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Home My WebLink About01-05974 -- . Jack F. Hurley, Jr., Esquire Attorney I.D. No. 24414 Dean F. Piennattei, Esquire Attorney I.D. No. 54837 Timothy J. Nieman, Esquire Attorney I.D. No. 66042 RHOADS & SINON LLP One South Market Sq., 12th Floor P.O. Box 1146 Harrisburg, PA 17108-1146 (717) 233-5731 Plaintiff, IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA OJ -.5971 CiV"i l Lompla.irJt NO. 01-4097 BAA HARRISBURG, INC., v. SUSQUEHANNA AREA REGIONAL AIRPORT AUTHORITY, IN EQillTY Defendant. JURY TRIAL DEMANDED COURT ORDER . AND NOW, this ~ day of October, 2001 it is hereby ORDERED that this case is transferred from the Equity Docket to the Civil Docket where it will be reassigned a Civil Docket number. All further proceedings in this matter shall be docketed to the Civil Docket number. BY THE COURT: J. ~ fi~ L!.-17-0 \ 404432.1 -~'<~""!""I!7\l'l -"'" -"'P" .. ,~~~~-, -'-----!lI' , -., FfLED,~YFJOE OF T'"1,' F2OTHONOTABY o I OCT 16 PH I: 07 CUM8EHLAND COUNTY PENNSYLVANIA B, J-I..~H!I~J~ ~Ji! "-_~_~J,_<__" c) _ '~''''_''_ _~IIfJ!iJIlJ j~,_._,7{!j~__Ji,~~lf'}J!!!f,t?!i,,':,;:'i:Fi'!~:-H:~k")"~~1:t1fr~1j~7lt':~~~~~iil~~~~ ,'" . ROBERT H. LONG, JR.l SHAWN D. LOCH INGER SHERILL. T. MOYER JAMES H. CAWLEY JAN P. PADEN DEAN F. PIERMATTEI RICHARD B. WOOD KENNETH L. JOEL I LAWRENCE B. ABRAMS III2 ~6~~AJ~S~fcLETE J. BRUCE WALTER LORI J. McELROY JOHN P. MANBECK THOMAS J. NEHILlA fRANK ). lEBER KEVIN M. GOLD PAUL A. LUNDEEN CARL D. LUNDBLAD JACK F. HURLEY, JR. JAMES E. ELLISON DAVID B. DOWLING RICHARD E. ARTELL DAVID F. O'LEARY ROBERT J. TRIBECK DAVID O. TWADDELL TIMOTHY J. NIEMAN CHARL.ES J. FERRY PAUL J. BRUDER, JR.4 STANLEY A. SMITH JOANNE BOOK CHRISTINE lENS H. DAMGAAR02 SUSAN E. SCHWAB DRAKE D. NICHOLAS AMY J. MENDELSOHN! THOMAS A. FRENCH MICHAEL W. WINFIEL03 DEAN H. DUSINBERRE KATHRYN G. SOPHY! DONNA M.J. CLARK STEPHANIE E. DIVITTQRE ~~~E~~Swi5~~[EHALL ~~~~~ ~.S::~6E~~CONE 1 ALSO ADMmED TO THE DISTRICT OF COLUMBIA BAR 2 ALSO ADMITTED TO THE FLORIDA BAR 3 ALSO ADMITTED TO THE MARYLAND BAR 4 ALSO ADMmED TO THE NEW JERSEY BAR 5 ALSO ADMITTED TO THE NEW YORK BAR RHOADS & SINON LLP ATTORNEYS AT LAW TWELFTH FLOOR ONE SOUTH MARKET SQUARE P.O. BOX 1146 HARRISBURG, PA 17108-1146 OF COUNSEL FRANK A. SINON HENRY W. RHOADS JOHN C. DOWLING R. STEPHEN SHIBLA TELEPHONE (717) 233-5731 PAUL H. RHOADS 1907-1984 JOHN M. MUSSELMAN 1919-1980 CLYLE R. HENDERSHOT 1922-1980 FAX (717) 231-6637 EMAIL dpiermatlei@rhoads-sinon.com WEB5lTE: www.rhoads-sinon.com DIRECT DIAL NO. (717) 233-5731 October 12,2001 FILE NO. 6216/01 Re: BAA Harrisburg. Inc. v. Susquehanna Area Regional Airport Authoritv. Docket No. 01-4097 Honorable Kevin A. Hess Cumberland County Courthouse One Courthouse Square Carlisle, PA 17013-3387 Dear Judge Hess: I am writing as a follow-up to my conversation with your secretary regarding the transferring of this matter from the Equity side to the Law side. In light of your ruling both parties are in agreement that this matter should be transferred to the Civil Docket. I am enclosing a letter from Michael Kelly who represents BAA Harrisburg in this matter. I am also enclosing a copy of a proposed Order. If there are any questions or problems, please feel free to call me. Very truly yours, ~~~ B. e : -;ermattei.~ DFP/tlp Enclosures cc: Michael Kelly, Esquire (w / encl. ) Counsel for BAA Harrisburg 404428.1 YORK; AFFILIATED OFFICE: LANCASTER: STE. 203, 1700 S. DIXIE HWY, BOCA RATON, FL 33432 TELEPHONE (561) 395-5595, FAX (561) 395-9497 TELEPHONE (717) 397-4431, FAX (717) 232-1459 TELEPHONE (717) 843-1718, FAX (717) 232-1459 "'i-';~O"I"Il_,~~ ~.4 ~ ,~J!I"1Ff ~~.I r ~ ",O' ',-d .1. Ul:J/~.' I i:UVl ~;;::: O~ .t'AA. 'f J.."(;;::" (O",uu ," !1:tt.;l"~~b rrl;:l..LJ..ttL:t:: b: l'lU.t:.LI".;.n. 'AY,v McNees Wallace & Nurick LLc; attorneys at Jaw 'i!!>I........... MtCRAEL R.lCELUY llTlU!c:fDlAL' (717)237-;3~2 E..MA.lL ADDRESS: Ml<BLLBY@MWN;COM September 21, 2001 VIA FACSIMILE AND U.S. MAIL Dean F. Piermattei, Esquire Rhoads & Sinon LLP One South Market Square Harrisburg. PA 17101 RE: 8AA Harrisburg, Inc. v. SARAA Dear Dean: We have filed a Second Amended Complaint. It was filed in the current equity action. We agree that this matter now should be transferred to the law side of the Court. We propose to accomplish this transfer through a joint stipulation and order. If your clients are agreeable to this, I will draft a stipulation and order. Please let me know. Sincerely, McNEES WAL By M . R.. Michael R. Kelley MRK:nfc ,.~...,.- ---- ,~ PO Box 1166 -100 PINE STREET - HARRISBURG, PA 17108-1166. TEL: 717.232.8000 . FA>: 717.237.5300' WWW;MWN.COM COLUMBUS, OH . HAZLETON, PA . WASI;INGTON. DC ""'~;~"l ~.~ "'1 '.'.< . BAA HARRISBURG, INC., IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff, v. NO. 01-5974 SUSQUEHANNA AREA REGIONAL AIRPORT AUTHORITY, CNIL COMPLAINT JURY TRIAL DEMANDED Defendant. NOTICE TO PLEAD TO: Plaintiff BAA Harrisburg, Inc. YOU ARE HEREBY NOTIFIED TO FILE A WRITTEN RESPONSE TO THE ENCLOSED NEW MATTER AND COUNTERCLAIM WITHIN TWENTY (20) DAYS FROM SERVICE HEREOF OR A JUDGMENT MAY BE ENTERED AGAINST YOu. RHOADS & SINON LLP By: ~.~~ JackF. Hurley, Jr., Esquire Dean F. Piermattei, Esquire Timothy J. Nieman, Esquire One South Market Square P. O. Box 1146 Harrisburg, PA 17108-1146 (717) 233-5731 - FOLEY & LARDNER Thomas R. Devine, Esquire David T. Ralston, Jr., Esquire 888 Sixteenth Street, N.W. Washington, D.C. 200006-4103 (202) 835-8000 Date: October 24, 2001 Attorneys for Susquehanna Area Regional Airport Authority j';}}J'iJ-_\l'., ~,-, '. ,,--~,,. ;- -'\' I ,-,... "'- - ~.;' Jack F. Hurley, Jr., Esquire Attorney 1.0. No. 24414 Dean F. l?iennattei, Esquire Attorney 1.0. No. 54837 Timothy J. Nieman, Esquire Attorney 1.0. No. 66042 RHOADS & SINON LLP One South Market Sq., 12th Floor P.O. Bolt 1146 Harrisburg, PA 17108-1146 (717) 233-5731 BAA HARRISBURG, INC., IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff, v. NO. 01-5974 SUSQUEHANNA AREA REGIONAL AIRPORT AUTHORITY, CIVIL COMPLAINT Defendant. JURY TRIAL DEMANDED ANSWER TO SECOND AMENDED COMPLAINT. NEW MATTER AND COUNTERCLAIM NOW COMES, Defendant Susquehanna Area Regional Airport Authority ("SARAN') by and through its attorneys, Rhoads & Sinon LLP and Foley & Lardner, and files the within Answer, New Matter and Counterclaim as follows: 1. Admitted. 2. Admitted. 3. Denied. SARAA is governed by a board of directors which currently is comprised of fourteen (14) members representing Dauphin County, Cnmberland County, York County, City of Harrisburg, City ofY ork, Lower Swatara Township and Fairview Township. 402793.1 ~~-*\~ " =, "71.'.'.." -- .-'-', ~ " l<tf""'" <O""'~'C'_ ""." 4. Admitted. 5. It is admitted that on December 16, 1997 SARAA and BAA Harrisburg, Inc. ("BAAH") entered into an "Agreement for the Management Operation and Maintenance of Harrisburg International Airport and Capital City Airport" (the "Agreement"). 6. Admitted in part. It is admitted that BAAH began to perform under the Agreement on or about January 3, 1998. It is denied that BAAH ever fully performed its responsibilities under the Agreement. 7. Denied. The terms of the Agreement speak for themselves and any attempt by BAAH to misconstrue or limit these terms is specifically denied. 8. Denied. The terms of the Agreement speak for themselves and any attempt by BAAH to misconstrue or limit these terms is specifically denied. 9. Denied. The terms of the Agreement speak for themselves and any attempt by BAAH to misconstrue or limit these terms is specifically denied. 10. Denied. The terms of the Agreement speak for themselves and any attempt by BAAH to misconstrue or limit these terms is specifically denied. By way of further answer, it is admitted that the airport police were employed by SARAA' 11. Denied. The terms of the Agreement speak for themselves and any attempt by BAAH to misconstrue or limit these terms is specifically denied. 12. Denied. The terms of the Agreement speak for themselves and any attempt by BAAH to misconstrue or limit these terms is specifically denied. -2- '"~aw;;5"'_ ",!. "-:!;I." , , ,,~ ,'~ 'I ,-,-. " ,,,, .-.~ "" . ~~ r- >,. ~" 13. Denied. The allegations in this paragraph are specifically denied. By way of further answer BAAH failed to meet its contractual requirements under the Agreement, including, but not limited to, the following: (i) BAAH did not provide the promised skills and experience; (ii) BAAH did not utilize its best efforts in promoting air service at HIA; (iii) BAAH did not ensure compliance with legal requirements concerning, inter ali!!, procurement, worker's compensation and other insurance; and (iv) BAAH did not maintain a professional, positive and responsive relationship with SARAA's Board. BAAH's failure to perform is further detailed in the Notices of Default which were sent to BAAH on February 19, 2001, April 2, 2001 and April 6, 2001. A copy of these notices are attached hereto as Exhibit "A" and incorporated herein by reference. 14. Denied. By way of further answer, BAAH refused to engage in any discussion of items of concern raised by SARAA at the meeting; SARAA indicated that, absent a mutually agreeable resolution, it was prepared to follow the formal default procedures under the contract to achieve a resolution through mediation or litigation; and any expression of a desire to terminate BAAH's role at the Airports was a direct result of BAAH's failure to perform its obligations under the Agreement, as detailed above. 15. Denied. SARAA's letter of March 23,2001 speaks for itself and any attempt by BAAH to misconstrue or limit the content of this letter is specifically denied. 16. Admitted in part. It is admitted that attached to the Answer to Second Amended Complaint as Exhibit "c" is a letter dated March 30, 200 I sent by BAAH to SARAA. The letter speaks for itself. The remaining allegations in this paragraph are specifically denied. By way of further answer, the allegations set forth in the March 30, 2001 letter are specifically denied. -3- ~"i~"""\\""\'_", .."