Case 1:10-cv-00223-DAE-KSC

Document 1

Filed 04/19/10

Page

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or.

ptx
CARLSMITH BALL LLP ANDREW L. PEPPER ERIKA L. LEWIS ASB Tower, Suite 2200

ORIGINAL
5141-0 8580-0

FILED IN THE
UNI

Bishop Street Honolulu, HI 96813

Tel No. 808.523.2500 Fax No. 808.523.0842 apepp er@c arlsmith. corn

1001

P atLPS'clikrBaErlI,

TEDois IARpTRIcEr?)Bur

elewis@carlsrnith.corn
Attorneys for Plaintiff BOMBARDIER, INC.
IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF HAWAI`I

BOMBARDIER, INC.,

Canadian

CIVIL

corporation,
Plaintiff,
VS.

CA6.100_0223AkE,

KSC

COMPLAINT; SUMMONS

HAWAII ISLAND AIR, INC. dba ISLAND AIR, a Delaware corporation;

Defendant.

COMPLAINT

Plaintiff Bombardier, Inc.

("Bombardier") alleges
PARTIES

and

avers as

follows:

1.

Bombardier is

Canadian

corporation with its principal place

of business in

Montral, Qubec, Canada.

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Case 1:10-cv-00223-DAE-KSC

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2. dba Island Air

On information and belief, Defendant Hawaii Island

Air,

Inc.

("Island Air") is

Delaware

corporation with its principal place of

business in Honolulu, Hawai`i.

JURISDICTION & VENUE

3.
28 U.S.C.

This Court has

subject matter jurisdiction over this

action under

1332 because the amount in controversy exceeds

among the

$75, 000 and there is

complete diversity of citizenship

4.

parties.
1391(a) and
district,
a

Venue is proper in this Court under 28 U.S.C.

(c) because Island Air's principal place

substantial part of the events
or

of business is within this judicial

omissions

giving rise

to the claim occurred in this

district, and a substantial part of the property that is the subject of the action was
is situated in this district.

or

STATEMENT OF FACTS The Aircraft

5. On
or

about

February 24, 2006, Island Air entered into

a

Lease

Agreement with Wilmington Trust Company,

Delaware

banking corporation,

(the "Wilmington Trust"), in which Wilmington Trust served trustee under a

Trust

Agreement for Bombardier Capital Inc., Bombardier's subsidiary and

predecessor-in-interest.

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6.

On

or

about March 3, 2006 Island Air and Wilmington Trust,

a

as

Trustee under the Trust 7.

Agreement, entered into

Lease

Supplement.

Under the Lease

Agreement and Lease Supplement, Island Air

leased the

following:
Manufacturer
FAA

Registration
No.

Manufacturer's Model
DHC-8-102

Manufacturer's Serial No.

373

Airframel
Engine
1

de Havilland Pratt &

N979HA

PW-121
PW-121 14SF-7 14SF-7

PCE-121346
PCE-121320

Whithey
Engine 2 Propeller
1 Pratt &

Whitney
Hamilton Standard Hamilton Standard MFG-940406 MFG-940407

Propeller
2

8.

Under the Lease

to

Agreement, Island Air was

successors or

to pay basic rent

("Basic Rent")
the Aircraft

Wilmington Trust or its

assigns (the "Lessor")

for

throughout the Lease Agreement term in amounts set forth in the Lease

Supplement.
9.

Under the Lease

Agreement, Basic Rent was USD $29, 000 per

month.

The Airframe, Engine 1, to herein as the "Aircraft."

Engine 2, Propeller

1 and

Propeller 2

are

referred

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10.

For any

nonpayment of rent, Island Air was required

to the Prime Rate

to pay

interest at
annum

fluctuating rate per annum equal

plus
or

1.5% per

computed on the basis of actual days elapsed over

may be.

365-

366-day year,

as

the

case

11.
Lease

Island Air

was

to remain in

possession of the Aircraft until the

2009.

Agreement's Expiration Date, which was January 28,

12.

Upon expiration of the Lease Agreement term, Island Air was

required contractually to return the Aircraft, according to numerous specified

requirements, including the following:
a.

"the Aircraft shall be in the

same

general
as on

and
the

good Delivery

operating

condition and appearance

Date, with all of the equipment, components and systems

functioning in accordance with their intended use,

ordinary wear excepted and with such alterations,

modifications and additions
under the Lease b.
c.

as

shall have been

permitted"

Agreement;

the Aircraft shall be clean; the Aircraft shall

comply with the manufacturer's

original specifications;

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d.

