bombardier, inc. v. hawaii island air, inc. complaint

8/6/2019 BOMBARDIER, INC. v. HAWAII ISLAND AIR, INC. Complaint

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Case 1:10-cv-00223-DAE-KSC Document 1 Filed 04/19/10 Page 1 of 11. ptx ORIGINALCARLSMITH BALL LLP

ANDREW L. PEPPER 5141-0ERIKA L. LEWIS 8580-0ASB Tower, Suite 2200 FILED IN THE1001 Bishop Street UNIHonolulu, HI 96813Tel No. 808.523.2500 TEDoissIARpTRIcEr?)BurFax No. 808.523.0842 Papepper@carlsmith. [email protected]

atLPS'clikrBaErlI,Attorneys for PlaintiffBOMBARDIER, INC.

IN THE UNITED STATES DISTRICT COURTFOR THE DISTRICT OF HAWAI`I

BOMBARDIER, INC., a Canadian CIVILCA6.100_0223AkE, KSCcorporation, COMPLAINT; SUMMONSPlaintiff,

VS.

HAWAII ISLAND AIR, INC. dbaISLAND AIR, a Delaware corporation;

Defendant.

COMPLAINTPlaintiffBombardier, Inc. ("Bombardier") alleges and avers as follows:

PARTIES1. Bombardier is a Canadian corporation with its principal place

of business in Montral, Qubec, Canada.4815-6435-9429.1.063395- 00001


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Case 1:10-cv-00223-DAE-KSC Document 1 Filed 04/19/10 Page 2 of 11

2. On information and belief, Defendant Hawaii Island Air, Inc.dba Island Air ("Island Air") is a Delaware corporation with its principal place ofbusiness in Honolulu, Hawai`i.

JURISDICTION & VENUE3. This Court has subject matter jurisdiction over this action under

28 U.S.C. 1332 because the amount in controversy exceeds $75,000 and there iscomplete diversity of citizenship among the parties.

4. Venue is proper in this Court under 28 U.S.C. 1391(a) and(c) because Island Air's principal place of business is within this judicial district, asubstantial part of the events o r omissions giving rise to the claim occurred in thisdistrict, and a substantial part of the property that is the subject of the action was oris situated in this district.

STATEMENT OF FACTSThe Aircraft

5. On or about February 24, 2006, Island Air entered into a LeaseAgreement with Wilmington Trust Company, a Delaware banking corporation,(the "Wilmington Trust"), in which Wilmington Trust served trustee under aTrust Agreement for Bombardier Capital Inc., Bombardier's subsidiary andpredecessor-in-interest.

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6. On or about March 3, 2006 Island Air and Wilmington Trust, asTrustee under the Trust Agreement, entered into a Lease Supplement.

7. Under the Lease Agreement and Lease Supplement, Island Airleased the following:

Manufacturer FAA Manufacturer's Manufacturer'sRegistration Model Serial No.

No.Airframel de Havilland N979HA DHC-8-102 373Engine 1 Pratt & PW-121 PCE-121346WhitheyEngine 2 Pratt & PW-121 PCE-121320WhitneyPropeller Hamilton 14SF-7 MFG-9404061 StandardPropeller Hamilton 14SF-7 MFG-9404072 Standard

8. Under the Lease Agreement, Island Air was to pay basic rent("Basic Rent") to Wilmington Trust o r its successors or assigns (the "Lessor") forthe Aircraft throughout the Lease Agreement term in amounts set forth in the LeaseSupplement.

9. Under the Lease Agreement, Basic Rent was USD $29,000 permonth.

1 The Airframe, Engine 1, Engine 2, Propeller 1 and Propeller 2 are referredto herein as the "Aircraft."

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10. For any nonpayment of rent, Island Air was required to payinterest at a fluctuating rate per annum equal to the Prime Rate plus 1.5% perannum computed on the basis of actual days elapsed over a 365- or 366-day year,as the case may be.

11. Island Air was to remain in possession of the Aircraft until theLease Agreement's Expiration Date, which was January 28, 2009.

