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TREATIES / CONVENTIONS
25. An action brought pursuant to the Warsaw Convention must be commenced:
A. Within four years of the date of the incident;
B. Within two years of the date of the incident;
C. Within two years of the date of the incident, unless the action involves the death of a passenger, in which case it must be brought within one year;
D. Within the applicable statute of limitations for a comparable claim as provided by the law of the state of the forum;
Answer: B.
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On May 4, 2001, you receive a call from Will Robb, who identifies himself as president, director and sole shareholder of Robb and Son, Inc. (“Robb and Son.”) He tells you the following:
Robb and Son is a Tennessee, Subchapter S corporation, which is in the business of buying helicopters to lease back to fixed base operators for use in flight instruction. The company owns three helicopters, two of which are leased under a written lease to Florida Collective,
Inc., a company at Tampa International Airport in Tampa, Florida. Florida Collective uses these two helicopters for flight training.
The other helicopter, N4589X, is leased to Rotor and Skid (“Rotor and Skid,”) a flight school at the Boca Raton Airport in Boca Raton, Palm Beach County, Florida. The lease with Rotor and
Skid is not written, but Robb and Son’s agreement with Rotor and Skid is that Rotor and Skid will pay Robb and Son fifty dollars ($50.00) per flight hour, and Rotor and Skid will pay all maintenance and insurance expenses for the helicopter.
The agreement has worked well for the past five years. The helicopter operated by Rotor and
Skid flew an average of 100 hours a month and netted Robb and Son $5,000.00 a month. In fact, the agreement has worked so well that on November 20, 2000, Will Robb asked Sam Fox, the owner of Rotor and Skid, to find for him another helicopter that he could purchase and than lease to Rotor and Skid on the same terms as the helicopter it presently leased.
On February 20, 2001, Mr. Fox called Mr. Robb and told him that he had a Bell Ranger helicopter owned by Rotor and Skid that they now wanted to sell. He said that he owed a little money on it, but he would sell it to Robb and Son for $85,000.000 and would then agree to lease it back for his flight training business, on the same terms as the other helicopter he was leasing from Robb and Son. He said the helicopter was in good shape and would be a moneymaker for both of them. Mr. Robb trusted Mr. Fox in his assessment of the condition
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and value of the helicopter because it was Mr. Fox who had found for him the two helicopters he was leasing to Florida Collective. He ordered a title search from Oklahoma City, and when it came back showing title in Rotor and Skid and no liens, he telephoned Mr. Fox and told him he would agree to the purchase, even though he had not inspected the helicopter. On March 4,
2001, he wired the funds to Rotor and Skid’s Florida bank account, and Mr. Fox, by FedEx, sent him a signed bill of sale made out to Robb and Son, Inc. Mr. Robb prepared an FAA application for registration in the name of the corporation and forwarded it and the bill of sale to a title agency in Oklahoma City, which lodged the documents for recording at the FAA Registry on
March 5, 2001.
On March 26, 2001, before Robb and Son had even received the first payment under their oral lease agreement, Mr. Fox called Mr. Robb and said, “I have some bad news for you. I had taken out a loan from Sunshine Bank to buy the helicopter. Although I intended to pay off the loan out of the purchase money I received from you, which is why I didn’t tell you about the loan, I didn’t, and the bank repossessed it yesterday. They sent Bill’s Towing Company to pick it up, and they trucked it off the airport. I found out that they’re storing it in a hangar at Fort
Lauderdale Executive Airport in Broward County, Florida.”
Your investigation reveals the following:
1. A financing statement for the helicopter was recorded on April 2, 1998, in
Tallahassee by Sunshine Bank the day after their loan to Rotor and Skid.
2. Your client called Sunshine Bank on March 26, 2001 to complain to them that they had no right to repossess the helicopter. The bank officer with whom he spoke told him that they had the right to repossess the helicopter by virtue of the loan documents signed in 1998 by Rotor and Skid’s owner and the financing statement they filed in Tallahassee, Florida.
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3. The FAA issued the registration certificate on March 23, 2001.
4. A lien on the helicopter was recorded in Oklahoma City on April 20, 2001 by
Sunshine Bank.
