEYS, Nations, Toman & McKnight, LLP, Atlanta, GA.

For MESA Airlines, Inc., Mesa Air Group, Inc., Defendants, Counter Claimants: Gordon Lee Garrett, Jr., Kacy Goebel Romig, LEAD ATTORNEYS, David Holmes Bouchard, Robert Allen Schmoll, Jones Day-Atlanta, Atlanta, GA.

OPINION

Page 1298

ORDER

Timothy C. Batten, Sr., United States District Judge.

This case comes before the Court on Defendants Mesa Airlines, Inc. and Mesa Air Group, Inc.'s motion for summary judgment [35].

I. Background

This is a business dispute between a service provider and its customers. Plaintiff Accessory Overhaul Group, Inc. (" AOG" ) provides commercial aircraft component testing, overhauling and certification services. Mesa Air Group, Inc. (" Mesa" ) and its subsidiary, Mesa Airlines, Inc., operate commercial aircraft, and in 2007 Mesa requested bids for servicing the wheels, tire and brakes of Defendants' aircraft. AOG submitted a bid, which Mesa accepted in the fall of 2007.

AOG began performing work for Mesa in October 2007, and the next month the parties executed a memorandum of understanding (" MOU" ). The MOU provides that it " shall remain in effect until the execution of the Contract by the Parties or its termination as described herein."

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From 2007 to 2012, AOG serviced and maintained Mesa's wheels, tires and brakes. The present dispute centers on whether the parties ever executed the contract contemplated by the MOU.

In January 2010, Mesa filed for bankruptcy protection, and the bankruptcy court deemed AOG a " critical vendor." Thus, Mesa continued its commercial relationship with AOG, and on January 14, 2010, the parties executed a critical trade agreement. The CTA broadly defined the parties' relationship during Mesa's bankruptcy case.

Sometime in 2011, after Mesa had emerged from bankruptcy, the parties resumed negotiations of a more detailed contract. AOG's president, Ron Byrd, worked with Scott Johnson, Mesa's senior director for maintenance and engineering technical administration, to draft the contract. According to Byrd, the parties were no longer operating under the CTA and the MOU had expired.

Byrd and Johnson exchanged several drafts of an agreement. Byrd had the authority to sign agreements on behalf of AOG; Johnson did not have signing authority for Mesa. On November 21, 2011, Johnson sent Byrd an email, stating that he had updated the pricing per AOG's request and that he had included with his email " a soft-copy version as well as the PDF." Johnson then stated, " If you're good, please sign and return. Then, I'll route through our contract signature process here at Mesa." Byrd signed and returned the document that day. However, AOG never received a copy of the November 21 document signed by Mesa.

Nonetheless, Byrd testified that he believed that his signature " indicated that the contract was . . . a binding contract" and that Mesa had previously not sent back a signed document in a timely fashion. Byrd also testified that he knew Mesa had a process for signing contracts; indeed, on November 23, 2011, Johnson emailed Byrd to inform him that Johnson was putting the document " in the contract sign-off pipe. It should be signed by the executive team next week." However, the Mesa team did not sign the November 21 document. On December 20, Johnson emailed Byrd that he had contacted " Legal a couple of times" about signing the November 21 document, and that he would check again.

On January 3, 2012, Johnson informed Byrd that the document had " hit a snag" in the finance department. Mesa's senior vice president of finance had " rejected" a term dealing with late fees, and Byrd agreed to the removal of that term. On February 24, Johnson notified Byrd about another issue: Byrd had failed to fill in the amount of commercial/product liability insurance AOG carried in the appropriate blank in the November 21 document. Byrd responded that day with the amount of its coverage, which Johnson put in the document.

In March 2012, Johnson presented the November 21 document to Mesa's president, Michael Lotz, for his review. Lotz refused to sign the contract because of two provisions, including the one upon which AOG seeks to recover in this action. AOG contends that Mesa never told it that Lotz rejected two provisions and refused to sign the November 21 document.

On May 9, 2012, AOG met with Mesa to discuss a rate increase. During the meeting, AOG's CEO represented that although AOG wanted to keep working with Mesa, it could not do so unless Mesa agreed to a rate increase. AOG unequivocally told Mesa during the meeting that if the rate did not increase, it would cease work with Mesa right away or " pretty quickly." Mesa responded that it was going to put

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the wheel, tire and brake work back out for bid immediately.

In a follow-up letter sent May 14, 2012, AOG again stated that the rate increase was absolutely necessary for AOG to continue its relationship with Mesa. That same day, Mesa issued a new request for proposals on the wheel, tire and brake maintenance work. AOG bid on the work at its increased rate. By the end of June, Mesa had chosen a different vendor, and on June 30 Mesa removed the majority of its aircraft from AOG's servicing. The remainder of Mesa's aircraft was removed from AOG's servicing in August.

On August 9 and 10, 2012, AOG sent Mesa the invoices that are the subject of this action, seeking over $3.4 million. The invoices bill Mesa for an aircraft-removal charge that AOG calculated pursuant to paragraph 7.2 of the November 21 document. AOG contends that Mesa must pay it for removing aircraft with AOG-repaired wheels, tires and brakes that it had not yet been paid for. Paragraph 7.2 is one of the two paragraphs that Lotz rejected when he reviewed the document in March 2012. Thus, Mesa refused to pay the invoices on the basis that the November 21 document is not a binding contract.

On October 18, 2012, AOG filed this action averring claims for breach of contract, prejudgment interest, and attorney's fees under O.C.G.A. § 13-6-11. AOG contends that Mesa prematurely removed aircraft from AOG's service, and consequently Mesa must compensate AOG. In the alternative to its breach-of-contract claim, AOG pleads claims for quantum meruit, unjust enrichment and promissory estoppel. AOG's claims and damages computations are premised on paragraph 7.2 of the November 21 document.

AOG was granted leave to file an amended complaint, which it did on December 20, 2012, and on January 10, 2013, Mesa filed an answer and counterclaim. On September 20, Mesa filed a motion for summary judgment on AOG's claims.[1] On January 16, 2014, the Court held a hearing on Mesa's motion and heard argument from the parties' attorneys.

II. Legal Standard

Summary judgment is appropriate when " there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). There is a " genuine" dispute as to a material fact if " the evidence is such that a reasonable jury could return a verdict for the nonmoving party." FindWhat Investor Grp. v. FindWhat.com, 658 F.3d 1282, 1307 (11th Cir. 2011) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). In making this determination, however, " a court may not weigh conflicting evidence or make credibility determinations of its own." Id. Instead, the court must " view all of the evidence in the light most favorable to the nonmoving party and draw all reasonable inferences in that party's favor." Id.

" The moving party bears the initial burden of demonstrating the absence of a genuine dispute of material fact." Id. (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). If the nonmoving party would have the burden of proof at trial, there are two ways for the moving party to satisfy this initial burden. United States v. Four Parcels of Real Prop., 941 F.2d 1428, 1437-38 (11th Cir. 1991). The first is to produce " affirmative evidence demonstrating that the nonmoving party will be unable to prove its case at trial." Id. at 1438 (citing

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Celotex, 477 U.S. at 324). The second is to show that " there is an absence of evidence to support the nonmoving party's case." Id. (quoting Celotex, 477 U.S. at 323).

If the moving party satisfies its burden by either method, the burden shifts to the nonmoving party to show that a genuine issue remains for trial. Id. At this point, the nonmoving party must " 'go beyond the pleadings,' and by its own affidavits, or by 'depositions, answers to interrogatories, and admissions on file,' designate specific facts showing that there is a genuine issue for trial." Jeffery v. ...


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