_ __<~ r -'~,,"'< '_'~_ I ,~ __v~ . , I" ,~ r''''''''"~' "q<<','-, 17. Denied as stated. It is admitted that SARAA sent a Notice of Default dated April 2,2001. The Notice of Default speaks for itself. 18. Denied. The allegations of this paragraph are specifically denied. 19. Denied. The terms of the Agreement speak for themselves and any attempt by BAAH to misconstrue or limit these terms is specifically denied. 20. Denied. It is specifically denied that SARAA was in default of any of its obligations under the Agreement. i! 21. Denied. The allegations of this paragraph are specifically denied for the reasons set forth above. 22. Admitted. 23. Admitted. 24-25. Admitted that the letter from SARAA's Executive Director is attached to the Second Amended Complaint as Exhibit "E." By way of further answer, the letter speaks for itself and any attempt by BAAH to misconstrue or limit the language of this letter is specifically denied. 26. Admitted, in part, denied, in part. It is specifically denied that the SARAA Board held a meeting on June 29, 2001. By way of further answer, on June 29, 2001, the SARAA Executive Committee held an Executive Session wherein it met with the Negotiating Committee and reviewed the Negotiating Committee's proposal to terminate the Agreement with BAAH. The Executive Committee gave its endorsement of the Negotiating Committee's decision to - 4- '-~~,,- -"2'.1 /' L"_'"'-<_ _~" , , "~i~,,:7_"^': I' "-~,,,. ,., - ~ - " F, <- -," ~ >. '. "~< ,-~- proceed with sending a Notice of Termination subject to the ratification and confirmation by the SARAA Board at the earliest possible time. The SARAA Board did not take action at the June 29, 2001 meeting. At a special public meeting of the SARAA Board on July 3, 2001, the SARAA Board voted to ratify and confirm the actions of the Negotiating Committee. 27. Denied. The allegations in this paragraph are specifically denied for the reasons set forth in paragraph 26 above. 28. Denied. The allegations in this paragraph are specifically denied for the reasons set forth above. By way of further answer, it was the Negotiating Committee that terminated the Agreement subject to ratification and confirmation by the SARAA Board which occurred on July 3,2001. At the time the Agreement was terminated most if not all ofBAAH's employees were offered employment with SARAA pursuant to the terms of the Agreement. The BAAH employees who refused employment with SARAA were prevented from returning to their place of employment at the Airports. BREACH OF CONTRACT 29. The averments contained in Paragraph 29 do not require a responsive pleading. By way of further answer, SARAA's answers set forth above are incorporated herein by reference. 30-34. Denied. The averments contained in these paragraphs are legal conclusions and do not require a response. To the extent that these paragraphs contain factual averments, same are denied for the reasons set forth above. - 5 - _;'r1~~_ ,- -,.,- -c' ':"'C': -"--";_:C":""'~ rJ .-.- ,~ .. ~ ,I f~"*,,,,~~ _ WHEREFORE, Defendant respectfully requests judgment in its favor and against Plaintiff dismissing the Second Amended Complaint and awarding Defendant its costs for defending this action, including reasonable attorneys' fees. NEW MATTER 35. BAAH breached the Agreement and, accordingly, is barred from recovery under the Agreement 36. BAAH has failed to satisfy and plead all of the conditions precedent which would allow it to recover under the Agreement. 37. BAAH acted in a fraudulent manner. WHEREFORE, Defendant respectfully requests judgment in its favor and against Plaintiff dismissing the Second Amended Complaint and awarding Defendant its cost for defending this action including reasonable attorney fees. COUNTERCLAIM BREACH OF CONTRACT 38. Defendant incorporates herein by reference its responses to Paragraphs 1 through 37. 39. Pursuant to the Agreement, BAAH was required to fully operate, manage and market Harrisburg International Airport ("RIA'') and Capital City Airport ("CCA") (collectively the "Airports"). (A true and correct copy of the Agreement is attached as Exhibit "A" to Plaintiff s Second Amended Complaint and incorporated herein by reference). - 6- ~ _7",_,_ ,j' ;_o~_ '- -,' I ~i_ Q , I' 40. Pursuant to Section 3.01 of the Agreement, Plaintiff had an obligation to provide expertise and use its best efforts in fulfilling its obligations under the Agreement. Specifically, Section 3.01 provides as follows: if; Section 3.01. Relationship of Parties. (a) The relationship of the parties to this Agreement shall be that of owner and independent contractor except as may otherwise be specifically stated herein. As of the Effective Date, the Authority will be owner of the Airport Facilities and the Contractor shall act as an independent contractor to the Authority for the safe, professional, and cost efficient management and operation of the Airport Facilities. (b) The Contractor will make available, either through its direct employees or employees of its affiliates, expertise in the management, operation and maintenance of airport facilities. The Authority is relying on such expertise to provide the best and most efficient management, operation and maintenance of the Airport Facilities. The Contractor shall at all times use its best efforts in the course of the performance of its responsibilities hereunder and shall use its best efforts to inform and educate the SARAA Board regarding all matters related to the operation of the Airport Facilities and the aviation industry in general as it relates to and affects the Airport Facilities. (Agreement, ~3.01). 41. In performing its obligations, however, BAAH engaged in the following conduct which demonstrates its failure to utilize expertise and/or its best efforts in managing, operating and maintaining the Airports: (a) BAAH failed to employ individuals with air service experience and specifically failed to employ a marketing personnel with aviation experience, despite SARAA's direct request and urging that BAAH hire experienced aviation -7- ".f>~iff~< ~, ~-- ',' , - '-"~:-;""-"r" _~'_"'-:'C ':,e ,-' . . "I -f' ~I'~': i ,'_li1l1T"'LJIJ - - " -i'_~~ marketing personnel. BAAH's failure to employ experienced aviation marketing personnel caused SARAA to suffer lost revenues; (b) BAAH concluded that "standard marketing efforts" were sufficient to develop air service, even at a time when enplanements at HIA were dropping significantly; (c) As acknowledged by BAAH officials during a February meeting with SARAA, BAAH failed to recognize fundamental changes in the United States air service market, as well as the measures necessary to promote air service at the Airports; (d) As acknowledged by BAAH officials during a March meeting with SARAA, BAAH underestimated the development of operations by Southwest Airlines at Baltimore-Washington International Airport (''BWI''), the primary threat to RIA identified by BAAH; (e) BAAH failed to recognize and discuss existing conditions in the United States Air Service market, particularly the impact of operations of low fare carriers, that were recognized and discussed by the airport industry and the federal government prior to 1998; (f) In developing a marketing plan for RIA in February, 2001, to address the material decline in enplanements that had befallen the Airport in the previous two years, BAAH merely drew upon steps that had been taken by other publicly owned and operated airports in the United States, including many - 8- ". . - ,~.,'- -~-'-<'" '", , " - .-..r 1'_ - If ~ - W:Tl'.'n-"l'_.'j "". measures discussed and considered by United States airports for a number years, even preceding the Agreement; and (g) In its February, 2001 marketing plan, BAAH included the establishment and full funding by SARAA of a Regional Economic Task Force, despite the fact that such an activity would be prohibited by federa1law and the Federal Aviation Administration's Policy and Procedures Concerning the Use of Airport Revenue, and thus could potentially subject SARAA to substantial penalties. 42. Despite the express contractual duty to utilize its expertise in the management operation and maintenance of airport facilities, as well as the express, contractual duty to utilize its best efforts in performing under the Agreement, Plaintiff has failed to utilize its expertise or its best efforts in managing, marketing, or operating the Airports for the reasons set forth above and in the Notices of Default which are attached hereto as Exhibit "A." 43. In Section 24.25 of the Agreement, Plaintiff agreed to exercise high standards of business conduct in managing, maintaining, and operating the Airports: Section 24.25. Business Conduct. The maintenance of extremely high standards of honesty, integrity, impartiality, and conduct by the Contractor, its employees and agents is essential to assure the proper performance of this Agreement and the maintenance of public confidence in the Authority. The Contractor shall uphold and meet these high standards and use its best judgment to avoid misconduct and conflicts of interest and require the same of its officers, employees and agents. (Agreement, 924.25). - 9- O:-''''''0'il'~~%''t:l,~" ~ - '''1 ,~._ ".--,--,,,,-,,-. '--.' "I" I'-'!;!C'~ . .'.~~'-'-' . ,.~ 44. Despite this express, contractual obligation, Plaintiff contacted the office of a Maryland State Senator and the Maryland Department of Transportation regarding the subject or privatization of BWI and failed to answer inquiries posed by SARAA regarding a newspaper article linking BAAH to privatization efforts at BWI, a conflict of interest under the Agreement. 45. Specifically, at a March 22, 2001 meeting, SARAA representatives asked BAAH officials, in response to the article, the following questions: whether there have been discussions or correspondence between BAAH and BWI on privatization, overseeing concessions, or other matters; whether BAAH is aware of any activities at BWI that will affect RIA; to identify BAAH's intentions with respect to BWI; and whether BAAH thought it had a duty to inform SARAA of developments or potential developments at BWI, including BAAH's potential role at BWI. Plaintiff failed to respond to SARAA's inquiries in violation of the duties imposed under Section 24.25 of the Agreement. 