UNITED STATES DEPARTMENT OF TRANSPORTION 

FEDERAL AVIATION ADMINISTRATION 

WASHINGTON, D.C. 

VENICE JET CENTER, LLC, 

- i n 

' O 

Complainant, FAA Docket No. 16-09-05 

V. 

CITY OF VENICE, FL, 

Respondent. 

EOfcuv^ 

SEP 3 ^uua 

{PART 16 DOCKETS 

'-•3 

RESPONDENT CITY OF VENICE, FLORIDA'S MEMORANDUM OF POINTS AND 

AUTHORITIES IN SUPPORT OF ITS ANSWER AND ITS MOTION TO DISMISS 

Robert C. Anderson, Esq. 

City Attorney 

Hall & Anderson, P.A. 

1314 East Venice Ave., Suite E 

Venice, FL 34285 

Telephone: (941) 480-0999 

Facsimile: (941)480-1446 

Thomas R. Devine, Esq. 

W. Eric Pilsk, Esq. 

KAPLAN KIRSCH & ROCKWELL LLP 

1001 Connecticut Ave NW, Suite 905 

Washington, DC 20036 

Telephone: (202) 955-5600X568 

Facsimile: (202) 955-5616 

Arthur P. Berg, Esq. 

KAPLAN KIRSCH & ROCKWELL LLP 

641 Lexington Ave. Suite 1409 

New York, NY 10022 

Telephone: (212) 328-9515 

Facsimile: (646)514-5440 

Counsel for Respondent City of Venice, FL 
TABLE OF CONTENTS 

L INTRODUCTION AND STATEMENT OF THE CASE 1 

IL STATEMENT OF FACTS 5 

i n . ARGUMENT 14 

A. APPLICABLE LAW 14 

(1) The FAA is Concerned with an Airport Sponsor's Current Compliance 14 

(2) The FAA's Airport Compliance Program seeks to ensure safe airports, properly 

maintained 15 

(3) Burden of proof 15 

(4) Requirement to Submit with the Complaint All Evidence Upon Which Complainant 

Relies 15 

B. PRELIMINARY ISSUES 16 

(1) The Complainant Relies on Analyses of Applicable Federal Law That Were Based on 

Circumstances That are Different Than the Actual Facts 16 

a) Kaplan Kirsch & Rockwell LLP Memorandum 16 

b) Statements from an Official at the local FAA ADO That the City Should Approve 

the VJC/Nadel Hangar Proposal 18 

(2) City Actions that the Complaint Calls "Delay" or "Stall Tactics" Are Simply the 

Reasonable, Deliberative Actions of a Conscientious Public Body Addressing Unusual 

Circumstances 21 

a) Allegations of Block Voting and "Improper" Motivations of City Council 

Members 22 

C. THE CITY'S RESPONSE TO SPECIFIC COUNTS 24 

(1) Count I: Venice Jet Center Has Failed To State A Claim That the City Has Violated 

Grant Assurance 1 24 

a) Grant Assurance 1 Does Not Apply To This Case Because The Dispute Regarding 

VJC's Hangars Does Not Relate To the Application, Acceptance and Use of Federal 

Funds For Any Project 24 

b) Even If A Sherman Act Claim Were Within Part 16's Jurisdiction, Count I of VJC's 

Complaint Still Must Be Dismissed Because The City's Actions Were 

Govenmiental Acts That Are Immune From The Sherman Act 26 

-1-
c) Even if AAS has Jurisdiction Over VJC's Antitrust Claim, And Even If The City Is 

Not Immune From Any Antitrust Claim, Count I Must Still Be Dismissed Because 

VJC Has Failed To Properly Plead A Violation Of The Sherman Act 29 

d) Even if VJC/Receiver Can Overcome All of Those Hurdles, Count I Must Still Be 

Dismissed Because VJC/Receiver Has Failed To Present Facts to Support Its Vague 

Antitrust Claim 31 

(2) Count II: The City Has Not Violated Assurance 5, Preserving Rights and Powers 32 

a) Substantive Standard 32 

b) No Action or Lack of Action by the City Cited by VJC/Receiver Has Diminished the 

City's Rights and Powers Necessary to Ensure its Ability to Comply with its 

Airport Sponsor Grant Assurances 33 

c) Lease for Non-Airport Property 36 

d) The VJC Lease Was Not Approved by the FAA 38 

(3) Count III: Operating and Maintaining the Airport in Safe Condition 38 

(4) Count IV: Unjust Economic Discrimination 40 

a) Substantive Standard 40 

b) VJC is Not Willing And Otherwise Qualified to Build and Lease Hangars at the 

Airport 41 

c) VJC Must Comply with the Airport's Minimum Standards, Which Include 

Demonstrating to the City's Satisfaction, the Financial Capability to Carry Out the 

