The opinion of the court was delivered by: RONALD GUZMAN, District Judge
MEMORANDUM OPINION AND ORDER
In this diversity action, plaintiffs Tradewinds Aviation, Inc.
("Tradewinds") and Corporate Eagle Capital, L.L.C. ("Corporate
Eagle") seek compensatory and consequential damages, costs, and
attorneys' fees for breach of contract against defendant Jet
Support Services, Inc. ("JSSI"). In Count II of the Amended
Complaint, Corporate Eagle alleges breach of contract as a
third-party beneficiary. JSSI, in separate motions, moves to (1)
dismiss Count II for failure to state a claim upon which relief
may be granted pursuant to Federal Rule of Civil Procedure
("Rule") 12(b)(6); and (2) strike Plaintiffs' jury demand and
prayer for consequential damages. For the reasons set forth
below, the Court denies the motion to dismiss and grants the
motion to strike.
The following facts from the Amended Complaint are presumed to
be true for the purposes of this motion to dismiss. See Conley
v. Gibson, 355 U.S. 41, 45-46 (1957). Tradewinds, which operates
a corporate aircraft management service, and Corporate Eagle,
which owns corporate aircraft, are participants in a joint venture. (Am. Compl. ¶¶
1-2, 6.) Pursuant to the joint venture, Corporate Eagle owns
certain aircrafts in Tradewinds' fleet, Corporate Eagle leases
the aircrafts to third parties, and Tradewinds provides
management services for the aircrafts. (Id. ¶ 6.) One of the
Corporate Eagle aircrafts that Tradewinds manages is a Hawker
aircraft with the serial number NA-0291 and registration number
N947CE ("Hawker Aircraft"). (Id.)
Tradewinds and JSSI entered into a contract whereby JSSI would
provide, among other things, programs for the repair and
maintenance of the turbine engines identified in the Application
section of the contract. (Id. ¶ 7; Am. Compl. Ex. A, JSSI
Complete Engine Maintenance Program Contract ["Contract"] at
8.)*fn1 The Application lists the Hawker Aircraft and
explicitly notes that Corporate Eagle is the owner of the
aircraft. (Am. Compl. Ex. A, Contract at 21.)
After Tradewinds and JSSI entered into the contract, the Hawker
Aircraft twice sustained engine damage. (Am. Compl. ¶¶ 9, 11.) On
both occasions the Hawker Aircraft was taken to a JSSI-authorized
repair facility, and the faulty engine was replaced with a loaner
engine. (Id. ¶¶ 10, 12.) The damaged engine was submitted to
JSSI for replacement or repair, and the repair and rental costs
were submitted to JSSI for reimbursement. (Id. ¶ 13.) JSSI has
not repaired or replaced the engine or reimbursed plaintiffs for
the aforementioned charges. (Id. ¶ 14.) JSSI denies liability
under the contract, contending that the engines were damaged from
pilots hot starting the engines, damage that is not covered under
the contract. (Id.) Plaintiffs deny hot starting the engines
and allege that JSSI has failed to satisfy its obligations under
the contract. (Id. ¶ 16.) Corporate Eagle alleges that it was an intended third-party
beneficiary of the contract and that JSSI therefore breached
contractual obligations owed to Corporate Eagle. (Id. ¶ 27.)
Corporate Eagle further alleges that JSSI was aware that
Tradewinds managed Corporate Eagle aircrafts and that JSSI
entered into the contract contemplating that it would benefit
Corporate Eagle if a Corporate Eagle aircraft engine required
maintenance. (Id. ¶¶ 7, 24.)
Among other things, Plaintiffs pray for damages for all
natural, proximate and probable or direct consequential damages.
(Id. ¶ B.) In addition, Plaintiffs demand a jury trial.
Defendant now moves to dismiss Count II and to strike Plaintiffs'
jury demand and their request for consequential damages.
A motion to dismiss under Rule 12(b)(6) challenges whether the
complaint sets forth a claim upon which relief may be granted.
Gen. Elec. Capital Corp. v. Lease Resolution Corp.,
128 F.3d 1074, 1080 (7th Cir. 1997). In deciding a motion to dismiss, the
Court must assume all well-pleaded facts as true and draw all
reasonable inferences from such facts in favor of the
claimant.*fn2 Conley, 355 U.S. at 45-46. Furthermore,
under the federal notice pleading standard, a short and plain
statement of the claim and the grounds for such claim is
sufficient to survive a motion to dismiss; detailed facts are not
required. Id. at 47. JSSI's motion to dismiss argues that Corporate Eagle is not a
third-party beneficiary of the contract and thus lacks standing
to sue for breach of contract. "Whether a plaintiff is a
third-party beneficiary of a contract is a legal conclusion that
[the Court] need not accept for the purpose of a motion to
dismiss." Choi v. Chase Manhattan Mortgage Co.,
63 F.Supp. 2d 874, 881 (N.D. Ill. 1999); see Christakos v. Intercounty Title
Co., No. 99 C 8334, 2001 WL 138896, at *4 (N.D. Ill. Feb. 16,
The parties agree that Illinois law governs the interpretation
of the contract. (Am. Compl. Ex. A, Contract at 13.) Under
Illinois law, there is a strong presumption against third-party
beneficiaries because it is assumed that parties to a contract
intend the contract to apply only to them. Quinn v. McGraw-Hill
Cos., Inc., 168 F.3d 331, 334 (7th Cir. 1999). However, a
third-party beneficiary does have standing to sue on a contract,
although not a party to the contract, if the contracting parties
intended the third party to benefit from the contract. Am.
