Virgin Australia Regional Airlines Pty Ltd. v. JetPro International LLC

Background

Virgin Australia Regional Airlines Pty Ltd. (VARA) and JetPro International LLC. entered an Engine Sale and Purchase Agreement on August 16, 2018. JetPro agreed to provide a V2500-A1 aircraft engine in Quick Engine Change (QEC) configuration, meaning that necessary components and accessories were pre-mounted and installed to reduce the time required to replace the engine.

VARA alleged that JetPro repeatedly assured it that the engine was in QEC configuration. After delivery, VARA inspected the engine and found that it was not in that configuration. JetPro did not cure the alleged breach, so VARA purchased the necessary parts at a cost of $791,054. VARA sued for breach of contract, breach of warranty, and negligent misrepresentation.

JetPro did not answer or otherwise respond. The Clerk of Court entered a Certificate of Default on December 29, 2020. The court had previously denied VARA’s original motion for default judgment and directed VARA to provide additional information about choice of law, service of process, personal jurisdiction, and compliance with a local rule. VARA filed a renewed motion addressing those issues.

Default judgment standard

Under Federal Rule of Civil Procedure 55, a court may enter default judgment when a party seeking affirmative relief has failed to plead or otherwise defend. A default admits well-pleaded allegations concerning liability, but it does not admit the amount of damages. The plaintiff must establish damages with reasonable certainty. Because JetPro never appeared, the court could determine damages from VARA’s submissions without holding a hearing.

Jurisdiction and governing law

The court held that it had subject-matter jurisdiction based on diversity of citizenship and an amount in controversy exceeding $75,000. The court stated that VARA was organized under Australian law and had its head office in Welshpool, Australia. It stated that JetPro was organized under Missouri law and had its principal office in Phoenix, Arizona. VARA claimed $791,054 in damages.

The court also found personal jurisdiction over JetPro based on the contract’s provision stating that each party irrevocably submitted to the exclusive jurisdiction of the courts of New York County, New York. The court concluded that this language made New York County the exclusive forum for disputes arising from the contract.

The contract stated that it would be governed by New York law, excluding conflict-of-law provisions that could result in applying another jurisdiction’s law. The court enforced that provision and found that VARA’s allegations were sufficient to hold JetPro liable under New York law. The court noted that the standards under New York and Missouri law were substantially similar.

Service of process

The court found that VARA properly served JetPro through the Missouri Secretary of State. Under the Missouri statutes discussed by the court, a limited liability company must maintain a registered agent in Missouri. If it fails to do so, or if an authorized person cannot be found after due diligence, the Missouri Secretary of State is automatically appointed as an agent for service of process while that failure continues.

VARA attempted service multiple times between September 1, 2020, and November 18, 2020, including at JetPro’s last registered business address, by email to JetPro’s chief executive officer and registered agent Kyle Wine, by certified mail to Wine’s home address, and at other addresses associated with JetPro and Wine. JetPro’s limited liability company registration had been canceled for failure to maintain a registered agent as of May 21, 2020. The court therefore found that service on the Missouri Secretary of State was proper.

The court also found that VARA had satisfied the requirement to attempt service on JetPro. VARA later sent the renewed motion and supporting papers by certified mail to multiple addresses, including an Arizona address associated with JetPro and Kyle Wine. The mailings were not successfully delivered, but the court found that VARA had complied with the applicable service and mailing requirements.

Liability and damages

The court found that JetPro’s repeated failure to participate in the litigation constituted a failure to plead or otherwise defend. It further found that VARA’s allegations, taken as true, established JetPro’s liability as a matter of law on colorable claims for breach of contract, breach of warranty, and negligent misrepresentation.

VARA submitted invoices, spreadsheets, and sworn declarations supporting its $791,054 request. The court found that these materials established the damages with reasonable certainty and would place VARA in the same economic position it would have occupied if JetPro had fulfilled the contract.

Under New York law, the court awarded prejudgment interest at 9% per year from September 1, 2018, when the engine arrived in Melbourne, Australia, and VARA confirmed through inspection that it was not in QEC configuration. The court entered default judgment for $791,054, plus 9% annual statutory interest from September 1, 2018, until judgment was entered, and 9% post-judgment interest.

Legal fees and costs

VARA also requested attorneys’ fees and legal costs. The court did not award them in the order. It stated that VARA would need to submit an accounting of the hours worked and costs incurred if it wished to seek those amounts.

Disposition

The court granted VARA’s Renewed Motion for Default Judgment and directed the Clerk of Court to enter judgment in VARA’s favor and against JetPro for $791,054, with the stated statutory interest.