Opinion
No. 16 Civ. 2030 (RJS)
03-30-2018
CH ACQUISITIONS 2, LLC, Plaintiff, v. AQUILA AVIATION L.P. & WELLS FARGO BANK NORTHWEST, N.A., Defendants.
MEMORANDUM AND ORDER :
This action involves dueling breach of contract claims arising from the failed sale of a 1999 Boeing Business Jet (the "BBJ") worth more than $20 million. Specifically, Plaintiff CH Acquisitions 2, LLC ("CH") seeks the return of its $1.5 million deposit on the aircraft, while Defendants Aquila Aviation ("Aquila") and Wells Fargo Bank Northwest, National Association ("Wells Fargo" and, together with Aquila, "Defendants") seek over $3.7 million in actual damages that resulted from CH's alleged breach of the sale contract.
Having presided over a bench trial in this action, the Court now issues the following findings of fact and conclusions of law in accordance with Federal Rule of Civil Procedure 52(a). For the reasons set forth below, the Court finds that Plaintiff has failed to meet its burden of proof with respect to its claim, that Defendants have satisfied their burden with respect to their claims, and that Defendants are entitled to $3,725,000 in damages and their reasonable attorneys' fees, costs, and expenses. Accordingly, the Court enters judgment for Defendants.
I. BACKGROUND AND PROCEDURAL
HISTORY
Plaintiff commenced this action on March 18, 2016 (Doc. No. 1), and Defendants responded with an answer and counterclaims on April 20, 2016 (Doc. No. 9). Following the conclusion of discovery, the case proceeded to trial on June 26, 2017, and was conducted in accordance with the Court's Individual Rules for non-jury proceedings. Specifically, the parties submitted affidavits containing the direct testimony of their respective witnesses, as well as copies of all exhibits and deposition transcripts that they intended to offer as evidence. The parties were then invited to call those witnesses whom they wished to cross-examine at trial. In all, seven witnesses - Chantal De Vos, Sonny Benzion Cohen Kahn, Robert Gallagher, Robert Charles Vickers, Matthew Ross, Marc Foulkrod, and Gary Weissel - submitted affidavits and testified before the Court. In addition, Defendants called non-party witness Edward Ashley, who gave both direct and cross-examination testimony during trial. Trial concluded on July 10, 2017. At the close of the trial, the Court orally found that CH had failed to prove Defendants' alleged breach of contract by a preponderance of the evidence and that Defendants had proven CH's breach of contract; the Court reserved judgment on the issue of damages. (Transcript of Trial Proceedings, July 10, 2017, at 1305:25-1306:18.)
II. LEGAL STANDARD
To prevail on their respective claims, the parties must present evidence in support of the allegations set forth in their complaint and counterclaims and prove those allegations by a preponderance of the evidence. See Diesel Props S.R.L. v. Greystone Bus. Credit II LLC, 631 F.3d 42, 52 (2d Cir. 2011). "The burden of showing something by a preponderance of the evidence . . . simply requires the trier of fact to believe that the existence of a fact is more probable than its nonexistence[.]" Metro. Stevedore Co. v. Rambo, 521 U.S. 121, 137 n.9 (1997). As the finder of fact, the Court is entitled to make credibility findings about the witnesses and testimony and to draw reasonable inferences from the evidence presented. See Merck Eprova AG v. Gnosis S.p.A., 901 F. Supp. 2d 436, 448 (S.D.N.Y. 2012), aff'd, 760 F.3d 247 (2d Cir. 2014).
III. FINDINGS OF FACT
The Court's factual findings are taken from the Stipulation of Facts (Doc. No. 72, Ex. A ("Slip.")), the trial transcript, dated June 26-30, 2017 and July 10, 2017 ("Tr"), witness affidavits, Plaintiff's exhibits ("PX"), Defendants' exhibits ("DX"), joint exhibits ("JX"), and the parties' deposition designations. To the extent that any finding of fact reflects a legal conclusion, it shall to that extent be deemed a conclusion of law, and vice versa.
CH is a Delaware limited liability company with its principal place of business in Miami, Florida. (Stip. ¶ 2.) Although owned by three trusts for the benefit of individuals residing in New York and Florida (id. ¶¶ 3-4), CH is actually one limited liability company in a cluster of corporations and partnerships that together comprise the real estate business of Crescent Heights, Inc. (See De Vos Aff. ¶ 3; Kahn Aff. ¶ 3.) As a result, while CH is the plaintiff in this action and the contracting party for the BBJ, it acted primarily through individuals and officers associated with Crescent Heights. Sonny Kahn is the chairman and chief executive officer of Crescent Heights and the principal actor in this drama involving the failed purchase of a luxury corporate jet. (Kahn Aff. ¶ 1.)
Aquila is a British Virgin Islands Limited Partnership that is ultimately controlled by the Legatum Group, a private investment partnership based in Dubai, United Arab Emirates. (Stip. ¶ 5; Vickers Aff. ¶¶ 5, 9.) In 2008, Aquila took ownership of the BBJ, although Wells Fargo held actual title to the aircraft. (Stip. ¶ 6; Vickers Aff. ¶¶ 11-12.)
For many years, Crescent Heights has maintained a number of private corporate aircraft (De Vos Aff. ¶ 7), which are managed by Chantal De Vos, Crescent Heights's Operations Manager for Special Projects, and maintained by Steve Vrabic, Director of Maintenance for the company's airplane fleet. (Id. ¶¶ 1, 11-15.) In the summer of 2015, Sonny Kahn was exploring the possibility of acquiring another aircraft for the company when he became aware that Aquila's BBJ was on the market. (Id. ¶ 22; Kahn Aff. ¶ 4.) At that time, Marc Foulkrod - and his company Avjet Global Sales was serving as the broker for the BBJ, which was stored at an Avjet facility in Burbank, California. (Foulkrod Aff. ¶¶ 1, 11, 13.) Kahn inspected the aircraft in Burbank several times starting that summer; he liked the BBJ and initiated negotiations to purchase it. (Kahn Aff. ¶ 5; Foulkrod Aff. ¶¶ 13-16.) To facilitate the purchase, Crescent Heights retained aviation consultant Patrick Murphy to perform a review of the BBJ's documentary records and assist with the pre-purchase inspection of the aircraft. (De Vos Aff. ¶ 30.)