"the Aircraft shall be

airworthy and shall have,

and be in

compliance with,

current

Airworthiness Certificate

issued by the FAA...

e.

the Aircraft shall be in

compliance with all mandatory

affecting the Aircraft;
passenger

FAA directives and instructions

f.

the Aircraft shall be in the

same

configuration

and condition, and "shall have installed thereon the

Engines

and

Propellers,
or

or

Parts installed thereon

on

the

Delivery Date

replacements therefor as permitted by

the terms hereof;"

g.

the Aircraft shall be free and clear of all Liens;

h.

Island Air shall have

performed systems

and structural

checks/inspections under its FAA-approved maintenance

program;

i.

landing gears
Delivery;

shall have the

same

cycles remaining as

at

j.
k.

all tires and brakes shall be in serviceable condition;

Engines

and

Propellers shall have

accumulated

no more

hours and/or

cycles

than at

Delivery.

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13. among other

Under the Lease

Agreement,

an

Event of Default

includes,

things,

failure to made rent payments and failure to

or

perform or

observe covenants,

conditions,

agreements under the "Operative Documents,

defined

as

the Lease

Agreement,
"2

its
a

supplements,

document entitled "Sub-Lease

Participation Agreement,

and

document entitled "Head Lessee Trust

Agreement."
14.
If an Event of Default takes

place, the Lessor3

may provide

written notice to Island Air that the Lease

Agreement is in default, and the Lessor

or

"may do

one or more

of the

following with respect to all Engines or Propellers

as

any part of the

Airframe and any

or

all of the

Lessor, in its sole

discretion, shall elect:"

(a)
Lease;

Lessor may cancel

or

terminate the Term of this

Lessor may demand that [Island Air]... upon written demand of Lessor and at [Island Air's] expense

(b)

and risk, forthwith assemble and return or store the [the Aircraft, the Airframe, the Engines and/or the Propellers (the "Items of Equipment")] and [accompanying]
2

The Sub-Lease Participation Agreement was entered into on February 24, 2006 between Island Air, Wilmington Trust, and Bombardier's subsidiary and predecesor-in-interest, Bombardier Services Corporation. about February 24, 2006, Wilmington Trust, as trustee of lessee, assigned its interest in the Lease Agreement to trustee of Owner, Wells Fargo Northwest, a national banking association ("Wells Fargo"). Thus, Wells Fargo became Lessor under the Lease Agreement. Wilmington Trust notified Island Air of the assignment in or around March, 2006.
On
or
3

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documentation... to Lessor....; or Lessor may enter upon the premises where any Item of Equipment or item of... documentation is located and take immediate possession of and remove it (together with any engine, propeller or part which is not an Engine, a Propeller, or a Part but which is installed on the Airframe or an Engine.

proceed by appropriate court action or actions, either at law or in equity, to enforce performance by [Island Air] of the applicable covenants of this Lease and to recover damages for the breach thereof; (d) with or without taking possession thereof, Lessor may sell or cause to be sold all or any part of any Item of Equipment at public or private sale..
(c)
Lessor may

exercise any other right or remedy which may be available to it under applicable law, including without limitation, the Cape Town Convention.

(f)

15.

Under the Lease

Agreement, Island Air is further liable:

for any and all unpaid Rent and for all reasonable out-of-pocket expenses incurred by reason of the occurrence of any Event of Default or the exercise of Lessor's remedies with respect thereto, including all reasonable out-of-pocket expenses incurred in connection with the

repossession, storage, transportation,

maintenance, insurance of and return of any Item [of

Equipment] in accordance with [this Lease Agreement] or in placing such Item [of Equipment] in the condition and with Airworthiness Certificates as required by [this Lease Agreement].
16.

Furthermore, under the Lease Agreement, Island Air

acknowledged and agreed that the Lease Agreement was subordinated to a Head
Lease

Agreement dated June 30, 1994.

7.

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Island Air Breached the Operative Documents

17.

On

January 9, 2009, Bombardier's subsidiary and predecessor-

in-interest, Bombardier Services Corporation ("Bombardier Services") provided

Island Air with written notice that the Lease

Agreement was

to

expire

on

January

28, 2009. Bombardier Services further informed Island Air that it was in default
due to failure to pay Rent for

August 2008 and December 2008, and as

result

owed USD $58, 000 in past due Rent.