46. BAAH further breached its contractual obligations by writing a letter dated March 30, 2001 adcb:essed to "Dear Community Leader" and delivering this letter to community leaders, including the Mayor of Harrisburg, as well as the political subdivisions that constitute members of SARAA. (A true and correct copy of the Letter is attached hereto as Exhibit "B" and incorporated herein by reference). 47. In that regard, the letter, dated March 30, 2001, was written on the letterhead of David M. Fleet, Airport Director, BAA Harrisburg and Harrisburg International Airport, and signed by David J. Roberts, Chairman, BAA Harrisburg, Inc. 48. In the letter, Mr. Roberts, a BAAH representative, stated that the SARAA Board failed to "embrace[ ] the partnership," "demonstrated a lack of commitment to both the spirit and - 10- '"f"igI;?>,",,"~_ <'-"~, "!Y. ", '">::,,-,,, '!,". :~'-^"T-- . . . . ~ " 1--- legal requirement of the contract," and made "inaccurate and unfounded accusations" against BAAH resulting from SARAA's "own lack of cooperation and overt hostility to BAA's professional management team." (Exhibit B). 49. The letter constitutes an improper, unprofessional and adverse attempt to interfere with SARAA's relationship with its constituent members and the public, as well as SARAA's own deliberations concerning its contractual relationship with BAAH. 50. Additionally, in the letter, BAAH materially misstates to the public the legal nature of the Agreement, presenting false and derogatory assertions regarding SARAA's acts and conduct, as well as inaccurate, misleading and harmful representations to public authorities and the general public. 51. In writing and delivering the letter containing material misstatements of fact regarding SARAA and the Agreement, BAAH violated its contractual obligation under Section 24.25 of the Agreement which requires BAAH to maintain high standards of honesty, integrity, impartiality and conduct in performing its contractual obligations and maintaining its contractual relationship with SARAA. 52. The letter also constitutes a violation of BAAH's obligation under Section 14.02(f) of the Agreement which states that "[t]he Contractor shall maintain a professional, positive, and responsive working relationship with the Airlines, the SARAA Board, and other representatives of SARAA, regulatory authorities, suppliers of materials, utilities, and services, and the public." (Agreement, g14.02(f)). - 11 - ~.~"'~'ill1'Jw."~,~~ ,,,. -".,',~> <. ~"l:" -.~ . . {f~-r -~ ~"~ " :;-?~~.~- 53. Despite the express, contractual requirement that BAAH maintain a professional, positive, and responsive working relationship with the SARAA Board, BAAH misrepresented -- to the public -. the nature of the Agreement and SARAA's conduct thereunder, a breach of Section 14.02(t) of the Agreement. 54. Moreover, in writing and delivering the letter, BAAH violated its obligation to act in the best interests of the Authority pursuant to Section 3.02 of the Agreement which provides that "[t]he Contractor hereby assumes all responsibility for prudent and diligent exercise of the rights and powers delegated hereunder and shall use such delegated rights and powers solely in the best interests of the Authority." (Agreement, ~3.02(c)). 55. Finally, by writing the letter containing material misstatements regarding SARAA and the Agreement on HIA letterhead, BAAH violated its obligations with respect to use ofHIA letterhead which must, under Section 3.02(c), be used only in the "best interests of the Authority." Id. 56. In Section 13.01(e) of the Agreement, Plaintiff expressly agreed to provide Workers' Compensation Insurance: Section 13.01. Contractor to Provide Insurance. The Contractor shall obtain and continuously maintain without interruption, during the Term and any Renewal term, the following insurance for the operations and activities on or at the Airport Facilities from Lloyd's Underwriters or a licensed insurance company or companies approved by the Authority and rated by Best's Rating at A-or better: . *** (e) Workers' Compensation Insurance with limits in amounts that fully comply with applicable statutory limits in the Commonwealth of Pennsylvania (including coverage for the - 12- --',>,' ,-,,--' , --:--"." ,'~ ~1_7_-' '" .~ I -,,~ I I> airport police). The scope of coverage afforded by the insurance shall also comply with applicable statutory requirements in the Commonwealth of Pennsylvania. This scope shall include, but not be limited to, coverage for injury, death or occupational disease of employees of the Contractor and the Authority arising out of and/or in the scope of their employment. (Agreement, g13.01(e)). 57. Contrary to the express obligation in the Agreement, Plaintiff failed to provide Workers' Compensation insurance in compliance with the statutory mandates of the Commonwealth of Pennsylvania. 58. In Section 3.06 of the Agreement, Plaintiff expressly agreed to provide professional services, including Airfield Maintenance and Snow Removal, and Purchasing and Contracts Management. (Agreement, gg3.06(b)(1), 3.06(c)(6)). 59. In addition, under Section 3.03(a) of the Agreement, Plaintiff agreed to administer and enforce all contracts in the best interest of SARAA: Section 3.03. Contract Administration. (a) The Contractor shall administer and enforce on behalf of and in the name of the Authority all of the Authority Agreements or any other leases, agreements, contracts, documents, and. instrnments which the Authority reasonably requests, consistent with the terms of this Agreement and all Legal Requirements and in a manner consistent with the best and most efficient operation, maintenance, and management of the Airport Facilities including, without limitation, the collection and payment of all sums due under the Authority Agreements or any other leases, agreements, contracts, documents, and instruments which the Authority reasonably requests and the giving and receiving of notices and requests to and from the parties to the Authority Agreements or any other leases, agreements, contracts, documents, and instruments which the Authority reasonably requests. Without limiting the foregoing, the Authority specifically authorizes the Contractor to request and demand all rent and other such charges -13 - "B~","",""_ e"_,,."t= ^"_._'_ ~ e, r,., I , . r ~_ Y'l"~1 J <- t'; ',' "'~~"'~,....~= - and to institute legal proceedings through such collection agencies or law firm(s) as the Contractor shall deem necessary or appropriate, on behalf of, and in the name of, the Authority. All rent and other charges shall be paid directly to the Authority. All actions taken by the Contractor pursuant to this Section 3.03(a) shall be ratified and confirmed by the SARAA Board as necessary or appropriate. (Agreement, ~3.03(a)). 60. Plaintiff failed to perform its contractual duties and obligations pursuant to Sections 3.03(a), 3.06(b)(1), and 3.06(c)(6) of the Agreement by negligently and improperly preparing and administering the public procurement documents for the purchase of a runway snow broom vehicle. As a result, SARAA was required to obtain the runway snow broom vehicle from a different company, at a significantly increased expense and with significant time and effort on the part of SARAA staff and Board members. 61. Plaintiff failed to perform its contractual duties and obligations pursuant to Section 3.03(a) of the Agreement by failing to properly administer the lease with Stambaugh's Air Services for Buildings 28 and 134 at HIA by performing approximately $40,000.00 of maintenance on the Stambaugh leased premises which Stambaugh was obligated to perform under the terms of the Stambaugh lease. 62. Plaintiff also failed to perform its contractual duties and obligations pursuant to Section 3.03(a) of the Agreement by failing to properly administer the Stambaugh lease in failing to require Stambaugh's to provide insurance coverage in compliance with Article 14 of the lease. 63. In addition, Plaintiff failed to comply with SARAA's public procurement policy and the procurement laws of the Commonwealth of Pennsylvania in the acquisition of a used paint machine (E-Z Liner Paint Striper) mounted on a 1989 Chevrolet chassis in violation of - 14- ..L.,>_' "' " ,..'. . l .... :1' ~. ~~~~ y r~ ';",~~""",,,~ Sections 3.03(a) and 10.01 which provides that "[t]he Contractor shall comply with all Legal Requirements." (Agreement, glO.OI). 64. Plaintiffs failure to perform the requisite duties and provide the requisite services to which it was contractually obligated, in the manner by which it was contractually obligated, constitutes Events of Default under Section 16.01(b) ofthe Agreement. (Agreement, gI6.01(b)). 65. In compliance with Section 16.03 of the Agreement, SARAA provided BAAH with written notice of each Event of Default and an opportunity to cure the defaults. (See Exhibit A). 66. Specifically, BAAH was notified by letters dated February 19, 2001 of the following Events of Default: BAAH's failure to provide workers' compensation insurance; BAAH's negligent and improper preparation and administration of the public procurement documents for the purchase of a runway snow broom vehicle; BAAH's failure to properly administer the lease with Stambaugh's by performing $40,000.00 of maintenance on the leased premises; BAAH's failure to properly administer the lease with Stambaugh's by failing to require Stambaugh's to provide insurance coverage in compliance with the Stambaugh's lease; and BAAH's failure to comply with SARAA's procurement policy and the procurement laws of the Commonwealth of Pennsylvania in the acquisition of a used paint machine. (See Exhibit "A" attached hereto). 67. Similarly, by letter dated April 2, 2001, counsel for SARAA notified BAAH of the EVents of Default under Section 3.01 of the Agreement, as well as Section 24.25 of the Agreement. (See Exhibit A). - 15- ''''''7'''"'''''' . .