On December 4, 2015, CH entered into a letter of intent ("LOI") with Aquila to purchase the BBJ for $27.725 million. (JX 2.) The LOI required CH to put down a $1.5 million deposit. (Id.) At this time, the BBJ was in San Antonio, Texas, undergoing its regular maintenance check - known as a B-Check - conducted by Vision Technology San Antonio Aerospace ("VT San Antonio"). (Stip. ¶ 19; Tr. 636:4-637:7.) After the LOI was signed, De Vos dispatched Murphy and Vrabic to San Antonio to start their review of the BBJ's records. (Stip. ¶ 20; De Vos Aff. ¶ 31.) At the same time, Matthew Ross - Aquila's Director of Maintenance - flew from Dubai to San Antonio to assist in the records review. (Ross Aff. ¶¶ 6-7, 13.) Aquila hired Chris Argyros, a contractor, to help Ross with this process. (Id. ¶ 16.)
On January 15, 2016, CH and Aquila entered into the Aircraft Purchase Agreement ("APA"). (Stip. ¶ 21; PX 7, DX 33 ("APA").) Like the LOI, the APA established a purchase price of $27.725 million and required a $1.5 million deposit, which would be refundable only under very narrow circumstances. (See APA §§ 2(A), 7, 17, 29.) Specifically, the APA anticipated that, after the completion of the B-check, the BBJ would be subject to an inspection process, after which - absent any issues - CH would accept delivery of the aircraft. (See APA § 7.) To that end, the APA provided that:
Upon completion of the Inspection, Purchaser shall either (i) accept the Aircraft, subject to no corrective work being performed on the same, . . . (ii) accept the Aircraft, subject to Seller's correction of airworthiness discrepancy items . . . , or (iii) reject the Aircraft but only in the event any airworthiness discrepancy, major corrosion, or major damage (including, without limitation, damage history to the airframe, any engine or material part, missing logs and/or records or failure to comply with the Aircraft Specifications attached hereto as Exhibit A) is found during the Inspection. Purchaser shall notify Seller of its decision in writing no later than three (3) business days after receipt by Purchaser and Seller of the Inspection Facility's written results of the Inspection.(Id. § 7(D).) If CH rejected the aircraft pursuant to Section 7(D)(iii), the security deposit would be immediately refunded. (Id. § 7(E).)
The APA also provided four scenarios that would result in the purchase agreement being "terminated": (1) by CH if Aquila breached its obligations under the APA or delivered the BBJ in an unsatisfactory state; (2) by Aquila if CH breached any of its obligations under the APA or failed to accept delivery of the BBJ; (3) by either party in the event of loss of the aircraft or damage exceeding $300,000; or (4) by CH following a contractually-defined "Event of Force Majeure." (Id. § 29.) To effect a termination, the terminating party was required to "give written notice of such termination to the other party[.]" (Id.) If the APA was terminated by way of options (1), (3) , and (4) above, CH would recover its deposit, but if the APA was terminated by way of option (2), Aquila would retain the deposit "as liquidated damages, without any further obligation on the part of [CH] as [Aquila's] . . . sole remedy." (Id.)
Although representatives of both parties were already on site at VT San Antonio with access to the BBJ, the signing of the APA allowed for the pre-purchase inspection to begin in earnest. (See id. § 7.) On January 20, 2016, five days after the parties executed the APA, Vrabic sent Ross an email including a list that Murphy had compiled of 93 issues - identified as "discrepancies" - with the BBJ's documentation. (PX 9; see Stip. ¶ 22; Ross Aff. ¶ 18.) Ross was able to resolve 27 discrepancies on the first day. (DX 35.) Five days later, by January 25, Ross had resolved 76 of the 93 identified discrepancies. (DX 43.) However, Ross had trouble locating two manuals - the Aircraft Maintenance Manual and the Illustrated Parts Catalogue Supplement - that were deemed to be key "aircraft documents" required by the APA. In searching for those documents, Ross learned that they were never turned over when the BBJ was released into service by the manufacturer. (See JX 15, JX 19.) In response, Aquila representatives contacted the Federal Aviation Administration ("FAA") to inquire about removing references to the AMM and IPCS manual in the BBJ's documentation, since they had never been delivered in the first place - a request the FAA eventually granted. (See DX 71; JX 50.)
On February 1, 2016, representatives of VT San Antonio sent Vrabic the pre-buy inspection list, detailing the physical "discrepancies" uncovered during VT San Antonio's B-Check. (JX 9.) If a discrepancy was "out of limits," meaning that VT San Antonio determined that repair measures would be necessary, the aircraft was removed from service. (See Tr. 412:20-25, 679:14-25; 712:5-13.) Only after all discrepancies were resolved - whether through repairs or a determination that repairs were unnecessary and the plane was fine as is - would the BBJ be returned to service. (Tr. 413:4-6, 481:14-20, 795:17-22, 1113:16-1114:8.)
The physical discrepancies identified for the BBJ by VT San Antonio included engine corrosion and dents in the engine acoustic panels. (JX 9; Ross Aff. ¶¶ 23-24.) On February 2, 2016, Vrabic forwarded the pre-buy inspection list to Ross. (JX 9.) Ross then forwarded it to Foulkrod, identifying three categories of issues: (1) those deemed "acceptable by" CH; (2) those that would be checked against the manufacturers' recommendations to confirm that repair measures were necessary; and (3) those that Aquila would be responsible for and could immediately commence repairing. (JX 7.) As relevant here, Ross indicated that addressing engine corrosion was Aquila's responsibility; he also stated that further inspection would be required to determine whether the dents were out of limits and, if so, what repairs would be necessary. (Id.)
VT San Antonio repaired the engine corrosion in early February. (Stip. ¶ 27; Tr. 660:1-661:21, 663:8-15.) However, the removal of the corrosion resulted in a potential skin-thickness problem in the affected area, prompting further discussion and ultimately a referral to the manufacturers, Boeing and Rohr, for resolution. (JX 42; Tr. 661:22-25, 663:16-664:4.) As for the dents, Ross believed they were "barely visible," and rejected the view that they were out of limits. (Ross Aff. ¶ 24-25.) In light of the parties' disagreement, VT San Antonio referred the issue to Rohr Mechanical, the manufacturer of the engine panels, for a determination on whether or not the dents were "within limits." (Ross. Aff. ¶ 24.) In the meantime, Ross advised Vrabic that Aquila was willing to fund the repairs; however, because he believed that fixing the dents would "do more harm than good," he sent Vrabic an email on February 12, 2016 advising him that CH would have "to commit to ownership" before Aquila "would be prepared to fund the repairs." (DX 73, DX 120.)
It is at this point that the parties' factual narratives starkly diverge. According to CH, Ross's email constituted a repudiation of the agreement - the final blow in an already poisoned and drastically delayed process - that prompted CH to reject the aircraft for being "non-airworthy." According to Aquila, Ross's email amounted to little more than modest pushback over the best course of action to take with regard to a minor problem dents that were not even visible to the naked eye. In Aquila's view, CH seized on Ross's email as a pretext to back out of its deal with Aquila in order to purchase a substantially similar - and cheaper - Boeing Business Jet that Kahn had identified after February 12, 2016. For the reasons that follow, the Court concludes that the evidence and credible testimony overwhelmingly support Aquila's account.