12. Upon expiration of the Lease Agreement term, Island Air wasrequired contractually to return the Aircraft, according to numerous specifiedrequirements, including the following:

a. "the Aircraft shall be in the same general and goodoperating condition and appearance as on the DeliveryDate, with all of the equipment, components and systemsfunctioning in accordance with their intended use,ordinary wea r excepted and with such alterations,modifications and additions as shall have been permitted"under the Lease Agreement;

b. the Aircraft shall be clean;c. the Aircraft shall comply with the manufacturer's

original specifications;

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d. "the Aircraft shall be airworthy and shall have, and be incompliance with, a current Airworthiness Certificateissued by the FAA.. .

e. the Aircraft shall be in compliance with all mandatoryFAA directives and instructions affecting the Aircraft;

f. the Aircraft shall be in the same passenger configurationand condition, and "shall have installed thereon theEngines and Propellers, or Parts installed thereon on theDelivery Date or replacements therefor as permitted bythe terms hereof;"

g. the Aircraft shall be free and clear of all Liens;h. Island Air shall have performed systems and structural

checks/inspections under its FAA-approved maintenanceprogram;

i. landing gears shall have the same cycles remaining as atDelivery;

j. all tires and brakes shall be in serviceable condition;k. Engines and Propellers shall have accumulated no more

hours and/or cycles than at Delivery.

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13. Under the Lease Agreement, an Event of Default includes,among other things, failure to made rent payments and failure to perform orobserve covenants, conditions, or agreements under the "Operative Documents,defined as the Lease Agreement, its supplements, a document entitled "Sub-LeaseParticipation Agreement, "2 and a document entitled "Head Lessee TrustAgreement."

14 . If an Event of Default takes place, the Lessor3 may providewritten notice to Island Air that the Lease Agreement is in default, and the Lessor"may do one or more of the following with respect to all o r any part of theAirframe and any or all of the Engines or Propellers as Lessor, in its solediscretion, shall elect:"

(a) Lessor may cancel or terminate the Term of thisLease;(b) Lessor may demand that [Island Air]... uponwritten demand of Lessor and at [Island Air's] expenseand risk, forthwith assemble and return or store the [theAircraft, the Airframe, the Engines and/or the Propellers(the "Items of Equipment")] and [accompanying]

2 The Sub-Lease Participation Agreement was entered into on February 24,2006 between Island Air, Wilmington Trust, and Bombardier's subsidiary andpredecesor-in-interest, Bombardier Services Corporation.

3 On or about February 24, 2006, Wilmington Trust, as trustee of lessee,assigned its interest in the Lease Agreement to trustee of Owner, Wells FargoNorthwest, a national banking association ("Wells Fargo"). Thus, Wells Fargobecame Lessor under the Lease Agreement. Wilmington Trust notified Island Airof the assignment in or around March, 2006.4815-6435-9429.1.063395-00001 6.


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documentation... to Lessor....; or Lessor may enterupon the premises where any Item of Equipment or itemof... documentation is located and take immediatepossession of and remove it (together with any engine,propeller o r part which is not an Engine, a Propeller, or aPart but which is installed on the Airframe or an Engine.(c) Lessor may proceed by appropriate court action oractions, either at law or in equity, to enforce performanceby [Island Air] of the applicable covenants of this Leaseand to recover damages for the breach thereof; (d) witho r without taking possession thereof, Lessor may sell orcause to be sold all or any part of any Item of Equipmentat public or private sale..

(f) exercise any other right or remedy which may beavailable to it under applicable law, including withoutlimitation, the Cape Town Convention.15. Under the Lease Agreement, Island Air is further liable:

for any and all unpaid Rent and for all reasonableout-of-pocket expenses incurred by reason of theoccurrence of any Event of Default or the exercise ofLessor's remedies with respect thereto, including allreasonable out-of-pocket expenses incurred in connectionwith the repossession, storage, transportation,maintenance, insurance of and return of any Item [ofEquipment] in accordance with [this Lease Agreement]or in placing such Item [of Equipment] in the conditionand with Airworthiness Certificates as required by [thisLease Agreement].16. Furthermore, under the Lease Agreement, Island Air

acknowledged and agreed that the Lease Agreement was subordinated to a HeadLease Agreement dated June 30, 1994.

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Island Air Breached the Operative Documents17. On January 9, 2009, Bombardier's subsidiary and predecessor-

in-interest, Bombardier Services Corporation ("Bombardier Services") providedIsland Air with written notice that the Lease Agreement was to expire on January28, 2009. Bombardier Services further informed Island Air that it was in defaultdue to failure to pay Rent for August 2008 and December 2008, and as a resultowed USD $58,000 in past due Rent.

