Opinion ID: 2596
Heading Depth: 2
Heading Rank: 1

Heading: The Contracts Between NetJets and LHC

Text: On August 1, 1999, LHC entered into two contracts with NetJets. In the first (the Lease Agreement), NetJets leased to LHC a 12.5 percent interest in an airplane, for which LHC was to pay NetJets a fixed monthly rental fee. The lease term was five years, with LHC having a qualified right of early termination. The second contract (the Management Agreement) required NetJets to manage LHC's interest in the leased airplane and to provide services such as maintenance and piloting with respect to that airplane, or substitute aircraft, at specified hourly rates. It required LHC to pay a monthly management fee, as well as fuel charges, taxes, and other fees associated with LHC's air travel. The Management Agreement allotted to LHC use of the airplane for an average of 100 hours per year for the five-year term of the lease (LHC air hours), and it provided that if the leased airplane were unavailable at a time when LHC wished to use it, NetJets would provide substitute aircraft. NetJets regularly sent LHC invoices for the services provided under the Lease and Management Agreements. The Lease Agreement provided that [i]f any action at law or in equity is necessary to enforce the terms of this Agreement, the prevailing party shall be entitled to reasonable attorneys' fees in addition to any other relief to which such party may be entitled. (Lease Agreement § 19.) It was agreed that the Lease Agreement would be governed by and construed in all respects in accordance with the laws of the State of New York. ( Id. § 17.) The Management Agreement, which the parties agreed would be governed by Ohio law ( see Management Agreement § 21), provided that if LHC failed to pay amounts due under that Agreement, LHC would be liable for the costs of collection, including reasonable attorneys' fees ( see id. § 7). In July 2000, LHC terminated its agreements with NetJets. LHC's chief financial officer (CFO) James P. Whittier sent a letter, addressed to a NetJets vice president, stating, in pertinent part, that [t]he present outstanding is $440,840.39 and we are requesting that you apply the deposit of $100,000 against the outstanding and contact this office to resolve the balance. (Letter from James P. Whittier to Ron Miller dated July 24, 2000 (LHC Termination Letter).) As requested, NetJets contacted LHC and applied the $100,000 deposit against LHC's debt; however, it did not receive payment of the remaining balance of $340,840.39. In 2001, LHC ceased operations.