5. Sunshine Bank now claims a security interest in the helicopter based upon the financing statement filed in Tallahassee and the lien filed in Oklahoma City.
6. Bill’s Towing claims they are owed the costs of repossessing the helicopter, plus storage charges of $40.00 per day since March 25, 2001. They are still storing it.
7. On October 19, 2000, Bill’s Towing Company sent to the FAA Registry in
Oklahoma City a Certificate of Repossession, signed by Bill Hook as President of
Bill’s Towing Company, and an Application for Registration of the helicopter in the name of Bill’s Towing Company, also signed by Bill Hook.
8. Robb and Son is losing revenue from the helicopter each day that it is not operating.
Mr. Robb wants to know what can be done, if anything, to get his helicopter back. Please discuss how you would respond to Mr. Robb, including what statutes, laws and case law apply, and the actions you would take in this matter. Please include a discussion of any applicable legal theories which may apply, causes of action, venue, jurisdiction, propriety of documents sent and/or filed with the FAA and other issues that might exist, if any. Also, please discuss the probable outcome of this matter .
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Defendants, Sunshine Bank and Bill’s Towing, at the direction of Sunshine Bank, wrongfully took, and are now wrongfully in possession of, the helicopter owned by the Plaintiff. Sunshine
Bank does not now have, nor did it ever have, a valid, perfected security interest against the helicopter so as to have priority over the interest of the Plaintiff.
The applicable law is as follows:
Title 49 U.S. Code Section 44107 provides that:
(a) The Administrator of the Federal Aviation Administration shall establish a system for recording -
(1) conveyances that affect an interest in civil aircraft of the United States; . . . 40 U.S.C. 44107
Title 49 U.S. Code Section 44108 provides that:
(a) Validity Before Filing. - Until a conveyance, lease, or instrument executed for security purposes that may be recorded under section 44107 (a)(1) . . . of this title is filed for recording
(emphasis added,) the conveyance, lease, or instrument is valid only against -
(1) the person making the conveyance, lease or instrument;
(2) that person’s heirs and devisees; and
(3) a person having actual notice of the conveyance, lease or instrument.. C. 44108
In addition, Florida law provides that:
No instrument which affects the title to or interest in any civil aircraft of the United States, or any portion thereof, is valid in respect to such aircraft, or portion thereof, against any person, other than the person by whom the instrument is made or given, his heirs or devisee, and any person having actual notice thereof, until such instrument is recorded in the office of the Federal
Aviation Administrator of the United States or such other office as is designated by the laws of the United States as the one in which such instruments should be filed. Any instrument required to be recorded by the provisions of this section takes effect from the date of its recordation and not from the date of its execution. Fla.
Stat. 329.01 (1999).
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Plan of Action:
Robb and Son should bring a replevin action against both Sunshine Bank and Bill’s
Towing.
Jurisdiction is Circuit Court.
Venue is county where property is located - Broward County.
The complaint should also include a count for lost profits, based upon the profits of the
Plaintiff’s other helicopter operated by Rotor and Skid, or calculated as interest at the statutory rate on the value of the helicopter for the time the Plaintiff is not in possession.
After filing the Complaint and serving the Defendants, Robb and Son should move, pursuant to Florida Statutes 78.065, for issuance of an Order to Show Cause why a writ of replevin should not be issued to Defendants, if Defendant has not waived its right to be heard.
An alternative method of commencing a replevin action is to file a verified pleading, showing the Defendants may destroy or conceal the helicopter, may remove it form the
State or form the jurisdiction of the court, or may transfer title to an innocent purchaser. This type of action requires posting of a bond in an amount twice the value of the helicopter.
The non-verified Complaint in this case is simpler and should obtain the desired result.
The Plaintiff should appear in person at the hearing and counsel should be prepared to introduce evidence of ownership and certified copies of the FAA Registry records regarding the helicopter, showing registration in the name of Robb and Son and the non-existence of a recorded lien.
In accordance with Fla. Stat. 78.075, if the Court finds that the Defendants have not waived the right to be heard on the order to show cause, the court shall at the hearing on the order to show cause consider the affidavits and other showings made by the parties appearing and make a determination of which party, with reasonable probability, is entitled to the possession of the claimed property pending final adjudication of the claims of the parties, based on a finding as to the probable validity of the underlying claim alleged against the defendant.