Project and City Approval of the Location for Hangar Development 41 

d) Requiring Assurance of Financial Capability is a Legitimate Exercise of Proprietary 

Powers and Does Not Violate the Prohibition Against Unjust Economic 

Discrimination 45 

e) There is No Current Proposal to the City by an Entity That Will Build and Operate 

the Hangars 48 

(5) Count V: Exclusive Rights 49 

a) Standard 49 

b) Grant Assurance 23 Does Not Prevent the City From Exercising an Exclusive Right 

to Provide Aeronautical Service 51 

c) Complainant Has Provided No Evidence That Other Tenants Have Been Given 

Exclusive Rights To Build and Lease Hangars 51 

-11-
D. AFFIRMATIVE DEFENSES 52 

(1) First Affirmative Defense: The Complaint Fails To State A Ripe Claim For Relief... 52 

(2) Second Affirmative Defense: VJC Lacks Standing To Pursue This Case 54 

IV. CONCLUSION 56 

-111-
TABLE OF AUTHORITIES 

Cases 

Belts V. CityofEdgewater, 646 F. Supp. 1427, 1435 (M.D. Fl. 1986) 31 

City of Columbia v. Omni Outdoor Advertising, Inc., 111 S. Ct. 1344, 1353 (1991) 27, 28 

Haillie v. Eau Claire, 105 S.Ct. 1713, 1717 (1985) 27 

Hillman Flying Serv.. Inc. v. City of Roanoke, 652 F. Supp. 1142, 1145-46 (W.D. Va. 1987) ... 28 

Hoover v. Ronwin, 104 S. Ct. 1989, 1995 (1984) 27 

Interface Group, Inc. v. Massachusetts Port Auth., 816 F.2d 9, 13 (1st Cir 1987) 28 

Rectrix Aerodrome Centers. Inc. v. Barnstable Municipal Airport Comm 'n, 534 F.Supp.2d 201, 

204-5 (D. Mass. 2008) 28 

Turk v. Richard, 47 So.2d 543, 544 (Fl 1950) 31 

United States of America v. Arthur G. Nadel 1, 2 

Statutes 

15 U.S.C. § 1 29, 30 

15 U.S.C. §§ 34-36 27 

18 U.S.C. § 201 25 

18 U.S.C. §666 25 

49 U.S.C. §40103 49 

49 U.S.C. § 47107 40, 50 

Fla. Stat. § 332.08(2)(a) 27, 28 

Fla. Stat. §§332.01-332.12 27 

Other Authorities 

41 North 73 West Inc. v. Westchester County, New York, FAA Docket No. 16-07-13, 2008 50 

Adventure Aviation v. City of Las Cruces, FAA Docket No. 16-01-14, 2003 15, 16, 39 

-iv-
Boston Air Charter v. Norwood Airport Comm'«., FAA Docket No. 16-07-03, 2008 35 

Buffalo Jet Ctr., Inc. v. Niagara Frontier Transp. Auth., FAA Docket No. 16-98-07, 1998 34 

Flightline Aviation, Inc. v. City of Shreveport, Docket No. 16-07-05, 2008 45 

House V. Kingman Airport Auth., FAA Docket No. 13-94-10, 1997 46 

Jet 1 Center, hic. v. Naples Airport Authority, FAA Docket No. 16-04-03, 2005 29, 51 

Jim Martyn v. PortofAnacortes, FAA Docket No. 16-02-03, 2003 36, 50 

Lytton V. Sheridan County Bd. Of County Comm 'rs, Docket No. 16-01-16, 2002 46 

M. Daniel Carey and Cliff Davenport v. Afton-Lincoln County Mun. Airport Joint Powers Bd., 

FAA Docket No. 16-06-06, 2007 35 

NDC, Inc. V. City of Beverly, Mass., FAA Docket No. 13-93-04, 2001 46 

Northwest Airlines, Inc. et al. v. Indianapolis Airport Auth., et al., 

FAA Docket 16-07-04, 2008 52 

Pacific Coast Flyers, Inc., v. County of San Diego., 

FAA Docket No. 16-04-08, 2005 15, 36, 45, 49 

Platinum Aviation and Platinum Jet Center v. Bloomington-Normal Airport Authority, 

