Monocoque Diversified Interests, LLC v. Aquila Air Capital DAC

Background

MDI is a consulting firm in the aviation business, and Aquila buys and leases airplanes and engines. Aquila hired MDI under a Services Agreement and later terminated the relationship as permitted by that agreement. MDI sued Aquila for alleged breaches of the agreement and sought a preliminary injunction. After expedited discovery and an evidentiary hearing, the court denied MDI’s preliminary-injunction motion.

Aquila then filed counterclaims against MDI for breach of the Services Agreement, interference with prospective economic advantage, and conversion. Aquila alleged that it had acquired engines and the engines’ historical repair records, which MDI kept at an Iron Mountain storage facility. Aquila alleged that MDI removed Aquila’s access to the records after the relationship ended.

Aquila moved for a temporary restraining order requiring MDI to restore access. MDI had initially said Aquila could obtain the records after paying Iron Mountain’s charges and MDI’s charges for reviewing and shipping them. Aquila agreed to pay those amounts, but MDI later demanded that Aquila place more than $400,000 in escrow for unrelated amounts MDI claimed Aquila owed, along with $4,520 for MDI’s legal fees.

Court’s Findings

The court found that the four boxes of records were Aquila’s property and that Aquila had access to them before terminating its relationship with MDI. The court found that MDI instructed Iron Mountain to prevent Aquila from accessing the records.

The Services Agreement required MDI, when the relationship ended, to return all of Aquila’s property. The agreement also stated that violating that provision would cause immediate and irreparable harm for which money damages would be inadequate. The court found that the historical repair records were irreplaceable and that losing access to them made a $4 million engine useless to Aquila. The court also considered MDI’s representation that it might become insolvent before the case ended.

Ruling

The court held that Aquila met the requirements for preliminary relief: a likelihood of success on the merits, a likelihood of irreparable harm without relief, a balance of equities favoring Aquila, and a public interest that would not be harmed by the order. The court found that Aquila was likely to succeed on its breach-of-contract claim because MDI failed to return Aquila’s records. It also found that Aquila was likely to succeed on its conversion claim because MDI exercised unauthorized control over the records in a way that interfered with Aquila’s right to possess them.

The court granted Aquila’s motion for a temporary restraining order directing MDI to restore Aquila’s access to the records. It ordered MDI, if it had not already done so, to direct Iron Mountain to send the records to Aquila at the specified recipient. Either Iron Mountain or Aquila had to provide MDI with a copy. Instead of requiring additional security under Rule 65(c), the court ordered Aquila to immediately pay $2,113 to Iron Mountain. The court stated that failure to comply could result in sanctions and ordered the parties to submit a joint status letter by March 31, 2023.