United States District Court, W.D. Washington, Seattle
ORDER GRANTING IN PART AND DENYING IN PART
DEFENDANTS' MOTION FOR SUMMARY JUDGMENT
RICARDO S. MARTINEZ CHIEF UNITED STATES DISTRICT JUDGE.
matter comes before the Court on Defendants' Motion for
Summary Judgment. Dkt. #52. Defendants ask the Court to
dismiss all of Plaintiff's claims on the basis that it
cannot meet the elements of its claims on the facts in this
record. Id. Plaintiff opposes summary judgment,
arguing that disputes of material fact require this Court to
allow a jury to decide the claims. Dkt. #69-1. For the
reasons discussed herein, the Court GRANTS IN PART AND DENIES
IN PART Defendants' Motion for Summary
matter arises out of a contract dispute between the parties.
Plaintiff Jet Parts Engineering, Inc. (“JPE”) is
a Washington corporation. Dkt. #19 at ¶ 1.1. JPE is
engaged in the business of designing, manufacturing,
distributing, and selling replacement jet parts. Dkt. #19 at
¶ 1.1. Defendant Quest Aviation Supply, Inc.
(“Quest”) is a California corporation previously
engaged in the business of designing, manufacturing and
selling replacement airplane parts. Id. at ¶
1.2. Defendant Brent K. de Ruyter was the CEO and the sole
shareholder of Quest. Id. at ¶ 1.3. JPE and
Quest designed, manufactured, distributed, and sold
replacement jet parts pursuant to Parts Manufacturer Approval
(“PMA”) from the Federal Aviation Administration
(“FAA”). Dkts. #53 at ¶ ¶ 2 and 3 and
#60 at ¶ 2. The grant of PMA authority means that
approved parts may be installed on commercial aircrafts as an
equivalent alternative to corresponding original equipment
manufacturer (“OEM”) parts. Id.
end of 2012 and beginning of 2013, JPE and Quest entered into
negotiations for the sale of Quest to JPE. Dkts. #60 at
¶ 5 and #53 at ¶ ¶ 6-10 and Exs. A-D thereto.
There were several offers from JPE; however, the final offer
was to purchase Quest for $1.7 million and employ Mr. de
Ruyter as a consultant for five months. Dkt. #60 at ¶ 10
and Ex. D thereto. Ultimately, the sale was not consummated.
Instead, JPE and Quest entered into two Distribution
Agreements, which provided that JPE would attempt to sell
Quest-manufactured parts to two airlines - Air France and
Delta. When those airlines chose to purchase such parts,
Quest would provide them to JPE based on purchase orders from
JPE to Quest. Dkts. #60 at ¶ ¶ 5-8 and Exs. A and B
thereto and #53 at ¶ 12 and Exs. E and F thereto.
March 2014, Mr. de Ruyter received an unsolicited offer from
HEICO, an aircraft parts supplier headquartered in Florida,
to purchase Quest's assets. Dkt. #53 at ¶ 13. The
offer was to purchase the assets for all cash, and was in an
amount significantly higher than what had previously been
offered by JPE. Dkt. #53 at ¶ 13. Quest informed JPE of
the offer. Although JPE subsequently negotiated with Quest to
purchase its assets, Quest ultimately accepted HEICO's
offer. Dkts. #60 at ¶ ¶ 11-12 and #53 at ¶ 13.
After the sale of the assets to HEICO, the proceeds were
distributed to Quest's sole shareholder, Mr. de Ruyter.
Dkt. #62, Exs. A at 15:11-15 and E. More specific facts
surrounding this transaction and the claims resulting
therefrom are further discussed below.
April 3, 2015, JPE filed the instant lawsuit. Dkt. #1. JPE
now alleges causes of action for breach of contract against
both Quest and Mr. de Ruyter, unjust enrichment against both
Quest and Mr. de Ruyter, and fraudulent transfer against
Quest. Dkt. #29 at ¶ ¶ 4.1-4.40. Defendants have
moved for summary judgment on all claims.
