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Rodgers Helicopter Services, LLC v. Bethell

United States District Court, N.D. Indiana, Hammond Division

March 20, 2018

CHARLES BETHELL, et al., Defendants.



         This matter is before the Court on the Motion to Dismiss Plaintiffs' Amended Complaint, filed by the defendants, Charles Bethell and Flamingo Cay Limited, on February 24, 2017. (DE #19.) For the reasons set forth below, the motion is GRANTED in part and DENIED in part.


         The original plaintiff, Sage-Popovich, Inc. (“SPI”), filed a complaint in Porter Superior Court, cause number 64D02-1611-CC-10406, against the defendants, Charles Bethell (“Bethell”), Flamingo Cay Limited (“Flamingo Cay”), and David Pearce (“Pearce”), on or about November 14, 2016.[1] (DE #4.) On December 28, 2016, Bethell and Flamingo Cay (collectively, “Defendants”), removed the case to federal court on the basis of diversity jurisdiction. (DE #1.) On January 26, 2017, Defendants filed a motion to dismiss the complaint, arguing that SPI was not a party to any agreement with Defendants that would allow for recovery in a breach of contract action. (DE #11.) Subsequently, SPI filed an amended complaint adding Rodgers Helicopter Services, LLC (“Rodgers”) as a co-plaintiff.[2] (DE #17.) On February 24, 2017, Defendants filed the instant motion to dismiss, arguing that the amended complaint still fails to allege any valid claim against either Bethell or Flamingo Cay. (DE #19.) SPI and Rodgers (collectively, “Plaintiffs”) filed a response on March 10, 2017. (DE #23.) Defendants filed a reply on March 17, 2017. (DE #25.) The motion is ripe for adjudication.


         Relevant Facts

         Rodgers hired SPI as its agent to sell a Sikorsky S-76 helicopter with serial number 760370 (the “Helicopter”) at auction at the Gary International Airport in Gary, Indiana on April 7, 2016 (the “Auction”). (DE #17, p. 2.) SPI required bidders to register in advance of the Auction by providing their contact information and related details via a written form (the “Auction Form”). (Id.; DE #17-1.) Plaintiffs allege that Bethell signed the Auction Form “in his own individual capacity without any indication of his agency relationship to Flamingo Cay.” (DE #17, p. 2.) However, the Auction Form itself lists Flamingo Cay as the company name in the bidder contact and details section, the email address is listed as, and the address is listed as Fort Lauderdale, FL, which is where Flamingo Cay is alleged to be located. (Id. at 1; DE #17-1.) The Auction Form was electronically signed by Bethell on April 4, 2016. (DE #17-1.) Plaintiffs allege that, as part of the registration process, each bidder was required to abide by certain terms and conditions and was given a copy of them prior to being allowed to bid at the Auction (the “Terms and Conditions”). (DE #17, p. 2; DE #17-2.) The Terms and Conditions provide, in part, that:

[a]ll bids tendered are to be considered valid and binding offers to purchase, and any bidder that defaults in payment of the deposit or balance of the purchase price due, the Seller, in its sole discretion, may cause such bidder's initial deposit to be forfeited to the Seller, and if Seller so elects, the Assets may be sold to the next highest bidder from the auction, without further notice. Seller reserves the right to seek damages including all collection costs and fees from any defaulting bidder.

         (DE #17-2.) Pearce, who is alleged to be the agent “for Charles Bethell of Flamingo Cay Limited, ” hand-delivered the Auction Form to SPI and then proceeded to inspect the Helicopter for a day and a half prior to the Auction. (DE #17, pp. 1-2.)

         A written bid letter agreement from “David Pearce/Flamingo Cay Limited” to Rodgers as “the ‘Seller'” and SPI as “the ‘Agent'” is dated and was allegedly signed by Bethell on April 5, 2016 (the “Bid Letter Agreement”).[3] In relevant part, the Bid Letter Agreement states:

We hereby, with full authority, submit this firm and unconditional offer to purchase the [Helicopter] . . . for consideration of $[425, 000], [4] payable as follows: 15% deposit by wire transfer by close of business on 7 April 2016 and the balance in cash as provided below (the ‘Purchase Price').
We understand that this unconditional bid is not subject to modification or change. On the day of being notified that we are the winning bidder, we will (i) wire transfer in immediately available funds a non-refundable deposit of 15% of the Purchase Price ($[63, 750.00]) (the ‘Deposit') to an escrow account designated pursuant to an escrow agreement with Insured Aircraft Title Service, Inc. (the ‘Escrow Agent') in such form satisfactory to the Seller. We shall promptly, with five (5) business days (the ‘Closing Date'), purchase the [Helicopter] on the terms set forth in this unconditional bid. On the Closing Date, we shall wire transfer to the Seller in immediately available funds the balance of the Purchase Price $[361, 250.00], upon which the Seller shall direct the Escrow Agent to release the Deposit to the Seller. Upon receipt of the balance of the Purchase Price, the Seller shall deliver a limited warranty bill of sale in the form attached hereto. Any failure to complete the purchase of the [Helicopter] pursuant to the foregoing provisions (which, for avoidance of doubt, include, without limitation, payment of the balance of the Purchase Price and execution of any documentation reasonably requested by Seller in its sole discretion), as a result of our breach or non-performance shall result in the forfeiture of the Deposit to Seller upon instruction by the Seller. The Seller reserves the right to seek any and all damages from us caused by our failure to close the sale of the [Helicopter]. The sale of the [Helicopter] is absolute, without right or setoff or deduction by us for any reason.
We agree that from and after the Closing Date, we become liable for storage and parking fees. We acknowledge that the Seller reserves the right to accept or reject this or any other bid and/or to adjourn, delay or terminate any sale, in its sole and absolute discretion.

