Contracts Clause - FBO lease

CT
Chuck Thompson
Fri, Jul 14, 2017 3:17 PM

In an interesting dispute between an FBO and an airport authority the 7th Circuit has sustained the dismissal of a Contracts Clause Claim.  The facts are a bit complicated, but synthesizing them the FBO and Authority entered into a lease, disputed various issues as time went by, settled a Section 1983 claim against the Authority and renewed the lease with a significant change requiring the FBO to develop and comply with Minimum Standards for FBO's at the airport.  The FBO contended that the Minimum Standards should not apply to the lease and the Authority contended they should and adopted new Minimum Standards under its regulatory powers.  The FBO claimed among other allegations that the new Minimum Standards violated the Contracts Clause by impairing its contract with the Authority.  The 7th Circuit concluded that under circuit precedence that a Contract Clause claim cannot be sustained if there is a remedy for damages available to the injured party.  Here, the court concluded there were remedies, but if in the future those remedies are denied under a claim of legislative power, the claim might be reasserted.
"At this juncture, the Authority has not relied on any legislative power to negate any hypothetical claim by Gary Jet for a breach of the 2007 Lease because no such claim has been raised. Therefore, Gary Jet cannot plausibly demonstrate that it is without a remedy for any violation of its contractual rights, which is the sine qua non of a Contracts-Clause claim."

http://media.ca7.uscourts.gov/cgi-bin/rssExec.pl?Submit=Display&Path=Y2017/D07-13/C:16-1233:J:Bauer:aut:T:fnOp:N:1994040:S:0

Charles W. Thompson, Jr.
Executive Director and General Counsel
International Municipal Lawyers Association, Inc.
51 Monroe Street
Suite 404
Rockville, Maryland  20850
202-466-5424  x7110
Direct: 202-742-1016
Cell: 240-876-6790
Plan ahead:
IMLA's Annual Conference October 14- October 18, 2017 - Niagara, Ontario, Canada (Passport required)
To register, go to: http://imla.org/events/conferences#registration
IMLA's Annual Seminar and Section 1983 Defense Conference - April 20- April 23, 2018 Washington, DC

In an interesting dispute between an FBO and an airport authority the 7th Circuit has sustained the dismissal of a Contracts Clause Claim. The facts are a bit complicated, but synthesizing them the FBO and Authority entered into a lease, disputed various issues as time went by, settled a Section 1983 claim against the Authority and renewed the lease with a significant change requiring the FBO to develop and comply with Minimum Standards for FBO's at the airport. The FBO contended that the Minimum Standards should not apply to the lease and the Authority contended they should and adopted new Minimum Standards under its regulatory powers. The FBO claimed among other allegations that the new Minimum Standards violated the Contracts Clause by impairing its contract with the Authority. The 7th Circuit concluded that under circuit precedence that a Contract Clause claim cannot be sustained if there is a remedy for damages available to the injured party. Here, the court concluded there were remedies, but if in the future those remedies are denied under a claim of legislative power, the claim might be reasserted. "At this juncture, the Authority has not relied on any legislative power to negate any hypothetical claim by Gary Jet for a breach of the 2007 Lease because no such claim has been raised. Therefore, Gary Jet cannot plausibly demonstrate that it is without a remedy for any violation of its contractual rights, which is the sine qua non of a Contracts-Clause claim." http://media.ca7.uscourts.gov/cgi-bin/rssExec.pl?Submit=Display&Path=Y2017/D07-13/C:16-1233:J:Bauer:aut:T:fnOp:N:1994040:S:0 Charles W. Thompson, Jr. Executive Director and General Counsel International Municipal Lawyers Association, Inc. 51 Monroe Street Suite 404 Rockville, Maryland 20850 202-466-5424 x7110 Direct: 202-742-1016 Cell: 240-876-6790 Plan ahead: IMLA's Annual Conference October 14- October 18, 2017 - Niagara, Ontario, Canada (Passport required) To register, go to: http://imla.org/events/conferences#registration IMLA's Annual Seminar and Section 1983 Defense Conference - April 20- April 23, 2018 Washington, DC