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GlobalOne Management Group Ltd. v. Tempus Applied Solutions, LLC

United States District Court, E.D. Virginia, Newport News Division

December 7, 2018

GLOBALONE MANAGEMENT GROUP LIMITED, Plaintiff,
v.
TEMPUS APPLIED SOLUTIONS, LLC and TEMPUS APPLIED SOLUTIONS HOLDINGS, INC., Defendants.

          OPINION AND ORDER

         This matter comes before the Court on five motions filed by defendants Tempus Applied Solutions, LLC and Tempus Applied Solutions Holdings, Inc., including motions to compel arbitration and to stay proceedings pursuant to Sections 3 and 4 of the Federal Arbitration Act, 9 U.S.C. § 1, et seq., ECF Nos. 31 and 32, and three motions to partially dismiss plaintiffs complaint, ECF Nos. 34-36. For the reasons set forth below, the Court GRANTS Defendants' motions to compel arbitration and stay proceedings, DISMISSES Defendants' motions to dismiss WITHOUT PREJUDICE, and STAYS this action consistent with the directives of this Order.

         I. PROCEDURAL HISTORY

         On May 23, 2018, GlobalOne Management Group Limited ("GlobalOne" or "Plaintiff) filed a complaint against Tempus Applied Solutions, LLC ("Tempus") and Tempus Applied Solutions Holdings, Inc. ("TASH") (collectively, "Defendants") seeking a declaratory judgment, injunctive relief, and damages in relation to a certain aircraft management agreement between the parties. ECF No. 1. Initially, Defendants failed to appear or timely respond to GlobalOne's complaint, and the Clerk entered default against Defendants at GlobalOne's request. However, on September 7, 2018, Defendants filed an unopposed Motion to Set Aside Default, which the Court granted on September 11, 2018. ECF Nos. 25, 30.

         On September 17, 2018, Defendants filed the instant motions to compel arbitration ("Motion to Compel") and to stay all proceedings pending such arbitration ("Motion to Stay") claiming that the parties entered a legally binding agreement to arbitrate their dispute before the International Chamber of Commerce in Paris, France. ECF Nos. 31 and 32; see Memorandum in Support ("Mem."), ECF No. 33. In the alternative, the Defendants also filed three motions to dismiss various portions of GlobalOne's complaint.[1] ECF Nos. 34-36; see Mem., ECF No. 37.

         On October 1, 2018, GlobalOne filed a response in opposition to Defendants' Motion to Compel and Motion to Stay ("Resp."), ECF No. 39, and a separate response in opposition to Defendants' three motions to dismiss, ECF No. 40. On October 8, 2018, GlobalOne filed a combined reply brief. ECF No. 42. On November 20, 2018, the parties appeared for oral argument on Defendants' five pending motions, and the Court took the matter under advisement. Such motions are now before the Court.

         II. FACTUAL BACKGROUND

         GlobalOne is a corporation organized under the laws of the British Virgin Islands with its principal place of business in Cyprus. Complaint ("Compl."), ECF No. 1 ¶ 29. At all times relevant to the complaint, GlobalOne operated a 2012 Bombardier Global 6000 with a Rolls-Royce BR710A2-20 engine (hereinafter, the "Aircraft") for business and personal use. Id. ¶¶ 3, 36. TASH is a Delaware corporation with its principal place of business in Williamsburg, Virginia. Id. ¶ 30. TASH is the sole member of Tempus, which is a limited liability company operating in Williamsburg, Virginia. Id. ¶ 31.

         A. The 2017 Aircraft

         Management Agreement On March 1, 2017, GlobalOne and Tempus entered into an Aircraft Management Agreement ("AMA") whereby Tempus agreed to provide management, operation, and maintenance services for GlobalOne's Aircraft in exchange for a monthly fee of $110, 000.00. See Ex. 1 to the Compl, ECF No. 1-1 (hereinafter "AMA"), § 9.1. Upon entering this agreement, GlobalOne paid Tempus an "Operating Deposit" in the amount of $750, 000.00.[2] Id. § 3.

         The AMA requires each party to cover certain costs in connection with maintaining and operating the Aircraft during the term of the agreement. For example, Section 9.1 of the AMA requires Tempus to cover the cost of training and compensating the pilots and crew (§9.1.1), the annual cost of insurance (§ 9.1.1.2), and the annual cost of maintaining flight manuals and subscriptions to tracking programs and navigation databases that are required under the agreement (§ 9.1.1.3). GlobalOne, on the other hand, is required to reimburse Tempus for the cost of fuel, consumables, and certain incidentals, including landing and parking fees, crew travel expenses, airway and navigation fees, and customs fees at fixed rates (§ 9.2) as well as other services and benefits at actual cost as set forth in the agreement (§§ 9.3-9.4).

         The term of the AMA is two years (§ 2.1), but either party may terminate the AMA for any reason upon sixty days written notice to the other party (§ 2.3). In addition, GlobalOne has the unilateral right to terminate the AMA immediately for cause upon the occurrence of one of eight enumerated conditions (§ 2.5). Upon expiration or earlier termination of the AMA, Tempus is required to immediately return the Aircraft with all necessary documentation, including "FAA required documentation, certificate of airworthiness, Aircraft registration and all such documents that rightfully belong with the Aircraft and GlobalOne" (collectively hereinafter referred to as the Aircraft "Records") in accordance with Section 2.6 of the AMA. Additionally, Tempus has six weeks after the termination or expiration to submit a summary of outstanding costs and charges to GlobalOne and to "set-off such charges against the Operating Deposit in accordance with Section 2.7. Tempus must then return the remaining amount of the Operating Deposit to GlobalOne within one day of such offset (§ 2.7).

