After six years of litigation, New York-based developer Don Peebles recently won a judgment for nearly $1.7 million against a Boca Raton-based charter jet company and its owner.
In 2009, Peebles sued Chardan Aero Corp. and Federico Machado in Miami-Dade Circuit Court, accusing both of defaulting on a lease payment for a Gulfstream IIB airplane Peebles purchased two years earlier.
Last year, Circuit Court Judge Sarah Zabel ruled in Peebles’ favor, but only awarded him $24,626.50 — the amount Chardan owed for the one month rent it did not pay. Peebles’ attorneys subsequently went to the Third District Court of Appeals to reverse Zabel‘s ruling on the damages, claiming Machado and his company owed five years worth of lease payments remaining on the contract. On Nov. 12, 2014, the Third DCA sided with Peebles, awarding him $1.2 million in damages plus $461,283 in interest. The judgment was ratified by Miami-Dade Circuit Court Judge Eric Hendon on March 4. Peebles, chairman and CEO of the Peebles Corp., has a home in Coral Gables, and splits his time between New York and Miami.
“The Third DCA’s decision was very significant,” Peebles’ attorney Susan Trench of the law firm Arnstein & Lehr told The Real Deal. “My client lost even more money after taking possession of a plane he didn’t want to begin with.”
Eric Arrington, an attorney representing Chardan Aero Corp. and Machado, defended his clients.
“Our position, which we argued before the 3rd DCA, was that the contract was terminated due to Peebles taking possession of the aircraft prior to Machado’s notice of the defaults’ maturation,” Arrington told TRD. “If the competing defaults had actually matured, Machado’s would have been valid and primary.”
The dispute began about a year after Peebles bought the Gulfstream jet and entered into an agreement on July 16, 2007 with Machado to lease his charter company the aircraft. According to Peebles’ complaint, Machado approached the developer to buy the plane because he didn’t have the credit to make the purchase himself, which Arrington doesn’t dispute.
Machado agreed to pay $24,626.50 a month for five years and allow Peebles to use the plane for ten days of every month. Peebles was responsible for paying charter expenses such as jet fuel, pilot costs, and landing fees when he used the plane. In September 2008, Peebles and Machado were going back and forth about the August invoice for expenses. A month later, Machado did not make his lease payment, according to the suit.
“Mr. Machado realized that he wasn’t making the money he anticipated from the aircraft and was looking for a way out of the deal,” Peebles’ attorney Trench said. “When he didn’t make his October payment he accused my client of defaulting on the invoice.”
According to Arrington, his client sent Peebles a notice of default on Oct. 12, 2008 for not paying the August invoice. Peebles countered by sending Machado a notice of default for not making his lease payment. He also repossessed the plane on Oct. 16.
Before Judge Zabel, Arrington argued that since his client filed a notice of default first, Peebles was not entitled to any damages. He also said Peebles failed to give his client a 10-day grace period to make his lease payment, per their contract.
“They tried to put words in my client’s mouth that he was looking to terminate the deal,” Arrington said. “He testified that they didn’t want to pay their bills so he was going to send them a notice of default.”
Arrington noted that Machado sent a notice of default pursuant to the terms of the contract, whereas, Peebles’ notice of default was contrary to the terms of the contract.
Zabel dismissed Machado’s counterclaim and sided with Peebles. However, she only awarded him one month’s lease payment based on the fact he took back the plane. The Third DCA overruled her decision.