Standard of Review for Motions of Summary Judgment
judgment is appropriate where “the movant shows that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(a); Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 247 (1986). In ruling on summary judgment, a
court does not weigh evidence to determine the truth of the
matter, but “only determine[s] whether there is a
genuine issue for trial.” Crane v. Conoco,
Inc., 41 F.3d 547, 549 (9th Cir. 1994) (citing
Federal Deposit Ins. Corp. v. O'Melveny &
Meyers, 969 F.2d 744, 747 (9th Cir. 1992)). Material
facts are those which might affect the outcome of the suit
under governing law. Anderson, 477 U.S. at 248.
Court must draw all reasonable inferences in favor of the
non-moving party. See O'Melveny & Meyers,
969 F.2d at 747, rev'd on other grounds, 512
U.S. 79 (1994). However, the nonmoving party must make a
“sufficient showing on an essential element of her case
with respect to which she has the burden of proof” to
survive summary judgment. Celotex Corp. v. Catrett,
477 U.S. 317, 323 (1986). Further, “[t]he mere
existence of a scintilla of evidence in support of the
plaintiff's position will be insufficient; there must be
evidence on which the jury could reasonably find for the
plaintiff.” Anderson, 477 U.S. at 251.
parties appear to agree that this matter is governed by
Washington law. Indeed, the Distribution Agreements at issue
contain a governing law provision that provides for
governance and construction of the Agreements under
Washington law. Dkts. #57-5 at ¶ 14.9 and #57-6 at
¶ 14.9. Accordingly, the Court applies such law to the
Breach of Contract Claims
first argue that Plaintiff cannot prove breach of contract
against either Quest or Mr. de Ruyter. Dkt. #52 at 10-18. To
prevail on a breach of contract claim under Washington law, a
plaintiff must establish (1) the existence of a contractual
duty, (2) defendant's breach of that duty, and that (3)
defendant's breach of that duty caused damages to the
plaintiff whom the duty is owed. Nw. Indep. Forest Mfrs.
v. Dep't of Labor & Indus., 78 Wn.App. 707, 712,
899 P.2d 6 (1995). Plaintiff alleges that Defendants breached
the Distribution Agreements in multiple ways (dkt. #29 at
¶ 4.5), addressed in turn below.
Right of First Refusal
alleges that Quest breached the Distribution Agreements by
failing to provide Plaintiff a good faith opportunity to
match HEICO's bid or option to purchase Quest's
assets. Dkt. #29 at ¶ 4.5(c). Section 13.2 of the
During the term of this Agreement, and for a period of six
(6) months thereafter, in the event SUPPLIER decides to offer
any of its assets, or stock for sale, SUPPLIER agrees to
notify DISTRIBUTOR of such intent and provides [sic] the
DISTIRBUTOR with an opportunity to meet any other potential
buyer's terms and conditions.
Dkt. #57, Exs. E and F at ¶ 13.2. Thus, the Agreements
gave rise to a duty by Quest to inform JPE of its intent to
sell its assets and provide JPE with an opportunity to meet
the potential buyer's terms and conditions.
parties agree that on March 28, 2014, Mr. de Ruyter notified
Vice President and Director of Operations of JPE, Nadim
Fattaleh, of HEICO's offer. Dkts. #53 at ¶ 13, Ex. H
and #60 at ¶ 11, Ex. D. JPE acknowledges that such
“notice was pursuant to § 13.2 of the Distribution
Agreements.” Dkt. #60 at ¶ 11. Mr. Fattaleh
thanked Mr. de Ruyter, and stated that JPE was interested in
the opportunity to meet the terms and conditions of the
offer. Dkt. #60, Ex. D. He asked for a copy of the offer from
the other party, “after redacting any information you
are not allowed to share with us, ” and Quest's
most recent financial statement. Id. (emphasis
added). Quest provided a redacted version of the offer, which
did not reveal the identity of the proposed purchaser. Dkt.
