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Symbolic Aviation, Inc. v. Pncef

September 8, 2010

SYMBOLIC AVIATION, INC., A CALIFORNIA CORPORATION; WEST COAST ACQUISITIONS, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY; MARC CHASE, AN INDIVIDUAL; GRAHAM COX, AN INDIVIDUAL; AND VICKI COX, AN INDIVIDUAL, PLAINTIFFS,
v.
PNCEF, LLC, AN INDIANA LIMITED LIABILITY COMPANY, DBA PNC AVIATION FINANCE, DEFENDANT.
PNCEF, LLC, AN INDIANA LIMITED LIABILITY COMPANY, DBA PNC AVIATION FINANCE, COUNTERCLAIMANT,
v.
SYMBOLIC AVIATION, INC., A CALIFORNIA CORPORATION; WEST COAST ACQUISITIONS, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY; MARC CHASE, AN INDIVIDUAL; GRAHAM COX, AN INDIVIDUAL; AND VICKI COX, AN INDIVIDUAL, COUNTERDEFENDANTS.



The opinion of the court was delivered by: Hayes, Judge

ORDER

The matter before the Court is the Motion to Dismiss filed by Defendant/ Counterclaimant PNCEF, LLC ("Defendant" or "PNC"). (Doc. # 5).

I. Background

On June 9, 2010, Plaintiffs/Counterdefendants ("Plaintiffs") initiated this action by filing a Complaint in this Court. (Doc. # 1).

A. Allegations of the Complaint

On January 26, 2007, Plaintiff Symbolic Aviation, Inc. ("Symbolic") and National City Commercial Capital Company, LLC ("National City") entered into a "Master Aircraft Mortgage and Security Agreement" ("Mortgage"). Id. ¶ 10. On June 19, 2008, pursuant to the terms of the Mortgage, National City loaned $5,400,000 to Symbolic to purchase a "Lear 45-103" aircraft. Id. "The Mortgage had a maturity date of May 30, 2009, when the remaining principal balance on Lear 45-103 would become due unless the parties could come to an alternative agreement." Id. ¶ 13.

"Around July 2009, National City's rights and obligations under the Mortgage were sold to PNC, without Symbolic's knowledge or consent." Id. ¶ 12.

"Recognizing that throughout the dealings Symbolic had made timely payments despite the economic downturn, PNC agreed that the maturity date should be extended for the benefit of all parties. The parties negotiated, and entered into an agreement on November 11, 2009 calling for monthly payments of $12,000 to be applied against interest in lieu of the principal balance ('Maturity Date Extension Agreement')." Id. ¶ 13. Plaintiffs Marc Chase, Graham Cox, Vicki Cox and West Coast Acquisitions, LLC are guarantors to the Maturity Date Extension Agreement. "The Maturity Date Extension Agreement extended the maturity date to May 31, 2010, a date just six months outside of the negotiation time frame. As Symbolic would not benefit from such a short extension, PNC was given the power to extend the maturity date two additional six month periods, with the understanding that the extensions would be exercised if Symbolic upheld their obligations under the Maturity Date Extension Agreement." Id. ¶ 14. "When negotiating the Maturity Date Extension Agreement, Symbolic and Guarantor-Plaintiffs relied on representations made by PNC that extensions of the maturity date would continue to be granted as necessary in the future." Id. ¶ 18.

"Symbolic has made all payments due on Lear 45-103 since June 2008.... All payments made to National City and PNC for the Lear 45-103 total $416,417.92. Symbolic has upheld all of its obligations under the Maturity Date Extension Agreement." Id. ¶ 17. "In good faith, Symbolic tendered its regular payment of $12,000 to PNC on June 7, 2010 despite the expiration of the last extension agreement on May 31, 2010, with the belief that PNC would exercise their power to extend the maturity date under the Maturity Date Extension Agreement." Id. ¶ 19. "In good faith, Symbolic had attempted to negotiate the regular extension, however, PNC has refused to extend the maturity date instead demanding new exorbitant payments completely out of line with the prior dealings between the parties." Id. ¶ 20.

The Complaint alleges two claims for relief: (1) breach of covenant of good faith and fair dealing; and (2) violation of California Business and Professions Code § 17200.

B. Judicially-Noticed Documents*fn1

The Mortgage, Mortgage Supplement and accompanying Promissory Note were entered into on May 30, 2008, and these documents state that National City loaned $5,500,000 to Symbolic to purchase the Lear 45-103 aircraft. (Pascarella Decl., Ex. B at 39, 42, Ex. C at 78, Doc. # 5-1). According to the Promissory Note, the original maturity date of the loan was August 30, 2008. (Id., Ex. C at 78). The Mortgage provides that it "shall be construed and enforced in accordance with and governed by the law of Ohio applicable to contracts made and to be performed entirely within such State." (Id., Ex. A at 25; see also Mortgage Supplement, id., Ex. B at 39 (same)).

On August 30, 2008, the parties entered into an Amended and Restated Promissory Note which extended the maturity date of the loan from August 30, 2008 to May 30, 2009. (Id., Ex. D at 81).

On November 11, 2009, the parties entered into the Maturity Date Extension Agreement. (Compl., Ex. A, Doc. # 1). The Maturity Date Extension Agreement provides that "Lender, in its sole and absolute discretion, will have the option... to extend the maturity date for two (2) additional consecutive periods of six (6) months...." (Id. at 2, ยง 2(b)). The Maturity Date Extension Agreement provides that the loan documents and the Maturity Date Extension Agreement "constitute the entire agreement between the parties" and that ...


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