~"o_._.,' _." -,--- if" ,-,= -~~ ~" 68. By letter dated April 6, 2001, counsel for SARAA notified BAAH of the Events of Default under the Agreement based on the letter sent by BAAH to community leaders. (See Exhibit A). 69. Despite the extensive notification in compliance with the Agreement, BAAH failed to cure the above Events of Default. Such failure to cure the above Events of Default constitutes a material breach of the Agreement. 70. Pursuant to Article XVII of the Agreement, SARAA engaged in dispute resolution with BAAH in an attempt to resolve the dispute between the parties in good faith. The dispute resolution, however, including the mediation, was unsuccessful. 71. As a result of BAAH's failure to perform it's responsibilities under the Agreement, the Agreement was terminated. 72. As a result of BAAH' s breach of the Agreement, SARAA has suffered damages including but not limited to (1) a decrease in enplanements HIA which is estimated to result in a loss of approximately $25,000,000; (2) injury to the reputation of RIA; (3) damages caused by the failure to adhere to both Federal and State laws; and (4) increased risk of civil liability associated with the operation of the Airports. 73. SARAA has also incurred the cost of defending against BAAH's frivolous attempt to obtain injunctive relief and, pursuant to the Agreement, as the prevailing party SARAA is entitled to receive payment from BAAH of SARAA's costs, including reasonable attorneys' fees associated with defending the Preliminary Injunction action and the present action filed by BAAH. - 16- ;'?i7,<""-,\""j~',,,"-'$ ~ ~"- ',- - -~ -'^ ,,- '~'~-1 -' ,-,L~ . !-~"'":'r ruJ 74. SARAA has satisfied all conditions precedent which would allow it to recover pursuant to the Agreement. WHEREFORE, Defendant Susquehanna Area Regional Airport Authority demands judgment in its favor and against Plaintiff BAA Harrisburg, Inc. in an amount in excess of $25,000.00, together with interest, costs, attorneys' fees and any other relief that this Court deems appropriate. Respectfully submitted, RHOADS & SINON LLP By: 1l .it - JackF. Hurle ,Jr., Esquire Dean F. Piermattei, Esquire Timothy J. Nieman, Esquire One South Market Square P. O. Box 1146 Harrisburg, PA 17108-1146 (717) 233-5731 FOLEY & LARDNER Thomas R. Devine, Esquire David T. Ralston, Jr., Esquire 888 Sixteenth Street, N.W. Washington, D.C. 200006-4103 (202) 835-8000 Date: October 24, 2001 Attorneys for Susquehanna Area Regional Airport Authority - 17- ,,;~~",,!!l' .::.<.J.,, -, ,-"" ~ , 'I. ""f, -,- - ,~ ,J;' '-'.',. "~"'~'''~'>- .- .. Oct-12-00 03:47P P.Ol ":-'f!.I'I'l'f:ll'>'l"'I!Il11''' ~_~ . VERIF.ICATION David Mcintosh. deposes and says, subjccllu the p"nalties of 18 Pa. C.S. ~ 4904 relating to unsworn talsitication to authorities. that he is the Ch"irmun nr the Roure! of Susquehanna Area Rcgional Airport Authority, that he make~ lhis v<.-TiGcation by its authority and rh:t' .he filets set forth in the tore~oin!l: Answt:r to Second Amended COInpll!illl IInd New Maller arc true and correct to the be.l of Iii. knowledge, infllnnlllion and belief. Date: AJ/-04 / / ~J /' I . j..~. Dav', 'Mclntush, Chairman ,) " . , - '.' ~':""--' "" ~"'''~'I_' ""_L ," "N , _,r .w~, '''~ , . . ,S.~~ Susquehanna Area Regional Airport Authority iJunish"f~ ;,je,mulionul"mid l"piluJ q1v Ai'PD~$ .208 Airport Drive Middletown,Pennsylvania 17057. (717) 948-4630 Fax (717) 948-4653 4~ UII-'/. TM 377232 I ;riy _ _::;;;t!!; CDm ',--"iifi''''''0'<'''i\!P-''''', ,~- " ~ > '. -" FebrUary t9,:1.001 . . VrATELECOPIER-:-(317) 487-5177 . .' .' AND CERTIFIED MAIL' .. RETURN RECEIPT REQUESTED .. . . .. Mr. David J. Rop.ms. .' ..... ... . '.. . INbIANAPOLISINTERI'lA TIONALArRPOI~.T '.Box'lOO,2506SouthHighSchoolRoad'.' .... . Indianapolis, IN 46241.: . .. . . '.Re: 'Notice of Default - A.greement rar the Manngement, Operntionand !\i[aintennnceoflInrrisburg International . Airport and Capital City Airport. . ....... " . .' :. ',.. .-.,. ",-' ..."'.- , ,,' ,. ."Dear'Mr. Roberts: . . This :isto llOtify BAA Hamsburg, .Inc. that the ... .. follOwing .evertt is a default by BAA Harrisburg, Inc..i.mderthe terms .. '. of the Agreement for. the Management, Operation and Maintenance of Harrisburg IntematiomH Airport and Capital City Airport, dated as of ... .. December)6, 1997,by.~nd betWeen theSu~quehanna Area Regional. Airport Authority ahciBAAHarrisburg, Inc.: .'. ' . ,. . :'... BAA Harrisburg, Inc;hasfail~dto. provide insurance. . coverage to SARAAin accordance with the terms:of Article XIII of the Agreement,. including, but not limited to, failure' to provide workers' compensation insurance coverage in' compliance with. the statutory requirementS .0ftheCommonwealth of ~ennsylvania, failure to'include SARAA as a named .insured on all policies and to thereby . ,provideeqmil.coverage toSARAA 'on allpolides, and' failUre to.. iqentify orto'prope:rliidentify CapitalQify Airport as an insured. 'location onrelevantpblicies.''- ... SARAA. reserves the rigbi to pursue any and all rights , and rerrieaiesunderthe .Agreement;or at law 'or in equity, if this default in' not curedby:- BAA'Harrisbtirg. within the cure period . provided under the AgreeJ1lent: . . . , ~.. , .'. .... ",' . . c". .'vid G. Holdsworth . Executive Director DGH/dnh cc: Mr. David McIntosh Jack F. Hurley, Jr., Esquire. Robert D. Swhier, Jr., Esquire Mr. David Fleet S00202 , ~' ,.,~~ " ~. < ". . ~ . .r ~ " <,'.'-~~ . ':~:", .' . ". ~ '.:.' "';>. ':~'~:.' .h. '". ~.,,:.., .... . '., '. .' . ", .:. .;. . . .... ", . ....., .:~~b~~li'19,2o'O 1 : : .~ ~ " \ .':.r'... .... .' Susqueiianna ':Area . Regionai. Airport AUtiiority.,. . .: . ..,..... . ." ,.... .. I .208 AirpDrt Dri\ie': .. ." MiddletDwn, Pennsy[vania,170~7 '. ....." " . ., .:VIATELEcopm'ii. -'- (317)487~51 i7 . .' .'. AND CERTIFIEDMA.IL" '.' ,':' :, '" .' .., ':RETURN'REcEIPT REO"uESTIW ,:'" '. . = . ~ . .) .;:'-:.,,:= '::<" ".. . '-. . ." .. ......, '".-, , '. " '. (717) 948-4630 .. Fax (717) 948-4653 '. Mr, David LRbberts., ',:,', . . . ,':'i:NulA~iAP6i:..IS.rNTERNATrONALAiRP6RT... :..' . Boxl00,25ciO South High:S chii 61 Road ". " . :"Ii:i&anapolis;IN '46241: .:.. ::.. ... :'. .';'. ',C". .'.'. : . R~; J" otice 'of D~f~~it...:. Agrce~~~~ for~h~ Managemc~t, , OperiltiDn, and Maintcnnnce of'Harrisburg Intetnationa1 ' - ,'Ai~port and Capital CitY Airpor:t.,:,., ,',', ',!.'.: ..:"._:":>".:.':.,...,\~~,:I../:./.~.~.,::,,.::/,;.:.." '::.':,;'_."../~,:...~. .:',:'.' : " .... ..' DearMr..RDoerts: ...., .........'. ,..." .., . ',;' .:' '.'j. .... '.:" :' '" ..Thlds'to,nDtlfy :BAAHalTisburg, Inc. that the fDIlDwing'evei1ts are defmihs'.biBAAHarrisbtirg, I,lc:under the.'. terms Df. the Agreement fDr' the:Managemerit,bperati6n . arid . .' , ,_., . .. ',' . ~. .. ' ... ' Maintenance of Harrisburg Inteniational Airport and Capital .,CitY::AirpDrt".datedas 'Df:b~ce;l1ber:r.~, 'i997,1:iy Gild betWeen: . .:the: Su~qlH~ha1i.iia"Ai:ea .R~giDnar .Airport Au'thcirity .:imd BAA. .. :,' "H. iL.-risburg,'.m.. c.:'":.,:.". . : ....." ..... '. .. ,: ,.'," . . ..... : ;.. ~ .....' , '" "'," . '.' ,. .' . .2. .. ..'F~iiu~e . tD.properly adri~inifte~'tl;e lease, with Stainba1:1gh's Air SerVices for Buildings28 and 134 at the .. Hamsburg mternatiDnal Airport. by' performing apprDximately . $40,000 . Df "mliintenance .Dn the..Stambaugh leased. premises .'" *hich"Starribaugh;';;'as obligatea tD .perfor1l1underthe terms 'of, . , th'~ ieaSe, .. " . :,:.:: . ."", ".. .. . In additiDn tD providing a, nDtice of default, SARAA".hereby notifies BAA Harrisburg, Inc. that .SARAA is demanding inderpnification,:by)lAA Harrisburg, Iric: 'm the 11 t.I,.Ii/. ™ "jy_~~eom . '.. ',;.. 37724 .1 800203 f~"-' - < "-' . .. .., "i-"'ir_""'i,, -.', .,"__1 . ' ,.... ,. .,"m,. ..' '. :-.., '., " '",. . .. . ..' .' ..,' . . ..:-...:.., . " " , . .. '... '. . . ., ;~'..' ".: . ~: ,. :..' ... '., .... . . .." ~. .. /' '. .' .... .' . ..... agg!eg~~/~ountiif$15,OQd f~;llie addjri6na~~osts in~urredby . SARAA. in . purchasing the'nmway, snow' broom . equipment . vehicle and in i!lakingreparrs.to . the Stambaugh leased. premises .which 'were' the 'responsibilitY of the .'tenant,jintler ,the; lease. ... . . .Payment of-the .amount, of $75,000.is tqbe:remitted :t6SARAA ' . .' Witl1In thirtY (3D) days 'ofthe' date.of-this J'etter: . .:. . . .z". ". '-'.' '. -' .' . .-. '_,' '. . .. '.,. .. ... .... .". . SARAA reseiYestlieright to pursue any m1d all.. . . .. .'rights and reri1ediesof SARP.A 'U!idel: the.Agreeinent,or ,at law ... .. . or ineqi.\ity, l'esultjrig fro,mtllese defa~}ts'bYBAA Hanisb.uig. '; . , ....~. .,' .- '.. .././IJ. ...17".;' ./j.... ...' ~ ". . . .'~. '., '.' .. .,. .... . ',,'." .....'.,.,<, '. E*ec1itiveDire~tor .j..... '.. .. ~ .. , . , .., DGHldn,h "L' ,"' .: '.c6:<:,'ryrI..ba;iid Mcirito'sh'. -. . ...... . Jiick,F:>Hurley,)r:, EsqUIre,. " .Mr'David Fleet ... ..' ...;,'.. . . . ~ ..' . "..' '. .' . , RohertD..Swhjer,1r.;Esqi.\ire . .', ". -" . ". . ."'f .,. ..-.' ... .,.... . r ....' "... ." .. . .....,.. ,..'. ':.. .. ;',,' '. : :'.,: . , . . . .', . .' ~ ,.; . "., .:' ..' '.'. .. .. '.. ~. ..... 500204 , ,. ~ , . . . eo ~= ~.- ~= -, " s...JJla~< Susquehanna Area Regional AiiportAuthorily . Horrisbur9 Inl""ulio~ul '"Hopil,1 Gty Airp,rts 208 Airport Driv~. .' . Middletown, Pennsylvania 17057 (717) 948-4630 Fax (717)948-465j 61 UIJI / TM ,iY _ _:;;;r.CDm >-<"Wl"'C"l*''fI'''~~_,_,,~, _ .'- " "_,~" ... ~ ,-,' 1-' -, 37776 .1 . . '.,' February19~2001 . -'. . VIATELECOPIER - (317) 487-51 n . AND CERTIFIED MAIL. RETURN RECEIPT REOUESTED .. Mr. David J. Roberts ....'. .. , ,DIDIANAPOLIslmERNA TIONAL AIRPORT . .. ,Box 100,2500 South High School Road . 'lndianapolis,IN 46241 Re: Notice of Default - Agreement f~r the Management, . Operation'nndMain teillince of Hm;ris burg! ntcrnation al . Airport and Capital City.Airport:.' , .', Dear Mr. Roberts: ' . .. . This istortotify BAA Harrisburg, Inc. that the fol1owingeventls'a default by BAA Hamsburg" Inc. under thetel1l1s 6fthe Agreemen! fot the'Management;Operaticin and Maintenance of, Harrisburg InternatiopalAirport and Capital CitY. Airport, dated as of .... DecemberJ6,'1997, by aildbetWeeri~the. Susquehanna Area Regional Airport.Authority and BAA Harrisbll)"g,lnc.: ., , . '. BAA failed to pr~perly adrtiirtister the F ARAccess Control Upgnide Project to put .into .plate proper contr6lsfor the ,. compliance of tile 'project with tbe Davis-!l~conAct. .'