Aquila's account goes like this: At the same time that the parties were working to remediate any issues with the BBJ, CH was also pursuing alternative options. On February 14, 2016, De Vos emailed Kahn a website link to a different Boeing Business Jet on sale, asking him to "check [it] out" and "advise on [his] thoughts." (JX 32.) This aircraft (the "Tracinda jet") belonged to the Tracinda Corporation and had been owned by the recently deceased billionaire Kirk Kerkorian. (See DX 70; JX 43.) On February 15, 2016, Keith Menin, the nephew of Crescent Heights principal Bruce Menin, emailed Kahn about the Tracinda jet, telling him that the owners were likely to sell the Tracinda jet "in [the] very low 20's as they are extremely motivated." (DX 70; DX 76.) Kahn responded, "I know it[,] we are looking and comparing[.] I will let you know." (Id.) Shortly after Menin's email, Kahn directed De Vos and Vrabic to run a comparison of the Aquila BBJ and the Tracinda jet. (De Vos Aff. ¶ 52; DX 82.) Vrabic promptly sent De Vos a "BBJ comparison," concluding that the planes had some differences but were in largely similar condition. (See DX 82.) Just an hour after telling Menin that he was comparing the airplanes, Kahn wrote back to Menin, "[c]an you please call me," and provided his phone number. (DX 76.) Later that night, Menin emailed Kahn to say "[t]hey got the message and said they will discuss with the trustees first thing tomorrow morning and call us." (Id.) The next morning, Kahn asked Menin if he had "[a]ny news," and Menin responded via email that he had just spoken with an executive responsible for selling the Tracinda jet, who indicated that "he would take something close to the 21,000,000 if real offer[,] quick closing etc.[,] maybe a few dollars more but you can work the magic." (Id.)
Following Menin's email, CH mobilized to purchase the Tracinda jet even though it was still bound by the APA. On February 16, 2016, De Vos sent Menin a draft letter of intent to purchase the Tracinda jet for $21 million. (DX 79.) Over the next three days, CH entered into a series of letters of intent to purchase the Tracinda jet. (Stip. ¶¶ 29, 31-35; DX 100.) Kahn inspected the Tracinda jet in Las Vegas on February 17. (See JX 38; JX 43.) That same day, CH's counsel emailed a "letter of rejection" to Aquila's counsel purporting to reject the BBJ. (Stip. ¶ 30; DX 87.) The notice stated that:
Upon completion of the Cursory Review and the Inspection, Purchaser has found that the aircraft has airworthiness discrepancies and major damage (as defined in the Agreement), and the Aircraft is hereby rejected by Purchaser in accordance with the terms of the Agreement. Escrow Agent is hereby instructed to return Purchaser's deposit in accordance with the Agreement.(DX 87.)
When Aquila representatives received the rejection notice, they were shocked, as CH representatives had never before suggested that the BBJ had airworthiness problems or major damage. (See, e.g., JX 40 (capturing Foulkrod's reaction: "WTF"); Vickers Aff. ¶ 31; Ross Aff. ¶¶ 29, 30, 33; Foulkdrod Aff. ¶¶ 22, 23.) In response to counsel's "letter of rejection," Aquila requested that CH identify the "airworthiness discrepancies" and "major damage" that justified rejecting the BBJ, (Vickers Aff. ¶ 32; JX 41, DX 94.) On February 18, 2016, De Vos directed Murphy to prepare "a list of all the items that ground the aircraft," specifically "only the items that are of airworthy concern." (JX 44.) In response, Murphy identified the two missing manuals - which the FAA had already determined were no longer required - and the dents in the engine acoustic panels. (Id.)
Meanwhile, despite CH's purported rejection, Aquila moved forward in addressing the physical discrepancies with the BBJ. Specifically, in response to the skin-thickness issue caused by the removal of engine corrosion, Boeing suggested the insertion of a screw and oversized fastener, a relatively minor repair which was quickly performed. (DX 108, DX 109, DX 112, JX 10, DX 49, JX 11; Tr. 660:1.) As for the engine panel dents, two were filled with a potting compound per the recommendation of Rohr, while the others were left "as is" at the recommendation of Boeing. (Ross Aff. ¶ 35; DX 116, DX 117, JX 53, JX 54; Tr. 657:18-659:11.) On March 4, 2016, after Aquila finished making these adjustments, VT San Antonio certified the the BBJ as "available for flight." (JX 55.)
On March 5, 2016, Aquila notified CH that the BBJ was ready for its test flight. (JX 56.) CH's attorneys' informed Aquila that CH had "no desire to conduct a test flight" (JX 57), so Aquila advised CH that the aircraft was ready for delivery. (JX 59.) Aquila did in fact make the BBJ ready for delivery on March 18, 2016, but CH did not accept the plane. (Stip. ¶ 45; DX 125, JX 59.) On March 21, 2016, Aquila notified CH that, in Aquila's view, CH was in breach of the APA. (Stip. ¶ 46; JX 63.) Aquila ultimately sold the BBJ to a Chinese company named Arquest on June 2, 2016 for $24 million - approximately $3.725 million less than the sale price specified in the APA. (Vickers Aff. ¶¶ 39-40; DX 140; Tr. 606:3-16.)
In CH's alternate telling of the facts, Ross's February 12 email was the final straw that prompted CH to reject the BBJ. According to Kahn, he had been frustrated with the slow pace of the deal for several weeks and had already asked De Vos to look into whether they could get out of the APA. (See, e.g., Tr. 123:2-124:2.) Nevertheless, Kahn testified that the February 12 email led to a conference call later that day during which Vrabic told Kahn that Aquila was dragging its feet and insisting that CH acquire the BBJ before it would perform the necessary repairs. Curiously, although Kahn insisted that the February 12 email is what led CH to reject the BBJ, it appears that Kahn did not see the email until Vrabic forwarded it to him on March 9, 2016. (See DX 120.)
