Great Gulf Corp. v. William Talford Graham, R.P. Air, Inc.

654 F.Supp.3d 838

GREAT GULF CORPORATION, Plaintiff/Counter-defendant, v. William Talford GRAHAM, R.P. Air, Inc., andRandolph M. Pentel, Defendants/Counter-claimants.

Case No. 20-CV-1835 (PJS/TNL)

United States District Court, D. Minnesota

Signed February 6, 2023

Erik F. Hansen, Elizabeth M. Cadem, and Kirk A. Tisher, BURNS & HANSEN, P.A.; Barbara P. Berens, BERENS & MILLER, P.A.; Fred A. Schwartz, SHAHADY WURTENBERGER, P.A., for plaintiff/counter-defendant.

Jacob B. Sellers and Justice Ericson Lindell, GREENSTEIN SELLERS PLLC, for defendants/counter-claimants.

ORDER

Patrick J. Schiltz, Chief Judge

In 2013, plaintiff Great Gulf Corporation ("Great Gulf") arranged for a vintage aircraft that it owned—a 1955 Grumman HU-16C (the "Aircraft")—to be flown from Anchorage, Alaska, to Toronto, Ontario, with a planned stop at the Anoka County Airport in Minnesota. After the Aircraft arrived in Minnesota, however, it never left. The Aircraft sat at the Anoka County Airport until May 2019, when defendant Randolph Pentel filed an action in state court in which he sought to establish that he owned the Aircraft. The state court granted default judgment to Pentel. Great Gulf moved to vacate the judgment on the basis that it had never had notice of the action, but the state court denied its motion. The state court's judgment was later reversed on appeal, and the matter was remanded to the state court for further proceedings. The state-court action remains pending.

While its state-court appeal was pending, Great Gulf filed this action, naming Pentel and R.P. Air, Inc.¹ (the "Pentel defendants") and William Talford Graham (Great Gulf's former president) as defendants. Great Gulf's complaint asserts fraud and breach-of-fiduciary-duty claims against Graham and replevin, conversion, and unjust-enrichment claims against the Pentel defendants. ECF No. 1. Great Gulf also asks this Court to declare that it continues to own the Aircraft. Id. Defendants have asserted counterclaims. ECF No. 38.

This matter is now before the Court on the parties' cross-motions for partial summary judgment.² For the reasons that follow, Great Gulf's motion is granted in part and denied in part, and defendants' motion is granted.

I. BACKGROUND³

Great Gulf purchased the Aircraft in September 2012. Ex. A to Sellers Decl. [ECF No. 120]. In the spring of 2013, Great Gulf hired Ryan Mohr to fly the Aircraft from Anchorage, Alaska, to Anoka, Minnesota, where Mohr would perform repairs on the Aircraft before flying it to Toronto, Ontario. Ex. B to Sellers Decl. ("Mohr Report"). Mohr flew the Aircraft to Anoka in June 2013 and completed the repairs that were needed before the Aircraft could be safely flown to Toronto. Id. Mohr then contacted Great Gulf's agent, Troy Wilson, to notify him that the repairs were complete. Wilson, however, is not a reliable individual; as Mohr and others were to learn, Wilson often failed to respond to communications and sometimes failed to pay Great Gulf's bills. In typical fashion, Wilson did not initially respond to Mohr or make arrangements for the Aircraft to finish its trip to Toronto. Id. The Aircraft was eventually moved out of the Anoka County Airport hangar (where Mohr had completed the repairs) and onto the tarmac at the airport. Id.

The Aircraft then sat on the tarmac—year after year—exposed to the harsh Minnesota weather. See Mohr Report. As the Aircraft deteriorated, Wilson would sporadically communicate with Mohr and the facility responsible for storing the Aircraft. Often, Wilson would seem to disappear, only to pop up months later. See Mohr Report; Ex. L to Sellers Supp. Aff. [ECF No. 155-4]; Ex. F to Sellers Decl. [ECF No. 123]. Throughout the years, however, Great Gulf continued to pay for storage of the Aircraft. The record reflects that Lynx FBO ("Lynx"), the most recent owner of the airport storage facility housing the Aircraft, last received payment from Great Gulf in May 2018. Ex. F to Sellers Decl. (email from Lynx to Wilson dated Sep. 25, 2018); Pentel Supp. Aff. ¶ 4 [ECF No. 153].

Pentel is a wealthy pilot and aviation enthusiast. Pentel learned about the Aircraft in December 2018. In early 2019, he went to the airport to inspect the Aircraft in person. Pentel took photos and videos of the Aircraft and noted that it was in very poor condition as a result of sitting unprotected for several years.⁴ Pentel Decl. [ECF No. 119]. Pentel later provided the photos and videos to Bolling DeSouza, the owner of an aircraft-brokerage firm, and DeSouza opined that the Aircraft "had essentially no value" at the time the photos and videos were taken. Ex. D to Sellers Decl. ("DeSouza Report") ¶ 38 [ECF No. 120-1].