. Specifically,..' . . BMfailed.tomonitorcontractjiayrollsubmissions to insure that the prevailing wage rates were paid~ BAA accepted contract certifications thai. were not, nohirized" tiine' reports which were not Signed by . . . employees, and 'invoices which did not have appropriate ,supporting: time' reports. The failure of.BAA Harrisburg" Inc. to properly' administer the FAR Access Control Upgrade Project resulted in the ' auditor conducting SARAA's Federal oMi:! Compliance Supplement for Single Audits of State and Local Govemment for 1999 issuing a . statement ofnon-comp1iimcein the Audit rep6rt~ ' . . . . . . .' , . . . SAI'--AA reserVes the right to pursue ariyand all rights and remedies of SARAA.under the Agreement, or .at law or inequity, . , resulting from this default by BAA Harrisburg: . .. . Sincerely, ... ."..'...... ... ....~!1~ . Executive Director DGH/dnh . cc:Mr. David McIiitosh Jack F. Hurley, Jr. . Robert D. Swhier, Jr., Esquire' Mr. David Fleet.. . 800205 1"- .., ..." I" ',*""",-,,, 'n,';'" , . .s.... ..;'-IAri/: ..... .A!,... '. -'~,--~"" ',,- --'- . ". ;.",.> ' ,.,'. Susquehanna Area' Regional...: Airport Authority . Harrisuu!g inlf.,",'liuno~"l1d tnpital [i1y}irp,r!; 208 Airport Drive. Middletown. Pennsylvania 17057 (717) 948-4630 Fax (717) 948-4653 Ily!'!~mTM J772J.1 :_/1'!"''''''~''!'~~--:;r" _..' ~"" _9.~ ~,_~ " , ".' . ..FebruaiY19,iOOl VIA TELECOPIER-(317) 487-5177 . AND,CERTIFIED MAiL ..... .' . . RETURN RECEIPT REQUESTED .. . Mr. David J. ~oberts: .' . INDiANA]'otrs INTERNATIONAL AIRPORT:,.. BcixIOO, '2500 .South High School Road . . Indianapolis; IN 46241 . . '. .. Re:NoticeofDefatilt ~ Agreementfor the Management, Operation '.andl\1alntenance of HarrisbUl~g International . Airport an.d Capital City Airport . . -. . . . ..; " .... . DearMi:Roberts:. ..... . ..' . . .,', '," . -, .' . . This is to notify BAA Harrisburg, Inc. that the fcillowing'everttisadefault by .BAAHarrisburg,. Inc. under the .. terms of theAgreenientfor.theManagement,Operation and Maintenance of Harrisburg- Intermitional Airport and. Capital 'Cit)r:Airport,dated,as'of December 16, 1997, by and . between. the. Susquehanna Area R~giorial. Airport 'Ailthority . andBA^ .. Harrisb'urg, Inc.: . ... .. . . .... . ' . . . . . .... .' ..' The. .faiiure to . comply .with. SARAA's public . procurement. policy and:theproci,lremerit hiws of Pennsylvania in. the acquisition ofa."used paintmachirie (E-Z LirierPaint. striper) .inounted on it 1989 Che\Tolet chassis.. . .... . . .. SAR.AA reserves the right to pu;sue any and alL rights and remedies.of SARAA'under the Agreement, or at law . .or in eqllity, resulting 'frorn,this defaultby BM Harrisburg. . ' .' .SincerelY" '.. . .... ..... . /'~~~ .'~'G~Olds:~rth ....... . ... ... ..:. Executive Director. ... DGH/dnh '. . . cc:. Mr. David Mcintosh ... jack F.Hurley,Jr. . Robert.D.. Swhier, Jr., Esqi.lire Mr. David Fleet 500206 ,. ~, ,R,~~ 'r I"!"'''''''-'''' \.'~-"" "'-,,, ~ . ...... ., . ,.. 'S..::J.a,....'.:-.~~.;....-d. .. ..,_.'~"'__""__,,.,-,;C>>" .'. : ;a.... . ... . Susquehanna' Area Regional. Airport Authority . '.. '.' .... " "'.,. '". ,~ , .' .. .,. '" -.... .. ',F:ebruar).'i 9,'.:iooi , . .. (717) 948-4630 Fax (717) 948-4653 VIATELECOPIER - (3.17) 487:S177 ANDCERTIFIEDIV(Arr;..,". . , . . RETURN RECEIPT REQUESTED . ." " Mr. DavidJ..Roberts: ". ..... .... . :fNI1!ANAPOLIS IWEjlNATIONAL AIRPORT..: 'Box 100, 2500'South Higl1'School Road' Iridiariap<ilis,iN462~1: .... ... .. . . ... ' , .-.... ,.... Re: . Notice of Ij~fa~lt - Agl:eemen'( for,the Man~gement, Operation nnd.Maintenance'lifHarrisDlirg Inte.rnationnl Airport. p' ~ndCnpital~itY1-itP~rt: ......... ...... ..' . ..... '.,.. '..'.' ,.'. ,,-.., ,Halliroum,!nlemollilnal 'nd Cupital (;Iy Ail]lo~.! 2mi Airport Drive'... .'. ... Middletown, Pennsylvania 17057...... . .'. . . . Dear Mr. Rcilierts: '.: ',. .;.. ,'." h.' '.~ ." . M .,:,. . " ". . Thjs)stcin~tijy BM Han:isburg, Inc. that' the .. following event is a default by BAA Barrisburg, Iric. under the tenns .: of the Agreement for, the .JvIart:lgeinent,.OpeniticmaridMaintenance of. . . ..Harrisb.urg .InteinationalAirpoit and Capiial City Ah-pb'ii;datedas of. .' . : :"DecemberI6;.1997; by 'and, betv{een 'the Susquehanna Area Regional '. .:. . 'Alrpoit.AuthorityandBAAHamsb.i.iri>~Inc.:;.: .. :"< . . . .. BAAHalTisbu~g; Inc'.. has .... failed tei properly. administer theLease between sARAA and Stambaugh's Air Services,.. . . rnc;, dated. January 1'8, 200b" for POrti()liS' oCBuildhlg 28 and :134. , Specifically, BAA HaTI1sburg fail~d to reciui~e Stambaugh'.s toprovide ... . . ... ins.urancec6verage i11,"compliartce.'\vith' ArtiCle 14 of the Lease. The deficiencies of stan1bailgh'sinsutance' coverage ~re. numerated in the .ietter . of February 14,. 200 1;.addressed. to the p.roperty Manager 'of. BAA Harrisburg, Inc.fromSARM'.s solicitor... A copy' cif that letter.... - is attached to this notice of default.:, .,: . . ... . . .. . .... .... . ..SARAA reserve; the right toptirs~e any and ail rights'. and remedies undedhe Agreement; or at law or hi equitY, if this defau)t., innof:cuted,by:1=3AA: I{arrisb1i~g. within :the cure:.period provide~urider theAgreement." .. . '. '-, . '. ,".., Sincerely;" . . ./~~~~ ~d~{OltsWcirth ......... .. .. .... Executive Director . . DGH/drih' Enclosure cc: . Mr. David McIntosh .. . Jack F. flurley, Jr., Esquire . Robert D. Swhier, Jr., Esquire. Mr; David Fleet. . fJy~~mTM' 37783.1 800207 -,,\'!jiH,qq"=~ , - ~ '~~,""" - ,- -,-= - "' J p_;:.~" _-E" , '.. . ) , " FOLEY 0.. LARDNER Attachment D A1'TQANCY::s, ..T t"....w E\RUSSE1..S c;'HICAao OENVal O!J"Orr ...IAC~N'IIIu..E I..OS' ANGELES IvtAOISON l\(11..WAUKE,E BeB 31~H 5TA~. N.W.. 7'" n.oOR WASH1NGTOH. D.C. 20000-4 I 0.;) TEl..EPt'lONE: (202.) 072-'5.:100 FAC,5IMIlL' t;e02) S:J.S-e l:Je gR\.AHOO """RAMENTO 3AA DIEGO SAN FFlANCISCll TAl...l.AKASSEE. TAM_ W,t$HtNCT'OH.O.C. WEST fl'AL.M I:It:ACH WR~'~ OIRECT" UNC: 202-835-8096 EMAI1.. ADDRESS Tdevine@tbleylaw.com cLlEl'lf/I-1ATTE:A. NUMSER 474547i.Q003 April 2. ZOO1 .. VIA TELEFAX 317481-5177 and 317-632-2962 and Certified U.S. Mail. Mr. DaVid J. RoberlS Chaiiman BAA Harrisburg, Inc. Indianapolis Intcruational Airport Box 100, 2500 South High School Rd. Indianapolis, Indiana 46241 Fax: (317) 487-5177 Mr. Robert D. Swhier, Jr. Esq. DANN PECAR NEWMAN & KLEINMAN, p.c. Oile American Square, Suite 2300 Box 82008 Indianapolis. Indiana. 46282 Fax: (317) 632-2962 Re: Notice of Default to BAA by Susquehanna Area RegiOnal Airport Authority Gentlemen: Pursuant to Articles XVI and XVII of the Agreement for the Management, Operation and Maintenance of Harrisburg International Airport ("IDA>> or the "Airport") and Capital City Aitport between the Susquehanna Area Regional Airport Authority ("SARAA" or "the Aumority") and BAA Harrisburg. Inc. ("BAA"), dated December 16, 1997 (me "Agreemem"), SA.Ri\A hereby provides notice of default to BAA for the reasons set forth below. Under section 16.01(b). the Authority asserts thaI BAA has breached representations, 002.101965.1 ESTABLISHED '942 A ,,"00'I12l:R D' OI.Q~= "liT... "~"OCfl Of"I",,"c::r. '.. 9dtul"l. 8..........0..00, OA~. F'....>nVUR'I'. Lo..DOtI. :s.~R(.. 3T'oC:/O'lOI..M ""'D S~ 800221 ",_?"'~"'~=~T , " ,~ -"'"-'f ~ r =" ~~ r~ " ,W-(:':""'t'r~ 1 ~ "'~ ) .. .- ! ., . covenants. warranties and obligations of BAA under the Agreement, and such breaches have had a Material Adverse Effect, as defined in Section 1.36 of the Agreement. 1) Breach of Section 3.01 Duty of BAA to Provide Expertise and Use its Best Efforts in ClUTylng out its Responsibilities Under the Agreement. Section 3.01 (b) contains the following requirements: The Contractor will make available, either through its direct employees or employees of its affiliates, expenise in the management, operation and maintenance of airport faCilities;-- The' Authority is relyiJIg on such expertise to provide the best and most efficient management, operation and maintenance of the Airport Facilities. The ContraCtor shall at all times use its best efforts in the course of the performance of its respousibilities hereunder and shall use its best efforts to inform and educate tbe SARAA Boanfregarding all matters related to the operation of the AiIport Facilities and the aviation industry in general as it relates to and affects the Airport Facilities. . : Thus, it is clear from the agreement that the Authority was relying on the expertise BAA~ promised to deliver. Under PellllSYlva.nia law, "best efforts" is a higher standard than the customary duty of gOod faith inherent in all contracts. Courts often look to the intent of the parties in determining what "best efforts" is meant to encompass. It is clear from the contract that the parties intended to set a very high standard. For instance on page 1, the Agreement states that the beSt and most efficient management, operation and maintenance of the Airport facilities requires unique and specialiied skills, together with experience in improving and managing highly-regarded, world-class airports of similar or larger size; and . . . the Authority desires . . . to contract for the management, operation and maintenance for the AllpOrt Facilities with an organization which has the specialized professional skills and experience to operate the Airport Facilities in the best and most efficienr manner possible." (Emphasis added). Moreover, as shown above, the very paragraph in which the phrase "best efforts" appears states that "The contractor will make available, either through its direct employees or employees of its affiliates, expertise in the lDanagement, operation and maintenance of airpon: facilities. The Authority is relying on such expertise to provide the best and most efficient management, operation. and mainrenance of the Airporr facilities." Para. 3.01(b) (emphasis added) . 