18.

Island Air failed to surrender

or

return the Aircraft upon lease

termination

on

January 28, 2009.

On

19.

April 13, 2009, Bombardier provided Island Air with further

requested that

notice that the date of surrender and return had passed. Bombardier Island Air pay rental amounts of USD

$67, 861.65 per month as damages in

accordance with the Lessor's contractual

obligations under the Head Lease.4

In

addition, Bombardier warned a notice of default would be forthcoming if Island

Air failed to return the Aircraft in
a

state of repair that would

satisfy the

conditions

of the Lease

Agreement.

This amount was later reduced through negotiation between Bombardier and owner/head lessor Avmax International Aircraft Leasing, Inc., to $45, 000 per month. These efforts by Bombardier to mitigate its damages incidentally benefited Island Air.

4815-6435-9429.1.063395-00001

8.

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20.

On

August 19, 2009, Bombardier Services issued a Notice of

Payment to Island Air, demanding that Island
2009.

Default and contractual Demand for

Air pay USD

$130, 000 by August 24,

21.

Island Air failed to pay the amount demanded

by August 24,

2009,

or on

any date thereafter. 22. To

date, Island Air has failed to pay any outstanding

amounts

due.
23.

The Aircraft

was

surrendered to Bombardier

on or

about

November 13, 2009.

24.

The Aircraft

was

surrendered to Bombardier in

a non-

operational state of disrepair and in material non-compliance with the Lease

Agreement's return conditions.
to

Bombardier

currently estimates

that the total cost

bring the Aircraft into the

as on

same

general

and

good operating condition and

appearance

the

Delivery Date will be approximately USD $2, 213, 000,

subject to upward adjustment as ongoing inspection of the Aircraft reveals further

contractual return status deficits.
COUNT I (Breach of Contract)
25.

Bombardier realleges and reasserts all

prior paragraphs.

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26.

Island Air breached the Lease

Agreement by failing to return

termination
on

the Aircraft to Bombardier's

2009. 27. On

possession upon lease

January 28,

April 13, 2009, Bombardier notified Island Air

Notice of

Default would be

forthcoming if Island Air failed to return the Aircraft in

satisfactory condition under the terms of the Lease Agreement.

28.
On

August 19, 2009, Bombardier Services issued a Notice of

Payment to Island Air.
on or

Default and Demand for

29. 2009 in
a

Island Air surrendered the Aircraft

around November 13,

non-operational

state of disrepair and in material

non-compliance with

the Lease

Agreement's return conditions.

30.

Bombardier is entitled to

damages

from Island Air in the form

of recovery of unpaid rents.

31.

Bombardier is entitled to

damages

from Island Air in the form

of recovery of repair costs to the Aircraft.

32.

Island Air

owes

Bombardier additional compensatory and

consequential damages in an amount to be determined at trial.

33.

Island Air further

owes

Bombardier the costs,

charges

and

expenses incurred in
terms of the Lease

collecting the outstanding amount owing and enforcing the

fees.

Agreement, including reasonable attorneys'

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WHEREFORE, Bombardier asks that this Court

favor and

enter judgment in

its

against Island Air for the following:

a.

an

amount amount

equal to all past due rents;

b.
no

an

equal to damages

for cost of repairs to the Aircraft of

less than USD

c.

$2, 213,000;
an

amount

equal to

all costs of enforcement,

including

reasonable

attorneys' fees, costs, and all out-of-pocket expenses incurred by

as a

Bombardier

result of Island Air's defaults and/or other actions

as

described

herein;
d.

all other

damages

as

provided in the Lease Agreement,

Head Lease

Lease

Supplement,

Sub-Lease

Participation Agreement,

Participation

Agreement, and Head Lease, and/or as may be proven at trial;

e.

pre-judgment and post-judgment interest;

and

f.
DATED:

such further relief as the Court deems just and proper.

Honolulu, Hawai`i, April

y, 2010.

0610=-'
ANDREW L. FEI-TEK

ERIKA L. LEWIS

Attorneys for Plaintiff

BOMBARDIER, INC.

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Case 1:10-cv-00223-DAE-KSC

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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF HAWAPI

BOMBARDIER, INC.,

Canadian

CIVIL NO.

corporation,
Plaintiff,
VS.

SUMMONS

HAWAII ISLAND AIR, INC. dba ISLAND AIR, a Delaware corporation;

Defendant.