18 . Island Air failed to surrender or return the Aircraft upon leasetermination on January 28, 2009.

19 . On April 13, 2009, Bombardier provided Island Air with furthernotice that the date of surrender and return had passed. Bombardier requested thatIsland Air pay rental amounts of USD $67,861.65 per month as damages inaccordance with the Lessor's contractual obligations under the Head Lease.4 Inaddition, Bombardier warned a notice of default would be forthcoming if IslandAir failed to return the Aircraft in a state of repair that would satisfy the conditionsof the Lease Agreement.

4 This amount was later reduced through negotiation between Bombardierand owner/head lessor Avmax International Aircraft Leasing, Inc., to $45,000 permonth. These efforts by Bombardier to mitigate its damages incidentally benefitedIsland Air.

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20. On August 19, 2009, Bombardier Services issued a Notice ofDefault and contractual Demand for Payment to Island Air, demanding that IslandAir pay USD $130,000 by August 24, 2009.

21. Island Air failed to pay the amount demanded by August 24,2009, or on any date thereafter.

22. To date, Island Air has failed to pay any outstanding amountsdue.

23. The Aircraft was surrendered to Bombardier on or aboutNovember 13, 2009.

24. The Aircraft was surrendered to Bombardier in a non -

operational state of disrepair and in material non-compliance with the LeaseAgreement's return conditions. Bombardier currently estimates that the total costto bring the Aircraft into the same general and good operating condition andappearance as on the Delivery Date will be approximately USD $2, 213,000,subject to upward adjustment as ongoing inspection of the Aircraft reveals furthercontractual return status deficits.

COUNT I(Breach of Contract)

25. Bombardier realleges and reasserts all prior paragraphs.

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26. Island Air breached the Lease Agreement by failing to returnthe Aircraft to Bombardier's possession upon lease termination on January 28,2009.

27. On April 13, 2009, Bombardier notified Island Air a Notice ofDefault would be forthcoming if Island Air failed to return the Aircraft insatisfactory condition under the terms of the Lease Agreement.

28. On August 19, 2009, Bombardier Services issued a Notice ofDefault and Demand for Payment to Island Air.

29. Island Air surrendered the Aircraft on or around November 13,2009 in a non-operational state of disrepair and in material non-compliance withthe Lease Agreement's return conditions.

30. Bombardier is entitled to damages from Island Air in the formof recovery of unpaid rents.

31. Bombardier is entitled to damages from Island Air in the formof recovery of repair costs to the Aircraft.

32. Island Air owes Bombardier additional compensatory and

consequential damages in an amount to be determined at trial.33. Island Air further owes Bombardier the costs, charges and

expenses incurred in collecting the outstanding amount owing and enforcing theterms of the Lease Agreement, including reasonable attorneys' fees.

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WHEREFORE, Bombardier asks that this Court enter judgment in itsfavor and against Island Air for the following:

a. an amount equal to all past due rents;b. an amount equal to damages for cost of repairs to the Aircraft of

no less than USD $2,213,000;c. an amount equal to all costs of enforcement, including

reasonable attorneys' fees, costs, and all out-of-pocket expenses incurred byBombardier as a result of Island Air's defaults and/or other actions as described

herein;d. all other damages as provided in the Lease Agreement, Lease

Supplement, Sub-Lease Participation Agreement, Head Lease ParticipationAgreement, and Head Lease, and/or as may be proven at trial;

e. pre-judgment and post-judgment interest; andf. such further relief as the Court deems just and proper.

DATED: Honolulu, Hawai`i, April y, 2010.

Attorneys for PlaintiffBOMBARDIER, INC.

4815-6435-9429.1.063395-00001 1 1.

0610=-'ANDREW L. FEI-TEKERIKA L. LEWIS


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Case 1:10-cv-00223-DAE-KSC Document 1-1 Filed 04/19/10 Page 1 of 2

IN THE UNITED STATES DISTRICT COURTFOR THE DISTRICT OF HAWAPI

BOMBARDIER, INC., a Canadian CIVIL NO.corporation, SUMMONS

Plaintiff,VS.

HAWAII ISLAND AIR, INC. dbaISLAND AIR, a Delaware corporation;Defendant.

