UNITED STATES OF AMERICA

FEDERAL AVIATION ADMINISTRATION

WASHINGTON, D.C.

FLIGHTLINE GROUND, INC. d/b/a )

FLIGHTLINE FIRST, )

)

Complainant )

)

v. ) DOCKET NO. 16-11-01

)

LOUISIANA DEPARTMENT OF )

TRANSPORTATION AND DEVELOPMENT, )

AS SUCCESSOR TO THE LOUISIANA )

DIVISION OF ADMINISTRATION and THE )

BOARD OF COMMISSIONERS FOR THE )

MANAGEMENT OF THE LAKEFRONT )

AIRPORT; NON-FLOOD PROTECTION )

ASSET MANAGEMENT AUTHORITY, )

AS SUCCESSOR TO THE BOARD OF )

COMMISSIONERS OF THE ORLEANS )

PARISH LEVEE DISTRICT and ORLEANS )

PARISH LEVEE DISTRICT, DIVISION OF )

NON-FLOOD ASSETS )

)

Respondents )

SUBMISSION OF DOCUMENTS IN

RESPONSE TO REQUEST FOR ADDITIONAL INFORMATION

COMES NOW the Non-Flood Protection Asset Management Authority, as successor

to the Board of Commissioners of the Orleans Levee District and Orleans Levee District,

Division of Non-Flood Assets, Respondent in the above captioned matter, and for its

response to the request of the Federal Aviation Administration (FAA) for additional

information and documents, respectfully submits the following:

Submission of Relevant Documents

The OLD relied on the following documents in entering into the mediated Settlement
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Agreement with AeroPremier and Advantage Capital:

1. The Judgment of the Court holding the OLD liable to AeroPremier for breach

of the lease. Respondent=s Exhibit R-1 which has been previously submitted

and is attached.

2. The report of LaPorte Sehrt Romig Hand. Respondent=s Exhibit R-3 which

has previously been submitted and is attached.

3. The report of Harold Asher. Respondent=s Exhibit R-4 which has been

previously submitted and is attached.

4. Certain tax returns which were made available under seal of confidentiality.

5. AeroPremier=s list of customers lost because of the lack of a facility (Building

101). See Respondent=s Exhibit R-7 which is attached hereto.

6. The report of The Aviation Group, prepared after the mediated settlement,

provide detailed information concerning the Settlement Agreement and the

justification therefore. That report was filed in these proceedings with the

Respondent=s rebuttal and is attached.

Justification for Settlement

For the FAA to understand the motivation of the OLD to settle the state court

litigation initiated by AeroPremier, it is important to understand the factual and procedural

antecedents that led to the mediated settlement. 

Under the Transportation Statute and the relevant FAA policies, Airport Sponsors

are entitled to use their best judgment to settle lawsuits using airport revenue in concert

with those statutory and regulatory obligations. As explained below, because (1) the OLD

had been found liable for breach of the lease with AeroPremier, (2) the OLD faced a
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substantial risk of a large adverse judgment in the state lawsuit, (3) the OLD recognized

that its expert report covered only one element of the damages claimed by AeroPremier,

lost fuel sales, and (4) a settlement meant that the OLD would not have to pay a monetary

judgment, which would have allowed AeroPremier to offset 100% of all amounts due OLD

until the judgment was paid, the OLD decided that it was reasonable to settle the state

lawsuit immediately for rent credits. When monetized, these credits were much less than

the amounts AeroPremier could have recovered in its lawsuit.

This settlement was between two adversarial parties in a lawsuit under the

jurisdiction and competency of a state court and pursuant to the laws of Louisiana. There

was no collusion and not a scintilla of evidence has been presented to prove collusion. Any

such “conspiracy” would have to, by definition, involve not only OLD and AeroPremier, but

also the judge of the State of Louisiana. The settlement was not disproportionate to the

risks in this lawsuit and did not prejudice any other party, including Complainant. 