Kahn testified that the February 12 phone call was a conference call with Vrabic and De Vos. (Tr. 99:6-18.) Kahn further testified that he was at his home in Miami at the time, and he recalled taking the call in his closet for greater privacy. (Tr. 103:11-19.) Kahn testified that during the call, he made the decision to terminate the APA because of the information relayed by Vrabic. (Kahn Aff. ¶¶ 13-14; Tr. 51:5-11.) Kahn also testified that he instructed Vrabic, who was then in San Antonio inspecting the BBJ, to return to South Florida; on the same call, he also told De Vos to terminate the APA. (Kahn Aff. ¶¶ 13-14; Tr. 60:21-61:6, 104:14-105:16.) De Vos similarly testified that Kahn decided to terminate the APA during the February 12 call and that he instructed her to have CH's attorneys at Greenberg Traurig prepare a notice rejecting the aircraft on or about that same date. (De Vos Aff. ¶ 49.) Both Kahn and De Vos maintained that the Tracinda jet had nothing to do with the termination, and that they did not even learn about the availability of that aircraft until after the decision to terminate the APA had been made on February 12. (De Vos Aff. ¶ 51; Kahn Aff. ¶ 16.)
Having observed the testimony of Kahn and De Vos first hand, and having also reviewed the exhibits and other testimony relating to the events in question, the Court readily concludes that both Kahn and De Vos's testimony regarding the February 12, 2016 termination decision was false, wholly unworthy of belief, and in large part perjurious. As a preliminary matter, although Kahn clarified that he was sure that the February 12 phone call was a single conversation with both Vrabic and De Vos on the line (Tr. 98:15-100:9, 127:25-128:4), neither De Vos nor Vrabic ever mentioned such a phone call in their depositions. In fact, although Kahn testified that Vrabic "did all the talking" (Tr. 104:8) on the purported phone call and told Kahn that the BBJ was not airworthy (Kahn Aff. ¶ 13; Tr. 126:12-15), Vrabic's deposition testimony reflects that he "had nothing to do with" the decision to reject the BBJ. (Vrabic Dep. Tr. 247:6-17.) Rather than informing Kahn that the BBJ was not airworthy and urging Kahn to terminate the purchase of the aircraft, Vrabic testified, without reference to a particular date, that Kahn "asked if there was any discrepancies that weren't getting fixed that could possibly allow us out of this contract." (Id. 238:22-239:2.)
Furthermore, De Vos, Vrabic, and other Crescent Heights representatives and agents took actions following this purported phone call that are wholly inconsistent with the testimony that the termination decision was made on February 12. For example, on February 15, 2016, Kahn requested that Vrabic conduct a comparison of the Tracinda jet and the BBJ a plane Kahn had supposedly decided to reject days before. Vrabic testified in his deposition that Kahn requested this comparison because "[w]hile waiting for [the BBJ's] inspection to be completed, [Kahn] had found another aircraft and wanted a comparison between the two because there was a possibility of moving forward on that aircraft." (Vrabic Dep. Tr. 230:22-231:16.) Thus, according to Vrabic, the decision to terminate the APA - in which he insisted he had no involvement - occurred well after Kahn learned of the Tracinda jet.
And despite Kahn's testimony that he terminated the deal and ordered Vrabic to come home to South Florida on February 12, the record reflects that Vrabic continued to engage in email communication with Aquila as late as February 15 about the search for the missing manuals. (DX 84.) On that day, he wrote that it was "[g]reat to hear" that the FAA had cleared the parties to omit reference to the manuals in the transaction materials (id.) - a response that would make no sense if Kahn had in fact terminated the APA three days before. Murphy also testified in his deposition that he and Vrabic were still working together in San Antonio when they learned that CH had rejected the BBJ on February 17th. (Murphy Dep. Tr. 161:5-12, 162:4-163:2.) Murphy testified that the rejection was "a huge surprise to me and Mr. Vrabic" (id. at 161:8-9) - again, a reaction that is impossible to square with Kahn's and De Vos's testimony that Vrabic participated in the February 12 call that killed the deal. Thus, Vrabic's own testimony, Murphy's testimony, and their contemporaneous conduct cannot be reconciled with De Vos's and Kahn's testimony that Vrabic told Kahn that the BBJ was not airworthy as of February 12 and that Kahn terminated the deal in response.
But there's more. Although Kahn testified that he directed De Vos to terminate the agreement on February 12, the record reflects that the termination notice was not sent until February 17, five days later. De Vos testified that the delay was due to CH's corporate attorneys traveling over President's Day Weekend. (Tr. 297:12-298:13.) But while Plaintiffs declined to call any witnesses from Greenburg Traurig regarding the genesis or timing of the termination notice, the notice itself appears to have been hastily prepared, reflecting no input whatsoever from outside lawyers. Indeed, the notice included a typographical error, requiring De Vos to scratch out the date of the APA's execution and replace it with the proper date. (PX 38.) In fact, the termination notice was a barely altered copy of the "Confirmation of Aircraft Acceptance" form that was attached to the APA as Exhibit C. (Compare id. with APA, Ex. C.) In short, it is difficult to imagine that outside counsel from a reputable law firm would have taken five days to fill in the blanks of an already existing form document. The much more plausible explanation is that Kahn did not direct De Vos to terminate the APA until February 17, 2016, and that the hastily-prepared termination form was sent only after CH had concluded negotiations to purchase the much cheaper - but substantially similar - Tracinda jet.
This conclusion is bolstered by De Vos's own conduct between February 12 and February 17. For example, the record reflects that De Vos continued to communicate with CH's lenders on the BBJ transaction well after February 12. (See DX 69; Tr. 302:24-305:18.) In fact, representatives of the lenders flew to San Antonio to inspect the aircraft on Monday, February 15 (Tr. 305:15-18) - three days after Kahn allegedly terminated the deal. Even after that inspection, the lender moved forward with the financing on the BBJ and continued to prepare loan documents, without any indication from CH that the deal had been scuttled. (Id. 306:22-310:15.)
Finally, as discussed above, it was not until February 18, 2016 that De Vos asked Murphy and Vrabic for "a list of all the items that ground the aircraft," specifically "only the items that are of airworthy concern." (JX 44.) This email suggests that there was no February 12 phone call during which Kahn and Vrabic concluded that the BBJ was not airworthy. Indeed, as noted above, Vrabic made no mention of a February 12 call in his deposition; to the contrary, he testified that the February 18 email was sent because CH was only then "looking to disengage with the purchase of [the BBJ]" in order to purchase the Tracinda jet. (Vrabic Dep. Tr. 243:5-19.)
In light of these inconsistent actions and statements, as well as credibility findings made on the basis of witness testimony at trial, the Court concludes that Kahn's and De Vos's testimony was a wholesale fabrication made up after the fact to justify their termination of the APA and purchase of a cheaper plane. Accordingly, the Court adopts Aquila's version of the facts, as described above, in full.
