Fraud claims vs 2 Swift Air executives to press ahead

• Saipan Air’s racketeering, unjust enrichment claims dismissed
• Pixley says he is preparing for the Feb. 2, 1015 jury trial

The federal court has allowed Saipan Air Inc.’s fraud claims against two of three Swift

Air executives to proceed, but issued a ruling favorable to the three executives on the
claims of racketeering and unjust enrichment filed against them.

In a 32-page decision and order, U.S. District Court for the NMI Chief Judge Ramona V.
Manglona ruled that Saipan Air’s fraud claim against Jeffrey Conry and Boris Van Lier shall
proceed but not against Donald A. Stukes.

Manglona also granted summary judgment in favor of Conry, Van Lier, and Stukes in
Saipan Air’s claims for violations of the Racketeer Influenced and Corrupt Organization Act
and for unjust enrichment. This means Saipan Air’s RICO and unjust enrichment claims are
now dismissed.

When asked yesterday, Saipan Air counsel Steven P. Pixley said he is preparing for the jury trial scheduled on Feb. 2, 2015.

The trial will be against Conry and Van Lier relating to the fraud claims. Conry and Van Lier are currently employed by Arizona-based Swift Air, which emerged from bankruptcy in 2013.

Saipan Air filed the racketeering lawsuit against Conry, Van Lier, and Donald A. Stukes in July 2012.

Swift Air filed for bankruptcy protection in Arizona shortly after notifying Saipan Air that it would not deliver two 757 aircraft and one 737 aircraft for Saipan Air’s program. Saipan Air was unable to sue Swift Air directly because of the bankruptcy filing.

Conry, Van Lier, and Stukes filed a motion for summary judgment. The motion sought a
dismissal of Saipan Air’s claims.

Saipan Air opposed the motion. After hearing the motion last Oct. 30, Manglona placed the matter under advisement.

In the order last week, Manglona said Stukes is alleged to have made false representations only during negotiations beginning May 31, 2012, for a $1.5 million bridge loan.

Manglona said because the loan was never consummated, Saipan Air cannot show detrimental reliance on or damages caused by those alleged misrepresentations.

“Therefore, as to fraud, summary judgment must be granted in favor of Stukes,” Manglona said.

With respect to Conry and Van Lier, Manglona said Saipan Air has produced sufficient evidence to create a genuine dispute as to whether, at the time the aircraft, maintenance, and insurance (ACMI) agreement was executed, the two had any intention to deliver on their promises of aircraft and services.

“Although as a matter of law, Saipan Air could have justifiably relied on misrepresentations made by defendants early in the negotiations, the evidence, when viewed in the light most favorable to the nonmoving party, does not support the conclusion that in fact Saipan Air so relied,” she said.

Manglona said that e-mails exchanged between Saipan Air’s chief operating officer Adam Ferguson and Van Lier show that in mid-January 2012, both parties to the negotiation doubted Swift Air could deliver service in time for Saipan Air’s July 2012 launch.

Manglona said the fact that Saipan Air’s COO [Ferguson], the person to whom the alleged false representations were made, does not think the fraud started until March 2012 is strong evidence that Saipan Air did not rely on the early representations.

Manglona said Saipan Air has not cited any substantial evidence that it relied on the early representations when it decided to enter into the ACMI Agreement and sent a security deposit in April 2012, or when it wired cash to Swift Air a second time in late May 2012.

“The court therefore finds that evidence of detrimental reliance on the early representations is not such that a reasonable jury might determine that fraud was proved within convincing clarity,” the judge said.

Manglona said there is a clear dispute as to material facts surrounding the conclusion of the ACMI Agreement and the two wire transfers.

Manglona said the court finds that Saipan Air has set forth specific facts showing that there is genuine issue for trial as to whether, after negotiations resumed in March 2012,

Conry and Van Lier knowingly made material misrepresentations that fraudulently induced Saipan Air to enter into the ACMI Agreement and pay the $900,000 security deposit.

Manglona said Saipan Air’s most compelling argument against justifiable reliance is that by May 22, 2012, Ferguson had concluded that Van Lier and Conry were liars. Moreover, she said, although Ferguson no longer trusted Conry and Van Lier, Saipan Air was “not aware that we’re in the middle of a completely fraudulent deal up until that point.”

“Saipan Air has produced sufficient admissible evidence to try this question to the jury,” the judge said.
On RICO claim, Manglona said Saipan Air cannot establish continuity by reference to alleged fraudulent acts against other persons and entities.

“Because Saipan Air has not come forward with evidence to show a pattern of racketeering activity, summary judgment will enter in favor of all defendants on the RICO claim,” Manglona said.

The judge said it is unnecessary therefore to consider Stukes’ alternative argument that the evidence does not show that he directed the affairs of the alleged racketeering enterprise.

On the unjust enrichment claim, Manglona said Saipan Air has not gone beyond inflated rhetoric to actually demonstrate that as a matter of law and based on the evidence, Swift Air was the defendants’ alter ego.