Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Alchemist Jet Air, LLC v. Century Jets Aviation

June 12, 2009

ALCHEMIST JET AIR, LLC, PLAINTIFF,
v.
CENTURY JETS AVIATION, LLC, 24TH CENTURY, INC., CHARLES SONSON, AND REGINA KELLY, DEFENDANTS.



The opinion of the court was delivered by: Judge Virginia M. Kendall

MEMORANDUM OPINION AND ORDER

Plaintiff Alchemist Jet Air, LLC ("Alchemist Jet") moves this Court to enjoin a lawsuit filed by Defendant Century Jets Aviation, LLC ("Century Jet")*fn1 and AC Aviation Services, LLC ("AC Aviation") in the United States District Court for the Southern District of New York. Alchemist Jet asserts that it filed the instant action prior to the time that Century Jet and AC Aviation filed the lawsuit in New York, and that the allegations raised by Century Jet and AC Aviation in the New York action must be brought as compulsory counterclaims to the case before this Court. Alchemist Jet has also filed a Motion to Strike the declarations of Charles Sonson and Stephen Sugrue submitted by Century Jet in opposition to Alchemist Jet's Motion to Enjoin. For the reasons stated, Alchemist Jet's Motion to Enjoin is denied and its Motion to Strike is denied as moot.

STATEMENT OF FACTS/PROCEDURAL HISTORY

On September 19, 2008, Alchemist Jet filed the instant case. In its Complaint, Alchemist Jet seeks damages for fraud (Counts I and II), breach of fiduciary duty (Count III), state law Civil Conspiracy (Count IV) and Breach of Contract (Count V). All of the allegations in Alchemist Jet's Complaint stem from a contract ("the Agreement") that was entered into by Alchemist Jet, Century Jet and AC Aviation in relation to the use and maintenance of a Gulfstream II jet aircraft ("the Aircraft") that Alchemist Jet had previously purchased. Specifically, Alchemist Jet alleges that Century Jet failed to perform the required maintenance and misled and overcharged Alchemist Jet in relation to the Aircraft's maintenance. On November 14, 2008, Century Jet and AC Aviation filed a lawsuit against Alchemist Jet in the Southern District of New York. The New York Complaint seeks damages for breach of the same contract that is the subject of Alchemist Jet's Complaint before the Court. Specifically, Century Jet and AC Aviation allege that Alchemist Jet failed to pay for the costs associated with flights that it directed be made for its own benefit and for which it was contractually required to pay, failed to provide Century Jets with the contractually required possession of the Aircraft so as to enable it to conduct charter flights and earn its percentage of the charter revenues, prevented Century Jets and AC Aviation from accessing required maintenance records so as to enable them to perform maintenance and repair obligations under the Agreement, and failed to provide proof of insurance coverages as required by the Agreement.

DISCUSSION

I. Motion to Strike

As an initial matter Alchemist Jet moves to strike the declarations of Charles Sonson ("Sonson"), Managing Member of Century Jet, and Stephen Sugrue ("Sugrue"), counsel for Century Jet, that were submitted by Century Jet in opposition to Alchemist Jet's Motion to Enjoin. The Court did not consider the portions of the declarations that Alchemist Jet seeks to strike when ruling on Alchemist Jet's Motion to Enjoin and therefore the Motion to Strike is denied as moot.

II. Motion to Enjoin

The Court has the ability to enjoin another court's proceedings if the action sought to be enjoined is a compulsory counterclaim to the first-filed action. See Asset Allocation & Mgt. v. Western Employers Ins., 892 F.2d 566, 569 (7th Cir. 1990) ("Despite the absence of a clear source of authority for enjoining a second, nonharassing lawsuit..., there is overwhelming case authority that the first court has power... to enjoin the defendant from bringing a separate suit against the plaintiff in another court, thereby forcing the plaintiff in another court to litigate his claim as a counterclaim or to abandon it."); see also Warshawsky & Co. v. Arcata National Corp., 552 F.2d 1257, 1263 (7th Cir. 1977). The Court's ability to enjoin another lawsuit is "a [discretionary] power, not a duty;" however, the Court should not "countenance the simultaneous litigation of identical claims in two federal courts." Asset, 892 F.2d at 572-73. The basis for the Court's power is practical. See id. at 572 ("A court-some court-should have the power to prevent the duplication of litigation even though neither party is acting abusively; this is implicit in the very concept of a compulsory counterclaim."). The Court should issue an injunction if it will conserve judicial resources, avoid conflicting rulings, and facilitate the economical management of complex litigation. See id; see also Northwest Airlines, Inc. v. American Airlines, Inc., 989 F.2d 1002, 1006 (8th Cir. 1993). While the "first to file" rule provides a presumption of priority for purposes of choosing among possible venues, the presumption is rebuttable. See Asset, 892 F.2d at 573. The presumption yields to the interest of justice; as such, courts exercising the power must balance the convenience if the parties litigate in one forum rather than another forum and must consider other special circumstances that militate in favor of proceeding with the later suit instead of the first-filed action. See id. at 572-73. Special circumstances can include the defendant's inability to obtain jurisdiction over a counterclaim defendant in the first-filed suit, the trivial nature of the original suit compared to the latter one, a showing that the first action was in bad faith, a showing that the plaintiff in the first-filed action raced to the courthouse to avoid litigation in another forum, or a showing that the second action has developed further than the first. See id; see also Crosley Corp. v. Westinghouse Elec. & Mfg. Co. 130 F.2d 474, 475 (3rd Cir. 1942).