IV. CONCLUSIONS OF LAW
A. Jurisdiction and Applicable Law
The Court has jurisdiction over this action pursuant to 28 U.S.C. § 1332. Venue is proper in this district pursuant to the APA's forum-selection clause (APA § 25) and 28 U.S.C. § 1391. New York law applies to this claim pursuant to the APA's choice-of-law provision (APA § 25). See also Hartford Fire Ins. Co. v. Orient Overseas Containers Lines (UK) Ltd., 230 F.3d 549, 556 (2d Cir. 2000). Except where contractual provisions provide otherwise, Article 2 of the New York Uniform Commercial Code (the "UCC") governs this dispute because it is a sale of a "good" between merchants - in this case aircraft brokers. See Austrian Airlines Oesterreichische Luftverkehrs AG v. UT Fin. Corp., 567 F. Supp. 2d 579, 592 (S.D.N.Y. 2008) (applying Article 2 to a dispute involving a contract to purchase an aircraft); see also N.Y. U.C.C. §§ 2-102, 2-104, 2-105.
B. Principles of Contract Interpretation
The APA contains a merger, or integration, clause. (See APA § 15.) Such a clause "establish[es] the parties' intent that the Agreement is to be considered a fully integrated writing," and a "completely integrated contract precludes extrinsic proof to add to or vary its terms." Primex Int'l Corp. v. Wal-Mart Stores, Inc., 89 N.Y.2d 594, 599-600 (1997). Furthermore, the Court concludes that the language of the APA, while perhaps inartfully drafted, is clear. "[A] written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms." Quadrant Structured Prods. Co., Ltd. v. Vertin, 23 N.Y.3d 549, 559-60 (2014) (quoting Greenfield v. Philles Records, 98 N.Y.2d 562, 569 (2002)). Accordingly, the Court interprets the APA on the basis of the text contained within its four corners and does not resort to parol evidence.
As a result, the Court has not considered many of the parties' exhibits, and certain witness testimony, where that material would only be relevant to interpreting the APA in the event the Court concluded the contract was ambiguous.
C. Breach of Contract
Under New York law, a party suing for breach of contract must prove, "by a preponderance of the evidence, (1) the existence of a contract between itself and [the] defendant; (2) performance of the plaintiff's obligations under the contract; (3) breach of the contract by [the] defendant; and (4) damages to the plaintiff caused by [the] defendant's breach." Diesel Props S.R.L. v. Greystone Bus. Credit II LLC, 631 F.3d 42, 52 (2d Cir. 2011). Here, there is no dispute that the APA is a valid contract between the parties. However, the parties advance dueling claims of breach.
CH advances two theories of Aquila's breach. First, CH claims that Aquila's supposed refusal to repair the BBJ's dents, as evidenced by Vrabic's February 12, 2016 email, functioned as an anticipatory breach of the APA. Second, CH argues that because the BBJ was missing allegedly crucial manuals and was suffering from corrosion and dents - all of which constituted "airworthiness discrepancies" - CH was entitled to terminate the APA pursuant to Section 7.E and receive a refund of the $1.5 million deposit. Therefore, CH argues that Aquila breached the APA by refusing to release and refund the deposit.
For its part, Aquila argues that CH breached the APA, first, by purporting to reject the airplane before the inspection was complete - on the wholly fabricated pretext of non-airworthiness - and second, by failing to accept delivery when Aquila made the plane available in an airworthy condition.
Considering the plain text of the APA and the facts developed at trial, the Court has little difficulty concluding that it was CH - not Aquila that breached the APA. First, CH's anticipatory repudiation theory is a non-starter. "[U]nder the doctrine of anticipatory repudiation, where one party repudiates its contractual obligations 'prior to the time designated for performance,' the nonrepudiating party may immediately claim damages for total breach and be absolved from its obligations of future performance." Palmetto Partners, L.P. v. AJW Qualified Parners, LLC, 83 A.D.3d 804, 806-07 (quoting Long Island R.R. Co. v. Northville Indus. Corp., 41 N.Y.2d 455, 463 (2d Dep't 1977)); see also N.Y. U.C.C. § 2-610. However, "[i]n order to sustain a cause of action sounding in anticipatory repudiation . . . 'there must be [among other things] some express and absolute refusal to perform, or some voluntary act on the part of the individual which renders it impossible for him [or her] to perform.'" Id. at 807 (alterations in original) (quoting Ga Nun v. Palmer, 202 N.Y. 483, 489 (1911)); see also Di Folco v. MSNBC Cable L.L.C., 622 F.3d 104, 111-12 (2d Cir. 2010). Ross's February 12 email by no means constituted an "express and absolute refusal to perform." The email merely indicated that Ross disagreed with taking any action in response to the dents, which he believed to be inconsequential. (See DX 73; DX 120.) He even went so far as to say that "fill[ing] the holes with compound is not something that I am prepared to see performed on our aircraft while we own it." (Id.) However, the same email also made clear that Ross "would be prepared to fund the repairs" "once you commit to ownership." This is not a clear repudiation of the agreement. Rather, it is consistent with § 7(G) of the APA, which anticipates that CH may accept the BBJ "subject to [Aquila's] correction of discrepancy items" and provides that "all airworthiness discrepancy items shall be corrected at [Aquila's] sole cost and expense[.]" (APA § 7(G).) The Court concludes that this statement did not constitute a repudiation.
CH is likely aware of the weakness of this argument, because, while CH included it in its proposed conclusions of law and fact, CH did not even mention it in its closing arguments.
Second, CH's argument regarding airworthiness hinges on its position that, at the time of rejection, the BBJ suffered from an "airworthiness discrepancy, major corrosion, or major damage" within the meaning of the APA. In fact, both parties called experts to testify as to whether the plane exhibited airworthiness discrepancies or major damage. In light of that expert testimony as well as the factual testimony of Vrabic, Murphy, Ross and others, the Court has no hesitation concluding that CH failed to prove the existence of airworthiness discrepancies or major damage at the time of the repudiation. But the Court need not even reach that issue because CH also failed to follow the procedure set forth in the APA for a rejection of the BBJ pursuant to Section 7.
The APA provides that, "[u]pon completion of the Inspection," CH shall either (1) accept the BBJ as is, (2) accept the BBJ subject to Aquila's correction of certain issues, or (3) "reject the Aircraft but only in the event any airworthiness discrepancy, major corrosion, or major damage . . . is found during the Inspection." (APA § 7(D) (emphasis added).) Similarly, Subsection 7(E) makes clear that CH can only reject the BBJ "following the pre-purchase inspection in accordance with the provision of this Section 7 . . . ." (Id. § 7(E) (emphasis added).) Thus, under both Sections 7(D) and 7(E), a rejection of the BBJ as a result of issues uncovered during the inspection could properly take place only after the close of the "pre-purchase inspection" or "Inspection."
