Article

Note: Swift Air, LLC and its representatives, Jeffrey Conry, Boris Van Lier, and Donald A. Stukes (collectively Service Provider), contracted with Saipan Air, Inc. (Carrier), an air transportation provider between the Commonwealth of the Northern Mariana Islands and various locations in Japan and China, to provide aircraft, crew, maintenance, and insurance ("ACMI") by a certain date. Service Provider, however, failed to provide the aircraft for Carrier on the launch date, terminated the ACMI Agreement, and filed for bankruptcy.

Carrier alleged that Service Provider made false representations regarding its financial information and capacity to have the aircraft available on the agreed launch date, on which Carrier relied to wire USD 900,000, of which USD 700,000 was for a deposit with International Lease Finance Corporation (Beneficiary) to secure the aircraft, and the remainder for Carrier's marketing efforts. Only USD 176,000 was transferred to Beneficiary, and Carrier's Parent was further required to provide a standby letter of credit in the amount of USD 524,000, the balance of the required USD 700,000 deposit. Carrier's Parent wired an additional USD 376,000 at the request of Service Provider to meet the launch date.

Carrier sued Service Provider on the claims of "(1) fraud, (2) violation of the Racketeer Influenced and Corrupt Organization Act [("RICO Act")], 18 U.S.C. § 1961 et seq., and (3) unjust enrichment." Service Provider moved for summary judgment, and the U.S. District Court for the District of Northern Mariana Islands, Manglona, J., granted the motion in favor of Stukes on the claim of fraud.

Stukes was a minority owner of Service Provider with a 10 percent interest but misrepresented himself as an independent financial advisor hired by Service Provider to negotiate a bridge loan with Carrier, and the Judge stated that an omission to inform Carrier of Stukes' interest in Service Provider did not amount to concealment of material fact "because the loan was never consummated, ... [not resulting in] detrimental reliance on or damages caused by those alleged misrepresentations."

Summary judgment was denied in favor of Conry and Van Lier because there was sufficient evidence of their intention for the ACMI Agreement to be "a ruse to siphon large amounts of cash away from" Carrier and of Carrier's justifiable reliance on the material fact to provide the cash and the letter of credit. However, the Judge granted summary judgment in favor of Service Provider on the claims of violations of the RICO Act and unjust enrichment, since there was no pattern of racketeering activity in the few months of the agreement and no benefit conferred on Service Provider's representatives personally from Swift Air.

[JL]

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