FAA Docket No. 16-06-09 5, 37, 39, 40 

Richard E. Steere v. County of San Diego, FAA Docket No. 16-99-15 (Dec. 7, 2004)... 14, 40, 52 

Rick Aviation, Inc v. Peninsula Airport Comm'«., FAA Docket No. 16-05-18, 2007 15 

Roadhouse Aviation v. City of Tulsa, FAA Docket No. 16-05-08, 2007 15 

Santa Monica Airport Association v. City of Santa Monica, 

FAA Docket 16-99-21, 2003 44, 46 

Thermco Aviation, Inc. v. County of Los Angeles., FAA Docket No. 16-06-07, 2007 20, 38, 54 

Wilson Air Center LLC, v. Memphis and Shelby County Airport Auth., 

FAA Docket No. 16-99-10, 2001 15, 52 

Regulations 

14 C.F.R. § 16.1 26 

14C.F.R. § 16.23 15 

- V-
14 C.F.R. § 16.25. 

14 C.F.R. § 16.29. 

52 

15 

-VI-
I. INTRODUCTION AND STATEMENT OF THE CASE 

The case set forth in the Complaint is, in essence, as follows: 

The City declined to approve a request for permission to build 4 hangars at Venice 

Municipal Airport by the managing partner of Venice Jet Center ("VJC"), Albert Nadel, a man who 

has been arrested and charged by the federal government as the mastermind behind a massive fraud. 

City Exhibit 1 {Indictment, United States of America v. Arthur G. Nadel). The federal government 

asserts that this mini-Madoff s scheme bilked approximately 350 persons out of "[a]t least 

approximately $360 million." Id. at 11-12. The appointment of a Receiver by the U.S. District 

Court for the Middle District of Florida (Tampa) over certain of Mr. Nadel's assets, including the 

Venice Jet Center, is premised on evidence that Mr. Nadel had infected those assets with the illgotten gains of his illegal scheme. That is, funds that were actually the property of his investor 

victims were plowed into VJC and other assets. City Exhibit 2 (Receiver's Declaration in Support 

of the Unopposed Motion to Expand the Scope of the Receivership) at 6-8.' 

Mr. Nadel, in frill knowledge of the fact that he had improperly siphoned at least $3 million 

of his investors' money into VJC, requested City permission to build first one, then two, then four 

8,000 ft. hangars on the VJC site, fiinding the development with cash. 

Not receiving approval from the City consistent with Mr. Nadel's preferred timeframe, Mr. 

Nadel sought the assistance of the FAA's Orlando ADO by self-righteously asserting, apparently 

with no sense of irony, that the City was violating federal law by not allowing him to build these 

hangars. Complainant's Exhibit 10. Perhaps out of habit, Mr. Nadel asserted that foregone gross 

' The Receiver reported to the Court overseeing his receivership that "money derived from the scheme was 

used by Nadel to purchase and/or fund other businesses, including Venice Jet Center, LLC." Exhibit 2 at p.6, 

^15. Specifically, the Receiver reported that Mr. Nadel used $2.79 million of stolen funds to purchase VJC 

and, subsequently plowed another $325,000 in stolen funds into VJC through December 12, 2006. Id. at p.8, 

\ 22-23. The receiver noted further that "it is likely that significantly more money was transferred to VJC 

from Receivership Entities, and we continue to look for evidence of additional transfers." Id. 

-I-
revenue from 11 hangars (notwithstanding the fact that he sought approval for 4 hangars) for a 30 

year period "would add up to hundreds of millions of dollars." Id. at 3. Conservatively interpreting 

"hundreds of millions" to mean $200 million, this means that each of the hangars would bring in a 

whopping $50,000 per month. 

An FAA ADO official, understandably unaware of Mr. Nadel's notorious scheme and the 

illicit fijnding of VJC with stolen money, advised the airport that it should approve the VLJ request. 

Complainant's Exhibits 12 and 14. 

A Receiver has been appointed for Mr. Nadel's holdings, including VJC, with the express 

charge from the U.S. District Court to marshal the assets of VJC and other Nadel holdings, so as to 

raise as much cash as possible to pay off, to the extent possible, victims of Mr. Nadel's fraudulent 

schemes. Complainant's Exhibit 1 (Court Order Reappointing Receiver). 

