IAL Aircraft Holding v. FAA, No. 98-5522

• Decision Date: 13 March 2000
• Docket Number: No. 98-5522
• Citation: 206 F.3d 1042
• Parties: (11th Cir. 2000) IAL AIRCRAFT HOLDING, INC., a Florida corporation, Petitioner, v. FEDERAL AVIATION ADMINISTRATION, Respondent.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1042

206 F.3d 1042 (11th Cir. 2000)

IAL AIRCRAFT HOLDING, INC., a Florida corporation, Petitioner, v. FEDERAL AVIATION ADMINISTRATION, Respondent.

No. 98-5522.

United States Court of Appeals Eleventh Circuit.

March 13, 2000.

Petition for Review of an Order of the Federal Aviation Administration.

Before COX, Circuit Judge, KRAVITCH, Senior Circuit Judge, and PROPST ^*, Senior District Judge.

KRAVITCH, Senior Circuit Judge:

Under applicable treaties and statutes, the Federal Aviation Administration ("FAA") may not register an aircraft in the United States if the aircraft is registered validly in another country. To ensure compliance with this requirement, the FAA promulgated a regulation requiring proof that any foreign registration has ended or become invalid as a prerequisite to registration in the United States. One option for those seeking registration from the FAA is to present a final judgment of a "court of competent jurisdiction" that the foreign registration is no longer in force or otherwise valid. This appeal from the FAA's final agency decision refusing to register an aircraft previously registered in another country centers on the proper interpretation of the phrase "court of competent jurisdiction." We conclude, as a matter of first impression, that this phrase encompasses all courts that properly may exercise subject matter and either personal or in rem jurisdiction, whether in the United States or in the country of prior registration.

I. BACKGROUND AND PROCEDURAL HISTORY

The facts in this appeal are simple and undisputed. Petitioner IAL Aircraft Holding, Inc. ("IAL") sold a Boeing 727-247 Aircraft bearing manufacturers's serial number 20974 ("aircraft") to a Brazilian customer pursuant to a conditional sales agreement in 1993. The Brazilian customer registered the aircraft with Brazil but never made full payment to IAL. In 1995, IAL and the Brazilian customer entered into a termination and settlement agreement pursuant to which the aircraft was returned to IAL, and the customer disclaimed any interest in it. IAL, with the assistance of its Brazilian customer, spent two years unsuccessfully trying to deregister the aircraft from the Brazilian registry. The FAA refused to register the aircraft in the United States without proof that the Brazilian registration had ended or become invalid.

IAL then filed an in rem action in the Circuit Court of the Eleventh Judicial Circuit in and for Dade County, Florida ("Florida court") seeking a judgment that Brazil's registration of the aircraft was no longer valid. Along with documentary evidence, IAL presented an expert in Brazilian law who testified that, under the laws of Brazil, the registration of the aircraft ceased to be valid when the Brazilian customer disavowed any interest in the aircraft. According to the expert, a person in possession of an aircraft pursuant to a conditional sales agreement may temporarily register the aircraft in Brazil, but that temporary registration is canceled if terms of the conditional sales agreement are not met.¹ Based on the evidence presented, the Florida court entered a final judgment and decree declaring the registration invalid under Brazilian law. See IAL Aircraft Holding, Inc. v. One Boeing 727-247 Aircraft, No. 96 Civ. 14893 (11th Cir. Ct. Dade County, Fla. Aug. 27, 1996). IAL presented this judgment to the FAA in support of its application for United States registration. The FAA queried Brazilian officials as to the validity of the Florida court's judgment, but instead of opining on the correctness of the court's decision, the officials responded that the judgment would be effective in Brazil only if it were certified by the Brazilian Supreme Court. Rather than submitting the decision for certification, IAL requested a final agency decision from the FAA. When the FAA refused to register the aircraft, IAL sought review of the decision in this court under 49 U.S.C. 46110(a).²

II. DISCUSSION

A.Statutory and Regulatory Background

The United States, together with more than 180 other countries, is a signatory to the Convention on International Civil Aviation, opened for signature Dec. 7, 1944, 61 Stat. 1180 ("Chicago Convention"). The treaty provides that "[a]n aircraft cannot be validly registered in more than one State, but its registration may be changed from one State to another." Id. art. 18, 61 Stat. at 1185. Any such termination of registration shall be done in accordance with the laws of the country of prior registration. See id. art. 19, 61 Stat. at 1185. Among other concerns, the Chicago Convention was aimed at avoiding friction among different countries. See id. Preamble, 61 Stat. at 1180. A few years later, the United States entered into a second treaty governing civil aviation, the Convention on the International Recognition of Rights in Aircraft, opened for signature June 19, 1948, 4 U.S.T. 1830 ("Geneva Convention"), which further provided that the registration of an aircraft may not be transferred from one signatory country to another "unless all holders of recorded rights have been satisfied or consent to the transfer." Id. art. IX, 4 U.S.T. at 1838.