002. \ 0ll;J65. t 2 S00222 '"-<"~''f<'''~'''W"'~ "I' I- "-'''7;''' ~ ~""".",:"," ,.". . "',r"-, ,,- ", , , } ") BAA has not made available expertise in promoting the aiIport or used best efforts to do so. For example, BAA hired a marketing person with no aviation experience - in spite of the fact that SARAA had urged BAA to hire experienced aviation marketing personnel. As another example, BAA officials acknowledged at a meeting with SARAA in February that BAA had .not recognized that fundamental. changes bad occurred in the U.S. air service xnarket and in the measures needed to be taken by airports to promote air service at their facilities: In a meeting in March, the Chairman of BAA Harrisburg stated that BAA had underestimated the development of operations by Soudlwest Airlines at BWl, the primary threat to the Airport identified by BAA. This does not indicate that BAA provided the expertise it was'requixed to provide under the Agreement. In yet another example, BAA recently put together a marketing plan to address the; material decline in enplanemellts that had befallen the airport in the past two years. In doing so, BAA indicated that" it drew upon steps that had been taken by publicly owned and operated airports in the U.S.'. Many of these measures had been discussed and considered by U.S. airports for a number of years, even p'receding the SARAA-BAA contract. Again, this evidences a lack of expertise on BAA's part, and a failure to provide such expertise to the AuthOrity in a timely aI1d effective manner. A specific example in the BAA plan illustrates the lack of expertise and best effons put forth by BAA. The plan included cbc establishment and full fundiJi.g by SARAA of a Regional Economic Task Force, despite the fact that such an activity would. be prohibited by federal stamte and the FAA's Policy and Procedures Concerning the Use of Airport Revenue (64 Fed. Reg. 7696 et seq., February 16,1999). Violation of those federal requirements could subjett the Autb.ority to substantial penalties. Again, this proposal evidences BAA's lack of expertise and failure to provide best.efforts to address the challenges faced by the Airport. Even under BAA's plan, BAA projects it would now take another year just to stabilize the situation at the Aixporr, with only modest improvements Over the next two years - i.e.. six years into the BAA contract. By any objective measure, BAA's own acknowledged performance ju analyZing and responding to the air service market in the U.S. as it relates to air service development at the Airport fell far short of the standard of best efforts by a company with expertise in the area. :; !:i Article II of the Agreement makes it abundantly clear that a "material increase in enplanements at RIA" is one of the three primary ways in which the parties intended that SARAA would benefit from BAA's devotion of its best efforts in applying its world-class skill and expertise to the challenge of IUI1I1ing the airport. Thus, there can be no doubt that a drop in enplanements is a "material" adverse effect. In response to SARAA's concern that BAA has not used best efforts to assess general industry [fends affecting the airport, educate the Board on such issues, and develop and 002.101965.1 3 800223 "1"';;'~"'b,~ ','or- ., . ) , "/ implement an cfkctivc marketing strategy, BAA has provided a January memo by David fleet to the Board, coupled with the presentation made by Mr. Reet last May. Unfortunately, those documents do not rebUt SARAA's contention that BAA did not demonstrate any expertise in airpott marketing and bad no plan to deal with the impact on HIA of existing and growing operations of Southwest at BWI. Nor do they rebut the facts that BAA hired personnel with no experience in aviation marketing, and. that it was SARAA that had to educate these BAA officials on me fUndamentals of airport marketing (e. g., by taking them to industry trade association seminars on the subject), rather than BAA educating the SARAA Board as required by the Agreement. The subsequent acknowledgement by BAA that it had initially thought that standard marketing efforts were all that was needed to develop air service, even at a time when enp~meDts at RIA were dropping precipitously, is further evidence that BAA did not have, or use best effo.rtS to. .deliver, the needed expertise to deal effectively with the threat to the Allport's ellplanementS~ . .The Authority relied lIpon the promise of delivery of expertise and best efforts by BAA wh~ ,the Authority entered into the Agreement. This is specifically set forth in the Agreement, in section 3.01(b). Inclusion of that section in the agreement demonstrateS that this was a critical part of the Anthority' 5 expectatiOD of contract performance by BAA. Simply put, the Authority expected BAA to provide expertise and use its best effortS in the course of the COntract. Such expertise and best efforts were needed precisely when the Aixpon faced serious threats to, and a significant decline in, enplanements. The Authority could not afford the lag time that occurred for BAA to recognize the problem, and the SUbsequent fitS and starts as BAA attempted, inadequately and belatedly, to address the. problem through unqualified personnellllld a lack of planning, Quite simply, the Authority deserved the benefit of its bargain, and it did not receive it. 2) Breach of Section 24.25 Duty to Maintain &tremely High Standards of Honesty, Integrity, Impartiality, and Conduct and to Avoid Misconduct and Conflicts of Interest BAA is required under Section 24.25 of the contract to ffi"inroin ~eXtrcmely high standards of honesty, inregrio/, impartiality, and conduct" and to "use its best judgment to avoid misconduct and conflicts of interest and require the same of its officers, employees and agents." In that regard, SARAA has twice raised with BAA SARAA's concerns about a newspaper article linking BAA to privatization efforts at Baltimore-Washington International Allport (BWl), and has asked BAA: 'Whether there have been discussions or correspondence between BAA and BWl (whether on pri,vatization or overseeing concessions or anything else); Whether BAA is aware of any activities at BWI that will affeCt the Airport; 0020. t 01965. 1 4 S00224 "'~'i'!,;;e'''''''n=,~., - ~. ,- 'I' ,~ ., 1'.'1 " f - .', .1 , <.-) -0' . What BAA's intentions are with respect to BWI; and Whether BAA did not think it had a duty to inform SARAA of developments or potential developments at BWI, ora potential BAA role there? SARAA posed these questions at a March 22 meeting with BAA, at which t:b:ne you declined to answer, SARAA again posed these questions to BAA in the March 23 letter, which, at your request. included a summary of the points SARAA had made at the March 22 '. meeting. Yoti'have yc<t to respond, and SARAA concludes that your lack. of response to . h_ simpii:, highiy'tClevant questio~ indicates that BAA bas had some contact with BWl that conflicts with BAA's obligations to SARAA to m..'1)t:lin the highest standards of honesty, integrity, iII1partiality, and conduct, to use its best efforts to avoid misconduct and conflicts of interest. and to act in !he best interests of SARAA. (See section 3.02(c)). Conclusion ., . AJl a result of the above circumstances, the Authority is compelled to issue this Notice of Default pursuant to the Agreement. SARAA reserves the right to pursue any and all rights and remedies of sARAA under the Agreemelll:, or: at law..or in equity, resulting from these defaults by BAA. Moreover, this lisdilg of Events of Default is not exhaustive; SARAA has already sent BAA other letters of default, and may send additioIlBllerters of default. Sincerely, ----t~ ~.~ Thomas R. Devine Counsel for Susquehanna Area Regional Aitport Authority ce. David McIntosh Jack Hurley Terry Morgan OD2.1 01 ~6S.' 5 800225 -"-""'i"l'~""'t*",'W~ft ,_. =., -~ , , ~ " -" ;^_~J-."lnw-..~(- ,,--~--~.~ ~. , .., FOLEY & LARDNER ATTORNEVS AT LAW BRUSSELS CHICAGO DENVER DETROIT JACKSONVILLE LOS ANGELES MADISON MILWAUKEE 8BB SIXTEENTH STREET, N.W., 7'" FLOOR WASHINGTON, D.C. 20006-4103 TELEPHONE: (202) 672-5300 FACSIMILE: (202) B35-B136 ORLANDO SACRAMENTO SAN DIEGO SAN FRANCISCO TALLAHASSEE TAMPA WASHINGTON, D.C. WEST PALM BEACH WRITER'S DIRECT LINE 202-835-8131 EMAIL ADDRESS Dralston@foleylaw.com CLlENT/MA HER NUMBER 474547-0003 April 6, 2001 VIA TELEli'AX AND CERTIFIED MAIL Mr. David J. Roberts Chairman BAA Harrisburg, Inc. Indianapolis Intemational Airport Box 100, 2500 South High School Rd. Indianapolis, Indiana 46241 Fax: (317) 487-5177 Robert D. Swhier, Jr. Esq. Dann Pecar Newman & Kleinman, P.C. One American Square, Suite 2300 Box 82008 Indianapolis, Indiana 46282 Fax: (317) 632-2962 Re: Notice of Default Gentlemen: Pursuant to Section 16.03 and Articles XVI and XVII of the Agreement for the lVIanagement, Operation and lVIaintenance of Harrisburg International Airport ("!'IIA" or the "Airport") and Capital City Airport between the Susquehanna Area Regional Airport Authority ("SARAA'" or "the Authority") and BAA Harrisburg, Inc. ("BAA"), dated December 16, 1997 (the "Agreement"), SARAA hereby provides notice of default to BAA for the reasons set forth below. Under section 16.01(b), the Authority asserts that BAA has breached representations, covenants, warranties and obligations of BAA under the Agreement, and such breaches have had a Material Adverse Effect, as defined in Section 1.36 of the Agreement. \lU/.lO:WG 1.1 t."'TAl:lL\SHE.D ,U<\l S00226 ~.{y,,,,,,,,,,,,"~;ry',I\ _ _,_ ~ l "'''''"",,'>''r.'- "'--.r. - - I"E"-""'~"''''jt..'