If the Court determines that the Plaintiff is entitled to take possession of the claimed property, it will issue an order directing the clerk of the court to issue a writ of replevin.
Fla. Stat. 78.067 (1999).
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It is probable, based upon the law and the facts of this case, that Plaintiff will prevail in its claim for replevin. Since the date of the wrongful taking of the helicopter, Plaintiff has been losing the use of the helicopter and the income it would have produced. A writ of replevin should be issued and the helicopter should be forthwith returned to
Plaintiff, pending final adjudication of Plaintiff’s claim for replevin.
The leading case is Philko Aviation, Inc. v. Shacket et ux.
In Philko, the United States Supreme Court held that 49 U.S.C. 1301 et seq (now 49
U.S.C. 44108) “prohibits all transfers of title to aircraft from having validity against innocent third parties unless the transfer has been evidenced by a written instrument and the instrument has been recorded with the Federal Aviation Administration (FAA.)”
The Court stated that: “The only situation in which priority appears to be determined by operation of the [federal] statute is where the security holder has failed to record his interest. Such failure invalidates the conveyance as to innocent third parties.”
Since at the time Plaintiff’s registration application was filed for recording, and at the time it was recorded by the FAA, Sunshine Bank had not filed any security interest with the FAA, Sunshine Bank’s security interest was not perfected. Robb and Son took title to the helicopter free and clear of the unperfected security interest of Sunshine Bank.
Sunshine’s lien filing with the FAA on April 20, 2001 is ineffective against Robb and Son, who had no notice of the lien when they purchased the helicopter.
Because Robb and Son had filed its application for registration prior to the taking of the helicopter by Sunshine Bank and/or Bill’s Towing, and also because Sunshine Bank had no perfected security interest at the time it took, or authorized the taking of, the helicopter, it improperly took possession of the helicopter, which was owned by Robb and Son at the time it was taken.
According to the law, the Plaintiff’s ownership rights take priority over the security interest, which was unperfected at the time Plaintiff purchased the helicopter and filed the bill of sale and registration documents with the FAA Aircraft Registry. The security interest of Sunshine Bank must be subordinate to the interests of the Plaintiff.
Robb and Son should prevail at the hearing on the Order to Show Cause and should have the helicopter returned to them pending final hearing.
Upon return of the helicopter, prior to flying it, it should be inspected by and A & P to determine whether or not it was damaged in the taking.
Upon filing of the replevin action, the Plaintiff should also write to FAA Aircraft Registry, in Oklahoma City, to request that any action on any pending conveyances involving the helicopter be abated pending the outcome of the replevin action.
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The documents filed by Bill’s Towing cannot be recorded at the FAA Registry because
Sunshine Bank, not Bill’s Towing, is the entity with the right to repossess the helicopter.
The Certificate must show Sunshine Bank as the secured party. In order for their
Certificate of Repossession to be recorded, Bill’s Towing would have to furnish the FAA an original or certified copy of the document authorizing Bill Hook to execute documents in the name of the bank, or Certificate of Repossession should be signed by a corporate officer or someone in a managerial position at the bank. There would also have to be a bill of sale from Sunshine Bank to Bill’s Towing Company and payment of a
$5.00 registration fee.
A possible defense exists if Sunshine Bank is able to show that Sam Fox was acting as agent of Robb and Son in locating on their behalf a helicopter for sale. If so, Robb and
Son might be deemed to have constructive knowledge of the debt owed and of
Sunshine Bank’s lien.
Sunshine Bank may also allege a defense of “unclean hands” and may try to show that the Plaintiff had knowledge, constructively or actually, of the history of the helicopter and did not have possession of it at the time of the sale.
Plaintiff should counter with an argument that it was told that Rotor and Skid owed a little money on the helicopter but wasn’t told that there was a lien on it, and that a title search at the FAA Registry showed no liens.
At the eventual trial, Robb and Son should prevail, but ideally Plaintiff should try to settle with the Defendants for monetary damages, general releases, a disclaimer of any interest in the helicopter, which should be filed with the FAA Aircraft Registry and an agreement to execute any documents which may in the future be necessary to negate any claims of title filed by the Defendants.
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