SUMMONSTO: HAWAII ISLAND AIR, INC. dba ISLAND AIR

99 Kapalulu PlaceHonolulu, HI 96819A lawsuit has been filed against you.Within 21 days after service of this summons on you (not counting the day

you received it) or 60 days if you are the United States or a United Statesagency, or an officer or employee of the United States described in Fed. R. Civ. P.12(a)(2) or (3) you must serve on the plaintiff an answer to the attachedcomplaint or a motion under rule 12 of the Federal Rules of Civil Procedure. TheAnswer or motion must be served on the plaintiff or plaintiff's attorney, whosename and address are:

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Case 1:10-cv-00223-DAE-KSC Document 1-1 Filed 04/19/10 Page 2 of 2

ANDREW L. PEPPER, ESQ.ERIKA L. LEWIS, ESQ.Carlsmith Ball LLPASB Tower, Suite 22001001 Bishop StreetHonolulu, HI 96813

If you fail to respond, judgment by default will be entered against you forthe relief demanded in the complaint. You also must file your answer or motionwith the court.

DATED: Honolulu, Hawai`i, April 2010.

SUCLERKOF3Ecr NAT COURT1 e-4, (.b-,

Deputy C1er1si,Aln4=Ki*istrict co",, pi aiOF n

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CPU 15.51 C. U5JO.,JL.,J.L.,JLSU

FOR OFFICE USE ONLY

Plaintiff seeking damages against Defendant for breach of contract and failure to return leased aircraft.

Case 1:10-cv-00223-DAE-KSC Document 1-2 Filed 04/19/10 Pa 1 of 10 0 ()a' OAE KSOta.IS 44 (Rev. 12/07) CIVIL COVER SHKE

The JS 44 civil cover sheet and the information contained herein neither replace nor supplement the filing and service ofpleadings or other papers as required by law, except as providedby local rules of court. This form, approved by the Judicial Conference of the United States in September 1974, is required for the use of the Clerk of Court for the purpose of initiatinthe civil docket sheet. (SEE INSTRUCTIONS ON THE REVERSE OF THE FORM.)I. (a) PLAINTIFFS DEFENDANTSBOMBARDIER, INC. HAWAII ISLAND AIR, INC. dba ISLAND AIR

(b) County of Residence of First Listed Plaintiff Montreal, Canada County of Residence of First Listed Defendant Honolulu, Hawaii(EXCEPT IN U.S. PLAINTIFF CASES) (IN U.S. PLAINTIFF CASES ONLY)

NOTE: IN LAND CONDEMNATION CASES, USE THE LOCATION OF THELAND INVOLVED.

(c) Attorney's (Finn Name, Address, and Telephone Number) Attorneys (If Known)Andrew L. Pepper, Erika L. Lewis (Carlsmith Ball LLP) Unknown1001 Bishop St., #2200, Honolulu, HI 96813

000 m ,y2 oann

II . BASIS OF JURISDICTION (Place an "X " in One Box Only) III. CITIZENSHIP OF PRINCIPAL PARTIES(Place an "X " in One Box for Plaintif(For Diversity Cases Only) and One Box for Defendant)O I U.S. Government 0 3 Federal Question PTF DEF PTF DEFPlaintiff (U.S. Government Not a Party) Citizen of This State 0 1 0 1 Incorporated or Principal Place 0 4 tg 4of Business In This State0 2 U.S. Government 18I 4 Diversity Citizen of Another State 0 2 0 2 Incorporated and Principal Place 0 5 0 5

Defendant of Business In Another State(Indicate Citizenship of Parties in Item III)Citizen or Subject of a DI 3 0 3 Foreign Nation 0 6 0 6

INT IV A TT TDU !YE' CI TIT fr. "V" /1

I coNTRAcr TORTS FORFEITURE/PENALTY BANKRUPTCY OTHER STATUTESO 110 Insurance PERSONAL INJURY PERSONAL INJURY 0 610 Agriculture 0 422 Appeal 28 USC 158 0 400 State ReapportionmentO 120 Marine 0 310 Airplane 0 362 Personal Injury 0 620 Other Food & Drug 0 423 Withdrawal 0 410 AntitrustO 130 Miller Ac t 0 315 Airplane Product Med. Malpractice 0 625 Drug Related Seizure 28 USC 157 0 430 Banks and BankingO 140 Negotiable Instrument Liability 0 365 Personal Injury of Property 21 USC 881 0 450 CommerceO 150 Recovery of Overpayment 0 320 Assault, Libel & Product Liability 0 630 Liquor Laws I PROPERTY RIGHTS 0 460 Deportation