~ J'~-~ ~ i Mr. David J. Roberts Robert D. Swhier, Jr., Esq. Apri16,2001 Page 2 of6 Exhibit 1 hereto is a letter dated March 30, 2001, on the letterhead of the David M. Fleet, Airport Director, BAA Harrisburg and Harrisburg Intemational Airport, signed by David J. Roberts, Chairman, BAA Harrisburg, Inc. ("Roberts Letter".) The Roberts Letter is addressed to "Dear Community Leader," and was delivered on March 30 to the Mayor of Harrisburg and apparently delivered to other political subdivisions that are constituent members of the Authority. (Exhibit 2.) Benish Associates, a firm not known to be in the employ of the Authority, provided the Roberts Letter to a member of the Authority Board several days after it was delivered to the addressees. Notably, the Roberts Letter was delivered to its recipients before the Authority received the "notice of default" referenced in the letter. The Roberts Letter states that "we," (sic) (presumably BAA Harrisburg, Inc.) have managed HIA and Capital Cities Airport since 1998 under a "professional services contract" with SARAA, presumably referring to the Agreement. The letter further states that "fundamental to the contract was the "partnership" relationship between SARAA and BAA. The Roberts Letter further states that the "SARAA Board" has not "embraced the partnership," has "demonstrated a lack of commitment to both the spirit and legal requirement of the contract[,j" and has made "inaccurate and unfounded accusations" against BAA that, the letter asserts, result from SARAA's "own lack of cooperation and overt hostility to BAA's professional management team." The Roberts Letter contains serious, material misstatements of fact concerning the Agreement, the conduct of the Authority, and BAA's performance under the Agreement. The Roberts Letter, apparently issued on behalf of BAA, breaches BAA obligations under the Agreement, as it violates BAA's duties to cooperate, act in good faith, and act in the best interest of the Authority, represents an act, outside the scope of BAA's delegated authority, designed to interfere improperly with, and usurp, the Authority's powers under the Agreement, and violates the express contract requirement that BAA employ proper business conduct. Accordingly, the Roberts Letter constitutes several "Event(s) of Default" under Section 16.01(b) of the Agreement as it breaches representations and warranties of the Contractor with a Material Adverse Effect on thc Authority, as detailed below. L The Roberts Letter Contllli.ns lVIlIlterilllllVIisstatemenl!:s of Fillet The Roberts Lettcr asserts that the Agreement is a "partnership" and that the Authority has not "embraced the partnership." Contrary to that assertion, Section 24.09 of the Agreement states that nature of the relationship between the Authority and BAA is that of "owner and independent eontract:Jr," and expressly states that "Nothing herein is intended to, or shall be construed to, create the relationship of the partners, of joint venturers or of employment 10/.1020611 S00227 "~I~~!T.~,, .", .,_J 1 . , ''ii~~.'i~' ';~f- -- ",,-; -,,-" ,- -,",~" Mr. David J. Roberts Robert D. Swhier, Jr., Esq. Apri16,200l Page 3 of 6 between the Authority and the Contractor." Similar language is found ill Section 3.01(a) of the Agreement. Accordingly, the Roberts Letter fundamentally and seriously misstates the legal nature and tenor of the Agreement. Contrary to the Roberts Letter, a "partnership" relationship is not, and could not be "fundamental to the contract"; indeed, the Agreement expressly provides to the contrary. Consequently, there has never been a contractual or other legal partnership "to be embraced," and the balance of the assertions predicated on the existence of a partnership relationship under the Agreement are obviously erroneoUs. (I note parenthetically that this misstatement is so fundamentally at odds with the terms of the Agreement that either BAA's understanding of the Agreement is altogether flawed, or BAA attempted deliberately to mislead public authorities.) In a similar vein, the Roberts Letter falsely states that the Authority Board has (1) not cooperated with BAA, (2) made inaccurate and unfounded statements about BAA, and (3) been overtly hostile to BAA's management team. Each of these statements is without factual basis, and notably, no factual support is provided in the Roberts Letter. The Roberts Letter also falsely states that BAA has "consistently worked to resolve the issues . . . privately." As the Roberts Letter graphically demonstrates, precisely the opposite is the case, as BAA has made very public attempts to involve outside officials and entities in the disputes, including retaining lobbyists to work actively against decisions of the Authority. Finally, contrary to the Roberts Letter, the Authority has not "elected to issue an ultimatum" to BAA requiring issuance of a "notice of default." Dispositively, the "notice of default" issued on March 30 by BAA makes no reference to an "ultimatum," and does not state that it is in response to such. More important, to imply that a "notice of default" is a proper "assertive" response to genuine issues as to BAA performance evinces a callous disregard for BAA's obligations under the Agreement and suggests strongly that BAA issued !:he notice of default in a bad faith attempt to deflect attention from its own defaults. n. Th'e R",berts lkeUen' IBreachem the Agre,emell1t, Can.asi.ng Materi..ul Adverse Effects. A. The Roberts Cooperation, Autlb.ollrHy. Letter Breaches BAA's Duties ",r Good Faith and Best Interests of the ti02 IO:WG-1 800228 j"-"~'-""'WH~,.j'i"'lfll'l!~ . Il~ ,,-,. >-~ \ ..' Mr. David J. Roberts Robert D. Swhier, Jr., Esq. April 6, 2001 Page 4 of 6 Section 14.02(f) expressly requires that BM shall "maintain a professional, positive and responsive working relationship with. . . the SARAA Board, and other representatives of the Authority. . . and the public." Section 3.08 further requires that BM shall "at all times act in good faith and cooperate fully with (i) the Authority, its agents, employees, contractors, subcontractors. . ." Moreover, Section 3.02 requires that BM act in the "best interests" of the Authority when perlorming its delegated duties, and among the delegated duties covered by the "best interests" requirement is "Public Relations" under Section 3.06(c)(4). The Roberts Letter represents an improper, unprofessional and adverse attempt to interfere with the Authority's relationship with its constituent members and the public, and the Authority's own deliberations conceming its contractual relationship with BM. Additionally, the misstatements as to the legal nature of the Agreement, and the false and derogatory assertions as Authority acts or conduct, present an inaccurate, misleading and harmful presentation to public authorities and the general public. The apparent purpose of the Roberts Letter is to cast the AUtJ:lOrity in an adverse light and undermine public confidence in the Authority, thereby compromising its position in negotiations with BAA and advancing BM's corporate interest. Its obvious effects are to poison the contractual and operational relationships with the Authority, to rais!: serious questions as to BM's bona fides in the contract dispute, and to cause serious and unnecessary public harm to the Authority. In short, the Roberts Letter is entirely inimical to the BM's role as a contractor for the Authority, patently contrary to the best interests of the Authority, and is a calculated attempt to undermine public confidence in the Authority. The Authority did not authorize the Roberts Letter, and BM is not authorized under the Agreement to use HIA letterhead to advance solely corporate positions contrary to the Authority. Moreover, the letter is not within the scope of BM's dutics under the Agreement, is not a proper, good faith response (contractual or otherwise) to the Authority's expressed concerns as to BM's failure of performance under the Agreement, and attempts to place the Authority in a highly adverse light. BM is entitled to use HIA letterhead pursuant to a delegation of power from the Authority. That very delegation under the Agreement carries with it the contractual duty to use such delegated rights and powers "solely in the best interests of the Authority." Section 3.02(c). The Roberts Letter is on HrA letterhead und is patently not solely in the best interests of the Authority. To the contrary, it is squarely opposed to the interests of the Authority, and is not a "prudent and diligent exercise" of the delegated rights and powers, id. As such, the Roberts Letter is a material breach of BAA's duty to maintain a "professional, positive and responsive working relationship" with the HJ:~ IO)OU I I 800229 <;,l"'''*''---i'n''''''''4'': " .. . I''];'" -~'~" "'~"'o ~ .., Mr. David J. Roberts Robert D. Swhier, Jr., Esq. April 6, 2001 Page 5 of 6 SARAA Board, representatives of the Authority and the public, its duty to act "at all times" in "good faith," its duty to "cooperate fully" with the Authority, its duty to perform its delegated duties in the best interests of the Authority, and to exercise delegated powers prudently and diligently, all in breach of the foregoing sections of the Agreement. Moreover, for the reasons, stated, the Roberts Letter constitutes either a grossly negligent or willful violation of the aforesaid sections of the Agreement. B. The Roberts Letter, Outside the Scope of BAA's Authority under the Agreement, Interferes With and Usurps the Authority's Powers. Section 4.01 provides that the Authority has expressly retained "direct control and [mal approval" of "strategic and central functions with respect to the Airport Facilities," including without limitation "Marketing and Development policies" and "All other powers not delegated to" BAA under the Agreement. Section 22.17 reserves to the Authority's Board, not BAA, full power and authority to act on behalf of the Authority. Section 22.02 reserves to the Authority the right to conduct performance audits and evaluations of BAA at "such times as the Authority deems necessary" and BAA agrees to cooperate with such audits. These sections, in conjunction, inter alia, with Section 4.02 and Articles XVI and XVII, reserve to the Authority the responsibility for determining BAA's compliance with the Agreement. The Roberts Letter, improperly presented on the official airport letterhead of David M. Fleet, HIA Airport Director, expressly attacked and criticized conduct and actions of the Authority's Board, failed to disclose that BAA was acting solely in advancing its corporate interests, implied that BAA had independent authority to represent the interests of the Authority in this matter, and sought to interfere with the Board's reserved powers under the Agreement.l Such action is outside the scope of duties delegated to BAA, constitutes an improper representation that such action is within the scope of BAA's responsibilities. and represents an unlawful usurpation of, and interference with, the Board's statutory authority and contractually reserved responsibly to monitor BAA's compliance with the Agreement. As such, BAA has breached Section 4.01 and the related sections noted, and its actions constitute either gross negligence or willful, intentional breach of the Agreement.2 C. The Roberts LeUer Breaches BAA's Duty to Maintain Propte!