The Receiver, on behalf of VJC ("VJC/Receiver") seeks a blanket approval from the City 

for an undetermined, undisclosed third party to build some type of hangars on the site, without 

providing any substantiation of the undetermined, undisclosed third party's qualifications for 

building or operating the facilities or its financial ability to do so, as required by the Airport's 

minimum standards. The Receiver's avowed intent is to maximize the value of the remaining VJC 

leasehold to pump up the value of VJC, so that the Receiver can sell VJC and, pursuant to his 

mandate from the federal district court, take the proceeds of the sale off Airport and place them in a 

fiind for distribution to the victims of Mr. Nadel's illegal scheme. 

Without knowing who, if anyone, will build the hangars, VJC/Receiver cannot meet the 

City's Minimum Standards, which require, among other things, proof that the operator has the 

financial capability to carry out the project. Moreover, substantial questions remain regarding the 

^ Although the Complaint is in the name of VJC, it is important to distinguish between VJC as it existed prior to Mr. 

Nadel's arrest, when Mr. Nadel controlled VJC, and VJC after that time, when it has been controlled by the Receiver. 

To maintain that distinction where appropriate, the City will refer to VJC as "VJC/Nadel" for the period prior to the 

appointment of the Receiver and "VJC/Receiver" for the period after the appointment of the Receiver. 
compafibility of the hangar project with the Airport's Airport Layout Plan and other provisions of 

the Minimum Standards. VJC/Receiver refuses to even attempt to comply with these requirements, 

and instead has filed this Complaint seeking an FAA mandate for the City to approve a project that 

VJC/Receiver does not intend to build for the distinctly non-aeronautical purpose of increasing 

revenue to the Receiver for the purposes of repaying the victims of Mr. Nadel's fraud. While the 

City certainly does not object to the Receiver seeking a measure of justice for the victim's of Mr. 

Nadel's fraud, that does not require the City to ignore its own Minimum Standards. Nor does that 

purpose, however worthy in itself, require the FAA to find a violation of any federal obligation. As 

detailed below, the City has at all times complied with its federal obligations. 

The Receiver alleges, in essence, although not so starkly, that failure of the City to grant 

approval to construct the hangars in contravention of the current, FAA-approved ALP to VJC/Nadel 

(a) when Mr. Nadel proposed to construct the hangars on the false pretenses that VJC had available 

funds to do so (when in fact, such funds were not the property of VJC, but rather they were stolen 

from the victims of Mr. Nadel's illegal scheme), or (b) when the Receiver requested approval so 

that an undisclosed, undetermined third party could, at an undisclosed time, construct the hangars, 

constitutes a violation of the federal antitrust laws and AIP Grant Assurances 1,5, 19, 22, and 23. 

Complaint at Tni 73-105. 

The fiindamental problem with the Complaint is that it does not identify any time that a 

legitimate developer has demonstrated to the City, pursuant to the City's minimum standards, that it 

is ready, willing, and able to build the hangars, and will do so if the City approves them. VJC, 

when it was run by Mr. Nadel, could not do so with untainted fiinds. The very fact that the Receiver 

is trying to get as much money from the VJC operation by selling it off and placing all of the 

proceeds into a fiind for the victims of the Nadel fraud demonsfrates that the funds available to VJC 
were ill-gotten gains of the Nadel fraud -and would not legitimately be available to build the 

hangars at any time. 

The Receiver, in ^ 58-59 of the Complaint, asserts that he told the City that VJC, under the 

receivership - that is, the entity that filed the complaint, "VJC/Receiver," will not build the hangars. 

The Receiver made that unequivocally clear in a letter to the City Attorney. City Exhibit 3 (6/25/09 

Letter from Receiver to R. Anderson). Thus, this case is unripe, based on facts evident from the 

Complaint itself 

FAA (and even the Receiver) should be thankful that the City did not allow VJC to 

undertake a construction project that would further enmesh the fraudulent proceeds of Mr. Nadel in 

the VJC site. There is no telling whether he would have actually built the hangars at all or used any 

additional flinds raised in fiirtherance of his illegal schemes, or partially build the hangzirs, leaving 

in his wake a series of claims related to the source of fiinds. 

However, instead of being grateful that more stolen money from the Nadel scheme was not 

plowed into the VJC site, the Receiver asserts, essentially, that the City acted illegally in not 

furthering that scheme. And now, the Receiver, standing in the shoes of the mastermind of the 

illegal financial scheme, asserts that the City must, without delay, approve a hangar development 

plan devised by VJC/Nadel, to be implemented by an undetermined third party that has made no 

showing to the City as to its relevant business experience and financial resources to devote to this 

project. The City is entitled, under its Minimum Standards, to ensure that an entity seeking to build 

and operate aeronautical facilities at the Airport has the financial resources available to complete 

the project. Complainant's Exhibit 4 (Venice Airport Minimum Standards for Aeronautical 

Activities) at 1. FAA acknowledges that this is a legitimate airport interest. Indeed, in this specific 

instance, the Acting Associate Administrator for Airports has stated that the City, in evaluating a 

proposal for hangars, is entitled to assure itself that the entity has sufficient resources to build them. 
City Exhibit 4, (July 1, 2009 Letter from Acting Associate Administrator for Airports Catherine M. 

