United States District Court, D. Arizona
Honorable John Z. Boyle, United States Magistrate Judge.
before the Court is Third-Party Defendants', Darrin and
Tina Cannon, f/d/b/a Phoenix Heliparts, Inc. (the
“Cannons”), Motion for Summary Judgment on all
remaining counts. (Doc. 69.) Specifically, the Cannons argue
that Third Party Plaintiff Robert Reish has waived all claims
against the Cannons for all actions that are the subject of
this suit. (Id. at 1.) The Court will deny the
third-party-litigation stems from the Azerbaijan Ministry of
Defense's suit of Robert Reish over his alleged breach of
a contract between them regarding the purchase and sale of a
MD Helicopter, Model 369FF, Serial No. 0041FF (the
“41FF”). (Doc. 1.) Defendant Reish has filed a
third-party complaint against the Cannons alleging fraud
relating to matters arising out of and relating to the 41FF
and seeking equitable indemnity as to AMOD's claims
against him. (Doc. 23.) On Summary Judgment, the Cannons
allege that Reish has waived his third-party claims against
them for all actions that are the subject of this action.
(Doc. 69 at 1.) With that procedural posture in mind, the
Court briefly summarizes the following relevant facts.
Reish, the Cannons, and PHP.
Heliparts, Inc. (“PHP”) was a corporation that
dealt in aircraft resoration and sales. (See Doc. 23
at 39, ¶¶ 12-14; doc. 43.) PHP was operated by Tina
Cannon, President, and Darrin Cannon, vice president of
operations. (Doc. 70, ¶¶ 2-3; doc. 73 at 2.) Reish
hired PHP on multiple occasions to assist with the purchase,
restoration, and sale of various aircraft. (See Doc.
23 at 38-60.)
February 13, 2014, PHP and Reish executed a contract for PHP
to sell Reish the 41FF, the helicopter at issue in this
action. The 41FF had previously been wrecked, and PHP needed
to make significant repairs before it could deliver it to
Reish in compliance with the 41FF sales agreement.
(See doc. 43, ex. 2, at 18, ¶ 4 (the 41FF Sales
Agreement, requiring that the 41FF be delivered “with
all systems operational, a current Airworthiness Certificate,
Flight records up to date, all mandatory Airworthiness
Directives and Service Bulletins complied with.”)).
Reish alleges that PHP failed to complete the repairs on the
41FF, render it airworthy, or deliver it to Reish by the
delivery deadline. (Doc. 23 at 38.) As late as September
2015, Reish was still pushing PHP to finish the 41FF so he
could sell it to another party.
PHP's Chapter 11 Filing.
September 18, 2015, PHP filed its chapter 11 bankruptcy case.
(Doc. 70, ¶ 1; doc. 73 at 1.) See also In re Phoenix
Heliparts Inc., 15-bk-12003-DPC at Docket
The bankruptcy filing was precipitated by a January 2015
state court judgment against PHP for $26 million and the
state court's subsequent order requiring PHP to post a
supersedeas appellate bond for $6, 765, 260.89. (Bankr. Doc.
1.) On October 22, 2015, the bankruptcy court appointed Louis
Mukai as chapter 11 Trustee for PHP. (Bankr. Doc. 108.)
31, 2016, the bankruptcy court approved the Trustee's
First Amended Liquidation Plan (the “Plan”).
(Doc. 77 at 17 (Bankr. Doc. 482).) The bankruptcy court's
approval Order established the Phoenix Heliparts Liquidation
Trust (“Liquidation Trust”), installed Louis
Mukai as the Liquidation Trustee. (Id.) The Order
also provided the Liquidation Trust with the exclusive right
to “institute, prosecute, abandon, settle or compromise
any causes of action, in accordance with the terms of the
Plan and the Liquidation Trust Agreement” and stated
that “the Liquidation Trustee will have standing, under
state and/or federal bankruptcy law or otherwise, to file,
litigate and settle the any remaining causes of action as
provided in the Plan and the Liquidation Trust
Agreement.” (Id. at 14-15.) Under the terms of
the Plan that was approved by the court, the Liquidation
Trust shall “succeed[ed] to all property, rights,
powers, causes of action, and other rights of the Debtor and
the Trustee, subject only to the terms of the Sale order and
APA.” (Id. at 37.)
Liquidation Trust Agreement and Declaration of Trust states
that “the primary purpose of the Liquidation Trust is
(i) oversee and direct the liquidation of the Trust Assets
for the benefit of the Beneficiaries thereunder; and (ii)
distribute any proceeds of the Trust Assets received by the
Liquidation Trust to the Beneficiaries pursuant to the terms
of the Plan.” (Id. at 47.) The Declaration
also provides context as to what liabilities were to be
conveyed to the Liquidation Trust from the Debtors and the
Estate upon approval of the Plan.
1.5 Assignment and Assumption of Certain Liabilities. In
accordance with Section 1 hereof, the Debtor hereby
irrevocably transfer, assign and convey the Trust Assets to
the Liquidation Trust, and the Liquidation Trustee on behalf
of the Liquidation Trust hereby assumes and agrees that all
such Trust Assets are being transferred to the Liquidation
Trust subject to the following liabilities, if any, that
arise out of or relate to any known or unknown claim (as such
term is defined in Section 101(5) of the Bankruptcy Code) or
causes of action against the Debtor or their respective
a) all fees payable pursuant to Section 1930 of title 28 of
the United States Code until such time as the Bankruptcy
Court enters a final decree closing each Debtor's Chapter
b) any expenses incurred and unpaid, or to be incurred, by
the Liquidation Trustee in the performance of its
administrative duties in respect of the winding up of the
Debtor' Estates, including the filing of final tax
returns. For the avoidance of all doubt, in no event shall
the Liquidation Trustee pay any tax liability for any member,
shareholder or owner of a business entity (as defined in Reg.