Monocoque Diversified Interests, LLC v. Aquila Air Capital DAC

Background

Monocoque Diversified Interests, LLC (MDI) is a consulting firm that advises on aircraft and aircraft-related assets. Aquila Air Capital (Ireland) DAC acquires, leases, and sells those assets. Their August 2021 Services Agreement required Aquila to pay several types of fees, including origination fees, monthly consultancy fees, profit-participation payments, and monetization fees. The agreement also gave MDI a right, no more than once each year, to engage a mutually agreed accounting firm to audit Aquila’s books and records concerning the equipment.

The agreement allowed Aquila to terminate the consultancy without cause with 60 days’ written notice. It also addressed interference with business opportunities and restricted the parties’ use of confidential information to solicit or provide competing services to the other party’s customers or financial partners. Aquila sent a termination notice on August 15, 2022, making the termination effective October 14, 2022. On the same day, Aquila sent letters to 10 to 15 equipment lessees stating that it had terminated its servicing relationship with MDI and would take over servicing responsibilities.

MDI alleged that Aquila owed more than $3.4 million in fees, although the amended complaint did not specify precisely what the amount represented. MDI also alleged that Aquila failed to cooperate with an audit and owed fees connected to three unsigned addenda concerning Gakona engines and one concerning a Jetran engine. MDI asserted seven claims: breach of contract, declaratory judgment, unjust enrichment, quantum meruit, tortious interference with business relations, trade disparagement, and defamation.

Court’s analysis

The court applied the standard for a motion to dismiss, under which the complaint must allege enough facts to make a claim plausible. The court accepted factual allegations as true for this motion but did not have to accept conclusory assertions or allegations contradicted by documents incorporated into or integral to the complaint.

Defamation, trade disparagement, and tortious interference

The court held that MDI did not plausibly allege defamation. The letters accurately conveyed the main point that Aquila was ending its relationship with MDI and taking over servicing responsibilities. Although the letters technically stated that Aquila had terminated the relationship before the 60-day period ended, the court treated that as a minor inaccuracy rather than a materially false statement. The letters did not state or imply that MDI had been terminated for misconduct. MDI also made only a conclusory allegation that follow-up calls were disparaging, without describing what was said.

The court treated MDI’s trade-disparagement claim as a claim for disparagement of goods, because New York does not recognize a separate cause of action called “trade disparagement.” The court held that MDI failed to plausibly allege that Aquila made a disparaging statement about MDI’s goods.

The court also rejected MDI’s tortious-interference claim. It found the claim duplicative of the defamation claim because it relied on the same statements and sought damages based on reputational injury. Separately, the court held that MDI did not plausibly allege an interference claim because the letters showed that Aquila was informing lessees about the transition, not acting solely to harm MDI or using improper means.

Contract claims concerning fees and engines

The court granted the motion as to MDI’s claims for post-termination monetization fees and profit-participation payments. The Services Agreement stated that monetization fees were due upon Aquila’s sale of equipment “during the term” of the agreement. It also tied profit-participation payments to the 20th day of each month “during the term” of the agreement. Because MDI sought payments based on post-termination sales and proceeds, the court held that the agreement did not require Aquila to make those payments.

The court also granted the motion concerning the Gakona and Jetran engines. Treating the unsigned addenda as valid modifications of the Services Agreement, the court noted that the Gakona addenda expressly stated that Aquila would not pay origination fees for those engines. The Jetran addendum required an origination fee, but MDI alleged that Aquila had paid it. MDI did not clearly identify other allegedly breached fee provisions. The addenda also limited monetization fees and profit-participation payments to the agreement’s term, so MDI could not recover post-termination payments under them.

The court granted the motion as to MDI’s unjust-enrichment and quantum-meruit claims concerning the engines. The parties agreed that those alternative claims would duplicate a contract claim if the addenda were valid modifications. The court further held that MDI could not plausibly allege an expectation of compensation for Gakona origination fees or post-termination payments when the written terms excluded those payments.

Contract claim concerning confidential information

The court denied the motion as to MDI’s claim that Aquila breached the Services Agreement by using MDI’s confidential information to solicit MDI’s business partners. The court distinguished that allegation from MDI’s claim based only on Aquila’s letters and calls to lessees. The agreement prohibited either party from using confidential information to solicit or provide competing services to the other party’s customers or financial partners. MDI alleged that Aquila used confidential financial information, contact information, and terms of prior business dealings to solicit MDI’s business partners. At the pleading stage, the court was required to accept that allegation as true. Aquila’s argument that MDI had not identified a trade secret was also raised for the first time in its reply brief, and the court noted that MDI was not pleading a trade-secrets claim.

Audit claim

The court denied the motion as to MDI’s claim that Aquila breached the audit provision. The court found that MDI had a contractual right to an audit conducted by a mutually agreed auditor and that the audit had not occurred. Although Aquila argued that MDI had unilaterally selected Weaver, MDI alleged that it later acted in good faith to find a mutually agreeable auditor while Aquila made no efforts to do so. The court held that factual questions about the parties’ performance prevented dismissal.

Declaratory judgment

The court granted the motion as to MDI’s declaratory-judgment claim. It explained that a declaratory judgment is a remedy rather than a separate cause of action and that MDI’s request was duplicative and served no independent purpose.

Disposition

The court granted in part and denied in part Aquila’s motion to dismiss. Specifically, it granted the motion with respect to MDI’s claims for breach of the fee provisions and breach of the Interference with Business provision using non-confidential information; declaratory judgment; unjust enrichment; quantum meruit; tortious interference with business relations; trade disparagement; and defamation. It denied the motion with respect to MDI’s claims for breach of the Interference with Business provision based on alleged use of confidential information and breach of the audit provision of the Services Agreement. Judge Mary Kay Vyskocil directed the Clerk of Court to terminate the motion.