AeroPremier presented a very strong case during the state court litigation. The

litigation began as a breach of lease dispute. The allegations were that the Orleans Levee

District breached the lease by failing to repair AeroPremier’s hurricane damaged facilities

on time and discriminated against AeroPremier in favor of similarly-situated lessees at the

Airport, including the instant Complainant. During the early stages of the litigation,

AeroPremier obtained a partial summary judgment for breach of the lease based on the

OLD’s failure to repair the facility on a timely basis. See Respondent’s Exhibit R-1. The

basis for this particular claim was that AeroPremier leased a large hangar complex

(Building 101), ramp space, and other facilities from the OLD for use as AeroPremier=s

hangar, FBO customer area, and office space. However, since this facility had been
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damaged by Hurricane Katrina, the lease required the OLD to repair Building 101 by

August 2009. In the meantime, AeroPremier was forced to use a trailer/pre-fabricated box

as a “temporary” FBO customer area and office. The OLD did not even initiate these

repairs by the beginning of August 2009, which was when they were supposed to be

completed under the lease. AeroPremier alleged and provided evidence during mediation

that it was losing customers directly because it lacked a permanent facility. See

Respondent’s Exhibit R-7 attached. This facility will be ready for occupancy on February

1, 2012. 

AeroPremier’s expert witness, an accountant named Harold Asher, opined that

AeroPremier lost between $2 million and $3.5 million as a result of the OLD’s contract

breaches. He further opined that had AeroPremier failed as a result of the OLD’s actions,

the losses would have exceeded $5 million. See Respondent’s Exhibit R-4. Pursuant to

Louisiana Civil Code Article 1997: “An obligor in bad faith is liable for all the damages,

foreseeable or not, that are a direct consequence of his failure to perform.” As the law

permits, the expert’s calculation included more than just lost customers that could be

identified by name, and also took into account lost market share and other identifiable

losses.

The FAA’s December 6, 2011 request for more information cites the OLD’s expert

report that shows a loss of a mere $200,000. See Respondent’s Exhibit R-3. While the

OLD engaged this expert, the OLD was concerned that its own expert’s report only covered

projected lost fuel sales. Among the OLD’s concerns was that the OLD’ expert report did

not include the following:

• The loss of other revenue streams generated along with the loss of fuel
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revenue: In addition to providing fuel, an FBO also earns substantial revenue

through the provision of maintenance, office rent, hangar fees, detailing,

catering, rental cars, travel service fees, ground support, and tie down fees.

The OLD’ expert report did not include these other revenue sources. 

• The OLD expert’s report compared AeroPremier to one competing FBO -

Flightline; there was no comparison to the other FBO, Odyssey/Landmark

Aviation. This was important because AeroPremier argued that the Airport’s

actions also placed AeroPremier at a disadvantage with respect to Odyssey/

Landmark. This FBO also opened a new office and hangar, leaving

AeroPremier as the only FBO at the Airport operating out of a trailer. OLD’s

expert report did not consider the additional market share that AeroPremier

could have taken from Odyssey/Landmark. 

• The OLD’s expert report did not address when the Airport would complete

repairs to the hangar/office complex. The report identifies April 2012 as the

end of damages period. But even if repairs were completed by that time,

there would be significant residual effects for an extended period of time on

revenue caused by opening an office 2 years, 8 months late. These

damages could have extended and may in fact extend many years beyond

the eventual renovation completion. Some of these negative effects could be

virtually irreversible. 

• The OLD’s expert report did not take into account the cumulative effect of

being the only FBO at New Orleans Lakefront Airport not having a first class

office/customer area. Each month of delay resulted in customers deciding
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to go to a competitor with an office with a resultant loss of future customers

and revenue. 

• AeroPremier also argued that due to the Airport’s actions, AeroPremier lost

Gulf Coast Aviation as a fuel, office, maintenance, and tie-down customer.

The approximate loss for five years was estimated at $288,000; the total loss

for 10 years was estimated at $448,000. AeroPremier also argued that it lost

Flight Academy of New Orleans as a customer. The total loss for five years

was estimated at approximately $214,000. 