SUMMONS TO: HAWAII ISLAND AIR, INC. dba ISLAND AIR 99 Kapalulu Place Honolulu, HI 96819
A lawsuit has been filed

against you.
summons on

Within 21
you received agency,
or an

days
or

after service of this

you

(not counting the day

United States

it)

60
or

days

if you

are

the United States

or a

officer

employee

of the United States described in Fed. R. Civ. P. the

12(a)(2)

or

(3)

you must

serve on

plaintiff an answer to the attached

complaint or a motion under rule

Answer
name or

12 of the Federal Rules of Civil Procedure. The

on

motion must be served

are:

the

plaintiff or plaintiff's attorney,

whose

and address

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ANDREW L. PEPPER, ESQ. ERIKA L. LEWIS, ESQ.

Carlsmith Ball LLP ASB Tower, Suite 2200 1001 Bishop Street Honolulu, HI 96813
If you fail to

respond, judgment by default will be entered against you

for

the relief demanded in the with the court.

DATED:

complaint.

You also must file your

answer or

motion

Honolulu, Hawai`i, April

2010.

SU
CLERK

e-4, OF3Ecr NAT

1

COURT

(.b-,

Deputy C1er1si, District

Aln4=Ki* co",, pi
OF
n

ai

4815-6435-9429.1.063395-00001

2.

Case 1:10-cv-00223-DAE-KSC
#ta.IS 44

Document 1-2

Filed 04/19/10

Pa

1 of 1

(Rev. 12/07)

CIVIL COVER SHKE

0 ()a'

OAE

KSO

The JS 44 civil cover sheet and the information contained herein neither replace nor supplement the filing and service ofpleadings or other papers as required by law, except as provided of by local rules of court. This form, approved by the Judicial Conference of the United States in September 1974, is required for the use ofthe Clerk of Court for the purpose initiating the civil docket sheet. (SEE INSTRUCTIONS ON THE REVERSE OF THE FORM.)

I.

(a)

PLAINTIFFS

BOMBARDIER, INC.

DEFENDANTS HAWAII ISLAND AIR, INC. dba ISLAND AIR

(b) County of Residence of First Listed

(EXCEPT

Plaintiff

Montreal, Canada
CASES)

County of Residence of First Listed Defendant

(IN
NOTE: U.S. PLAINTIFF CASES

Honolulu, Hawaii
ONLY)

IN U.S. PLAINTIFF

IN LAND CONDEMNATION CASES, USE THE LOCATION OF THE

LAND INVOLVED.

(c) Attorney's (Finn Name, Address, and Telephone Number) Andrew L. Pepper, Erika L. Lewis (Carlsmith Ball LLP) 1001 Bishop St., #2200, Honolulu, HI 96813
CPU 15.51
C. U5JO.,JL.,J.L.,JLSU

Attorneys (If Known) Unknown

000 m,y2 oann

II. BASIS OF JURISDICTION

O I U.S. Government

(Place

an

"X" in One Box

Only)

III. CITIZENSHIP OF PRINCIPAL PARTIES(Place an "X" in One Box for Plaintiff and One Box for Defendant) (For Diversity Cases Only)
PTF DEF PTF DEF 4

0 3 Federal Question

Plaintiff

(U.S.

Government Not

Party)

Citizen of This State

0 1

0 1

Incorporated or Principal
of Business In This State

Place

tg

0 2

U.S. Government

18I 4

Diversity (Indicate Citizenship of Parties in

Item

Citizen of Another State

0 2

Incorporated and Principal Foreign Nation

Defendant

III)
Citizen
or

Place of Business In Another State

0 5

Subject of a

DI

0 6

INT

IV A TT TDU

!YE' CI TIT

fr.

"V"

/1

I
O O O O

coNTRAcr
110 Insurance

TORTS
PERSONAL INJURY

FORFEITURE/PENALTY
PERSONAL INJURY

BANKRUPTCY 0 422

OTHER STATUTES

120 Marine 130 Miller Act

310 315
320

140 Negotiable Instrument O 150 Recovery of Overpayment 0 & Enforcement ofJudgment 0 O 151 Medicare Act O 152 Recovery of Defaulted 0 Student Loans

Airplane Airplane Liability

Slander

0 Product 0

362 Personal

Injury

Assault, Libel &

0

330 Federal 340 Marine

Employers' Liability

Med. Malpractice 365 Personal Injury Product Liability 368 Asbestos Personal Injury Product

