## Facts

- BP Group, Inc. (BP), a Florida corporation, leased a Gulfstream G200 aircraft and entered into a nonexclusive aircraft-use arrangement with Capital Wings Airlines, Inc. (CWA), allowing BP to use the jet while CWA operated it in charter service.
- The parties’ written agreement required CWA to pay BP based on hours flown, subject to a monthly minimum payment of $80,000, reduced by BP’s own use of the aircraft.
- The agreement also contemplated that CWA could paint and refurbish the aircraft at CWA’s expense.
- CWA’s owners, including David N. Kloeber, Jr., executed personal guaranties for CWA’s payment and performance obligations.
- The aircraft was flown to Colorado for painting and refurbishment work costing roughly $650,000, and the refurbisher retained possession of the aircraft when the bill was not paid.
- After about six months, BP paid the refurbishment charges to obtain release of the aircraft and retrieve it.
- CWA later ceased operations and liquidated assets, and BP arranged for another operator to use the aircraft under a replacement deal that produced less revenue and did not include the $80,000 monthly minimum.
- BP sued CWA and Kloeber in federal court (D. Minnesota) for breach of the agreement and enforcement of the guaranty, seeking (among other items) unpaid amounts due under the monthly-minimum structure and reimbursement for the refurbishment and retrieval costs BP paid.
- The district court granted BP summary judgment, enforcing the agreement and guaranty and awarding damages exceeding $1.5 million, using Florida’s lessor-damages statute and treating the replacement agreement as sufficiently similar to the original deal.
- Kloeber appealed, challenging the contract’s enforceability, the scope of his guaranty (including refurbishment costs), and the damages calculation, including mitigation and the similarity of the replacement agreement.

## Issues

1. Was the aircraft agreement enforceable under Florida law, and did Kloeber’s guaranty make him liable for CWA’s obligations (including refurbishment costs)?
2. Was BP entitled to summary judgment on damages under Florida’s lessor-damages statute, or did fact disputes exist about whether BP reasonably mitigated damages and whether the replacement agreement was sufficiently similar to the original agreement?

## Decision

- The Eighth Circuit affirmed the district court’s summary judgment that the agreement was valid and enforceable and that Kloeber was liable under his guaranty for CWA’s obligations, including the refurbishment-related charges allocated to CWA by the agreement.
- The Eighth Circuit reversed the summary-judgment damages award, holding that factual disputes existed regarding the comparison between the original agreement and the replacement agreement and regarding BP’s mitigation efforts.
- The case was remanded for further proceedings on the proper measure of damages.

## Legal Principles

- Under Florida contract law, mutual promises and reciprocal obligations can supply sufficient consideration to form an enforceable agreement.
- A guaranty is interpreted according to its terms; where the guarantor promises full and prompt payment of amounts due by the principal obligor, the guarantor may be held liable for categories of charges the underlying contract assigns to the obligor.
- Summary judgment is improper when material facts are disputed on questions that affect damages, including the commercial reasonableness of a replacement transaction and the extent of loss attributable to the breach.
- Under Florida’s statutory remedies for a lessor after a lessee’s default, a lessor that re-lets may recover contract-based losses measured against the replacement arrangement only if the replacement transaction meets the statute’s requirements; disputes about whether the replacement is sufficiently comparable and whether the lessor acted reasonably can require fact-finding.

## Conclusion

The Eighth Circuit upheld enforcement of BP’s aircraft agreement and Kloeber’s guaranty, including liability for refurbishment costs the contract assigned to CWA, but it set aside the district court’s summary-judgment damages award because the record left material fact questions about BP’s mitigation and whether the replacement arrangement was comparable enough under Florida’s lessor-damages framework to support damages as a matter of law.


BP Group, Inc. v. Kloeber, 664 F.3d 1235 (2012)