Atorie Air, Inc. v. F.A.A. of U.S. Dept. of Transp.

• Decision Date: 30 September 1991
• Docket Number: No. 90-8186,90-8186
• Citation: 942 F.2d 954
• Parties: ATORIE AIR, INC., Plaintiff-Appellant, v. FEDERAL AVIATION ADMINISTRATION, OF THE UNITED STATES DEPARTMENT OF TRANSPORTATION, et al., Defendants, Roger Knight, Etc., et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 954

942 F.2d 954

ATORIE AIR, INC., Plaintiff-Appellant, v. FEDERAL AVIATION ADMINISTRATION, OF THE UNITED STATES

DEPARTMENT OF TRANSPORTATION, et al., Defendants,

Roger Knight, Etc., et al., Defendants-Appellees.

No. 90-8186.

United States Court of Appeals, Fifth Circuit.

Sept. 30, 1991.

Rehearing Denied Oct. 30, 1991.

Ronald F. Ederer, U.S. Atty., El Paso, Stanley M. Serwatka, Mollie Crosby, Asst. U.S. Attys., for Knight, et al.

Catherine L. Fisk, Barbara L. Herwig, Richard Olderman, Appellate Staff, Civ. Div., Dept. of Justice, Washington, D.C., for Federal Aviation Admin.

Susan Larsen, Malcolm McGregor, El Paso, Tex., for Atorie.

Appeals from the United States District Court for the Western District of Texas.

Before CLARK, Chief Judge, GOLDBERG and GARWOOD, Circuit Judges.

CLARK, Chief Judge:

Atorie Air, Inc. (Atorie), filed this action against the United States, the Federal Aviation Administration (FAA), and several FAA employees in their official and individual capacities, seeking recovery for the loss of its business due to acts and omissions of the defendants. The district court dismissed several claims and defendants prior to trial. At the conclusion of trial, the district court entered judgment in favor of the remaining defendants. We affirm.

I

A. The Dispute

Atorie is a Texas company which engaged in an air cargo transport business. On March 3, 1986, one of its aircraft made a forced landing while on a scheduled cargo flight over New Mexico. Investigation by the National Transportation Safety Board (NTSB) revealed that one engine had failed, another had partially failed, the landing gear had collapsed, and records on the aircraft and engines were not properly maintained.

By letter of March 12, Dorvin Hagen, a principal operations inspector of the FAA, advised Atorie that it was in violation of federal aviation safety regulations and could have the certificates necessary to its operation revoked. Hagen cited Atorie's high turnover of flight crew personnel as a "continuing problem" justifying a concern that Atorie did not have sufficient management or instructor personnel to meet operation and training requirements. On April 1, Hagen met with Pat Madera, Atorie's chairman of the board, to discuss problems at Atorie.

On April 5, another Atorie aircraft made a forced landing near El Paso. The NTSB investigation again determined that an engine had failed and the aircraft's records had not been properly maintained. During the investigation, Atorie's president, Ed Scott, acknowledged there had been sixteen engine failures attributable to poor overhauls in the past twelve months, as well as four forced landings which resulted in aircraft damage over a forty-day period.

By letter of April 24, Hagen advised Atorie of what the FAA perceived to be deficiencies in Atorie's operations, and that certain changes in personnel, management, and maintenance must be made by May 5, or it would take action to suspend Atorie's certificates. Hagen met with Scott on April 30 to clarify the FAA's concerns. On May 5, the FAA sent a maintenance inspection team to Atorie's El Paso office.

Thomas Walenta is a flight standards manager for the FAA, and Keith Runyan is an inspector. Following the inspection, Hagen, Walenta, and Runyan briefed John Curry, the FAA's associate regional counsel, on May 7 about Atorie's problems. Curry consulted with his immediate supervisor and with the FAA's Office of Chief Counsel in Washington, D.C., regarding a certificate revocation. Curry was specifically authorized to issue an emergency certificate revocation order. See 49 U.S.C. § 1429(a); 14 C.F.R. § 121.53(c). While drafting this order, a third Atorie plane went down on May 9 near Las Vegas. Curry determined it was necessary to ask Atorie immediately to surrender its certificates voluntarily. See 14 C.F.R. § 121.53(d).

Curry called a meeting with Ed Scott and Atorie's counsel on Saturday, May 10. Atorie's counsel included Alan Zvolanek, a former FAA attorney retained for purposes of this meeting, who was familiar with applicable FAA statutes and regulations. Atorie voluntarily surrendered its certificates at the conclusion of this meeting. Zvolanek memorialized the agreement reached in a May 10 letter to Curry. The substance of this letter was that Atorie's surrender of its certificates was based on the FAA's agreement to return them immediately upon demonstration of compliance with FAA regulations. The letter further provided that when aircraft and necessary crew records were ready, the FAA would immediately inspect them. Atorie's stated intention was to be ready to fly its routes on Monday, May 12, 1986.