The APA defines the "Inspection" as "[t]he pre-purchase inspection and review of Aircraft Documents together with the test flight," and the "pre-purchase inspection" to "include a test flight of no more than two (2) hours of duration to be performed upon completion of the Current B-Check . . . ." (Id. § 7(C).) Both of these terms are thus contractually defined to include a test flight of the BBJ, and both parties agree that a test flight never occurred. (See, e.g., Tr. 291:9-11, 535:9-10.) Accordingly, CH's purported rejection was extracontractual and did not trigger the procedure outlined in Section 7.E. CH can point to no other instance of Aquila breaching the contract.
At trial, CH suggested that Section 7 is ambiguous since it employs the terms "Inspection" (capital i) and "pre-purchase inspection" (lowercase i) in the same section. However, this argument is unpersuasive, since, as noted above, "Inspection" was contractually defined to include the term "pre-purchase inspection."
In contrast, Aquila's breach of contract claim is simple, and meritorious. CH committed at least two breaches of the APA. First, CH's extra-contractual rejection of the BBJ on February 17, 2016 constituted "a definite and final communication of the intention to forego performance," and was thus a repudiation and breach of the agreement. Rachmani Corp. v. 9 E. 96th St. Apartment Corp., 211 A.D.2d 262, 267 (1st Dep't 1995); see also Palmetto Partners L.P.. 83 A.D.3d at 806-07. Second, CH failed to take possession of the airworthy BBJ when Aquila made it ready for delivery on March 18, 2016. The other elements of a breach of contract claim are also satisfied: Aquila performed under the APA by preparing the BBJ for a test flight and delivering it in a commercially reasonable timeframe. (See Tr. 512:14-513:3.) Furthermore, Aquila suffered damages as a result of CH's breach - it ultimately sold the BBJ for a lower price. That Kahn and De Vos resorted to fabricating a story to bolster their pretextual repudiation claim adds insult to injury, and, as discussed below, has serious consequences relevant to the Court's assessment of damages. But the Court need not rely on that finding to conclude that CH breached the APA.
D. Damages
Although the Court concludes that CH is liable to Aquila for breach of contract, the amount of damages to be awarded remains in question. CH argues that, even if the Court finds it in breach, Aquila's damages are contractually limited to the $1.5 million deposit. By contrast, Aquila argues that it is entitled to actual damages - in this case totaling $3.725 million - plus incidental damages and attorney's fees, a sum significantly greater than the deposit.
Where a contract - such as the APA - is governed by Article 2 of the UCC, remedies are considered cumulative "unless the [contractually specified] remedy is expressly agreed to be exclusive, in which case it is the sole remedy." N.Y. U.C.C. § 2-719(1)(b); see also id. official comment 2 ("[The UCC] creates a presumption that clauses prescribing remedies are cumulative rather than exclusive. If the parties intend the term to describe the sole remedy under the contract, this must be clearly expressed."). CH argues that the $1.5 million deposit is intended to function as liquidated damages - the sole remedy under the contract in case of breach. A close reading of the APA, however, does not support this conclusion.
The APA contains two provisions that could potentially govern damages liability with respect to the particular factual scenario at issue here. Pursuant to Section 17, the "default" provision, "[i]f [CH] defaults in the performance of its obligations, [Aquila's] remedy shall be to rescind this Agreement, whereupon [Aquila] shall be immediately paid by Escrow Agent the Deposit in full and without deduction for costs or fees[,] . . . and upon receipt by Aquila of such payment, this Agreement shall terminate and be of no further force or effect." (APA § 17 (emphasis added).) This language stands in stark contrast to the language elsewhere in that section discussing remedies in the event that Aquila, not CH, defaulted on its obligations under the APA: "If [Aquila] defaults in the performance of any of its obligations hereunder, [CH] shall have the right to terminate this agreement in accordance with the provisions of Section 29 (a) below, whereupon [CH] shall be immediately refunded . . . the Deposit." (Id. (emphasis added).) Thus, in the event of a breach by Aquila, Section 17 requires CH to terminate the contract in accordance with Section 29 of the APA as a prerequisite to recovery of the deposit. By contrast, in the event of a breach by CH, Section 17 imposes no such requirement on Aquila. That is, Aquila has the option of (1) pursuing relief via Section 29, or (2) rescinding the agreement pursuant to Section 17, with no explicit restrictions on its damages.
Pursuant to Section 29, the "termination" provision, the APA "may be terminated: (i) by [CH] if [Aquila] breaches any of its obligations under this Agreement, or fails to deliver the [BBJ] in the condition required by Section 6; [or] (ii) by [Aquila] if [CH] breaches any of its obligations under this Agreement, or if [CH] fails to accept delivery of the [BBJ] (provided that [Aquila] has then tendered the [BBJ] in the condition required hereunder and otherwise in accordance with the terms of this Agreement) . . . ." (Id. § 29.) Under this section, "[t]he terminating party shall give written notice of such termination to the other party and the Escrow Agent." (Id. (emphasis added).) Significantly, "[i]f this Agreement is terminated by [Aquila] pursuant to Section 29(ii) above, the Deposit shall be paid to [Aquila] as liquidated damages, without any further obligation on the part of [CH] as [Aquila's] . . . sole remedy." (Id. (emphasis added).) Section 2 of the APA further provides that "the Deposit shall be . . . paid to [Aquila] as liquidated damages should [CH] fail to take delivery of the [BBJ] . . . in accordance with the provisions of Section 29 hereof[.]" (Id. § 2(A).) Thus, if Aquila terminated the APA pursuant to Section 29, the deposit would function as Aquila's "sole remedy."
Under New York law, "if parties to a contract omit terms[,] . . . the inescapable conclusion is that the parties intended the omission. The maxim expressio unius est exclusio alterius, as used in the interpretation of contracts, supports precisely this conclusion." Quadrant Structured Prods. Co., 23 N.Y.3d at 560. Therefore, because Aquila's remedies under Section 17 are clearly distinct from Aquila's remedies under Section 29, and because Section 17 does not describe the deposit as "liquidated damages" (see APA § 2(A)) or as Aquila's "sole remedy" (see id. § 29), the Court must conclude that the distinction was intentional. Accordingly, in light of this language and the UCC's presumption that remedies are cumulative, the Court finds that Aquila was not limited to liquidated damages as its sole remedy in the event of a breach by CH. Put differently, the deposit would function as the sole remedy only if Aquila effected a termination of the APA under Section 29 - which clearly did not occur, as there is no evidence that Aquila ever invoked that provision or provided "written notice" of termination to CH and the Escrow Agent as required by that provision. (See id.)