#53, Ex. H. The redacted version did identify the following
terms: proposed purchase price, escrow, inventory,
representations and warranties, indemnification (without
identifying the proposed indemnitee), real estate (without
identifying the proposed purchaser), and
expenses. Id. Quest also provided its most
recent financial statement. Id. The “purchase
price” term contained no redactions, and stated that
transaction structure would be a purchase of all assets for a
cash amount (less escrow) on a debt free basis. Id.
April 1, 2014, Mr. Fattaleh responded to Mr. de Ruyter,
stating that the offer had been redacted to the point where
JPE was unable to fully evaluate it. Dkt. #53, Ex. I.
Accordingly, Mr. Fattaleh asked for a copy of the agreement
that essentially included every term and redacted only the
Offeror's name. Dkt. #53, Ex. I. Mr. de Ruyter responded
that the redacted offer represented the terms and conditions
of the potential buyer, and that the redactions were only
non-essential items that protected the anonymity of the
buyer. Id. Mr. de Ruyter then stated that the
Distribution Agreement did not obligate him to do anything
more that provide the applicable terms and conditions, which
he had done, and asked for a response from JPE. Id.
response, JPE sent a Letter of Intent offering to acquire
Quest for the same purchase price in cash. Dkt. #53, Ex. L.
However, the offer was structured such that the purchase
price would be paid in installments, with a sum certain up
front, a sum certain at closing, and the balance to be paid
in the form of earn out payments over the course of ten
years. Id. The offer also included an option for the
continued employment of Quest's President and CEO for
five years, and other terms. Id. As noted above,
Quest rejected JPE's offer.
essentially argues that Quest never provided it with a fair
opportunity to meet the terms and conditions of HEICO's
offer because it was only provided with a heavily redacted
version of the offer, which prevented them from making a
meaningful offer. Dkt. #69-1 at 18. JPE further asserts that
Quest's actions are questions of material fact.
Id. The Court disagrees.
respect to materiality, the Court notes that “the
substantive law will identify which facts are
material.” Anderson, 477 U.S. at 248.
Specifically, a “material” fact is one which is
“relevant to an element of a claim or defense and whose
existence might affect the outcome of the suit.”
T.W. Electrical Serv., Inc. v. Pacific Electrical
Contractors Ass'n, 809 F.2d 626, 630 (9th Cir.
1987). Mere “[d]isputes over irrelevant or unnecessary
facts, ” therefore, “will not preclude a grant of
summary judgment.” Id. Determining whether a
“genuine” issue exists is often a close question.
Id. The Court must consider the substantive
evidentiary burden the nonmoving party must meet at trial -
e.g. a preponderance of the evidence in most civil
cases. Anderson, 477 U.S. at 252. No genuine issue
for trial exists where the record, taken as a whole, could
not lead a rational trier of fact to find for the non-moving
party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio
Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538
(1986) (citing First Nat. Bank of Ariz. V. Cities Service
Co., 391 U.S. 253, 289, 88 S.Ct. 1575, 20 L.Ed.2d 569
case, the duty set out in § 13.2 of the Distribution
Agreements was that Quest was to provide notice of intent to
sell its assets and provide an opportunity to JPE to meet the
other potential buyer's terms and conditions. There is no
dispute that Mr. de Ruyter provided such notice prior to the
sale of its assets to HEICO. While JPE asserts that it could
not make a meaningful offer because of the redactions to
HEICO's offer, the record demonstrates that the material
terms were conveyed, and that the redactions did not hide
anything material to the purchase price or purchase
structure. Moreover, JPE does not identify which redacted
provisions, if any, would have meaningfully informed its
offer had it known about such provisions at the time it made
its offer. Thus, on this record, the Court agrees with Quest
that undisputed evidence establishes that Quest satisfied the
requirements of § 13.2, and no genuine issue exists for
trial. Accordingly, the Court finds that the breach of
contract claim based on an alleged breach of § 13.2
shall be dismissed.
Assignment of Distribution Agreements
also alleges that Quest breached the Distribution Agreements
by failing “to properly seek assignment of the
Distribution Agreements and the sale of the substantial part
of its assets was to a competitor.” Dkt. #29 ...