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NetJets Aviation, Inc. v. LHC Communs., LLC - 537 F.3d 168 (2d Cir. 2008)

Rule:

Although a district court may, on an appropriate record, grant summary judgment sua sponte--after giving the party against which the court is contemplating such a decision notice and an opportunity to present evidence and arguments in opposition--the court, in considering such a decision, is required to view the record in the light most favorable to the party against which summary judgment is contemplated and to resolve all ambiguities and draw all factual inferences in favor of that party. Summary judgment is not appropriate if the evidence is such that a reasonable jury could return a verdict in favor of the party against which summary judgment is contemplated.

Facts:

Plaintiffs NetJets Aviation, Inc., and NetJets Sales, Inc. (collectively "NetJets"), appeal from so much of a judgment of the United States District Court for the Southern District of New York, Deborah A. BattsJudge, as summarily dismissed their claims against defendant LHC Communications, LLC ("LHC"), for breach of contract and their claims against defendant Laurence S. Zimmerman, as LHC's alter ego, for breach of contract and account stated. The district court, having granted partial summary judgment in favor of NetJets on account-stated claims against LHC, sua sponte dismissed NetJets's breach-of-contract claims against LHC on the ground that they were duplicative of the account-stated claims. The court sua sponte granted summary judgment dismissing NetJets's claims against Zimmerman on the ground that NetJets had not adduced sufficient evidence to pierce the corporate veil. On appeal, NetJets contended principally that the district court erred in treating its breach-of-contract claims as duplicative of its account-stated claims, because the pertinent contracts allow NetJets to recover not only the balances due on LHC's accounts but also attorneys' fees. Netjets also claimed that the district court erred in concluding that there was not sufficient evidence to support its breach-of-contract and account-stated claims against Zimmerman as LHC's alter ego.

Issue:

Did the district court err in dismissing NetJets’ claims against LHC for breach of contract and NetJets’ claims against Zimmerman, as LHC's alter ego, for breach of contract and account stated?

Answer:

Yes

Conclusion:

NetJets’ breach-of-contract claims against the LHC were erroneously dismissed and NetJets were entitled to trial on the contract and account-stated claims against Zimmerman as LHC's alter ego. As attorneys' fees based on contract clauses could not be recovered on claims for account stated, NetJets' contract claims were not duplicative of the claims for account stated. Both the question of whether LHC was operated as Zimmerman’s alter ego and the question of whether it was so operated in a way that showed fraud, illegality, bad faith, or an overall element of injustice or unfairness, remained to be answered by the factfinder after trial.

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