United States District Court, D. Minnesota
G. Lina, Esq., Fluegel, Anderson, McLaughlin & Brutlag,
Chtd., counsel for Plaintiff.
Smith, Pro Se, Defendant.
MEMORANDUM OPINION AND ORDER
DONOVAN W. FRANK UNITED STATES DISTRICT JUDGE
matter is before the Court on a Motion for Default Judgment
brought by Bakko Aviation, LLC (“Plaintiff”).
(Doc. No. 14.) Also before the Court is an untimely Motion to
Dismiss for Lack of Personal Jurisdiction and for Failure to
State a Claim Upon Which Relief Can Be Granted brought by
Defendant Justin Smith (“Smith”). (Doc. No. 19.)
Defendant KK Air, LLC (“KK Air”) has not answered
or otherwise appeared to defend this action. For the reasons
set forth below, the Court grants Plaintiff's Motion in
part and denies Smith's Motion.
action arises out of a lease agreement (“Lease”)
between Plaintiff and KK Air, a Texas corporation, entered
into on or about August 10, 2012. (Doc. No. 1
(“Compl.”) ¶¶ 2, 6.) Under the Lease,
KK Air agreed to pay Plaintiff monthly payments of $15, 000
in exchange for the exclusive use of an
aircraft for a four-year term. (Id. ¶
7.) Along with the required monthly payments, the Lease
required KK Air to pay a $25, 000 security deposit.
(Id.) KK Air was also required to log and report all
flight hours to Plaintiff and to make payments of $70 per
hour flown pursuant to the Lease terms. (Id.)
Lease imposed several obligations upon KK Air regarding
repairs, maintenance, and inspections, including monthly
maintenance reporting to Plaintiff. (Id.
¶¶ 7-11.) According to Plaintiff, KK Air had an
obligation to immediately report any damage to the aircraft
and incur the necessary expenses to fully repair the aircraft
upon Plaintiff's approval of such repairs. (Id.
¶ 12.) Upon termination, KK Air was required to return
the aircraft to Plaintiff in Glenwood, Minnesota at KK
Air's expense. (Id. ¶ 13.) Plaintiff
alleges the aircraft was required to be delivered “with
all maintenance inspection up-to-date, duly certified as an
airworthy aircraft, with all equipment, systems, radios,
[and] appliances in the same condition as received [f]rom
Plaintiff, normal wear and tear excepted.”
(Id. ¶ 14.) Plaintiff asserts that the
prevailing party in a lawsuit relating to the Lease is
entitled to reasonable attorney fees. (Id. ¶
to the Complaint, KK Air failed to pay the $25, 000 security
deposit, and as of November 2, 2015, owed $67, 227.15 in
past-due monthly lease payments and $122, 500 for unpaid
expenses associated with 1, 750 incurred flight hours.
(Id. ¶¶ 19-22.) Plaintiff terminated the
Lease on or about September 17, 2015. (Id. ¶
24.) KK Air failed to return the aircraft to Minnesota as
required by the Lease. (Id.) On October 14, 2015,
Plaintiff recovered the aircraft from KK Air in Texas,
incurring approximately $25, 000 in recovery expenses.
(Id. ¶ 25.)
alleges upon information and belief that KK Air damaged the
aircraft, failed to inform Plaintiff of such damages, and
performed poor quality repair work using non-approved
components without Plaintiff's permission. (Id.
¶¶ 26-28.) Due to KK Air's substandard repairs,
Plaintiff asserts it has incurred at least $350, 000 in
repair expenses. (Id. ¶ 29.) Similarly,
Plaintiff alleges KK Air performed improper maintenance,
repairs, and updates that resulted in the aircraft being
declared not airworthy by the FAA. (Id. ¶¶
30-31.) According to Plaintiff, in order to obtain
airworthiness certification, Plaintiff has had to incur
significant expenses. (Id. ¶ 31.)
Complaint asserts breach-of-contract and negligence claims
against both KK Air and Smith. (Id. ¶¶
32-37.) Plaintiff alleges upon information and belief that
Smith “formed or maintained Defendant KK Air, LLC, as
his personal alter ego.” (Id. ¶ 34.)
Specifically, Plaintiff alleges upon information and belief
that Smith did so “by (1) insufficiently capitalizing
the corporation; (2) failing to observe corporate
formalities; (3) maintaining the insolvency of the
corporation; and () siphoning corporate assets for
individual dealings.” (Id.) Plaintiff also
alleges upon information and belief that Smith was
responsible for the substandard repairs and maintenance.
(Id. ¶ 35.) The Complaint asserts that the
alleged breach of contract and negligence have caused
Plaintiff to incur damages in excess of $500, 000 plus
attorney fees. (Id. ¶ 36.) According to the
Complaint, “Plaintiff is entitled to the equitable
remedy of piercing the corporate veil to hold Defendant
Justin Smith liable for damages alleged herein against
Defendant KK Air, LLC.” (Id. ¶ 37.)
March 23, 2016, Plaintiff commenced this action by filing a
Complaint. (See generally Compl.) The Defendants
were served on July 22, 2016, with Smith being served as both
an individual and as agent of KK Air. (See Doc. Nos. 9, 10.)
Both Defendants failed to plead or otherwise defend the
action within the time permitted following service, and a
Clerk's Entry of Default was filed on August 29, 2016.
(Doc. No. 13.) On September 6, 2016, Plaintiff filed a Motion
for Default Judgment seeking a default judgment for
Defendants' alleged breach of contract, (Doc. No. 14),
and a hearing on this motion was set for November 4, 2016,
(Doc. No. 16).
November 3, 2016, Defendant Justin Smith submitted via e-mail
to the Court a pro se Motion to Dismiss for Lack of
Personal Jurisdiction and for Failure to State a Claim Upon
Which Relief Can Be Granted. This motion was filed on the
docket on November 4, 2016. (Doc. No. 19.) The Court held the
scheduled hearing on Plaintiff's Motion for Default
Judgment on November 4, 2016, and counsel for Plaintiff
appeared. Neither Defendant made an appearance. (Doc. No.
November 17, 2016, the Court ordered Smith to pay
Plaintiff's attorney fees and costs associated with
bringing the Motion for Default Judgment within thirty days
as a condition of going forward in defending the case. (Doc.
No. 24.) Defendant Justin Smith did not pay any attorney fees
and costs. Pursuant to the Court's request, on January 5,
2017, Plaintiff filed a letter brief addressing the
jurisdictional issues raised in Defendant Justin Smith's
untimely motion. (Doc. No. 25.) The ...