Florida Aviation Business Association
Serving the General Aviation and Business Aviation Community Since 1946
Tuesday, 10 May 2016 17:38

Who left their Boeing 727 on my leasehold?

Written by Richard L. Richards
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As aviation attorneys, we oftentimes have clients who deal with unique issues where the truth is stranger than fiction. A few years ago, a client approached our law firm complaining about a Boeing 727-22 aircraft that appeared on their leasehold at Opa Locka Airport in Miami, Florida. It seemed as if it would be a straight forward case.

Opa Locka Airport

Miami-Opa Locka Executive Airport (OPF) is located seven miles north of Miami International Airport and it is the largest of Miami-Dade County’s four general aviation airports. The name ‘Opa Locka’ was originally ‘Opa-tishawoka- locka’ a Native American name that loosely translates into ‘the high land north of the little river with a camping place.’ This unique name was chosen by aviation pioneer Glenn Curtiss who retired from aircraft manufacturing in the 1920’s to become a real-estate developer in Florida. Curtiss founded the City of Opa Locka and thereafter founded the Opa Locka airfield in 1927 on the grounds of what used to be his Florida Aviation Camp. Curtiss deeded his Opa Locka airfield to the United States Navy shortly before his early death in 1930.

Opa Locka Airfield became part of the United States Navy Training Command during World War II and the hub of six naval training bases known as NAS Miami. NAS Miami consisted of three separate fields: Opa Locka, Miami Municipal, and Master Field. Extensive construction work began in 1939 with the designation of the airfield as a major air station. The US Navy commissioned NAS Miami in August 1940, this facility served to provide intermediate training for the US Navy. In 1942 both Miami Municipal and Master Fields became part of the complex1.

After World War II, the federal government disposed of hundreds of small airports, pursuant to the Surplus Property Act of 1944 (58 Stat. 765). They were given by quitclaim deed to local governments. The Surplus Property Act of 1944, as amended in 1947, not only authorized, but prescribed the terms of the deed by which the federal government transferred the airport to the county. The deeds typically state that the transfer was occasioned by the “United States of America, acting by and through the War Assets Administration, under and pursuant to ... the powers and authority contained in the provisions of the Surplus Property Act of 1944, as amended, and applicable rules, regulations[,] and orders ...”).

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The 1947 amendments to the act established the following two preconditions for transfer of property to a local government for use as a public airport: “the transfer had to be subject to the terms, conditions, reservations, and restrictions contained in the act, and the property interest conveyed had to be essential, suitable, or desirable for the development, improvement, operation, or maintenance of a public airport ... [,] or reasonably necessary to fulfill the immediate and foreseeable future requirements of the grantee for the development, improvement, operation, or maintenance of a public airport, including property needed to develop sources of revenue....” Act of July 30, 1947, Pub. L. No. 80–289, § 13(g) (1), as reprinted in 1947 U.S. Code Congressional Service 673, 673–75 [hereinafter Surplus Property Act Amendments].

Having thus provided that only property suitable for airport use could be granted in the first instance, Congress declared that “no property disposed of under the authority of this subsection shall be used, leased, sold, salvaged, or disposed of by the grantee or transferee for other than airport purposes without the written consent of the administrator of civil aeronautics, which consent shall be granted only if the administrator of civil aeronautics determines that the property can be used, leased, sold, salvaged, or disposed of for other than airport purposes without materially and adversely affecting the development, improvement, operation, or maintenance of the airport at which such property is located.... “ Id. § 13(g) (2) (A).


To enforce these restrictions, Congress required the inclusion of a reversion clause, providing that “in the event that any of the terms, conditions, reservations, and restrictions upon or subject to which the property disposed of is not met, observed, or complied with, all the property so disposed of or any portion thereof, shall, at the option of the United States, revert to the United States in its then existing condition.” Id. § 13(g) (2) (H).