& Enforcement ofJudgment Slander 0 368 Asbestos Personal 0 640 R.R. & Truck 0 820 Copyrights 0 470 Racketeer Influenced andO 151 Medicare Ac t 0 330 Federal Employers' Injury Product 0 650 Airline Regs. 0 830 Patent Corrupt OrganizationsO 152 Recovery of Defaulted Liability Liability 0 660 Occupational 0 840 Trademark 0 480 Consumer Credit

Student Loans 0 340 Marine PERSONAL PROPERTY Safety/Health 0 490 Cable/SatTV(Excl. Veterans) 0 345 Marine Product 0 370 Other Fraud 0 690 Other 0 810 SelectiveServiceO 153 Recovery of Overpayment Liability 0 371 Truth in Lending LABOR SOCIAL SECURITY 0 850 Securities/Commodities/

of Veteran's Benefits 0 350 Motor Vehicle 0 380 Other Personal 0 710 Fair Labor Standards 0 861 HIA (13951T) ExchangeO 160 Stockholders' Suits 0 355 Motor Vehicle Property Damage Act 0 862 Black Lung (923) 0 875 Customer ChallengeR 190 Other Contract Product Liability 0 385 Property Damage 0 720 Labor/Mgmt. Relations 0 863 DIWC/DIWW (405(g)) 12 USC 3410O 195 Contract Product Liability 0 360 Other Personal Product Liability 0 730 Labor/Mgmt.Reporting 0 864 SSID Title XV I 0 890 Other Statutory ActionsO 196 Franchise Injury & Disclosure Act 0 865 RSI (405(g)) 0 891 Agricultural ActsI REAL PROPERTY CIVIL RIGHTS PRISONER PETITIONS 0 740 Railway Labor Act FEDERAL TAX SUITS 0 892 Economic Stabilization Ac0 210 Land Condemnation 0 441 Voting 0 510 Motions to Vacate 0 790 Other Labor Litigation 0 870 Taxes (U.S. Plaintiff 0 893 EnvironmentalMatters0 220 Foreclosure 0 442 Employment Sentence n 791 Empl. Ret. Inc. or Defendant) 0 894 Energy Allocation Act0 230 Rent Lease & Ejectment 0 443 Housing/ Habeas Corpus: Security Act 0 871 IRSThird Party 0 895 Freedom of Infonnation0 240 Torts to Land Accommodations 0 530 General 26 USC 7609 Act0 245 Tort Product Liability 0 444 Welfare 0 535 Death Penalty IMMIGRATION 0 900Appeal of Fee Determinati0 290 Al l Other Real Property 0 445 Amer. w/Disabilities 0 540 Mandamus & Other 0 462 Naturalization Application Under Equal AccessEmployment 0 550 Civil Rights 0 463 Habeas Corpus to Justice

O 446 Amer. w/Disabilities 0 555 Prison Condition Alien Detainee 0 950 Constitutionality ofOther 0 465 Other Immigration State Statutes

O 440 Other Civil Rights Actions

V. ORIGIN (Place an "X " in One Box Only) Appeal to DistricCR 1 Original El 2 Removed from II 3 Remanded from 171 4 Reinstated o r n, Transferred from Lj 0 Multidistrict 0 7 Judge fromanother district MagistrateProceeding State Court Appellate Court Reopened itigation(specify) Judgment

'Cite the U.S. Civil Statute underwhich you are filing (Do no t cite jurisdictional statutes unless diversity):onii c rs,. .1 -1noVI. CAUSE OF ACTION I!Brief description of cause:VII. REQUESTED IN II CHECK IF THIS IS A CLASS ACTION DEMAND CHECK YES only ifdemanded in complaint:

COMPLAINT: UNDER F.R.C.P. 23 JURY DEMAND: 0 Yes a NoVIII. RELATED CASE(S) (See instructions):IF ANY JUDGE DOCKET NUMBERDATEAPH 1 9 2010 SIGNATURE OFATTC_ . . . . . . . . . . . . . .abLEA&WMKORD

RECEIPT AMOUNT APPLYING IFP JUDGE MAG. JUDGE