Here, Alchemist Jet moves the Court to enjoin Century Jet and AC Aviation from proceeding with their New York action asserting that they must bring their claims as counterclaims to Alchemist Jet's suit before the Court. The flaw with Alchemist Jet's request is that AC Aviation is not a party to the instant case. Without jurisdiction over AC Aviation, the Court cannot properly order AC Aviation to do or not do anything. See Asset, 892 F.2d at 569. Alchemist Jet asserts that the Court's lack of jurisdiction over AC Aviation is not fatal to its position because the Court can obtain jurisdiction over AC Aviation if it is allowed to be joined as a party under Federal Rules of Civil Procedure 19 and 20. Alchemist Jet misses the point; the Court does not have jurisdiction over AC Aviation right now, and therefore it has no authority to order that AC Aviation be enjoined from proceeding with its suit against Alchemist Jet in New York.

Furthermore, under Federal Rule of Civil Procedure 13(a), a compulsory counterclaim is a claim that "the pleader has against an opposing party if the claim arises out of the transaction or occurrence that is the subject matter of the opposing party's claim and does not require adding another person over whom the court cannot acquire jurisdiction." Fed.R.Civ.P. 13(a). AC Aviation is not a party to the instant case and therefore Alchemist Jet is not an opposing party. As such, AC Aviation is not required under Rule 13(a) to bring its New York claims against Alchemist Jet as compulsory counterclaims in the instant action.

In addition, to the extent that Alchemist Jet requests that the Court "order" AC Aviation and Century Jets to bring their New York claims as compulsory counterclaims, it misunderstands the compulsory counterclaim rule. Despite the impression one might get from the name of the doctrine, no one is "compelled" to present a compulsory counterclaim. See Publicis Communication v. True North Communications, Inc., 132 F.3d 363, 365 (7th Cir. 1997). The definition of a compulsory counterclaim mirrors the condition that triggers a defense of claim preclusion (res judicata) if a claim was left out of a prior suit. See id. Preclusion is an affirmative defense and the usual method by which it is enforced is simply by the plaintiff pleading the judgment as res judicata in the defendant's suit. See Asset, 892 F.2d at 572. If Alchemist Jet obtains a judgment against Century Jet in this suit it can plead that judgment as a bar to Century Jet's suit in New York. Nowhere in Rule 13 does it give the Court the authority to order that a counterclaim be brought in a specific court at a specific time.*fn2 See Fed.R.Civ.P. 13.

The Court has jurisdiction over Century Jet and therefore it may consider whether Century Jet should be enjoined from proceeding with its suit in New York federal district court. To decide this issue, the Court must first determine if Century Jet's New York claims are in fact compulsory counterclaims. See Asset, 892 F.2d at 573 (because counterclaims generally can be adjudicated most efficiently in one action (as Rule 13 envisioned), the presumption is that courts should enjoin prosecution of subsequently-filed lawsuits that state claims characterizable as compulsory counterclaims to the initial action). Whether Century Jet's New York claims are compulsory counterclaims hinges on whether they are "logically related" to Alchemist Jet's claims in the instant action and whether the instant action was filed first. See Colonial Penn Life Ins. Co. v. Hallmark Ins. Adm'rs, Inc., 31 F.3d 445, 448 (7th Cir. 1994).

Unfortunately, "logical relationship" is an imprecise phrase with no universally-agreeable meaning. See Burlington Northern Railroad Co., v. Strong, 907 F.2d 707, 711 (7th Cir. 1990) ("there is no formalistic test to determine whether suits are logically related"). The Court must examine the factual allegations underlying Alchemist Jet's and Century Jet's claims to determine if the logical relationship test is met. See id. In doing so, the Court can consider "the totality of the claims, ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.