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Moseley v. Freight Feeder Aircraft Corporation, Inc.

United States District Court, Seventh Circuit

October 24, 2013

JOHN J. DUPONT and RANDY MOSELEY, Plaintiffs,
v.
FREIGHT FEEDER AIRCRAFT CORPORATION, INC., L. DAVID BRIDGES, R. DARBY BOLAND, KEVIN WILLIAMS, STEPHEN CARMICHAEL, H. CLIFF SAYLOR, EDWARD F. EATON, WILL WEEKS, KIM LITTLEFIELD, and THE FIRST NATIONAL BANK OF ST. LOUIS, Defendants.

MEMORANDUM AND ORDER

J. PHIL GILBERT, District Judge.

This matter comes before the Court on the motion to dismiss or, in the alternative, for judgment on the pleadings as to the individual defendants (Doc. 43) filed by defendants Freight Feeder Aircraft Corporation ("Freight Feeder"), L. David Bridges, Stephen Carmichael and H. Clif Saylor, the only remaining defendants in this case. Plaintiffs John J. Dupont and Randy Moseley have responded to the motion (Doc. 53), and the defendants have replied to that response (Doc. 54).

I. Background

This case stems from a May 2011 settlement agreement (and several addenda thereto) (collectively, "the Settlement Agreement") between the plaintiffs, all the defendants except the defendant First National Bank of St. Louis ("Bank"), and other parties who are not present in this lawsuit. The Settlement Agreement resolved another case in this district, Freight Feeder Aircraft Corp. v. Dupont, 11-cv-259-JPG-DGW, involving allegation of securities fraud, fraudulent misrepresentation, negligent misrepresentation, misappropriate of trade secrets, breach of contract, promissory estoppel, breach of the duty of good faith and fair dealing, breach of fiduciary duty and self-dealing. Among other things, the Settlement Agreement obligated Freight Feeder to make reasonable efforts to negotiate and close a sale of its assets, to pay certain sums to Dupont and Moseley following the sale, and to pay Dupont certain sums on a monthly basis if the sale did not occur within a certain time after the Settlement Agreement was executed. The Settlement Agreement specifically states, in pertinent part:

5.35 Freight Feeder shall use commercially reasonable efforts to successfully close a Freight Feeder Asset Sale within six (6) months of the Signature Date. Should the Funding Date not occur within six (6) months following the Signature Date, beginning in the seventh month following the Signature Date Freight Feeder shall pay to Dupont monthly payments of Ten Thousand Dollars ($10, 000) (the "Adequate Protection Payment") for each month that a Freight Feeder Asset Sale has not been closed. The Adequate Protection Payment shall be due on the fifteenth (15th) day of each given month.
* * *
5.38 Contingent upon and following a successful closing and funding of a Freight Feeder Asset Sale, Freight Feeder agrees to pay Mosely Sixty-Five Thousand Dollars ($65, 000). The payment set forth in the preceding sentence shall be paid to Mosely within seven (7) business days of the Funding Date of any Freight Feeder Asset Sale.
* * *
5.40.... Dupont and Mosely agree and acknowledge that their remedies following a payment default shall be limited to monetary damages against Freight Feeder for the amounts owed hereunder, and will not give rise to any claims for rescission or nullification of this Settlement Agreement....

Settlement Agreement at 17-18 (Doc. 2-1). The Settlement Agreement also provided that the parties released their claims against all other parties of any kind, known or unknown, that they possessed before the Settlement Agreement was executed. Settlement Agreement ยง 6.01. The addenda to the Settlement Agreement extended the Settlement Agreement's deadlines.

Plaintiffs Dupont, Moseley and Utilicraft Aerospace Industries, Inc. ("Utilicraft") bring a claim against Freight Feeder and a number of individual parties to the Settlement Agreement (defendants Bridges, R. Darby Boland, Kevin Williams, Carmichael, Saylor, Edward F. Eaton, Will Weeks and Kim Littlefield) for breach of contract (Count 1). They also sue the individual defendants (Count 2) and the Bank (Count 3) for fraud. Defendants Boland, Williams, Eaton, Weeks, Littlefield and the Bank and all claims purportedly brought by Utilicraft have been dismissed from this case without prejudice.

The defendants ask the Court to dismiss Counts 1 and 2 against the individual defendants pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim or, in the alternative, to grant judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c). As for Count 1, the breach of contract claim, they argue that the plain language of the Settlement Agreement reveals that they have no obligation to pay Dupont or Mosely and that the payment obligation was solely undertaken by Freight Feeder. As for Count 2, the fraud claim, the defendants first argue that the First Amended Complaint fails to meet the pleading standard set forth in Federal Rule of Civil Procedure 8(a) or the heightened pleading standard for fraud as set forth in Federal Rule of Civil Procedure 9(b). They then argue that these fraud claims, which are based on alleged misrepresentations by the individual defendants prior to the Settlement Agreement, were released by that agreement.

In response (Doc. 53), the plaintiffs argue that the intent of the Settlement Agreement was clearly to provide them with certain sums of money and that the individual defendants, as principals of Freight Feeder and signatories to the Settlement Agreement, breached their obligation under the Settlement Agreement to make reasonable efforts to sell Freight Feeder's assets. As for the fraud claim, the plaintiffs argue their claim is based on fraudulent inducements to enter into the addenda to the original settlement agreement in March and September 2012, namely, misrepresentations that the individual defendants were making commercially reasonable ...


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