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Sky Harbor Air Service, Inc. v. Cheyenne Regional Airport Board

Supreme Court of Wyoming

February 9, 2016

SKY HARBOR AIR SERVICE, INC., a Wyoming Corporation, Appellant (Defendant),
v.
CHEYENNE REGIONAL AIRPORT BOARD, a Wyoming Corporation, Appellee (Plaintiff). SKY HARBOR AIR SERVICE, INC., a Wyoming Corporation, Appellant (Appellant/Defendant),
v.
CHEYENNE REGIONAL AIRPORT BOARD, a Wyoming Corporation, Appellee (Appellee/Plaintiff) SKY HARBOR AIR SERVICE, INC., a Wyoming Corporation, and H. PAUL MARTIN, Appellants (Defendants),
v.
CHEYENNE REGIONAL AIRPORT BOARD, a Wyoming Corporation, Appellee (Plaintiff).

Appeal from the District Court of Laramie County The Honorable Steven K. Sharpe, Judge

Representing Appellant(s): Susan Martin, Wellington, Colorado.

Representing Appellee: Patrick M. Brady, Jane M. France, and Raymond W. Martin, Sundahl, Powers, Kapp & Martin, LLC, Cheyenne, Wyoming. Argument by Mr. Martin.

Before BURKE, C.J., and HILL and KAUTZ, JJ., and BROOKS and FENN, DJJ.

BROOKS, District Judge.

[¶1] These three consolidated appeals are the culmination of years of litigation between the parties. They involve a tangled web of claims and allegations between the Appellant ("Sky Harbor") and the Appellee (Cheyenne Regional Airport or "Airport"). At the heart of the controversy is Sky Harbor's alleged failure to pay rent to the Airport. The focus of Sky Harbor's defense is that the District Court lacked subject matter jurisdiction to decide any of the cases now on appeal. The District Court disagreed and generally found in favor of the Airport in all three cases. We affirm.

ISSUES

[¶2] The parties raised numerous issues on appeal. The Court finds the following issues to be dispositive:

1. Did the District and Circuit Courts lack subject matter jurisdiction in the three combined appeals?
2. If the lower Courts had subject matter jurisdiction, were judgments entered in accordance with the law?

FACTS

[¶3] Sky Harbor ran a Fixed Based Operator ("FBO") business at the Airport for many years. An FBO provides mooring, hangar space, fuel, maintenance, and other services for general aviation users of the Airport. Sky Harbor entered into an FBO lease with the Airport in September of 1996. The lease contained a termination date of December 31, 2011.

[¶4] In addition, the Airport decided to renovate a hangar and convert it into an aircraft paint shop. The Airport received partial funding for the renovation from the U.S. Department of Commerce Economic Development Administration ("EDA"). The Paint Shop became operational in 1997. It was operated by several entities, but was never successful. The Paint Shop lease was taken over by Sky Harbor in 2004.

[¶5] Thereafter, Sky Harbor had difficulty staying current with rent payments on both the FBO and Paint Shop leases. In 2006, Sky Harbor sought and obtained additional funding through a Small Business Administration ("SBA") grant which was ultimately administered by United Western Bank ("Bank")[1] of Denver, Colorado.

[¶6] In 2006, there was an amendment to the FBO lease which allowed Sky Harbor to extend the lease to December 31, 2018, if certain conditions were met. In 2006, there was also an agreement between Sky Harbor and the Airport which allowed Sky Harbor to assign its interest in the FBO lease to the Bank as collateral for the SBA loan. The Assignment of Sky Harbor's interest to the Bank included the following:

1. If Sky Harbor defaulted under the lease, the Bank could reassign the lease to a new FBO operator who would assume all of Sky Harbor's responsibilities;
2. That the Bank would have no liability under the lease unless the Bank itself took over the lease;
3. That Sky Harbor would remain fully liable for all obligations under the lease;
4. If the Bank took possession of the lease it would pay any unpaid rent;
5. If the Bank took possession of the lease it would make payments due under the lease, but if the Bank abandoned the lease or reassigned the lease, the Bank would have no further obligations to the Airport;
6. The Airport would not terminate the lease without giving the Bank notice of Sky Harbor's default and the opportunity to cure the default within 60 days from receipt of the notice.

[¶7] On October 6, 2010, the Airport gave the Bank notice of Sky Harbor's default under the FBO lease. The Airport alleged that Sky Harbor had failed to pay rent due, failed to pay required insurance premiums, and had failed to meet minimum performance standards. There was no attempt to cure the default by the Bank or Sky Harbor. On December 23, 2010, the Airport terminated the FBO lease with Sky Harbor. On January 21, 2011, the Bank failed and went into Federal Deposit Insurance Corporation ("FDIC") receivership.

PROCEDURAL BACKGROUND

Federal Court Litigation

[¶8] In 2008, Sky Harbor initiated litigation against the Airport in the United States District Court for Wyoming, based on the Paint Shop lease. Sky Harbor Air Serv., Inc. v. Reams, 491 Fed.Appx. 875, 879 (10th Cir. 2012). Sky Harbor asserted claims for extortion, fraud, conspiracy, defamation, violation of Constitutional rights, breach of contract, and multiple other causes of action. Id. at 880. The Airport counterclaimed for breach of contract. Id. Ultimately, the U.S. District Court granted summary judgment in favor of the Airport and awarded the Airport $429, 809.20 in damages, attorney fees, and costs. Id.

[¶9] That Judgment was appealed by Sky Harbor to the United States Court of Appeals for the Tenth Circuit. The Tenth Circuit generally affirmed the District Court. Sky Harbor did not appeal to the United States Supreme Court.

Ejectment Action (S-15-0143)

[¶10] After the Airport terminated the FBO lease in December of 2010, the Airport filed a petition for ejectment and recovery of real property in February 2011. Suit was brought in Wyoming State District Court, seeking possession of the FBO buildings and removal of Sky Harbor from the premises. Sky Harbor filed multiple counterclaims. The Airport then filed a motion for summary judgment asking the District Court to address only the FBO lease termination date. In 2012, the District Court, in a comprehensive opinion, concluded the FBO lease expired by its own terms on December 31, 2011, and was never extended. The claim for ejectment was therefore granted.

[ΒΆ11] The Airport then filed another motion for summary judgment in the same case, to determine whether Sky Harbor was in breach of the FBO lease, and whether the Airport was due any damages. After some procedural starts and stops, the District Court concluded that Sky Harbor breached multiple amendments to the FBO lease. A judgment was entered in the ejectment action, awarding the ...


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