         B. Termination of the AMA

         The complaint alleges that on November 14, 2017, GlobalOne notified Tempus that GlobalOne desired to terminate the AMA for business reasons. Compl. ¶ 62. A copy of GlobalOne's notification email is attached to the complaint as Exhibit 3. Id; see ECF No. 1-3. With its email, GlobalOne sent a draft termination and settlement agreement to Tempus that purported to resolve outstanding matters between the parties in lieu of formally terminating the AMA pursuant to Section 2.3 of the agreement. Id. ¶ 63. In its email, GlobalOne directed Tempus either to accept or to counter the proposed termination agreement by November 20, 2017. Ex. 3 to Compl., ECF No. 1-3. According to the complaint, Tempus acknowledged receipt of GlobalOne's email, but it never responded to GlobalOne's settlement offer. Compl. ¶¶ 64-65.

         Rather, on November 22, 2017, Tempus sent a letter to GlobalOne purporting to terminate the AMA. Id. ¶67. A copy of this letter is attached to the complaint as Exhibit 4. Id.; see ECF No. 1-4. In such letter, Tempus claims that (1) GlobalOne is in "repudiatory breach" of the AMA for its alleged "ongoing and repeated failure" to pay its outstanding balances, totaling $225, 565.33, on eleven different invoices issued to GlobalOne pursuant to the AMA and that (2) Tempus therefore "terminates the AMA at common law.*' Id. at 2.

         The complaint further alleges that on November 29, 2017, Tempus then surrendered the Aircraft at Vnukovo Airport in Moscow without GlobalOne's knowledge or instruction. Id. ¶ 68. At the time of such surrender, Tempus allegedly had not returned the Aircraft Records or transferred the Aircraft's subscriptions and accounts to GlobalOne. Id. Furthermore, at the time this action was filed in May, 2018, Tempus was allegedly still in possession of certain Aircraft Records and subscriptions despite GlobalOne's repeated requests for same. Id. ¶¶ 68-71, 74. However, during the November 20, 2018 hearing before this Court, counsel for GlobalOne conceded that all Aircraft Records and subscriptions had been returned to GlobalOne as of the date of such hearing.

         C. Tempus's Alleged Risk of Insolvency or Bankruptcy

         The complaint also makes certain allegations with respect to Tempus's financial status. Specifically, it alleges that "there is a significant risk" that GlobalOne will not be able to recover any funds or monetary relief from Tempus because Tempus is likely to become insolvent or "judgment proof in the near future. Compl. ¶ 85. In support of this claim, GlobalOne alleges, for example, that a Prospectus filed with the United States Securities and Exchange Commission ("SEC") on February 12, 2018, disclosed that TASH has suffered "significant operating losses and negative cash flows from [its] operations" and that it has not been and may never be consistently profitable. Id. ¶¶ 86-87 (quoting Prospectus, Ex. 2 to Compl., ECF No. 1-2, at 19). GlobalOne further alleges that TASH's Form 10-Q filed with the SEC on November 28, 2017 (hereinafter "10-Q") states that TASH's "recurring losses," "recurring negative cash flows from operations," and its current capital deficit raise "substantial doubt about the Company's ability to continue as a going concern." Id. ¶88 (quoting 10-Q, Ex. 9 to Compl., ECF No. 1-9, at 10). Lastly, the complaint alleges that an affiliate of TASH, whose principal is also the CEO of Tempus, is involved in separate litigation in this Court, and the progress of such litigation appears to indicate that this Tempus affiliate also has serious financial problems. Id. ¶¶ 95-97.

         D. Summary of GlobalOne's Claims

         Relying on the foregoing factual allegations, the complaint asserts the following claims.

         1. Count I: Breach of Contract against Tempus

         Count I alleges that Tempus breached the AM A in five ways: (i) terminating the AMA without providing sixty days' notice; (ii) failing to return certain Aircraft Records to GlobalOne; (iii) failing to transfer all subscriptions and accounts to GlobalOne; (iv) failing to pay certain EUROCONTROL fees assessed against the Aircraft; and (v) failing to return the $750, 000.00 Operating Deposit to GlobalOne. Compl. ¶ 100. In addition to judgment in favor of GlobalOne on this claim, Count I also seeks an injunction "ordering Tempus to immediately return the Logbooks and other Aircraft Records to GlobalOne" and "to immediately transfer all subscriptions and accounts registered to the Aircraft to GlobalOne." Id. ¶ 103.

         2. Count II; Declaratory Judgment against Tempus

         Count II seeks a declaration that "Tempus's knowing and unlawful retention of the Logbooks and certain Aircraft Records and refusal to return the Deposit to GlobalOne constitutes a breach of the AMA." Id. ΒΆ 107. It further requests an injunction "ordering Tempus to immediately return the remaining Aircraft Records to GlobalOne" and "prohibiting Tempus and any of its affiliates, parent companies or subsidiaries (including [TASH]) from selling, ...


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