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NetJets Aviation, Inc. v. LHC Communications, LLC

United States Court of Appeals for the Second Circuit
537 F.3d 168 (2d Cir. 2008)


Facts

NetJets Aviation, Inc. (NetJets) (plaintiff) leased to LHC Communications, LLC (LHC) (defendant) an interest in an airplane for a term of five years. LHC was a limited liability company (LLC) whose only member-owner was Zimmerman (defendant). Zimmerman had sole authority to make all financial decisions with respect to LHC. He often withdrew money from LHC’s account for personal use and transferred money into LHC’s account from his own personal account. Zimmerman did not have any written agreements with LHC regarding this comingling of funds. Many withdrawals from LHC’s account were for personal expenses, including a residence, phone and cleaning bills, a car, and health insurance for his family. Much of the flight time used by LHC under the lease with NetJets was used by Zimmerman and his family for personal trips. LHC terminated the lease agreement with NetJets about one year into the agreement. The next year, LHC ceased operations, owing NetJets a balance of $340,840.39. NetJets brought suit against LHC and Zimmerman. NetJets presented evidence that, among other things, Zimmerman took more money out of LHC’s account than he put in, continued withdrawing money for personal uses even while refusing to pay debts LHC owed to NetJets, and identified his deposits to LHC as loans when other evidence suggests that they were capital contributions. NetJets filed a motion for summary judgment. The district court granted the motion with respect to LHC, but denied the motion with respect to Zimmerman’s personal liability. The district court sua sponte granted Zimmerman, personally, summary judgment and dismissed the claims against him. NetJets appealed.

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Holding and Reasoning

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