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Jet Source Charter, Inc. v. Gemini Air Group

June 23, 2010

JET SOURCE CHARTER, INC., A NEVADA CORPORATION, PLAINTIFF,
v.
GEMINI AIR GROUP, INC., AN ARIZONA CORPORATION; TIM CARPAY; AND DOES 1 THROUGH 30, INCLUSIVE, DEFENDANT.



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

ORDER: (1) VACATING TRIAL GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION IN LIMINE CONFERENCE; and (2) DATE AND SETTING STATUS (Doc. No. 60.)

Presently before the Court is Defendant's motion in limine to exclude evidence regarding breach of the implied covenant of good faith and fair dealing. (Doc. No. 60.) Also before the Court is Plaintiff's response in opposition and Defendant's reply. (Doc. Nos. 64, 66.) A jury trial in the matter is currently scheduled to commence July 28, 2010.

The Court HEREBY VACATES the jury trial set to commence July 28, 2010 and SCHEDULES a status hearing for July 15, 2010 at 1:30 PM in Courtroom 6 to set a new trial date and discuss other pre-trial issues.

The Court further GRANTS IN PART and DENIES IN PART Defendant's motion in limine, for the reasons discussed below.

BACKGROUND

I. Factual Background

This action arises out of an agreement between Jet Source Charter ("Jet Source") and Gemini Air Group, Inc. ("Gemini"). Jet Source is a certified charter flight operator and Gemini leases aircrafts and provides flight crews. (See Third Amended Complaint ("TAC") ¶ 1, 2.) In July of 2005, Jet Source and Gemini entered into a twelve-month agreement ("Agreement") in which Jet Source guaranteed 250 charter hours per year and agreed to pay Gemini $3700 per hour for use of the aircraft. (See Agreement ¶¶ 1.1, 2, 4.2-4.3.) In return, Gemini agreed to make the aircraft available for no less than 180 days per year and to pay for the aircraft's maintenance, certification and operation. (See id. ¶¶ 3.1-3.2, 4.2.)

On September 21, 2006, the Federal Aviation Administration ("FAA") conducted a ramp check of the aircraft and discovered that Gemini was violating federal aviation regulations ("FAR"); specifically, FAR 135, which regulates charter flights in which revenue is generated. (See TAC ¶¶ 6, 7.) The FAA allegedly found that Gemini was reporting FAR 135 flight operations as FAR 91 flights. (Id. at ¶ 7; see also id., Ex. B (FAA complaint against Gemini.) FAR 91 regulates private, non-commercial flights. (Id. at ¶ 7.) As a result of this discovery, the FAA issued a "no fly" order for the aircraft. (Id. at ¶ 8.) Jet Source thereafter terminated the Agreement and removed the aircraft from its FAR 135 certification. (Id. at ¶ 16.)

II. Procedural Background

Jet Source initiated this action in state court, which was removed to federal court on May 8, 2007. (Doc. No. 1.) Jet Source filed a First Amended Complaint ("FAC") on May 17, 2007. (Doc. No. 9.) Gemini filed a motion to dismiss the FAC on June 1, 2007, which was granted in part and denied in part by this Court on November 19, 2007, denying the motion to dismiss as to the causes of action for negligence and accounting and granting leave to amend the causes of action for breach of contract and fraud and . (See Doc. No. 19.) On December 18, 2008, Jet Source filed a Second Amended Complaint ("SAC"). (Doc. No. 21.) Gemini filed a motion to dismiss the SAC on January 7, 2008. (Doc. No. 21.) On July 22, 2008, this Court granted Gemini's motion without prejudice, granting leave to amend the causes of action for breach of contract and fraud. (See Doc. No. 25.) A Third Amended Complaint ("TAC"), the operative complaint in this matter, was filed on August 22, 2008. (Doc. No. 26.) Gemini filed an Answer to the TAC and a counter-claim on August 11, 2008. (See Doc. Nos. 27, 28.)

On May 13, 2010, Gemini filed the present motion in limine to exclude all evidence regarding a breach of the implied covenant of good faith and fair dealing. (Doc. No. 60.) Jet Source filed its response in opposition on May 27, 2010 (Doc. No. 64), and Defendant filed its reply on June 3, 2010. (Doc. No. 66.) Oral argument was heard on the motion on June 10, 2010. At oral argument, the Court permitted supplemental briefing for both parties. Both Gemini and Jet Source filed supplemental briefs on June 16, 2010. (Doc. Nos. 72, 75.)

DISCUSSION

Gemini's motion in limine seeks to exclude all evidence relating to a breach of the implied covenant of good faith and fair dealing, asserting that this Court's prior motion to dismiss orders held that such an implied contractual obligation fails as a matter of law. The Court disagrees.

First, the two motion to dismiss Orders dealt with the adequacy of the allegations in the First and Second Amended Complaint. The operative complaint, however, is the Third Amended Complaint. The TAC was not challenged and therefore there is no Order discussing the adequacy of the breach of contract claim in the TAC. Accordingly, Gemini's argument that the Court "has previously ruled that such general contentions of a breach of implied contractual obligations are not viable as a matter of law" is inaccurate on this ground alone. The Court has ...


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