The economic viability of one of Leesburg Executive Airport’s fixed-base operators could hinge on the outcome of a civil lawsuit filed in Loudoun County Circuit Court.
ProJet Aviation, a Leesburg Airport-based fixed base operator providing fueling and other services for more than a decade, is suing its longtime business partner, Salamander Aviation and its related businesses, along with Salamander’s CEO Sheila C. Johnson.
According to the suit, filed in Loudoun County Circuit Court on Feb. 12, ProJet was formed as a joint venture between Salamander Aviation and Professional Jet Services, Inc., in 2007. It was intended, the suit states, to be a partnership between Salamander’s Johnson and Professional Jet Services’ Shye Gilad, the latter of whom would go on to be ProJet’s CEO.
However, according to ProJet, the relationship went south almost from the start.
“Since ProJet’s inception, the relationship between Salamander Aviation and ProJet has been characterized by bad faith, bullying, and strong-arm tactics on the part of Salamander Aviation. This bad faith and bullying resulted in Salamander Aviation and the other defendants breaching their fiduciary duty to ProJet on multiple occasions, by inter alia, usurping ProJet’s corporate opportunities, utilizing strong-arm tactics to bleed ProJet of critical operating funds, and causing a severe devaluation of ProJet as a company,” the lawsuit stated.
The lawsuit alleges and details a number of instances when action, or inaction, by Salamander allegedly undermined ProJet’s business interests, even alleging that Salamander COO Stuart Haney personally threatened during one disagreement that the company would “bankrupt ProJet.”ProJet is seeking more than $15 million in damages from Salamander arguing breach of fiduciary duty, breach of contract, and alter ego liability against a variety of other limited liability corporations, as well as against Johnson, among other charges.
ProJet’s attorney Joseph Manson said the lawsuit was formally served on Salamander in mid-March. Salamander has denied the allegations and has already filed a demurrer seeking to have the case dismissed. No hearing date is scheduled.
“ProJet has tried to avoid litigation by agreeing to mediation and agreeing to a process to have ProJet and Salamander select a broker with experience in fixed-base operators, and also on selling aircraft hangars. We got the broker identified through a process that we agreed on. We had an agreement on economic terms and then things hit a brick wall. ProJet just felt it had no alternative but to go to court and have the court resolve the dispute,” he said.
Salamander representatives point the finger right back at Gilad, alleging that his own poor financial management of his business is what has put ProJet in its current position.
According to Matthew Edwards, whose firm Ain & Bank, P.C. has served as longtime counsel to Johnson and entities in which she has an interest, Salamander has invested an incredible amount of money in ProJet and in Gilad, who has been responsible for running the business.
“It is most disappointing that Mr. Gilad was unable to make the business the success that he promised. His attempt to blame Salamander for his own failures is based largely on erroneous fundamental assumptions about the viability of his business model,” he said.
Johnson and Salamander deny all liability and have responded to the lawsuit by challenging its legal basis, added trial counsel Tim McEvoy.
“Our clients vigorously dispute the merits of the lawsuit and have filed several preliminary motions seeking dismissal of the case, as is our right. While we continue to hope that this dispute can be resolved in a constructive way that makes good business sense and best serves the community that relies on the airport, we are also fully prepared to have a court decide the issues now or after a full trial,” he said.
The lawsuit also brings Leesburg Airport’s future fixed base operator into the limelight, with ProJet’s contention that JK Moving Services CEO Chuck Kuhn first approached Gilad about purchasing the business from him in 2018. Kuhn instead built his own hangar at the airport after a stalled negotiation on a needed easement with ProJet soured the relationship, a delay the lawsuit blames on Salamander. That resulted in Kuhn and his son Scott obtaining a second FBO contract at the airport for their SK Aviation.
According to the lawsuit, that competition sharply devalued ProJet and threatens its viability.
“There’s not enough business at the Leesburg Airport for two FBOs,” Manson said. “And Mr. Kuhn has substantial assets.”
According to the lawsuit, ProJet and Salamander entered mediation proceedings last year, where the parties attempted to work out a solution that would have sold ProJet and the hangar to Kuhn. However, those negotiations have also stalled, the lawsuit alleges.
Kuhn declined comment.
Johnson is the co-founder of BET, CEO of Salamander Hotels and Resorts, and principal shareholder of the Washington Mystics, Washington Capitals, and Washington Wizards.