In 1961, the United States quitclaim deeded Miami-Opa Locka Executive Airport to Dade County (now known as Miami-Dade County). Miami-Dade County has continually served as the airport’s sponsor through the Board of Miami-Dade Commissioners. By the mid-1990s, the airport had become a virtual graveyard for aircraft that had reached the end of their lifespan. Before the mid-2000’s, OPF had lessees who were holding development leases and were simply not performing. Under pressure from the Miami-Dade Aviation Department and the Miami-Dade County Commission, the lessees were forced out. From 2008, major improvements in security cleared the way for the build-up in the number of private jets based at Opa Locka and the emergence of several fixed base operators. In 2014 the Miami-Dade County Commission voted to change the name of the airport to the ‘Miami-Opa Locka Executive Airport’ as part of a rebranding effort to include the names ‘Miami’ and ‘Executive’ in the name of OPF.

The leasehold

The client holds a typical airport developmental lease with Miami-Dade County. These leases require approval from the Federal Aviation Administration (FAA). The FAA provides monetary grants to airport sponsors, or public agencies that own and operate airports, through the FAA’s Airport Improvement Program, authorized under the Airport and Airway Improvement Act of 1982 (“AAIA”), 49 U.S.C. § 47101 et seq. Congress has required that grant applications contain certain written assurances that an airport sponsor seeking federal funds will abide by a variety of requirements. 49 U.S.C. § 47107(a). Under the AAIA, the Secretary of Transportation is responsible for ensuring compliance with these assurances, 49 U.S.C. § 47107(g), and is authorized to approve grant applications only if the airport sponsor’s assurances are “satisfactory to the Secretary.” 49 U.S.C. § 47107(a). Accordingly, the Secretary of Transportation has promulgated and revised a set of standardized grant assurances “grant assurances”.2

boeing 727

The aircraft

Aviation in the United States is regulated primarily by FAA pursuant to Title 14 of the Code of Federal Regulations (FARs), 49 USC (Transportation Code), and the corresponding regulations. The registration of aircraft is the responsibility of the FAA. Under the Transportation Code and the FARs, an aircraft is eligible for registration only if its owner is a US citizen and the aircraft is not registered under the laws of a foreign country. The citizenship requirement applies to individuals and partnerships, provided each member thereof is a citizen. It also applies to corporations, provided that the president, at least two-thirds of the board of directors and other managing officers, and owners of at least seventy-five per cent of the voting stock are citizens (FAR part 47).

The aircraft in question is a Boeing 727-22 manufactured in 1967 and originally operated by United Airlines. In 2001 the aircraft was sold and registered to Wilmington Trust Company, Trustee. Pursuant to FAR part 47.7 an owner’s trust over the aircraft may also be used to satisfy the US citizenship registration requirements. In this case, the foreign beneficial owner of the aircraft places the aircraft in a trust with a US citizen owner trustee.3 Thus, Wilmington Trust Company was not the actual owner and rather was the trustee for the foreign owner of the aircraft.

The dispute

Sometime in 2010, the Boeing 727-22 landed at OPF. The aircraft was parked on our client’s leasehold without their knowledge or consent and was never moved or touched for two years. In May of 2012 the client asked my firm to investigate and take steps remove the aircraft from the leasehold. We discovered that another company had surreptitiously attempted to take legal control of the aircraft by bringing a lien foreclosure suit against the aircraft’s trustee in 2011. In fact, we discovered that in March of 2012 the court had already entered a final judgment on default following no response from the trustee. On behalf of the client, we intervened in the lawsuit in seeking relief from the judgment and the dismissal of the complaint on the basis that the claimed lien was bogus. In June 2012, the company recognized that its claims against the aircraft were unfounded and agreed to set aside the judgment and dismiss its complaint.

Aircraft removal was easier said than done

Following the dismissal of the complaint, the client naturally wanted us to cause the aircraft to finally be removed from its leasehold. Removal of an abandoned aircraft by a non-government entity is not clear cut under Florida law, as opposed to abandoned motor vehicles and boats which have specific statutes which govern. Incidentally, airport sponsors have a statute as their disposal entitled “Disposal of derelict or abandoned aircraft on the premises of public-use airports” (F.S. 705.183) which provides the director of the airport or the director’s designee a mechanism to remove derelict aircraft. This statute is unfortunately not available to a leasehold tenant.