At about the time that he inspected the Aircraft, Pentel spoke with Mike Agee, Lynx's general manager, and Agee informed Pentel that Wilson was Lynx's point-of-contact with respect to the Aircraft. Agee gave Wilson's email address to Pentel, and Pentel reached out to Wilson to ask about the Aircraft. See Pentel Decl.; Pentel Supp. Aff. Wilson responded on January 11, 2019, telling Pentel that Wilson did not own the Aircraft but that he "managed it for a period of time. The ownership remains with the same company." Ex. D to Pentel Supp. Aff. [ECF No. 153-3]. Wilson also informed Pentel that he had been "asked recently to look into the status of the plane and bring it back up to airworthy." Id. Pentel then asked for the name and telephone number of the owner of the Aircraft. In response, Wilson informed Pentel that Great Gulf owned the Aircraft, but told Pentel that Wilson was the point-of-contact for Great Gulf, and asked Pentel to explain the nature of his interest in the Aircraft. Pentel refused to do so, but asked again for Great Gulf's direct contact information. Id. Wilson did not provide that information.

In May or June 2019,⁵ Pentel purported to purchase liens on the Aircraft from Lynx and Mohr. See Ex. A to Pentel Decl.; Pentel Supp. Aff. ¶ 12. At about the same time, Pentel filed an action in state court, seeking a declaration that the Aircraft was unclaimed property under Minn. Stat. § 345.02 and an order declaring that Pentel "[has] a valid lien in and against the Aircraft and directing sale of the Aircraft." Ex. C to Compl.

Although Pentel knew that Great Gulf owned the Aircraft—and although he had Wilson's contact information—Pentel never notified Great Gulf or Wilson of the lawsuit. After Pentel's attorney made inaccurate representations to the state-court judge, Pentel obtained a default judgment in September 2019. Ex. C to Sellers Decl. Supp. Mot. Dismiss [ECF No. 16-3]. A month later, Great Gulf moved to vacate that judgment on the grounds that it had never received notice of the action. Ex. D to Sellers Decl. Supp. Mot. Dismiss [ECF No. 16-4]. In responding to Great Gulf's motion to vacate, Pentel submitted an affidavit from Graham, in which Graham claimed that he was the president of Great Gulf and that the motion to vacate had not been not authorized by the company. 2019 Graham Aff. [ECF No. 154-1]. Graham had no basis for making that claim, as Graham had not had any involvement in—or even knowledge of—Great Gulf's operations since 2012. Id. ¶¶ 3-4, 20. The state court nevertheless relied on Graham's affidavit in denying Great Gulf's motion to vacate on March 20, 2020. Ex. G to Compl. Great Gulf appealed the state court's judgment.

While that appeal was pending before the Minnesota Court of Appeals (which eventually reversed the state court⁶), Great Gulf filed this action. It appears that, by the time Great Gulf filed its complaint, the Pentel defendants had taken possession of the Aircraft and had begun making repairs to it. See Compl. ¶¶ 60-61; Def. Ltr. to Ct. [ECF No. 33].

Great Gulf's complaint includes claims for fraud and breach of fiduciary duty against Graham for his role in assisting Pentel in the state-court litigation (Counts I and II); claims for replevin, conversion, and unjust enrichment against the Pentel defendants (Counts III, IV, and V); and a request for a judgment declaring that Great Gulf is the owner of the Aircraft (Count VI). ECF No. 1. After the Court denied defendants' motion to dismiss, ECF No. 34, defendants filed an answer and counterclaims. Defendants seek a judgment that the Pentel defendants are the owners of the Aircraft (Count I) or alternatively that the Aircraft is unclaimed (Count II); ask the Court to enter an order foreclosing on defendants' liens on the Aircraft (Count III); and ask the Court to award them damages (Counts IV, V, and VI). ECF No. 38.

The action is now before the Court on the parties' cross-motions for partial summary judgment. For the reasons that follow, defendants' motion is granted in full and Great Gulf's motion is granted in part.

II. ANALYSIS

Great Gulf moves for summary judgment on Counts III (replevin) and IV (conversion) of its complaint and on Counts I (declaratory judgment), II (unclaimed property), and III (lien foreclosure) of defendants' counterclaims. Meanwhile, defendants ask the Court to enter judgment in their favor on Counts I (fraud), IV (conversion), and V (unjust enrichment) of Great Gulf's complaint.

The dispute over the current ownership of the Aircraft is at the heart of both Count III of Great Gulf's complaint (replevin) and Count I of defendants' counterclaims (declaratory judgment). Therefore, the Court will begin by addressing that dispute.

A. Legal Standard

Summary judgment is warranted "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A dispute over a fact is "material" only if its resolution might affect the outcome of the suit under the governing substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A dispute over a fact is "genuine" only if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. "The...