Air Serv Corp. v. Flight Services Systems
74928-5
| Wash. Ct. App. | May 30, 2017Background
- FSS contracted with Delta to provide cabin cleaning at SeaTac; FSS lacked a federal compliance agreement for international flights, so Air Serv supervised FSS’s handling/transfer of trash on international flights from May–Sept 2011.
- Air Serv invoiced FSS (initially $250/flight, then $175/flight); FSS refused to pay and paid only a small hourly amount it claimed; Air Serv sued for unjust enrichment/quantum meruit, among other claims.
- Trial court found liability for unjust enrichment/quantum meruit, awarded Air Serv damages and attorney fees, then imposed $35,000 sanctions for discovery and other violations; FSS appealed (Air Serv I).
- Court of Appeals in Air Serv I remanded for clearer findings on the measure of damages (market value v. disgorgement) and more specific findings supporting attorney-fee and sanction awards.
- On remand the trial court found no market rate, concluded disgorgement of FSS’s profit was the appropriate remedy, and—because FSS withheld revenue/cost data despite orders—calculated profit as gross revenues tied to Air Serv’s services ($143,723.26) with attorney fees and sanctions totaling $115,323.22; total judgment $259,046.48.
- FSS again appealed; the Court of Appeals affirmed, holding disgorgement permissible where no market value is shown and the defendant intentionally withheld cost information, and upheld sanctions and fee findings.
Issues
| Issue | Plaintiff's Argument (Air Serv) | Defendant's Argument (FSS) | Held |
|---|---|---|---|
| Proper measure of damages for unjust enrichment | Disgorgement of the profit FSS received is appropriate because no market value exists | Disgorgement is inapplicable; trial court used wrong measure | Affirmed: disgorgement is a viable remedy when no market value is shown and defendant withheld cost data; trial court did not abuse discretion |
| Allocation/deduction of costs from disgorgement | Costs should be deducted from gross revenues when provable | FSS: trial court erred by not deducting costs and by allocating 100% of fixed fees to international flights | Affirmed: FSS intentionally withheld cost information; court permissibly inferred revenues and allocated fixed fees as a sanction, declining deductions |
| Sanctions and attorney-fee findings | Sanctions and fee award were warranted by discovery misconduct, false certifications, and other rule violations | FSS: sanctions unspecified, excessive, procedurally improper | Affirmed: remand findings detailed violations, discovery abuses, false declarations; lodestar analysis addressed; sanctions within discretion |
| Judicial bias / need for new judge | N/A (Air Serv opposed recusal) | FSS: judge exhibited bias and remand should be to different judge | Denied: no adequate proof of bias; remand to same judge not required |
Key Cases Cited
- Young v. Young, 191 P.3d 1258 (Wash. 2008) (describing measures of recovery for unjust enrichment: market value or increase in defendant’s property/interests)
- Burnet v. Spokane Ambulance, 933 P.2d 1036 (Wash. 1997) (requirements for imposing discovery sanctions and related procedures)
- Arkison v. Ethan Allen, Inc., 160 P.3d 13 (Wash. 2007) (doctrine of judicial estoppel and consistency of litigation positions)