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Jet Source Charter, Inc. v. Gemini Air Group

November 19, 2007


The opinion of the court was delivered by: Honorable Janis L. Sammartino United States District Judge


Presently before the Court is Gemini Air Group, Inc.'s and Tim Carpay's (collectively, "defendants") motion to dismiss the first amended complaint ("FAC"). (Doc. No. 13.) For the reasons stated below, the Court grants in part and denies in part defendants' motion. With respect to all dismissed causes of action, the Court grants leave to amend.


A. Factual Background

Jet Source Charter, Inc. ("plaintiff" or "JSC") is a certified charter flight operator, and Gemini Air Group, Inc. ("Gemini") leases aircraft and provides flight crews. (Compl. ¶ 2; Memo. ISO Motion, at 2.) On July 21, 2005, JSC and Gemini entered into an "Aircraft Charter Agreement" ("Agreement") for charter flights involving a Gemini Bombardier Challenger 604 aircraft ("aircraft"). (Agreement ¶ 1.1.) Mr. Carpay is the acting president of Gemini and pilot of the aircraft. (Compl. ¶ 3.) During the Agreement's twelve-month term, JSC guaranteed a certain amount of charter hours and agreed to pay Gemini an hourly rate for using the aircraft. (Agreement ¶¶ 2, 4.2-4.3.) JSC represented that it held the necessary certificates to comply with part 135 of the Federal Aviation Regulations ("FAR"). (Id. ¶ 1.2.) For its part, Gemini agreed to make the aircraft available for a certain number of days and to pay the necessary amounts for the aircraft's ongoing maintenance, certification, and operation. (Id. ¶¶ 3.1-3.2, 4.2.) Gemini would retain "operational control" of the aircraft during its own flight operations, pursuant to FAR part 91.*fn1 (Id. ¶ 1.3.)

If one party breached or defaulted on any provision, the Agreement specified, "the non- defaulting party may . . . recover from the defaulting party any and all damages or expenses which the non-defaulting party shall have sustained by reason of the default." (Id. ¶ 9(iii).) The Agreement also contained a liability waiver "for indirect, incidental, consequential, special, exemplary damages, or diminution of value following loss whether in contract or tort . . . such as but not limited to loss of revenue, loss of use, or anticipated profits." (Id. ¶ 10.) In the event of termination or default, JSC was obligated to remove the aircraft from its FAR certificate. (Id. ¶ 6(a).)

On September 21, 2006, Federal Aviation Administration ("FAA") officials allegedly conducted a ramp check of the aircraft and discovered that defendants were violating FAR 135 regulations by, inter alia, conducting FAR 135 flights and reporting them as FAR 91 flights.*fn2

(Compl. ¶ 7; Memo. ISO Motion, at 6.) The FAA issued a "no fly" order for the aircraft. (Compl. ¶ 9.) JSC terminated the agreement and removed the aircraft from its FAR 135 certificate. (Id.)

B. Procedural Background

On December 20, 2006, plaintiff filed a complaint in the North County division of San Diego County Superior Court. (Doc. No. 1, Exhibit A.) On March 8, 2007, defendants removed the case to this Court. (Doc. No. 1.) Defendants moved to dismiss the complaint on April 2, 2007. (Doc. No. 5.) After plaintiff amended its complaint as a matter of right on May 17, 2007 (Doc. No. 9), the motion to dismiss was denied as moot (Doc. No. 11).*fn3

The FAC alleges five causes of action: (1) breach of contract, (2) fraud, (3) accounting, (4) implied indemnity, and (5) negligence. All causes of action name Gemini; only the second, fourth, and fifth causes of action name Mr. Carpay. On June 1, 2007, defendants moved to dismiss the FAC. (Doc. No. 13.) Plaintiff filed its response in opposition on July 13, 2007. (Doc. No. 15.) Defendants filed their reply on July 23, 2007. (Doc. No. 16.) Finding the motion suitable for adjudication on the papers, the Court then took the matter under submission, pursuant to Civil Local Rule 7.1(d)(1).


A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) alleges that the plaintiff's complaint "fails to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). A complaint may be dismissed "if it appears beyond doubt that the plaintiff can prove no set of facts in support of [its] claim which would entitle [it] to relief." Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001) (quoting Conley v. Gibson, 355 U.S. 41, 45-46 (1957)) (internal quotations omitted). Such a situation arises when the complaint either lacks a cognizable legal theory or fails to plead facts essential to a cognizable legal theory. Zamani v. Carnes, 491 F.3d 990, 996-97 (9th Cir. 2007); SmileCare Dental Group v. Delta Dental Plan of Cal., Inc., 88 F.3d 780, 783 (9th Cir. 1996).

In determining whether a complaint can withstand a Rule 12(b)(6) dismissal, "a court must construe the complaint in the light most favorable to the plaintiff and must accept all well-pleaded factual allegations as true." Shwarz v. United States, 234 F.3d 428, 435 (9th Cir. 2000) (citing Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 338 (9th Cir. 1996)). However, a court is not required to credit "conclusory allegations of law and unwarranted inferences[.]" Schmier v. U.S. Court of Appeals for the Ninth Circuit, 279 F.3d 817, 820 (9th Cir. 2002) (quoting Associated Gen. Contractors of Am. v. Metro. Water Dist. of S. Cal., 159 F.3d 1178, 1181 (9th Cir. 1998) (other quotations omitted)). To determine whether plaintiff can prove facts entitling it to relief, the Court may consider documents attached to the complaint. Nat'l Ass'n for Advancement of Psychoanalysis v. Cal. Board of Psychology, 228 F.3d 1043, 1049 (9th Cir. 2000); Durning v. First Boston Corp., 815 F.2d 1265, 1267 (9th Cir. 1987); Santos v. County of L.A. Dep't of Children & Family Servs., 299 F. Supp. 2d 1070, 1075 n.8 (C.D. Cal. ...

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