In re Air Florida System, Inc.

• Decision Date: 18 March 1985
• Docket Number: Adv. No. 84-0690-BKC-SMW-A.,84-01224-BKC-SMW,Bankruptcy No. 84-01223-BKC-SMW
• Citation: 48 BR 437
• Parties: In re AIR FLORIDA SYSTEM, INC., Debtor. In re AIR FLORIDA, INC., Debtor. AIR FLORIDA SYSTEM, INC. and Air Florida, Inc., Plaintiffs, v. TRANSWORLD AIRLINES, INC., Defendant.
• Court: U.S. Bankruptcy Court — Southern District of Florida

48 B.R. 437 (1985)

In re AIR FLORIDA SYSTEM, INC., Debtor.

In re AIR FLORIDA, INC., Debtor.

AIR FLORIDA SYSTEM, INC. and Air Florida, Inc., Plaintiffs, v. TRANSWORLD AIRLINES, INC., Defendant.

Bankruptcy Nos. 84-01223-BKC-SMW, 84-01224-BKC-SMW, Adv. No. 84-0690-BKC-SMW-A.

United States Bankruptcy Court, S.D. Florida.

March 18, 1985.

Robert M. Quinn, Tampa, Fla., for Air Florida.

Stanley Arthur Beiley, Miami, Fla., for Transworld Airlines, Inc.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

SIDNEY M. WEAVER, Bankruptcy Judge.

This cause came on to be heard on the complaint of Air Florida System, Inc. and Air Florida, Inc. ("Air Florida") to avoid a lien, to partition and sell property, and to avoid and recover preferences, and was heard by the Court on January 8, 1985. The Court, having heard the testimony and examined the evidence presented, having observed the candor and demeanor of the witnesses, having considered the arguments of counsel, and being otherwise fully advised, does hereby make the following findings of fact and conclusions of law:

This dispute involves the respective rights of the parties in a portion of an airport terminal building (the "Concourse Addition") which was constructed by defendant Transworld Airlines, Inc. ("TWA") on land TWA leased in the Fort Lauderdale/Hollywood International Airport (the "Airport") from Broward County, Florida (the "County"). The disputed portion of the Concourse Addition is referred to as the Air Florida Facility. The basic dispute is whether TWA leased or sold its rights in the Air Florida Facility and an attached loading bridge to Air Florida, and, if the transaction was a sale, whether TWA has a perfected security interest in the rights transferred, as well as two loading bridges now attached to the Air Florida Facility.

The testimony established that TWA built the Concourse Addition on ground space it leased at the Airport pursuant to the terms of an Interim Agreement and Interim Lease with the County. The Interim Agreement and Lease provided that TWA could occupy the Concourse Addition until such time as the County completed construction of a new terminal facility at the Airport, at which time the Interim Lease would end. When the Interim lease ended TWA would lease space in the new terminal facility, and the Concourse Addition would revert to and become the property of the County.

After TWA built the Concourse Addition, TWA and Air Florida negotiated the transfer of TWA's rights in the Air Florida Facility and an attached loading bridge to Air Florida. The parties executed an Agreement, setting forth the terms of the transaction on September 15, 1980 (the "Agreement"). The parties closed the transaction contemplated by the Agreement on November 10, 1980. At the closing the parties executed several documents, copies of which were admitted into evidence without objection. The closing documents include a letter agreement dated November 10, 1980, (the "Sublease"), a bill of sale (the "Bill of Sale") a chattel mortgage and security agreement (the "Chattel Mortgage") and a financing statement (the "Financing Statement"). Also, at the closing, Air Florida paid TWA $875,000 in cash and executed and delivered a promissory note to TWA in the same amount (the "Note"), as the agreed payment for the transfer of TWA's rights in the Air Florida Facility and the attached loading bridge.

With the exception of the Sublease, all of the closing documents and the Agreement clearly and unambiguously state that TWA was selling its rights in the Air Florida Facility and the attached loading bridge to Air Florida. Furthermore, the terms of the Sublease, and the testimony concerning the Sublease, are not necessarily inconsistent with a sale rather than lease transaction. The Sublease could be construed as merely a convenient means by which to require Air Florida to pay a proportionate share of the rent due the County under the Interim Lease and of the other expenses for the operation of the Concourse Addition, without granting Air Florida any rights other than those conveyed under the Agreement and Bill of Sale. Finally, and most importantly, the Sublease provides that in the event of any conflict between it and the Agreement, the terms of the Agreement control. Accordingly, for all the foregoing reasons, the Court finds that both Air Florida and TWA intended a sale, not a lease, of TWA's rights in the Air Florida Facility and the existing attached loading bridge to Air Florida. See In re: Associated Air Services, Inc., 42 B.R. 768 (S.D.Fla.1984).

Having concluded that the parties intended a sale, the Court...