United Logistics, Inc. v. Catellus Dev. Corp., 319 F.3d 921, 930
(7th Cir. 2003) (explaining that a third party who receives an
unintended benefit from the contract is an incidental third party
and does not have standing). The intent of the contracting
parties is "based on the contract as a whole as well as the
understandings between the parties at the time of the contract's
execution." Id. The surrounding circumstances at the time of
execution are also taken into account. F.W. Hempel & Co., Inc.
v. Metal World, Inc., 721 F.2d 610, 613 (7th Cir. 1983); McCoy
v. Ill. Int'l Port Dist., 778 N.E.2d 705, 712 (Ill.App. Ct.
2002). The best evidence of the parties' intent is express
language in the contract identifying the third-party beneficiary,
but an implied showing may be sufficient if "`the implication
that the contract applies to third parties [is] so strong as to
be practically an express declaration.'" Quinn, 168 F.3d at 334 (quoting 155 Harbor Drive Condo. Ass'n v. Harbor
Point, Inc., 568 N.E.2d 365, 375 (Ill.App. Ct. 1991)).
JSSI argues that Corporate Eagle is not a third-party
beneficiary because the contract expressly excludes third-party
beneficiaries. (Def.'s Mot. Dismiss at 3.) The provision states,
in part, that the rights and obligations of the parties are for
the exclusive benefit of such parties and shall not benefit any
unrelated third parties. (Am. Compl. Ex. A, Contract at 13.)
Corporate Eagle argues that it is not an unrelated party because
of its joint venture with Tradewinds. (Pl.'s Resp. Mot. Dismiss
at 6.) After reviewing the Amended Complaint (including the
attached contract) and making all reasonable inferences in favor
of the plaintiff, the Court finds that Corporate Eagle has set
forth a claim upon which relief may be granted. Corporate Eagle
alleges that JSSI was aware that Tradewinds managed Corporate
Eagle aircrafts. (Am. Compl. ¶ 24.) In addition, Corporate Eagle
alleges that JSSI and Tradewinds "clearly contemplated" that the
contract would benefit Corporate Eagle if one of its aircraft had
engine problems. (Id. ¶ 7.) The contract also expressly
provides for the coverage of engines listed in the Application.
(Id. Ex. A, Contract at 8.) The Hawker Aircraft is included in
the Application, and Corporate Eagle is listed as its owner.
(Id. at 19-21.) As a result, Corporate Eagle is expressly
included in the contract, and the alleged circumstances
surrounding the contract's execution may show that Corporate
Eagle was an intended third-party beneficiary. See Paukovitz v.
Imperial Homes, Inc., 649 N.E.2d 473, 475-76 (Ill.App. Ct.
1995) (reversing the dismissal of the plaintiff's third-party
beneficiary breach of contract claim because the plaintiff's name
appeared on the contract, and the parties to the contract
negotiated with the knowledge the plaintiff would benefit from
the contract). Accordingly, it is reasonable to infer that Tradewinds and JSSI
intended the contract to benefit Corporate Eagle and did not
intend for the provision against third-party beneficiaries to
apply to Corporate Eagle. See Am. United Logistics,
319 F.3d at 930-31 (holding that the plaintiff stated a claim as a
third-party beneficiary despite express contractual language that
"`nothing herein is intended to create any third party benefit,'"
when a separate contractual provision expressly conferred an
intended benefit on the plaintiff and the circumstances
surrounding the contract's execution supported the intention).
Despite the strong presumption against third-party beneficiaries
under Illinois law, the Court finds that the allegations in the
Amended Complaint, taken as true and with all reasonable
inferences drawn in favor of Corporate Eagle, are sufficient to
set forth a third-party beneficiary breach of contract claim.
Therefore, JSSI's motion to dismiss Count II is denied.
II. Motion to Strike Jury Demand
JSSI argues Plaintiffs' jury demand should be stricken because
the contract at issue contains an express "Waiver of Jury Trial"
provision. Although the Seventh Amendment to the United States
Constitution guarantees the right to a jury trial in civil cases,
the right may be waived if contracting parties knowingly and
voluntarily agree to a waiver. In re Reggie Packing Co., Inc.,
671 F. Supp. 571, 573 (N.D. Ill. 1987). Because of the
fundamental nature of a jury trial, every reasonable presumption
is indulged against waiver. Whirlpool Fin. Corp. v. Sevaux,
866 F. Supp. 1102, 1105 (N.D. Ill. 1994). Courts consider four
factors in determining whether a party knowingly and voluntarily
entered into a waiver: "(1) the parties' negotiations concerning
the waiver provision, ...