• The OLD expert report also was alleged to have failed to consider

AeroPremier’s lost profits for not being able to sublease office space.

AeroPremier’s position was that it would have leased several thousand

square feet of the hangar/office facility and an additional structure (Building

103 and NG Office) each year with a profit margin of at least $3 psf. The

total for five years was estimated at $315,000; for 10 years at $765,000.

Other points raised included prospective sublease tenants for approximately

35,000 square feet of office space. In addition to Gulf Coast Aviation,

AeroPremier alleged it was unable to accommodate a significant number of

prospective tenants, including an aviation maintenance school and repair

shop, Flight Academy of New Orleans (they were tenants in AeroPremier’s

north hangar but moved to Flightline’s more convenient space near the main

terminal), a movie stunt company, which wanted to utilize office and

warehouse space to bring in celebrities in their aircraft to prepare for

upcoming movie stunts. AeroPremier believes had the space been available
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to lease, it would have leased most of it.

• AeroPremier also argued that it was harmed by having its use of its leasehold

reduced by an unauthorized structure (Building 105) being on its leasehold

and from the Flightline self-service pump, which may have encroached on

the leasehold. It alleged that it was also harmed by not having equal access

(as other FBOs) to areas outside of its leasehold. There was no

calculation/estimate of this damage in the OLD’s expert report.

Based on the factors explained above, and even using the OLD’s loss numbers for

fuel-revenue calculations, AeroPremier’s losses were alleged to be a minimum of $2 million

up to $3.5 million. The OLD’s expert report also was alleged to contain other flaws, such

as the way expenses were calculated and the way the damage period was determined.

The OLD Benefitted From the Settlement

Had the issue of the amount of damages - the only question remaining in the breach

of contract litigation - gone to trial, AeroPremier’s recovery may have been based on

identifiable lost customers or contracts, projected revenue and market share lost, and any

award by the court would likely have required the OLD to pay AeroPremier an award in

cash. Any fair evaluation of the settlement, then, must consider that the OLD derived

significant benefit from the granting of rent credits payable over a period of years. For

example, the OLD retained a revenue stream from AeroPremier all of which would have

been lost for a significant period of time based on the amount of monetary damages the

court would have awarded AeroPremier. The value of these intangibles must be considered

in evaluating the settlement, which benefitted both sides. Moreover, Advantage Capital

Partners invested in AeroPremier based on the various contractual rights AeroPremier had
Sahuque Realty Co. v. Employers Commercial Union Ins. Co., 327 So.2d 563 (La.App 4 Cir. 1976), 1

cert. den. 330 So.2d 617 (La.); Lou-Con, Inc. v. Gulf Bldg. Services, Inc., 287 So.2d 192 (La.App. 4 Cir. 1973),

cert. den. 290 So.2d 899 (La.) and cert. den. 290 So.2d 901 (La.).

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under its FBO Lease and other agreements alleged with the OLD. This Company=s

investment turned sour, allegedly as a result of the breach of the lease, prompting

Advantage to file its own claim for damages against the OLD that was ultimately resolved

by the settlement. Certain tax returns were made available to undersigned counsel under

seal of confidentiality showing losses which far exceeded the amount of rent credits

attributable to Advantage’s losses.

With liability established, the litigation would have come down to a credibility

determination by the court on the competing expert reports. Where liability is shown, a

claim will not be rejected merely because of uncertainty as to the amount of damages.

Where damages cannot be precisely or mathematically determined, the court is vested with

much discretion in making awards for damages. AeroPremier presented a responsible 1

expert report - one that took into account all of the sources of revenue known to have been

damaged at the time the report was written. The OLD’s expert report focused exclusively

on fuel sales and failed to account for other revenue streams. 

It would be inappropriate for the FAA to second guess the Sponsor’s decision to settle

rather than risk a factual determination on damages by the judge in the state court litigation.

