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Dupont v. Freight Feeder Aircraft Corporation, Inc.

United States District Court, S.D. Illinois

October 21, 2014



J. PHIL GILBERT, District Judge.

This matter comes before the Court on the motion for partial summary judgment and/or to dismiss Count 2 filed by defendants L. David Bridges and Kim Littlefield (Doc. 72). Plaintiffs John J. Dupont and Randy Moseley have responded to the motion (Doc. 77).

I. Background

This case stems from a May 2011 settlement agreement (and several addenda thereto) (collectively, "the Settlement Agreement") between the parties to this case and others 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.

In an order dated February 13, 2014, Magistrate Judge Donald G. Wilkerson described the plaintiffs' view of the events leading to the filing of Freight Feeder Aircraft Corp. v. Dupont:

According to the First Amended Complaint, John J. Dupont founded American Utilicraft Corporation (now named Utilicraft) in 1990 in order to produce specialized freight aircraft. In 2007, Freight Feeder Aircraft Corporation ("FFAC") entered into an Asset Purchase Agreement with Utilicraft, to purchase certain patents related to the design, use, and control of freight aircrafts, and an employment agreement with Dupont [that allowed him to retain management control over FFAC. Utilicraft also obtained royalty and ownership interests in FFAC.] In 2009, the individual Defendants (who appear to be the principals and directors of FFAC) sought to buyout Dupont's interest in FFAC and terminate his employment agreement. The buyout agreement contained various clauses in which FFAC would compensate Dupont for relinquishing his interests in FFAC. Plaintiffs allege that FFAC failed to execute its part of the agreement, by failing to pay certain sums to Dupont, and further represented to him (in January 2010) that the buy-out agreement (a liability for FFAC) would be held by a shell corporation once the assets of FFAC were sold to a third party, MidAmerica Aircraft Corporation ("MidAmerica, " which also is owned and controlled by the individuals controlling FFAC). Plaintiff Randy Moseley began employment with FFAC in December 2007 as its Chief Financial Officer and director. He also had an employment agreement with FFAC that "has been inexorably terminated" by the sale of FFAC's assets to MidAmerica.

Memorandum and Order at 1-2 (Doc. 64) (footnotes omitted). Freight Feeder Aircraft Corp. v. Dupont was settled by the Settlement Agreement at issue in this case.

The Court described the salient parts of the Settlement Agreement in an order dated October 24, 2013.

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.

.... The addenda to the Settlement Agreement extended the Settlement Agreement's deadlines.

Memorandum and Order at 2 (Doc. 56).

In this suit, Dupont and Moseley bring a claim against FFAC for breach of the Settlement Agreement (Count 1). They also sue 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 fraud based on a January 7, 2013, representation by their counsel (Count 2). The only remaining individual defendants are Bridges and Littlefield.

In the pending motion, Bridges and Littlefield ask the Court for summary judgment on Count 2 or, in the alternative, to dismiss Count 2 for failure to state a claim. The Court considers only the request ...

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