The New York doctrine of election of remedies provides that:
When a party materially breaches a contract, the non-breaching party must choose between two remedies - he can elect to terminate the contract and recover liquidated damages or he can continue the contract and recover damages solely for the breach. A party can indicate that he has chosen to continue the contract by continuing to perform under the contract or by accepting the performance of the breaching party. Once a party elects to continue the contract, he can never thereafter elect to terminate the contract based on that breach, although he retains the option of terminating the contract based on other, subsequent, breaches.Bigda v. Fischbach Corp., 898 F. Supp. 1004, 1011-12 (S.D.N.Y. 1995); see also Lucente v. Int'l Bus. Machs., 310 F.3d 243, 258-59 (2d Cir. 2002); ESPN, Inc. v. Office of the Com'r of Baseball, 76 F. Supp. 2d 383, 387-88 (S.D.N.Y. 1999).
Here, while Aquila would have been entitled to terminate the APA pursuant to Section 29 in response to CH's repudiating breach, was not required to. Rather, Aquila could - as it did - elect to carry on performing its obligations under the agreement and sue for breach at a later date. There is no question that Aquila remediated the outstanding issues with the BBJ, made the BBJ available for a test flight, and made the BBJ available for CH to pick up. Aquila thus "elect[ed] to continue the contract" and can "recover damages solely for the breach." Bigda, 898 F. Supp. at 1011-12. Nor was Aquila required to terminate the APA pursuant to Section 29 after CH failed to accept delivery of the BBJ. Aquila could - as it did - "reserve[] all rights and remedies arising under applicable law and the [APA]" pursuant to Section 17 as a result of CH's "breach of its obligations under the [APA]." (JX 63.)
Since there is no suggestion that Aquila resold the BBJ in anything other than "in good faith and in a commercially reasonable manner" N.Y. U.C.C. §2-706(1), New York law provides that the applicable measure of damages is actual - or economic - damages incurred by Aquila as result of the breach. See N.Y. U.C.C. §§ 2-703, 2-706. These damages are calculated by subtracting the price at which CH contracted to purchase the BBJ - $27.725 million - from the price at which Aquila in fact sold the BBJ - $24 million - resulting in a difference of $3.725 million.
Notably, although the APA does include a clause that generally limits a party from recovering certain types of damages (see APA § 25), that clause neither (1) precludes the recovery of actual damages nor (2) specifies that the deposit should function as the sole remedy in the event of a breach. Specifically, Section 25 of the agreement provides that "[n]o party hereto shall be liable for any consequential damages or incidental damages, including without limitation, any damages for loss of use, loss of revenue, loss of profits or diminution of market value." (Id. (emphasis omitted).) This section does not prohibit the recovery of actual damages, nor does it mandate the payment of the deposit as liquidated damages in the event of a breach by CH - in fact, it does not mention the deposit at all. Obviously, the parties were capable of drafting such limitations had they wished to do so. (See id. § 29.)
Nevertheless, CH argues that the calculation of actual damages necessarily incorporates a "diminution of market value" of the BBJ, and that Section 25 therefore bars the recovery of actual damages. (See Tr. 629:9-15.) The Court rejects this interpretation of Section 25, concluding that the phrase "diminution of market value" was not intended to extend to the calculation of actual damages. This conclusion is informed by the ordinary rules of English grammar. That is, because the APA precludes recovery of "any consequential damages or incidental damages, including without limitation, any damages for . . . diminution of market value[,]" the phrase "diminution of market value" must be construed as a type of consequential or incidental damages. (APA § 25 (emphasis added).) While diminution of market value is not a common measure of consequential damages, it does appear in cases involving takings of real property. See, e.g., S. J. & J. Serv. Station, Inc. v. State, 74 A.D.2d 707, 707 (3d Dep't 1980); Matter of Town of Islip, 66 A.D.2d 854, 858 (2d Dep't 1978). Accordingly, the Court concludes that "diminution of market value" was meant to define a type of unrecoverable consequential and incidental damages, not as an absolute bar on using market price to calculate actual damages.
In addition to recovering the difference between the contract price and ultimate sale price, Aquila seeks to recover several additional classes of damages, including (1) costs incurred as a result of owning the BBJ between the delivery date of March 18, 2016 and the sale date of June 2, 2016; (2) legal fees related to the ultimate sale of the BBJ to Arquest; and (3) legal fees incurred while litigating this lawsuit against CH. (See DX 160; Vickers Aff. ¶ 41; Tr. 588:15-596:14; 1099:3-1100:14.) The Court determines that Aquila may not recover the first and second classes of damages, but may recover any legal fees incurred as a result of this litigation.
The first class of damages - those incurred after the date the BBJ was made available for delivery to CH and before it was sold to Arquest - includes: (1) renewal of BBJ software and manual subscriptions; (2) routine and non-routine maintenance; (3) pro rata insurance fees; (4) pro rata fees to maintain the BBJ's registration in the British Virgin Islands; and (5) employee expenses. (See DX 160; Tr. 588:15-596:14.) All told, these categories total $171,702. (See DX 160.) These expenses would generally be considered incidental damages under the UCC, which defines incidental damages as "any commercially reasonable charges, expenses or commissions incurred in stopping delivery, in the transportation, care and custody of goods after the buyer's breach, in connection with return or resale of the goods or otherwise resulting from the breach." N.Y. U.C.C. § 2-710. However, as discussed above, Section 25 of the APA precludes either party from recovering incidental damages, and Aquila is therefore barred from recovering the costs incurred as a result of owning the BBJ between March 18, 2016 and June 2, 2016.
Notwithstanding this clear prohibition on incidental damages, Aquila argues that a different section of the APA - the indemnification provision in Section 18 - supports its request for costs. The Court disagrees. Section 18 states that CH must indemnify Aquila "from and against any and all Claims [defined as "claims, losses, liabilities, judgments, or expenses"] against [Aquila] arising as a result of or in connection with use, operation, maintenance, storage, repair or alteration of the [BBJ] after Delivery . . . ." (APA § 18.) But the costs at issue here are not the kind of expenses that are typically considered the subject of indemnification. Rather, indemnification clauses have "traditionally been used and interpreted as extending only to third-party claims." Hensel Phelps Constr. Co. v. Cooper Carry Inc., 861 F.3d 267, 275 (D.C. Cir. 2017); see also Bank of New York Tr. Co. v. Franklin Advisers, Inc., 726 F.3d 269, 283 (2d Cir. 2013) ("[W]e are wary of the inference that indemnification clauses apply to litigation between the parties in the absence of express wording . . . . Where, as here, the contract does not 'exclusively or unequivocally refer[ ] to claims between the parties themselves,' we will presume that indemnification extends only to third-party disputes.") (quoting Hooper Assocs., Ltd. v. AGS Computers, Inc., 74 N.Y.S.2d 487, 492 (1989).).
