Contracts-Clause Claim – Federal Jurisdiction

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7^th Circuit Court of Appeals

Case Name: Gary Jet Center, Inc. v. AFCO AvPorts Management LLC

Case No.: 16-1233

Officials: WOOD, Chief Judge, and BAUER and ROVNER, Circuit Judges.

Focus: Contracts-Clause Claim – Federal Jurisdiction

Plaintiff-appellant Gary Jet Center, Inc. is a Fixed Base Operator (FBO) at the Gary/Chicago International Airport. Defendant-appellee Gary/Chicago International Airport Authority is a municipal corporation that owns and operates the Gary Airport. Defendants-appellees Mays, Dillard, Pritchett, Cooper, and Irving, are members of the Authority’s board. Defendant-appellee AFCO AvPORTS Management LLC manages operations at the Gary Airport.

Gary Jet filed suit on September 24, 2015. The Authority moved to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) on October 19, 2015. The district court granted the motion as to the Contracts-Clause claim without prejudice on December 18, 2015. It declined to dismiss the state law claims pending further briefing on the issue of supplemental jurisdiction. At Gary Jet’s request, it relinquished jurisdiction over the state law claims on January 19, 2016. This appeal followed.

The primary issue on appeal is whether Gary Jet has stated a Contracts-Clause claim, as it is the sole basis for federal jurisdiction. The Contracts Clause provides that “No state shall … pass any … Law impairing the Obligation of Contracts … . ” U.S. CONST. art. I, § 10. Gary Jet is still operational at the Gary Airport and has not been forced to comply with the new provisions set forth in the New Minimum Standards. Further, the Authority relies upon the 2014 Settlement Agreement in which the parties agreed that the New Minimum Standards would control Gary Jet’s lease. No legislative power has been used to deny Gary Jet a remedy for a breach of the 2007 Lease. Therefore, this contract dispute has not risen to the level of a constitutional impairment. Accordingly, we find that Gary Jet has failed to state a Contracts-Clause claim. Because there is no basis for federal jurisdiction, Gary Jet’s remaining state law claims must be pursued in state court.

Affirmed

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Attorney Derek A. Hawkins is the managing partner at Hawkins Law Offices LLC, where he heads up the firm’s startup law practice. He specializes in business formation, corporate governance, intellectual property protection, private equity and venture capital funding and mergers & acquisitions. Check out the website at www.hawkins-lawoffices.com or contact them at 262-737-8825.