\' Busilruess COllllLduct. i Seclion24.20 expressly precludes BAA from using any promotional device without the Authority's prior \vntten consent. , Section 24.15 expressly provides there arc [10 inteuded third-party beneficiaries to tile Agreement. and Sectious 3.04 irnd 10.14 provide that BAA rcports, including reports concerning litigation in which both tile Autilority and BAA arc partics, are to be made tile SARAA Board Chairman, the Management Committee Chainmrn. or tile AutilOrity. Consequently, tilere was no contractual basis for contact witil any party except tilt Authority as to dispules under th~ Agreement 0/ lo:wrj'j 1 S00230 --C"?""l','i~g~~_ _ ~,~ _ _,BlIIt .. ~~ I"""'"'''' ,,'>'^,'- .,..,'" Mr. David J. Roberts Robert D. Swhier, Jr., Esq. April 6, 2001 Page 6 of 6 Section 24.25 commits BM to maintaining "extremely high standards of integrity, impartiality, and conduct" as "essential to assure proper performance of' the Agreement and to maintaining "public confidence in the Authority." The Roberts Letter violated this contractual requirement as it seeks to advance BAA's corporate interest through improper use of HIA letterhead, by public dissemination of material misstatements of fact about the Agreement and the Authority, and by attempting to undermine public confidence in the Authority. BM's actions in this regard constitute gross negligence or willful breach of the Agreement. III. Conclusion Pursuant to Section 16.03, BM is directed to cure the foregoing breaches. In the event BM fails to cure the foregoing breaches within the cure period in the Agreement, the Authority reserves the right to pursue any and all rights and remedies under the Agreement, or at law or in equity, resulting from BM's defaults. This listing of Events of Default is not exclusive as there are other outstanding, uncured notices of default, and others may now exist. Very truly yours, f!\EY & LARa '-7~ ~-:<7~' ~avid T. R~~ ~~:.-~:~. . .. . , Counsel for Su uehanna Ar~ Regional Airport Au on ../ Enclosures cc: Chairman David McIntosh (w j encs.) Jack Hurley, Esq. (wjencs.) Thomas R. Devine, Esq. (wjencs.) (L~. 'I 0206 1.1 500231 '-P;';Y.'IT_'ffi'ljl!l,~'~~l ,_ I!l.~ ,,!, ~" -,"- ,. r~""""""" "" ,~ , , .' . .~:;;._._." ~"-.. Ap,--03-00 01, 06B" . .. .. -- ---- --....- ..~- ........ ........,......... "'- ' ~ROM ~J.,lQ HQwIoo; X 1'019 I:lI!t$;OC ... 717 239 U9B ZI!illJ1..12!4-1il2 m~;,:;Ci tl4;;i3 Q.~2""02 BAA Harrisburg JIf'* DIill"I<i!M.1Fl:Be1 N'iP"fi: mlW~W H!lllmsbUJfg intll!!matiol'lsl Airport 208 Ai""", DrivP. WIIII_n. 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"'" ., BENISH ASSOCIATES Public 'R~i1itill>>~ / FAX Covel' . .r- Date: 4..;u. @# To: ::J:,."g,'"M .$<iJ,p~.....d.. Fax # .3S-~~ 3@J'l'f,;, From: ~ 1:1 qj!..@o;'./n Subject: iJ/J..!L .J'Adfi?J9A ~oJ>(k,<f? k~ NOl. pages 51 including cover: ..;J NOTES': 1 j" ,I. ,,"II '.. r#h!:.I,II~'i~t "1/jf'J.M AF~"'''@'~ .;:;r;;,~p H ~. F o/:JC.- .Jr' ,AAJ<;tVJ ~ 7f/!;<f! ,)~~p .~dl~~",i1 'f "')J}Jflf>rC .~g>.$/!11fdJ (,"7'" w,'iJ1I, fii4~ -d.rUIiJD /P ,tfJI;P.J@tM'" blf'tf '[ ,~I /7 ~;!.r l::f.='f!([f.~?lj/le leu" ...a'.iI,.".:...:'f!l.<l' , ,!#Q;--kd>fb b~IJ,-J'a.:r fLJEiifi~ Yf!iJfU?'O'> ,-C"",tt o>>tP tde 1J.P,?tf} (f)!J.r (fiiWgtfijfJ'L "";;,,,:.:,}F/) /l~" 'j lJ ~:"'i'" ...;,' ~~? d'}t'- ~ f1'=' ~",.. ....... "r. I' J' ^,~""J," II' ~r;I60'J//f(;l'1- r;!J /hi!. . ",-=' ,j'''',.'! 1~tP,piJ.f'''' ~k4.if<? .e4l.g,,~ ,pMJ<i?- f/U'" ,3'f f! 1 " ~p- -. :~"l' . r.-~ r.i 1f'" I" '!~1~.11 ;'.1t:,nn:r StriO'61." Slli',.'i.! :,1f,d' H~If"j'lb':~JlI"!~, p~ "(1'H;'( ,,"i!'<;11; .f'J'i'-.tIn'l~i~" 1':~'lJt:. "}"1'},..T.-;j!lll-~~TS~ ,. PlP1i",r~!gJ:Atiln:lQ.I.(:o:rt'>" :l"~~~'" f'f""'"". - ....... .... ..~ = EXHIBIT. l V'''''''''--''~'''';,l, ~~," '.. - . 'f - , ,- ~" ~" _r_, .r ,. . 500233 ~,y,j)V;;;,,~~.., ~. .. r ...- ~l~' """'~ ~''''':''-:Ti .., t<......' ......... _............ ............... .. ........ ,'....y ,-....... ",,-,r"!;.~ , .J ~,~,~-Ov ~.~, FROM :,l.o;J:; ~1o(.NS =SSOc. ..:) BAA Harrisburg ~f) David M. Fleet Airport Director 71. 7 2::s.e 4:590 ) 20'21.,,':'!~-Q2 0'''55 Q4:S:S "'~IlI:;t Harrisburg lntemational Airport 2.08 Airport Oriva M"tdGl.aown. PA 17057 Attachment C 717.94&-4&42 Fax: 717-948-3870 Marcil 30, 200 1 Dear Community Leader: Siuce Jazwary 1998 we have mR~ Harrisburg Iut~ationa1 sad Capital City Airpol't$ under a professional service. contract with the Susqueh8%ll24 Area Regional AiIport Authority (SAARA). Our company was selected lQr this responsibility as this !lowly fo~ local gov~ent agency assumed. ownership of the airports from the Comtl\(l1\~th ofPennsylvmia. For the State officials, securing professional airport m8l18g~ent WM a critical factor in the divestiture of the airports to the local authority. We were excited about bciDg part of this inaugural regional government initi4tive in l'cim5ylvanil1's capital oity. We ultimately negotiated 1110-~ man~ment contract with SAARA 'Ihe.~ <?Ontract d""'"'ed. our role as the aitport IlI8l1qet' I.Ild the policy role of the SAARA Board~. FWldamelltal to the oonttaclt was the "partner'Ship" r:elationslUp and the "spirit of c.oopecatiQn" between SAARA lIDd BAA. UnfurtuDatel.y, the SAARA Board bas not cmbrlle<<! the partnership and c<iOpecation CIlvisagccl in the agreement. Over the past sevm1 m~ the SAARA Bollld IInd its agentSha.velitmonstrated a. lack of commitment to both the &pint lUIcllegal requirements oft!ul~omract. ~e and unfounded accusati()llS have been made by the SAAR-ABoard against "BAA. A filctua1 analysis shows that many of the issues raised by SAAllA haW resulted 6:om .sAARA' I; own lack of cooperation and OVtlrt hoslility to BAA' J professio.oalmaDagell1ent team. While this confrontational and advenarial relationship eVQlved, WI: have collSisten"dy worlted to resolve t$ issues peacefully and privately:. However, the SAARA . Board has dc:cted to ~sue All. ultimatum that requires BAA to respond in a more assertive i11alll1Cl". Today we ba.ve issued a fonnal "notice of contract default.. to the SAARA Board. We regret: that this course of action is necessary, but we have been left no altematlve. We are eagerw commence the dispute ~Qlution proceduml as set forth in our agreement with SA.Alt.A. We enjoy working with many wonderful people in the gr~Hani8burg area lIDli are proud ofour progress in managing the airports to $etVe the citizens ofthi$ area. We are hopeful. tlmt Qur relationship with the SAARABoatd em be mended, and that together w.e can continue to address the challenges fur IIirport and aviation services to the regjon. ., Y oUC$ truly, ~JJ~ David J. Roberts Chairman, BAA Earrisb\lrg, Inc. S00220 -<'1M--_"~ ,T,-_ +,"',~,__, '10"-1,..--__ _ . . -- " "f t;~?i:I'-~rr"~;n-":m . 0,_ . ~.. .... CERTIFICATE OF SERVICE I hereby certify that on this 24th day of October, 2001, a true and correct copy of the foregoing Answer to Second Amended Complaint, New Matter and Counterclaim was served by means of Hand Delivery upon: Alan R. Boynton, Jr., Esquire McNees, Wallace and Nurick 100 Pine Street Harrisburg, P A 171 08-1166 ~'fAv,~ '-"~~~'""'" , ~~_ __(,~~!r,.,~_ ", I' ,__~ _J " w~ .:;J:::: 'f! '","'-":'--'<;""'-'--,:"","'1' -'; ."''''~')''0''..' ". ,-~, ,,>,' "~- .- --<'~'~ ." iiTTITJi' iNn IlrY\~'1l'lliililli'''N 0 C) , .-) c ~ . I < C') """t1r: nln' (-) Z:"Ti ~-'I Z l r" ~:t- f' , ~:::' zc~ Pc-- r:~) z =:) :r> =< (]'\ :D -, '. . J[."U"lr 1._- [~~~1~@l~~1Wk~~'''f1)J''h''''~1'')''''i_i"f\1''~''ff,'w.,w-''1'',;'')1'!~1''''''~'''''~W'~'\@~~~~~,ij!Jj,''<'%l!1rISf.J#i!m}~I~~!~~~-it('' ,'__~f'I. r II Ii I' !~ " I; Ii ,I 11 II It I" ifu I! I'. '" fi'i BAA HARRISBURG, INC., Plaintiff v. SUSQUEHANNA AREA REGIONAL AIRPORT AUTHORITY, Defendant 'f'; r ::j !'~ '~_1 ,~'I 1:,',1 :;f : IN THE COURT OF COMMON PLEAS : OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION NO. 01-5974 PRAECIPE TO MARK THE ACTION SATISFIED, DISCONTINUED, AND ENDED WITH PREJUDICE 5<1 I"" ".1 I;' ,,0 TO THE PROTHONOTARY: Ii;' ,'-' 1'/ Please mark the this action as satisfied, discontinued, and ended with prejudice as ," ;;" ,'j, I? to all claims by all parties. v- ,. 1'1 ,-:1_; RHOADS & SINON LLP "', I:" ;';' :(, i,',: :t{, :;:; attei . . No. 53847 1 S Market Square Harrisburg, PA 17101 (717) 233-5731 ,J Attorneys for Defendant 'i Dated: Z1J2-Joz.-- .-J ,:; ~.:;i9":-,";"1' *. ' . _ "__:,-c'C,,'~;:"\"t~"-;'Zj!-," >__"_,o',__~"'''J!',''j;'_''''''-''''''-'''le._,;,,'~';__""__""'c-:',;,?, "m ,'_ ,0,' ." McNEES WALLACE & NURICK LLC By~J-Jh~ Donald B. Kaufman 1.0. No. 49764 100 Pine Street P.O. Box 1166 Harrisburg, PA 17108-1166 (717) 232-8000 Attorneys for Plaintiff Dated: I /3 I I () 2- , ,-- '" ",'1"'''_'''' ,_>_-,_-",_"",p",__,~ ,-~ -~, . . ,,- ,~-,~ ~ ':~I,,<:'f"- '-' - ,d., ., "_"".,,, ,_",,0,_ ,<-",-"":-'-'':'':",' "'""'...""""'.'"'.'.'"' <~- .',' """','.'V, ",~,__"",~.,.,,,. -<-,....,+ ',,4K" 'V,'''^. . "'~ii!I{'~l"r.'lrnllTiJn l,tliiJliiilllf 1.1 . ','" >'''J'(r''i,'t'.4''~ . '-"1i.-'ftt1!-~;~'~,-~1li~ ;,U 'ifJl'I!'j!~j~l~,_~",_. ", ,,-k_;-- ;:~~>\'? ""~~., ,- \ uC':' fTJ r- . 2;:~- ~Q~'-~ r::-..:: ",- '- ->,. -- ~'.:,.- ~ ~C. >. 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