Second, and more obviously, the indemnification provision on which Aquila relies only takes "effect from Delivery," and requires CH to indemnify Aquila only for "Claims against [Aquila] arising . . . after Delivery." (APA § 18.) The APA defines "Delivery" to mean "the execution and delivery by [CH] to [Aquila] of an Aircraft Delivery Receipt substantially in the form of Exhibit D, and payment of the Purchase Price by [CH] to [Aquila] in accordance with the terms hereof . . . ." (Id. § 5.) Obviously, since "Delivery" never occurred (see, e.g., JX 63), the indemnification clause does not apply.
Nor may Aquila recover the $23,437.81 it incurred in legal costs in connection with the sale of the BBJ to Arquest. (See DX 160.) As expenses incurred in the resale of the BBJ, these costs also fall under the UCC's definition of incidental damages. See N.Y. U.C.C. § 2-710. Accordingly, these legal fees are contractually forbidden incidental damages, which Aquila cannot recover. While Aquila contends that CH's pretextual breach of the APA to buy the cheaper Tracinda jet constituted the "bad faith" necessary to "pierce" a liability-limiting contractual provisions pursuant to the UCC, see, e.g., Sommer v. Fed. Signal Corp., 79 N.Y.2d 540, 554 (1992), the law is clear that a decision to breach a contract motivated solely by economic self-interest is insufficient under New York law to nullify contractual terms. See, e.g., Deutsche Lufthansa AG v. Boeing Co., No. 06-cv-7667 (LBS), 2007 WL 403301, at *3 (S.D.N.Y. Feb. 2, 2007); Metro. Life Ins. Co. v. Noble Lowndes Int'l, 84 N.Y.2d 430, 439 (1994).
Finally, Aquila seeks to recover the more than $2 million dollars it has spent litigating this case. (See DX 160; Tr. 593:2-11.) Aquila argues that such an award is appropriate in light of the bad faith demonstrated by CH throughout this litigation. Generally, it "is well settled in New York that a prevailing party may not recover attorneys' fees from the losing party except where authorized by statute, agreement or court rule." U.S. Underwriters Ins. Co. v. City Club Hotel, LLC, 3 N.Y.3d 592, 597 (2004). However, "[u]nder its inherent powers to supervise and control its own proceedings, a district court has the authority to award attorney's fees to the prevailing party when the losing party 'has acted in bad faith, vexatiously, wantonly, or for oppressive reasons.'" Eisemann v. Greene, 204 F.3d 393, 395 (2d Cir. 2000) (quoting F.D. Rich Co. v. United States ex rel. Indus. Lumber Co., 417 U.S. 116, 129 (1974)). Before awarding such attorneys' fees, the Court "must find clear evidence that (1) the offending party's claims were entirely without color, and (2) the claims were brought in bad faith - that is, 'motivated by improper purposes such as harassment or delay.'" Id. at 396 (quoting Schlaifer Nance & Co v. Estate of Warhol, 194 F.3d 323, 336 (2d Cir. 1999)). "The test is conjunctive and neither meritlessness alone nor improper purpose alone will suffice." Sierra Club v. U.S. Army Corps of Eng'rs, 776 F.2d 383, 390 (2d Cir. 1985).
A claim is without color "when it lacks any legal or factual basis." Id. CH's claim so qualifies. As noted above, CH boldly commenced this suit on the basis of false assertions in order to fraudulently recover a deposit to which it was not entitled under the APA. Thus, CH's breach of contract claim lacked any factual basis from the outset and amounted to a conscious fraud on the Court. Accordingly, the Court finds that CH's claim is without color.
"While there is no precise definition of 'improper purpose' it may be evidenced by conduct occurring either before or during trial." Sierra Club, 776 F.2d at 390. Again, the Court has no doubt that CH's behavior with regard to this litigation was "motivated by improper purpose" and marked by bad faith. Again, CH not content with the windfall associated with purchasing the cheaper Tracinda jet - launched this breach of contract action to also fraudulently recover its $1.5 million deposit. In doing so, it asserted facts that those responsible for bringing suit clearly knew to be false. CH's bad faith is further underscored by the fact that its two corporate witnesses - Kahn and De Vos - perjured themselves on the stand, concocting a narrative of a February 12 call in order to pretend that their purported termination of the APA was something other than a pretext to purchase the cheaper Tracinda jet and recover the $1.5 million deposit.
In light of CH's lies, baseless claims, and improper motives, the Court concludes that Aquila may recover its reasonable attorneys' fees, costs, and expenses incurred in defending this action. See, e.g., Shangold v. Walt Disney Co., No. 03-cv-9522 (WHP), 2006 WL 71672 (S.D.N.Y. Jan. 12, 2006), aff'd 275 F. App'x 72 (2d Cir. 2008) (awarding attorneys' fees to defendants where plaintiffs "imposed substantial burdens on Defendants including . . . [the] distraction of defending this litigation" because plaintiffs "fabricated evidence and manipulated the judicial process" in a manner "calculated to advance their claims.").
V. CONCLUSION
For the reasons set forth above, the Court concludes that: (1) CH has failed to prove its breach of contract claim by a preponderance of the evidence; (2) Aquila has proven its breach of contract claim by a preponderance of the evidence; (3) Aquila is entitled to a judgment in the amount of $3,725,000, including the $1,500,000 deposit - $1,499,000 of which is being held by the Court in the Court Registry Investment System (Doc. No. 26), and $1,000 of which is already in Aquila's possession (Doc. No. 25); and (4) Aquila is entitled to its reasonable attorneys' fees, costs, and expenses incurred in defending this action. Aquila is furthermore entitled to prejudgment interest at the annual rate of 9%, dating from the delivery date of March 18, 2016, on the actual damages collectible from CH. See N.Y. C.P.L.R. §§ 5001, 5004.
Aquila shall file its request for attorneys' fees, costs, and expenses no later than April 23, 2018, and CH shall respond by May 14, 2018. The Clerk of Court is respectfully requested to release the deposit held in the Court Registry Investment System to Aquila and to close this case. SO ORDERED.
/s/_________
RICHARD J. SULLIVAN
United States District Judge Dated: March 30, 2018
New York, New York
* * *
Plaintiff CH Acquisitions 2, LLC is represented by Aaron Benjamin Lauchheimer, Kristin T. Roy, and Yehuda David Scharf of Morrison Cohen, LLP, 909 Third Avenue, New York, New York 10022.
Defendants Aquila Aviation L.P. and Wells Fargo Bank Northwest, National Association are represented by Jacob S. Pultman and Michael Franklin Westfal of Allen & Overy LLP, 1221 Avenue of the Americas, New York, New York 10020.