United States District Court, N.D. Illinois, Eastern Division
BA JACOBS FLIGHT SERVICES, LLC, an Illinois Limited Liability Company, Plaintiff,
RUTAIR LIMITED, a/k/a RUTAIR LLC, a Jamaica Corporation, and GEORGE LEVY, an individual, Defendants.
MEMORANDUM OPINION AND ORDER
JEFFREY T. GILBERT, MAGISTRATE JUDGE
Court assumes familiarity with, and incorporates by
reference, the underlying facts as set forth in its previous
Memorandum Opinions and Orders in this case. See
[ECF Nos.74, 88], Briefly, on December 1, 2010, Plaintiff BA
Jacobs Flight Services, LLC ("BA Jacobs") entered
into a lease agreement (the "Lease Agreement") with
Defendant RutAir Limited ("RutAir"), in which BA
Jacobs agreed to lease to RutAir a new 2010 Cessna Caravan
208B airplane (the "Aircraft") for a period of five
years with monthly rent of $25, 000, among other terms. As a
condition of BA Jacobs entering into the Lease Agreement,
Defendant George Levy signed a guaranty (the "Guaranty
Agreement") in which he agreed to guarantee personally
RutAir's payments under the Lease Agreement up to $300,
000 in the event of a breach of that Agreement and to pay
attorneys' fees and costs incurred by BA Jacobs in
enforcing its rights under the Guaranty Agreement.
January 27, 2015, this Court issued a Memorandum Opinion and
Order [ECF No.74], in which it concluded that RutAir had
breached the Lease Agreement. The Court granted partial
summary judgment in favor of BA Jacobs and against RutAir and
George Levy as to their respective liability under the Lease
Agreement and the Guaranty Agreement.
Jacobs then sought summary judgment on its claim for damages
as a result of RutAir's breach of the Lease Agreement. On
December 8, 2015, the Court issued a second Memorandum
Opinion and Order [ECF No. 88] denying that motion and set
this matter for an evidentiary hearing for BA Jacobs to prove
up its damages. Specifically, the Court held that the
acceleration clause in the Lease Agreement is an
unenforceable penalty, and therefore, BA Jacobs is not
entitled to accelerate the lease payments under the
Agreement. Notwithstanding its holding that the acceleration
clause is unenforceable, the Court recognized that BA Jacobs
still is entitled to recover its actual damages.
Court held an evidentiary hearing in this matter on February
17, 2016, and it was continued to and completed on March 4,
2016. The parties submitted pre-trial and post-trial briefs.
[ECF Nos. 95, 96, 106, 108, 112]. The Court now must
determine the monetary damages to which BA Jacobs is entitled
as a result of RutAir's breach of the Lease Agreement.
This Memorandum Opinion and Order memorializes the
Court's findings of fact and conclusions of law with
respect to BA Jacobs' damages in accordance with Rule 52
of the Federal Rules of Civil Procedure.
evidentiary hearing and in the pre-trial and post-trial
briefing, the parties agreed on very little with respect to
how to calculate BA Jacobs' damages in this case. In its
post-trial brief, BA Jacobs claims that its actual damages
include all of the unpaid monthly rent payments under the
Lease Agreement for the full term of the Agreement ($1, 500,
000), minus the depreciation of the Aircraft ($400, 000),
minus the refurbishing costs of the Aircraft ($100, 000),
minus the early recapture from the sale of the Aircraft
($330, 000) for a total of $670, 000, plus the costs incurred
in chartering the Aircraft after it was repossessed and
before it was sold ($50, 000) for a total of $720, 000 in
actual damages. Plaintiffs Post-Trial Brief, [ECF No. 106, at
3]. BA Jacobs then calculates late fees in the amount of
$743, 850 for a total damage award of $1, 463, 850.
Plaintiffs Post-Trial Brief, [ECF No. 106, at 3].
contrast, RutAir asserts that BA Jacobs' actual damages
include $45, 545 for past due delinquent payments as of the
date when the Aircraft was repossessed, $110, 000 in profits
on the rent payment due under the Lease Agreement after the
Aircraft was repossessed but prior to it being sold between
April 2011 and February 2012. RutAir maintains that BA
Jacobs' actual damages in this case are only $155, 545.
Defendant's Post-Trial Brief, [ECF No. 108, at 2]. RutAir
argues that the $50, 000 in mitigation damages claimed by BA
Jacobs should not be attributed to RutAir because they are
not factually substantiated. Defendant's Post-Trial
Brief, [ECF No. 108, at 3 n.1]. But even if the Court does
include the $50, 000 in mitigation losses, RutAir argues that
the total damages award then would be $205, 545.
Defendant's Post-Trial Brief, [ECF No. 108, at 3].
starting point for our analysis is this Court's holding
in its previous Memorandum Opinion and Order, which states in
In the instant case, the Court finds that the acceleration
clause in the Lease Agreement is an unenforceable penalty
because the Lease Agreement does not take into account the
effect of the early recapture of the leased Aircraft, which
BA Jacobs subsequently has sold. Because BA Jacobs no longer
owns the Aircraft and does not have any financial obligations
related to the Aircraft, the acceleration clause in the Lease
Agreement obligating RutAir to pay the remaining monthly rent
payments for the remainder of the term of the Lease
Agreement, which would amount to $1, 400, 000, 00 for the 56
additional months of the term, would create a windfall for B
The Court finds that the losses to BA Jacobs are calculated
easily, and that the liquidated damages allowed for in the
Lease Agreement do not approximate the actual damages in this
case. While actual damages may include, among other damages,
loss of the monthly rent payments after the Aircraft was
repossessed but prior to it being sold, once the Aircraft is
sold, BA Jacobs no longer has the carrying costs of the
equipment and recovering all of the monthly rent payments
would be a windfall for BA Jacobs. This creates an incentive
to default RutAir, repossess and sell the Aircraft as soon as
possible, and collect the remaining lease payments anyway.
[ECF No. 88, at 4-5], Even though the Court concluded that
the acceleration clause is unenforceable, BA Jacobs still is
entitled to recover its actual damages. [ECF No. 88, at 6],
Illinois law seeks to place the non-breaching party in as
satisfactory a position as it would have been had the breach
not occurred and had the contract been performed. See
Equity Insurance Managers of Illinois, LLC v.
McNichols, 324 Ill.App.3d 830, 837, 755 N.E.75, 80 (1st
Court is not persuaded by either party's proposed
calculation of damages. BA Jacobs' alleged damages are
largely speculative and unsupported by the evidence.
Moreover, its damages calculation starts from the premise
that it should recover all of the monthly rent payments
during the entire term of the Lease Agreement. As discussed
above, however, the Court previously concluded that the
acceleration clause is a penalty and not enforceable. [ECF
No. 88, at 4-5], Awarding BA Jacobs the total amount of the
monthly payments due under the full term of the Lease
Agreement would constitute a windfall for that reason, and
the Court therefore disagrees with the underlying premise of
BA Jacobs' damages calculation.
damages calculation offered by RutAir also is unpersuasive.
It is unclear to the Court the reasons why and how RutAir
limits BA Jacobs' actual damages to $155, 545. RutAir
simply asserts without explanation that the past due rent
plus the profits from the Lease Agreement from the date of
repossession to the date of sale totals $155, 545. Rut Air,
however, offers no explanation or reason why it excludes from
its damage calculation the $15, 000 monthly loan ...