(DE #17-3.) The Bid Letter Agreement states that the bid shall remain valid until “N/A, ” and a hand-written note next to that statement says, “Purchased at Auction 7 April 2016.” (Id.) The Bid Letter Agreement was “[a]cknowledged and accepted by: SELLER: Rodgers Helicopter, by Nick Popovich.”[5] (Id.)

         On April 7, 2016, the day of the Auction, Pearce actively bid on the Helicopter and was ultimately deemed to be the highest bidder with an oral bid of $425, 000.00. (DE #17, p. 3.) SPI “publically accepted” Pearce's high bid on behalf of Rodgers. (Id.) According to Plaintiffs, Pearce advised SPI that he would contact Bethell to ensure the bid deposit was wired to the Escrow Agent in accordance with the Bid Letter Agreement. (Id.) However, the deposit was not timely submitted. (Id.)

         Subsequently, Defendants tendered several reduced-price offers, which were never “consummated.” (Id. at 4.) As of November 10, 2016, Defendants had not remitted any form of deposit, nor had they closed on the purchase of the Helicopter, so it was sold to another party for $300, 000.00. (Id.) Plaintiffs claim they have suffered damages “in the form of the lost sale deficiency, lost commission, additional storage and carrying costs, and additional efforts to market the Helicopter, including advertising costs and two subsequent auctions.” (Id. at 4-5.)


         Federal Rule of Civil Procedure 12(b)(6) allows a complaint to be dismissed if it fails to “state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). Allegations other than fraud and mistake are governed by the pleading standard outlined in Federal Rule of Civil Procedure 8(a), which requires a “short and plain statement” that the pleader is entitled to relief. In order to survive a Rule 12(b)(6) motion, the complaint “must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face'.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). All well-pleaded facts must be accepted as true, and all reasonable inferences from those facts must be resolved in the plaintiff's favor. Pugh v. Tribune Co., 521 F.3d 686, 692 (7th Cir. 2008). However, plaintiffs may plead themselves out of court if the complaint includes allegations that show they cannot possibly be entitled to the relief sought. McCready v. eBay, Inc., 453 F.3d 882, 888 (7th Cir. 2006). “A motion under Rule 12(b)(6) can be based only on the complaint itself, documents attached to the complaint, documents that are critical to the complaint and referred to in it, and information that is subject to proper judicial notice.” Geinosky v. City of Chicago, 675 F.3d 743, 745, n. 1 (7th Cir. 2012) (citing Fed.R.Civ.P. 10(c) and collecting cases). When contracts or other documents attached to a complaint contradict it, the allegations presented in the complaint are trumped by the documents. Chicago Dist. Council of Carpenters Welfare Fund v. Caremark, Inc., 474 F.3d 463, 466 (7th Cir. 2007). This principle serves the “important purpose of weeding out non-meritorious claims for which a trial is not necessary.” Flannery v. Recording Industry Ass'n of Am., 354 F.3d 632, 638 (7th Cir. 2004).

         A federal court sitting in diversity must apply federal procedural law and the appropriate state substantive law. First Nat. Bank and Trust Corp. v. Am. Eurocopter Corp., 378 F.3d 682, 689 (7th Cir. 2004). “When a case is removed from state court based on the parties' diverse citizenship, the forum state's choice-of-law rules determine the applicable substantive law. Carlisle v. Deere & Co., 576 F.3d 649, 653 (7th Cir. 2009) (citing Rockwell Automation, Inc. v. Nat'l Union Fire Ins. Co., 544 F.3d 752, 759 (7th Cir. 2008)). In a typical contract case in Indiana, courts apply the “most intimate contacts” or “most significant relationship” test to determine the applicable law. NUCOR Corp. v. Aceros Y Maquilas de Occidente, S.A. de C.V., 28 F.3d 572, 581 (7th Cir. 1994). Here, neither party addresses the threshold choice of law issue, but both Defendants and Plaintiffs submit their arguments according to Indiana law. Because there is a reasonable relation to Indiana in that the Helicopter itself was located in Indiana prior to and during the Auction which is the event the dispute is centered around, the Court ...

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