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7th Circuit sends contractual claims back to state court

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A fixed based operator stationed at the Gary/Chicago International Airport must pursue its contractual claims against the airport authority in state court, as the FBO failed to present a constitutional claim that could be considered in federal court, the 7th Circuit Court of Appeals ruled Thursday.

In the fall of 2006, Gary Jet Center Inc. began negotiating a lease extension that would govern Gary Jet’s operations at the airport. The lease included a provision in its “Minimum Standards” that called for a 1.5 percent charge on gross revenue that would apply ‘for all commercial FBO services on the airport on or after” Jan. 1, 2001.

However, Gary Jet’s original 1991 lease did not include that provision, so the it objected and the parties developed an alternative solution. Under the new lease, Gary Jet would pay a supplemental rent consisting of 10 percent of the amount of all fuel flowage, parking and lending fees that Gary Jet paid to the Gary/Chicago International Airport Authority each year.

The 39-year amended lease began on Jan. 1, 2007, and the terms of the lease held that Gary Jet must comply with the Minimum Standards unless the standards conflicted with the terms of the lease. In that case, the lease would control.

In December 2013, Gary Jet filed a complaint against the airport authority alleging breach of contract and a constitutional violation under 42 U.S. Code Section 1983. The parties entered into a settlement and mutual release agreement in August 2014. As part of the agreement, Gary Jet agreed to help the authority develop new Minimum Standards, which would then control in the case of a conflict with the FBO’s lease. Additionally, Gary Jet contended the parties also agreed to waive the 1.5 percent charge.

A second amended lease was signed in July 2014, in which the parties agreed the Minimum Standards would control. Then in May 2015, the authority informed Gary Jet that it intended to include a provision in the new Minimum Standards that would require that each FBO pay the authority a percentage of its gross revenue to the authority. That provision was approved over Gary Jet’s objection, reinstating the 1.5 percent payment requirement.

Gary Jet filed suit in September 2015, bringing a variety of claims including a violation of the Contracts Clause of the U.S. Constitution by impairing the obligations of the 2007 lease. The airport authority moved to dismiss, and the U.S. District Court for the Northern District of Indiana dismissed without prejudice as to the contracts-clause claim.

On appeal in Gary Jet Center, Inc. v. AFCO AvPorts Management, LLC, et al., 16-1233, the 7th Circuit Court of Appeals examined the issue of whether Gary Jet had stated a contracts-clause claim. In a Thursday opinion, Judge William Bauer wrote Gary Jet did not raise such a claim, so it “cannot plausibly demonstrate that it is without a remedy for any violation of its contractual rights, which is the sine qua non of a Contracts-Clause claim.”

Specifically, Bauer wrote that Gary Jet is still operational at the airport and has not been forced to comply with the new provisions in the Minimum Standards. Additionally, the authority pointed to the 2014 agreement that held the New Minimum Standards would control the lease.

Thus, no legislative power was used to deny the FBO’s remedy for a breach of the 2007 lease, so the contractual dispute does not rise to a constitutional level, Bauer said. Instead, the 7th Circuit affirmed the district court’s dismissal and held Gary Jet’s remaining state law claims must be pursued in state court.
 

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  1. He TIL team,please zap this comment too since it was merely marking a scammer and not reflecting on the story. Thanks, happy Monday, keep up the fine work.

  2. You just need my social security number sent to your Gmail account to process then loan, right? Beware scammers indeed.

  3. The appellate court just said doctors can be sued for reporting child abuse. The most dangerous form of child abuse with the highest mortality rate of any form of child abuse (between 6% and 9% according to the below listed studies). Now doctors will be far less likely to report this form of dangerous child abuse in Indiana. If you want to know what this is, google the names Lacey Spears, Julie Conley (and look at what happened when uninformed judges returned that child against medical advice), Hope Ybarra, and Dixie Blanchard. Here is some really good reporting on what this allegation was: http://media.star-telegram.com/Munchausenmoms/ Here are the two research papers: http://www.sciencedirect.com/science/article/pii/0145213487900810 http://www.sciencedirect.com/science/article/pii/S0145213403000309 25% of sibling are dead in that second study. 25%!!! Unbelievable ruling. Chilling. Wrong.

  4. Mr. Levin says that the BMV engaged in misconduct--that the BMV (or, rather, someone in the BMV) knew Indiana motorists were being overcharged fees but did nothing to correct the situation. Such misconduct, whether engaged in by one individual or by a group, is called theft (defined as knowingly or intentionally exerting unauthorized control over the property of another person with the intent to deprive the other person of the property's value or use). Theft is a crime in Indiana (as it still is in most of the civilized world). One wonders, then, why there have been no criminal prosecutions of BMV officials for this theft? Government misconduct doesn't occur in a vacuum. An individual who works for or oversees a government agency is responsible for the misconduct. In this instance, somebody (or somebodies) with the BMV, at some time, knew Indiana motorists were being overcharged. What's more, this person (or these people), even after having the error of their ways pointed out to them, did nothing to fix the problem. Instead, the overcharges continued. Thus, the taxpayers of Indiana are also on the hook for the millions of dollars in attorneys fees (for both sides; the BMV didn't see fit to avail itself of the services of a lawyer employed by the state government) that had to be spent in order to finally convince the BMV that stealing money from Indiana motorists was a bad thing. Given that the BMV official(s) responsible for this crime continued their misconduct, covered it up, and never did anything until the agency reached an agreeable settlement, it seems the statute of limitations for prosecuting these folks has not yet run. I hope our Attorney General is paying attention to this fiasco and is seriously considering prosecution. Indiana, the state that works . . . for thieves.

  5. I'm glad that attorney Carl Hayes, who represented the BMV in this case, is able to say that his client "is pleased to have resolved the issue". Everyone makes mistakes, even bureaucratic behemoths like Indiana's BMV. So to some extent we need to be forgiving of such mistakes. But when those mistakes are going to cost Indiana taxpayers millions of dollars to rectify (because neither plaintiff's counsel nor Mr. Hayes gave freely of their services, and the BMV, being a state-funded agency, relies on taxpayer dollars to pay these attorneys their fees), the agency doesn't have a right to feel "pleased to have resolved the issue". One is left wondering why the BMV feels so pleased with this resolution? The magnitude of the agency's overcharges might suggest to some that, perhaps, these errors were more than mere oversight. Could this be why the agency is so "pleased" with this resolution? Will Indiana motorists ever be assured that the culture of incompetence (if not worse) that the BMV seems to have fostered is no longer the status quo? Or will even more "overcharges" and lawsuits result? It's fairly obvious who is really "pleased to have resolved the issue", and it's not Indiana's taxpayers who are on the hook for the legal fees generated in these cases.

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