The Chicago and Geneva Conventions were implemented by federal statute and FAA regulation. Congress provided prerequisites for registering an aircraft in the United States, including the proviso that the aircraft not be "registered under the laws of a foreign country." 49 U.S.C. 44102(a)(1) (1994). Once an aircraft owner has satisfied the requirements codified in section 44102, the FAA "shall" register the aircraft. See 49 U.S.C. 44103(a)(1) (1994). The FAA issued a regulation delineating the means by which an aircraft owner may transfer registration of his aircraft from another country. If the country of last registration is also a signatory to the Geneva convention, the owner must submit "evidence satisfactory to the Administrator that ... the foreign registration has ended or become invalid, and each holder of a recorded right against the aircraft has been satisfied or consented to the transfer...." 14 C.F.R. 47.37(a)(3) (1999). The regulation provides that:

satisfactory evidence of termination of the foreign registration may be-

(1) A statement, by the official having jurisdiction over the national aircraft registry of the foreign country, that the registration has ended or is invalid, and showing the official's name and title and describing the aircraft by make, model, and serial number; or

(2) A final judgment or decree of a court of competent jurisdiction that determines, under the law of the country concerned, that the registration has in fact become invalid.

Id. 47.37(b).

IAL contends that it satisfied the requirements of section 46.37(b)(2) by securing a final judgment and decree from the Florida court that, under the laws of Brazil, the Brazilian registration was no longer valid. The FAA counters that only an appropriate court from the foreign country concerned, in this case Brazil, is a "court of competent jurisdiction" within the meaning of the regulation. Our resolution of this appeal, therefore, centers on the interpretation of the phrase "court of competent jurisdiction."

The FAA's decision not to register the aircraft is a final agency decision and will be upheld unless it is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law." 5 U.S.C. 706(2)(A) (1994). When reviewing a final agency decision, the agency's interpretation of its own regulation is entitled to substantial deference and must be accorded "controlling weight unless it is plainly erroneous or inconsistent with the regulation." Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 512, 114 S.Ct. 2381, 2386, 129 L.Ed.2d 405 (1994) (internal quotation marks omitted). In contrast, an agency's interpretation of its regulation that is merely offered as a litigation position is not entitled to any deference. See Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 212-13, 109 S.Ct. 468, 473-74, 102 L.Ed.2d 493 (1988); Lohr v. Medtronic, Inc., 56 F.3d 1335, 1341 n. 4 (11th Cir.1995); Florida Manufactured Hous. Ass'n, Inc. v. Cisneros, 53 F.3d 1565, 1574 (11th Cir.1995).

In this case, we are satisfied that the FAA's proffered interpretation of its regulation is only a litigating position and entitled to no special deference. The FAA has never formally interpreted the regulation and has never issued clarifying regulations.³ With the exception of presenting a defense in one other court litigation, the FAA has never offered an opinion on the meaning of the regulation. In that prior litigation, also an appeal of the FAA's refusal to register an aircraft, see Air One Helicopters, Inc. v. Federal Aviation Admin., 86 F.3d 880, 883 (9th Cir.1996),⁴ the Ninth Circuit Court of Appeals implicitly rejected the reading of the phrase "court of competent jurisdiction" offered by the FAA here, but the FAA did not amend or clarify the regulation. The FAA's position, now presented in two cases without any attempt to modify the underlying regulation, is not entitled to controlling weight.⁵ See William Bros., Inc. v. Pate, 833 F.2d 261, 265 (11th Cir.1987) ("Common sense tells us that if deference were always to be given to the Director's litigation position, then claimants would be effectively denied the right to appellate review.").

B.Interpretation of the Phrase "Court of Competent Jurisdiction"

The FAA regulation sub judice recognizes "a final judgment or decree of a court of competent jurisdiction that determines, under the law of the country concerned, [as evidence] that the registration has in fact become invalid." 14 C.F.R. 47.37(b)(2) (1999). The FAA's interpretation of the phrase "court of competent jurisdiction" would limit the phrase to only a court from the foreign country involved, in this case Brazil. Courts repeatedly have interpreted the phrase "court of competent jurisdiction," however, to mean any court that may properly...