Lang to Sen. Mel Martinez at 1). 

No provision of federal law requires an airport to accept without examination the "trust me" 

representations of a known con artist, or the "trust me" representations of a Receiver whose stated 

criterion for selecting the entity to succeed VJC is to pick the one "most advantageous for my 

Receivership" City Exhibit 5 (July 21, 2009 letter from Burton W. Wiand, Receiver, to Robert C. 

Anderson, City Attorney and Isaac Turner, City Manager) at 2, that is, the one that provides him 

with the most money to take off airport, rather than providing any benefit to the airport or aviation 

users. 

The purpose of the FAA Compliance Program is to enforce valuable rights agreed to by 

airport sponsors in exchange for federal Airport Improvement Program fiands. Platinum Aviation 

and Platinum Jet Center v. Bloomington-Normal Airport Authority, FAA Docket No. 16-06-09, 

2007 WL 4854321 at *5 (Final Decision and Order, Nov. 28, 2007) ("[The Airport Compliance 

Program] monitors the administration of valuable rights, which airport sponsors pledge to the 

people of the United States in exchange for monetary grants and donations of federal property, to 

ensure that airport sponsors serve the public interest"). Quite simply, however, there is no federal 

aviation interest in pumping up the value of the VJC leasehold, so that the Receiver may sell VJC 

for the maximum amount, and immediately take those funds off the airport. 

H. STATEMENT OF FACTS 

The City Council, in evaluating the VJC hangar proposal, faced highly unusual 

circumstances that changed significantly over time, raising fundamental questions about the City's 

rights and responsibilities regarding the proposed development. 

The prior leaseholder of the VJC parcel intended to build t-hangars on what is now the VJC 

site. Exhibit 3 (Minutes of January 13, 2009 City Council Meeting, statement of R. Jemigan, VJC). 

-5-
VJC assumed the leasehold for the site in May 2006. The original proponent of the VJC hangar 

project, its managing member, Mr. Nadel, has been accused by the federal government and the 

current overseer of VJC, the Receiver, to have grossly misrepresented the financial condition of his 

businesses, stolen funds from investor clients, and plowed some of his ill-gotten gains into VJC. 

City Exhibits 1 and 2. 

Although the VJC/Receiver asserts that "[i]n May 2008, VJC applied to the City for 

approval to construct four new hangars on approximately 2.5 acres of vacant land," (Complaint at ^ 

18), in fact, there is no evidence in the record that any such application was made at that time. To 

the contrary, the City Manager explicitly informed VJC/Nadel on June, 2008, that the proposed 

hangar project would require approval by the Mayor and City Council and directed VJC/Nadel to 

submit a "concept plan" to City staff with sufficient technical detail to allow staff to determine if 

there were any "fatal technical flaws" with the plan prior to City Council consideration. City 

Exhibit 18 (June 23, 2008 Letter from Martin Black, Venice City Manager to E.G. Boone). This 

correspondence demonstrates clearly that VJC/Nadel was only beginning, and certainly had not 

completed, the application process by late June, 2008. 

Moreover, as evidenced by letters from VJC/Nadel to the City, once VJC/Nadel began 

corresponding with the City on the proposed project, the requests for City approval changed 

considerably. In fact, the VJC/Nadel hangar request evolved from 1, to 2, then to 4 hangars. On 

Jime 13, 2008, counsel for VJC/Nadel wrote to the City seeking a place on the June 26, 2008 City 

Council Meeting agenda "to request permission from City Council to process a building permit 

application for an eight thousand square foot hangar, along with necessary paving and retention." 

City Exhibit 17 (June 13, 2008 Boone letter) at 1. (Emphasis added). This was followed shortly 

thereafter by another letter from VJC/Nadel's counsel expressing a desire "to make one change in 

its letter to you dated June 13, 2008." City Exhibit 6 (June 16, 2008 Boone letter) at 1. "The 
application will be for construction of two 8,000-square-foot hangars rather than one ... " Id. 

(Emphasis added.) 

