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Billionaire vs. Billionaire in Airport Dogfight

Honda Motor HondaJet compact business jet in flight
Honda Motor HondaJet compact business jet in flight

When the titans of industry collide, it's usually over buying and selling companies. But two of the richest men in the country are facing off in court...over jet fuel.

Rob Maguire built up Maguire Properties into a commercial real estate giant which shaped the LA skyline. He left last year as profits tumbled, but he remains the company's largest shareholder.

David Murdock is getting ready to take Dole public to raise cash, as his Castle & Cooke development company suffers in this economy.

Both men own aviation operations at Van Nuys Airport, the busiest general aviation airport in the country, and second only to Teterboro in corporate traffic. Maguire Aviation is one of four Fixed Based Operators here, or FBOs, which usually pay the airport a premium for the right to sell jet fuel to outside aircraft. Maguire is now suing Murdock's Castle & Cooke aviation for allegedly posing as an FBO and selling millions of gallons of fuel, sales that rightfully belong to Maguire and other legitimate operations.

"They've been running kind of like a gypsy FBO for years and siphoning off a big portion of fuel revenue," Rob Maguire told me in an exclusive interview. "You're advertising as an FBO, which is illegal!" He says he has ads and photos of out of state airplanes being fueled at Castle & Cooke to prove his case.

Rob Maguire
Source: Maguire Properties
Rob Maguire

Maguire says Murdock's facility occupies five to six percent of the property at the airport, and, therefore, its fuel purchases should reflect that percentage. Instead, "They went from 10 percent in '07 to 12 percent in '08 to 14 percent in '09...it's very easy to demonstrate that there is a million and a half to a million six hundred thousand gallons that are being siphoned off, and that's three million bucks a year potentially."

Castle & Cooke tells CNBC the lawsuit had no merit. David Murdock told the Los Angeles Business Journal, "We have never done anything illegal at Van Nuys Airport, and the suit...it totally a lie."

But a July letter to Castle & Cooke Aviation Services from Los Angeles World Airports, the governing authority over Van Nuys, tells the company that it "must immediately stop referring to itself as an FBO at VNY." The letter reminds the company that its lease agreement lays out that it "shall not engage in any activities directly competitive with those being conducted by existing fixed base operators at Airport..."

Signature Flight Support, one of the other FBOs here, tells CNBC it is watching the lawsuit very closely. "The rules of fair play need to be enforced here," says VP of Marketing Patrick Sniffen.

"I've known David for years," says Rob Maguire of Murdock. "I don't have anything against David. I think David really should be looking at what's going on out here." When I responded, "You don't think he knows?" Maguire replied, "He's trying to do an IPO, so he's pretty busy."

David murdock
Source: Castle & Cooke
David murdock

Maguire alleges the abuse has been going on for years, and he says he's due $20 million to $25 million.

Why sue now?

Because he says Castle & Cooke is in the process of applying to become an FBO while having its rent slashed. Maguire doesn't want to subsidize that, and, "We want the profits back."

All this over jet fuel?

When I said to Maguire, "From the outside, it looks like two really rich guys bickering over coffee money," he seemed caught off guard, and then laughed. "The issue is that none of us will tolerate the money being siphoned off, because we think it's blatant and illegal." Yes, it's about the principle of fair play, he says, but also, "It's about the money."

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