The Complaint Should Be Dismissed

Lastly, as stated in its Answer, the Complainant’s Complaint should be dismissed

because it did not comply with the requirements of §16.21 “Pre-Complaint resolution” as

follows:
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Prior to filing a Complaint under this part, a person directly and

substantially affected by the alleged noncompliance shall

initiate and engage in good faith efforts to resolve the disputed

matter informally with those individuals or entities believed

responsible for the noncompliance. These efforts at informal

resolution may include, without limitation, at the parties’

expense, mediation, arbitration, or the use of a dispute

resolution board, or other form of third party assistance... A

Complaint under this part will not be considered unless the

person or authorized representative filing the Complaint

certifies that substantial and reasonable good faith efforts to

resolve the disputed matter informally prior to filing the

Complaint have been made and that there appears no

reasonable prospect for timely resolution of the dispute. This

certification shall include a brief description of the party's efforts

to obtain informal resolution b ut shall not include information

on monetary or other settlement offers made but not agreed

upon in writing by all parties.

Based upon the four corners of the Complaint and upon information and belief, there

have been no actual “good faith efforts” to resolve these issues between Flightline and the

Sponsor, and thus the Complaint must be dismissed. Even though in December 2009,

Flightline initiated what seems to have been a Part 13 complaint about a rental issue

involving AeroPremier, Flightline’s Part 13 complaint does not justify the commencement

of a Part 16 action without further effort to seek a resolution of the issues presented in the

Complaint. Mere allegations of informal discussions do not constitute a good faith effort

to resolve issues, but constitute an unwarranted effort to prevent or delay the

implementation of the Settlement.

Conclusion

In further response to the FAA for additional information, Respondent reiterates the

statements made in its original Answer to the Complaint regarding justification for the

settlement with AeroPremier, specifically found on pages 14, 15, 16 and 17. Respondent
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also requests that the FAA re-examine the report prepared by The Aviation Group (TAG)

attached to Respondent’s rebuttal.

Respondent reiterates its position that this Complaint be summarily dismissed.

Respectfully submitted this 5 day of January, 2012. th

GERARD G. METZGER (APLC)

BY: s/Charles T. Curtis, Jr. 

GERARD G. METZGER (LSBA #9468)

EMAIL: gerry@metzgerlawfirm.com

CHARLES T. CURTIS, JR. (LSBA #4677)

EMAIL: ccurtis@metzgerlawfirm.com

829 BARONNE STREET

NEW ORLEANS, LA 70113

TELEPHONE: (504) 581-9322

FACSIMILE: (504) 581-2773

AND

J. E. MURDOCK, III

5034 NEBRASKA AVE.

WASHINGTON, D.C. 20008

TELEPHONE: (202) 333-5986

ATTORNEYS FOR RESPONDENT,

NON-FLOOD PROTECTION ASSET

MANAGEMENT AUTHORITY
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CERTIFICATE OF SERVICE

I hereby certify that I have this day served the foregoing Submission of Documents

in Response to Request for Additional Information on the following persons at the following

address via electronic mail:

Office of the Chief Counsel

Attn: FAA Part 16 Airport Proceedings Docket

AGC-610

Federal Aviation Administration

800 Independence Ave., S.W.

Washington, DC 20591

Email: 9-AWA-AGC-Part-16@faa.gov

Alan Armstrong, Esq.

2900 Chamblee-Tucker Road

Building 5, Suite 350

Atlanta, GA 30341

Email: alan@alanarmstronglaw.com

Counsel for Complainant,

Flightline Ground, Inc. d/b/a Flightline First

Brandon Brown, Esq.

1201 Capital Access Road

Baton Rouge, LA 70804

Email: brandon.brown@la.gov

Counsel for Respondent,

Louisiana Department of Transportation and Development

Dated this 5 day of January, 2012. th

 s/Charles T. Curtis, Jr. 

CHARLES T. CURTIS, JR.

Counsel for Respondent, Non-Flood Protection 

Asset Management Authority