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AH Aero Services, LLC v. Heber City

United States District Court, D. Utah, Central Division

June 6, 2018

AH AERO SERVICE, LLC dba OK3 AIR, Plaintiff,
v.
HEBER CITY, a municipal corporation, PAUL BOYER, an individual, in his individual and official capacity; DENIS GODFREY, an individual, in his individual and official capacity Defendants.

          ORDER AND MEMORANDUM DECISION

          TENA CAMPBELL U.S. District Court Judge

         AH Aero Service, LLC (OK3 AIR), a service provider for the Heber City airport, has filed this lawsuit against Heber City (the City) and the two most recent Airport Managers, Paul Boyer and Denis Godfrey (collectively, Defendants) for infringing upon their first amendment rights. OK3 AIR also seeks various breach of contract remedies and asserts a tortious interference with economic relations claim.

         Defendants have filed two separate motions to dismiss.[1] OK3 AIR's action for failure to state a claim. The court finds that OK3 AIR's complaint has sufficient factual content to move forward. Accordingly, the court denies both of Defendants' motions.

         BACKGROUND[2]

         The relationship between the parties began with OK3 AIR entering a Long-Term Ground-Lease Agreement (the Agreement). OK3 AIR became the airport's full-service Fixed Base Operator (FBO). As an FBO, OK3 AIR had various responsibilities in addition to paying rent. For example, OK3 AIR provided airport customers with aircraft maintenance, flight training, ramp parking, deicing, overnight hanger space, and weekly safety inspections. It also maintained the City's airport buildings and utilities. It ensured that restrooms are clean and vending machines stocked. One of the most important services OK3 AIR provided, and the most lucrative, was selling fuel.

         The City had certain duties owed to its tenants. It maintained the runway, taxiway, and beacon lights, among other duties. The City created an Airport Advisory Board (AAB) to resolve issues arising at the airport. And the City appointed an airport manager for handling daily issues, who reported directly to the City Council.

         To receive continuous funding from the Federal Aviation Administration (FAA), the City had to comply with FAA regulations. In order to ensure compliance with FAA regulaitons, the City developed and adopted the “Minimum Standards and Requirements of the Conduct of Commercial Aeronautical Services and Activities at the Heber City Municipal Airport” (Minimum Standards). The Minimum Standards lay out the obligations that must be met by any party seeking to become a commercial operator at the airport. The City must apply the Minimum Standards equally to all commercial operators.

         The Agreement described when the Minimum Standards could be amended. Changes to FAA regulations would mandate amendments to the Minimum Standards. Similarly, changes to state law that affected the airport would require amendments. OK3 AIR and the City could jointly amend the Minimum Standards. Finally, the City could unilaterally amend the Minimum Standards to ensure safety.

         OK3 AIR and the City had agreed to amend the Minimum Standards in 2009 and in 2010. OK3 AIR points to this as evidence that unless there was a change to FAA regulations, state laws or safety concerns existed, the City had to seek OK3 AIR's approval before amending the Minimum Standards.

         2014 Revisionary Lease Debate

         According to OK3 AIR, the relationship with the City began to sour in 2014. The members of the 2014 AAB, in consultation with a professional aviation consultant, developed a proposal for revisionary leases. These reversionary leases would revert to the City at the end of their terms. And OK3 AIR's president, Mr. Nadim AbuHaidar, supported the proposal because he thought it was in the best interest of the city.

         Numerous owners of hangar leaseholds, including Mr. Boyer, did not approve the proposal and consequently, they blocked it. Then they convinced the City to remove Mr. AbuHaidar from the AAB because, they argued, he had a “conflict of interest.” Consequently, OK3 AIR is without a voice on the AAB.

         2016 Amendments to the Long-Term Ground-Lease Agreement

         In 2016, the City, without OK3 AIR's consent, sought to amend the 2010 Minimum Standards. The 2016 amendments would lower the financial investment new commercial operators would have to make to begin business at the airport. The City stated that it had done this to increase competition at the airport. OK3 AIR objected to the 2016 amendments throughout the year.