Liability
PERSONAL PROPERTY 0 370 Other Fraud 0 371 Truth in Lending 0 380 Other Personal

0 610 Agriculture 0 620 Other Food & Drug 0 625 Drug Related Seizure of Property 21 USC 881 0 630 Liquor Laws 0 640 R.R. & Truck 0 650 Airline Regs. 0 660 Occupational

Appeal 28

USC 158

0 423 Withdrawal 28 USC 157

0 400 State Reapportionment 0 410 Antitrust 0 430 Banks and Banking 0 450 Commerce
0 0 0
460

PROPERTY RIGHTS 0 820 Copyrights 0 830 Patent 0 840 Trademark

Deportation
Corrupt Organizations

470 Racketeer Influenced and 480 Consumer Credit

Safety/Health
0 690 Other

O 153

0 (Excl. Veterans) Recovery of Overpayment

of Veteran's Benefits Stockholders' Suits Other Contract Contract Product Liability Franchise

345 Marine Product

Liability
350 Motor Vehicle 355 Motor Vehicle

0
0 0

LABOR 0 710 Fair Labor Standards

Act

O 160

190

O 195 O 196

Product Liability 360 Other Personal

Property Damage 0 385 Property Damage Product Liability

PRISONER PETITIONS
0
510 Motions to Vacate

0 720 0 730

Labor/Mgmt. Relations Labor/Mgmt.Reporting

& Disclosure Act

Injury
CIVIL RIGHTS

REAL PROPERTY 0 210 Land Condemnation 0 220 Foreclosure 0 230 Rent Lease & Ejectment 0 240 Torts to Land 0 245 Tort Product Liability 0 290 All Other Real Property

0
0

441
442

0
0 0 O

443

Voting Employment Housing/

Sentence
Habeas

0 740 Railway Labor Act 0 790 Other Labor Litigation n 791 Empl. Ret. Inc.

SOCIAL SECURITY 0 861 HIA (13951T) 0 862 Black Lung (923) 0 863 DIWC/DIWW (405(g)) 0 864 SSID Title XVI 0 865 RSI (405(g)) FEDERAL TAX SUITS
0 870 Taxes
or

0 490 Cable/Sat TV 0 810 Selective Service 0 850 Securities/Commodities/

Exchange
0
0
875 Customer

Challenge

12 USC 3410 890 Other Statutory Actions 0 891 Agricultural Acts 0 892 Economic Stabilization Act 0 893 Environmental Matters 0 894 Energy Allocation Act 0 895 Freedom of Infonnation Act

Corpus:

Security Act
IMMIGRATION 0 462 Naturalization Application 0 463 Habeas Corpus Alien Detainee 0 465 Other Immigration

0 871

(U.S. Plaintiff Defendant) IRSThird Party

Accommodations 444 Welfare 445 Amer. w/Disabilities

Employment
446 Amer. w/Disabilities

0 0 0 0 0

530 General

26 USC 7609

535 Death 550 Civil

Penalty

900Appeal
to

540 Mandamus & Other

of Fee Determination Under Equal Access

Rights

Justice

555 Prison Condition

0 950

Constitutionality of
State Statutes

Other

440 Other Civil

Rights

Actions

V. ORIGIN CR 1 Original

(Place an "X" in One Box Only) II 3 El 2 Removed from

State Court

Proceeding

Remanded from Appellate Court

171 4 Reinstated or

Reopened filing (Do

from n, another district (specify)

jurisdictional

Transferred

Lj 0

Multidistrict L itigation

0 7

Appeal to District Judge from Magistrate

Judgment

VI. CAUSE OF ACTION I VII.

'Cite

the U.S. Civil Statute under which you are

.1 -1no

not cite

statutes unless

diversity):

onii c rs,.

!Brief description

of cause:

REQUESTED
COMPLAINT:

IN

Plaintiff seeking damages against Defendant for breach of contract and failure to return leased aircraft. CHECK YES only ifdemanded in complaint: DEMAND II CHECK IF THIS IS A CLASS ACTION
UNDER F.R.C.P. 23 JURY DEMAND:

0 Yes

a No

VIII. RELATED

CASE(S)

IF ANY

(See instructions):

JUDGE
SIGNATURE OF

DOCKET NUMBER

DATEAPH 1 9 2010
FOR OFFICE USE ONLY

ATTC_..............abLEA&WMKORD

RECEIPT

AMOUNT

APPLYING IFP

JUDGE

MAG. JUDGE