Typically, an aircraft is abandoned at a leasehold following a tie down or hangar arrangement. The effective procedure in such a case is loosely based on a landlord lien where a tenant has vacated the premises and has left personal property behind. Thus, we typically send a notice to the aircraft owner and publish that the aircraft has been abandoned on property is going to be sold at auction. This process usually yields the owner paying to save their precious aircraft or the aircraft goes to auction and the client either recovers funds or credit bids, which results in the client owning the aircraft.

In our Opa Locka case, we published a public auction notice for the Boeing 727-22 and, lo and behold, the alleged actual owner of the Boeing 727-22 emerged. In spite of over two years having passed since they parked the aircraft and seemingly walked away, the alleged owner filed a complaint in the same lawsuit seeking an injunction to stop the public auction. Thus, we were now back in court, with the actual owner wanting us to not hold the auction, and of course our client wanting to go forward with the auction in order to remove the aircraft from its leasehold.

Following a trial held in September of 2012, wherein the trial court considered the circumstances surrounding the public sale and the owner’s eleventh hour intervention, the trial court ruled that the only way the auction would not go forward is if the owner posts a substantial bond. The owner then appealed to a higher court on an emergency basis claiming that the bond requirement was onerous. We defended the auction on the appellate level and obtained a victory for the client. This paved the way for the auction and thus we finally answered the client’s plea to ‘get that darn 727 off of my leasehold!’

Richard L. Richards, Esq. is a Florida aviation attorney who is board certified by the Florida Bar in Aviation law. Richards is a partner in the firm of Richards Goldstein LLP whose representative clients include FBO’s, aircraft owners, aircraft dealers, lessors/lessees, aircraft fuelers, and aircraft/engine repair stations in all aspects of aviation law including leases, sales contracts, liens, and lawsuits. He has over twenty-two years of experience in aviation law including private practice, general counsel for an airline, and airport counsel for an airport authority. Richards also serves as a board member and Vice President of the Florida Aviation Business Association.

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References

1 Miami Municipal and Master Field, connected by a taxiway across railroad tracks, served in support of NAS Miami with each having four asphalt paved runways, hangars, barracks, and support buildings. Rededicated in 1947 as Amelia Earhart Field, the Miami Municipal field no longer serves as an airport and now is a public park. Similarly, the former Master Field is not an airport, and rather now is the site of Miami Dade Community College – North Campus.

2 The major Grant Assurances tenancies include: Grant Assurance 22, entitled “Economic Nondiscrimination”. This grant assurance requires the airport sponsor to make the airport available as an airport for public use on reasonable terms and without unjust discrimination to all types, kinds and classes of aeronautical activities, including commercial aeronautical activities offering services to the public at the airport.” 64 Fed. Reg. 45,008, 45,011 (Aug. 18, 1999); 62 Fed. Reg. 29,761, 29,766 (June 2, 1997); Grant Assurance 23, entitled “Exclusive Rights,” requires the airport sponsor to assure that “[i]t will permit no exclusive right for the use of the airport by any person providing, or intending to provide, aeronautical services to the public.” Further, the airport sponsor must agree that “it will not, either directly or indirectly, grant or permit any person, firm, or corporation, the exclusive right at the airport to conduct any aeronautical activities.”; Id.; and Grant Assurance 24, entitled “Fee and Rental Structure,” requires an airport sponsor to assure that it “will maintain a fee and rental structure for the facilities and services at the airport which will make the airport as selfsustaining as possible under the circumstances existing at the particular airport, taking into account such factors as the volume of traffic and economy of collection.” 62 Fed. Reg. at 29,767.

3 Our firm, Richards Goldstein LLP, serves as trustee for foreign owners of several U.S. registered aircraft.

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