On the afternoon of May 12, Atorie advised the FAA office in Albuquerque it was ready for inspection in El Paso. Because it was too late in the day to fly officials from Albuquerque, the FAA offered to perform the inspection on the next day. Instead of agreeing to this offer, Atorie immediately flew its records to Albuquerque. No inspection occurred, but the parties dispute the reasons why. Atorie claims that the FAA would not look at the records, but instead indicated it would start a new, massive inspection before recertifying Atorie. The FAA claims that, by consent, the inspection was postponed until May 15, and on that day, Atorie stated it was not ready for inspection. The FAA inspection team found that Atorie's erroneous record-keeping continued to violate FAA regulations.

The FAA asserts it attempted to allow Atorie to cure its problems, but still found unaddressed deficiencies on May 28, June 3, and on into late June. Atorie was recertified on July 2 and 3, 1986, and its certificates were returned. By that time, Atorie had allegedly lost all of its contracts.

B. Proceedings Below

Atorie filed suit against the United States, the FAA, and the following FAA personnel in their official and individual capacities: Roger Knight, acting regional director; Keith Runyan, inspector; Dorvin Hagen, principal operations inspector; Thomas Walenta, flight standards manager; and John Curry, associate regional counsel. Atorie sought damages under the Federal Tort Claims Act (FTCA) for misrepresentation and tortious interference with contractual relations. Atorie also sought recovery for deprivation of substantive and procedural due process under Bivens v. Six Unknown Named Agents of the Federal Bureau of Narcotics, 403 U.S. 388, 91 S.Ct. 1999, 29 L.Ed.2d 619 (1971).

On defendants' motion, the district court dismissed the FTCA claims for lack of subject matter jurisdiction. Finding Atorie's Bivens claim to be purely procedural, the district court sua sponte dismissed the substantive due process claim as to all defendants. It also dismissed the procedural due process claim as against the United States, the FAA, and the FAA personnel in their official capacities. However, the district court ruled that Atorie's complaint stated a cause of action for violations of procedural due process against the FAA personnel in their individual capacities.

A jury tried the procedural due process claim. At the close of Atorie's case, the district court directed a verdict in favor of Knight, Runyan, and Walenta for lack of evidence. The jury found that Hagen and Curry had not acted in good faith and had deprived Atorie of due process, but found that Atorie waived its procedural due process rights. The district court adopted the jury's findings of fact. Additionally, the district court held that any violation of procedural due process was also waived as a matter of law, finding that Atorie had foregone its right to judicial review under 49 U.S.C. § 1486. The district court entered judgment against Atorie.

II

Atorie asserts the district court erred in dismissing its FTCA and substantive due process claims. Atorie also argues that the jury, as a matter of fact, and the district court, as a matter of law, erred in finding a waiver of procedural due process rights.

A. The FTCA Claim

All suits brought under the FTCA must be brought against the United States. Vernell v. United States Postal Service, 819 F.2d 108, 109 (5th Cir.1987). All defendants other than the United States were properly dismissed for lack of subject matter jurisdiction.

Explicit exceptions in the FTCA reserve the tort immunity of the United States for claims of misrepresentation, deceit, or interference with contract rights. 28 U.S.C. § 2680(h). Atorie asserts that FAA officials made misrepresentations, upon which it relied to its detriment, and which directly and proximately resulted in the loss of its contracts. Such claims are squarely barred by the statute.

Atorie contends it was denied further discovery which would have led to evidence showing either that the FAA breached its duty of good faith and fair dealing or that the FAA negligently failed to control its employees. These claims, Atorie argues, are actionable under the FTCA. See Block v. Neal, 460 U.S. 289, 295-97, 103 S.Ct. 1089, 1093, 75 L.Ed.2d 67 (1983).

Because the FTCA provides a waiver of immunity otherwise to be accorded the sovereign, the limitations and conditions upon which the government consents to be sued must be strictly construed in favor of the United States. Lehman v. Nakshian, 453 U.S. 156, 160, 101 S.Ct. 2698, 2701-02, 69 L.Ed.2d 548 (1981); Akutowicz v. United States, 859 F.2d 1122, 1125 (2nd Cir.1988). In accord with this principle, causes of action distinct from those excepted under section 2680(h) are nevertheless deemed to be barred when the underlying governmental conduct "essential" to the plaintiff's claim can fairly be read to "arise out of" conduct that would establish an excepted cause of action. Williamson v. United States Dept. of Agriculture, 815 F.2d 368, 377 (5th Cir.1987) (quoting Metz v. United States, 788 F.2d 1528, 1534 (11th Cir.), cert. denied, 479 U.S. 930, 107 S.Ct. 400, 93 L.Ed.2d 353 (1986)).

Any cause of action Atorie could assert, regardless of how it is...