         Before the 2016 Minimum Standards were adopted, OK3 AIR notified the City that it did not consent to the new amendments. To bolster its position, OK3 AIR hired an aviation expert to review the 2010 Minimum Standards. The preexisting 2010 Minimum Standards, according to the expert, complied with state and federal rules and regulations and with FAA requirements. Further, the 2016 amendments did not address any legitimate safety issues. According to the expert, safety at the airport would be decreased if the 2016 Minimum Standards went into effect.

         Even so, the City, citing safety concerns and changes to FAA regulations as justification, adopted the 2016 Minimum Standards in October of 2017. The 2016 Minimum Standards allowed the City to offer waivers and variances to commercial operators at the airport. As part of those waivers and variances, the City could offer a Specialized Aviation Service Operations Agreement (SASO) to operators. A SASO allows an operator to self-fuel rather than purchase fuel from OK3 AIR. Profits from the sale of fuel allowed OK3 AIR to provide other services at the airport.

         Specialized Aviation Service Operations Agreements

         1. Mr. Hansen's SASO

         So far, the City has issued two SASOs: one to Dave Hansen and one to Barry Hancock. The City granted a SASO to Mr. Hansen in May of 2016. He was not a hangar owner. Instead, he sublet a hangar and operated Dave's Custom Sheetmetal, a commercial aircraft maintenance business at the airport. At the time of his application, he had not paid rent for the hangar for two years. And he had not maintained his insurance, as required by his previous SASO. His previous SASO had expired.

         OK3 AIR alerted the City to problems with Mr. Hansen's application. In short, OK3 AIR alleged that Mr. Hansen could not comply with the Minimum Standards and that an acceptance of his application would result in an unequal application of the Minimum Standards. An unequal application of the Minimum Standards, in turn, could jeopardize funding from the FAA.

         In spite of this, the City approved Mr. Hansen's SASO application during a meeting of the City Council. The sole purpose of that meeting, alleges OK3 AIR, was the approval of Mr. Hansen's application. At the meeting, the City Council not only praised Mr. Hansen, but Mr. Boyer, a member of the City Council, criticized OK3 AIR for raising its concerns.

         2. Mr. Hancock's SASO

         The second SASO was issued to Mr. Hancock for the period of May, 2017, through October of 2017. Mr. Hancock operated Worldwide Warbird and Pilot Makers (Warbird) at the airport. According to OK3 AIR, Warbird did not have sufficient apron space[3] to comply with the Minimum Standards for commercial operators. OK3 AIR again raised its concerns regarding the unequal application of the Minimum Standards, and OK3 AIR repeated similar arguments that it had made about Mr. Hansen's SASO. The City issued the SASO nonetheless.

         Improper Tie-Downs of Airplanes

         In early July of 2016, the City, after a closed door meeting, hired Mr. Boyer as Acting Airport Manager. Mr. Boyer had previously argued against revisionary leases. He is also the same City Council member who criticized OK3 AIR for raising safety concerns about issuing a SASO to Mr. Hansen. As Airport Manager, Mr. Boyer became the contact point for safety concerns.[4]

         On September 20, 2016, Mr. Boyer sent an email to the City stating that he intended to make an issue of OK3 AIR's apron use. Use of the apron is covered by safety regulations. In the email, Mr. Boyer suggested that a cease-and-desist letter be sent to OK3 AIR and that the City Council make a single “big-item change” to the Minimum Standards “like reducing [OK3 AIR's] required 8 acres to just 2 acres… and then wait for the lawsuit to come.” (Opp'n to Paul Boyer 21, ECF No. 41.)

         Two days later on September 22, 2016, OK3 AIR reported to Mr. Boyer that airplanes were improperly tied down on the airport apron. Mr. Boyer responded by telling OK3 AIR that it, too, would have to comply with the tie-down requirements, and because it had not tied down all of its aircraft, it also violated the Minimum Standards.[5] Mr. Boyer went on to criticize OK3 AIR for “cherry picking” violations and applying them to other commercial operators while seeking to avoid meeting those obligations itself.

         On September 30, 2016, Mr. Boyer urged the City's legal counsel to investigate whether OK3 AIR illegally parked its airplanes on apron space owned by the City. OK3 AIR responded that that apron space was actually part of its leasehold. The City pursued this claim until May of 2017 when it dismissed it without resolution.

         Mr. ...


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