This was reaffirmed in a July 1, 2008 letter from counsel for VJC/Nadel to the Mayor and 

City Council members requesting permission to proceed with building permitting for hangar 

construction. "The permit application to be filed is to construct two 8,000 square foot hangar 

buildings along with necessary paving and retention. The two hangars will be located on the west 

side of the parcel numbered 1 and 5 on the drawing." City Exhibit 7 (July I, 2008 Boone letter) at 

1. The letter then noted that "We have been requested to show where all hangars will be located on 

this parcel even though further hangar construction permits will be applied for if and when the need 

arises."" Id. (Emphasis added). Thus, it is clear that at this point, the request for City approval was 

only for a proposal to build only two hangars, and fliture hangars would be built only //"specific 

demand arose. 

Through the requirement that VJC/Nadel submit a conceptual plan for the entire parcel the 

City's Fire Marshal was able to study the plan and determine that the VJC/Nadel's plan ultimately 

to build 5 hangars was not viable on that site. A July 1, 2008 email from Nancy Woodley (City 

Engineer) to Marty Black (City Manager), stated that at meeting with Jack Stevenson (Fire 

Marshal), Roger Jemigan (VJC) and others, consensus "was to reduce the number of hangars from 5 

to 4 thereby meeting state fire code's separation of 50' between buildings of different occupancy." 

City Exhibit 8 (7/14/08 Woodley Email). Mr. Jemigan, VJC's representative who was copied on 

the email, wrote back to Ms. Woodley, "Thanks for your time and your input, it was greatly 

appreciated." Id. 

By August 18, 2008, VJC/Nadel sent a letter to the City indicating that the proposal was for 

4 hangars. City Exhibit 9 (August 18, 2008 Venice Jet Center Letter) at 1. There is no indication 

as to how demand rose from 2 to 4 hangars in such a short period of time, thus justifying 
VJC/Nadel's intent to seek approval of the entire 4 hangar proposal at this time. The City 

scheduled an informational presentation by VJC/Nadel on its hangar proposal for the August 26, 

2008 meeting of the City Council. Complaint at ^ 22. At that presentation, Mr. Nadel stated that 

VJC/Nadel had "just recently" applied for approval of construction of the hangars. 

While VJC/Nadel's attorneys argued that the City should approve the VJC/Nadel hangar 

proposal at that time, the City did not do so, as it had scheduled the presentation as an information 

item only, not an action item. 

Rather than pursuing an action item for the next City Council meeting, VJC/Nadel submitted 

an informal complaint to the FAA ADO on September 2, 2008. Complainant's Exhibit 10. On 

September 3, the ADO advised the City that VJC/Nadel had filed the informal complaint, and on 

September 15, 2008, the City Attorney replied, on behalf of the City. Complainant's Exhibit 11. 

In November, VJC/Nadel submitted proposed plans to constmct hangars to the City's 

Building and Engineering Departments. City Exhibit 10 (11/7/08 Building Permit Applications for 

hangars by VJC). 

On December 29, 2008, the official at the ADO handling the informal complaint determined 

that informal resolution was not possible, and told VJC that it was free to file a formal Part 16 

complaint, if it chose. Complainant's Exhibit 14. In the meantime, the City obtained a legal 

memorandum from Kaplan Kirsch & Rockwell LLP, concerning its obligations under the grant 

assurances based on certain assumed facts; the factual premise of the memorandum later proved to 

be in incorrect in several material aspects, as set forth below. 

In January, 2009 the fundamental nature of the project, and indeed of VJC itself, changed 

dramatically when Mr. Nadel disappeared for a period of time and was ultimately arrested and 

indicted on several charges, described above. See City Exhibit 1. Many of Mr. Nadel's assets, 

including VJC, were seized by a Receiver appointed by the U.S. District Court for the Middle 

-8-
District of Florida (Tampa), for the purpose of marshalling and liquidating those assets in order to 

raise money to repay Mr. Nadel's victims. Mr. Wiand was appointed Receiver over VJC on 

January 29, 2009. Complaint at ^ 47. According to papers filed in those proceedings, the Receiver 

has discovered evidence that Mr. Nadel used fraudulently obtained fiinds to purchase and operate 

VJC. City Exhibit 2. Mr. Wiand was appointed Receiver over VJC on January 29, 2009. 

Complaint at ^ 47. 

The appointment of a receiver was an unprecedented event for the City, and the City 

Council appropriately wanted to make sure it understood the consequences of that action. The City 

Council discussed in a measured and deliberative way, various issues relating to VJC as the unusual 

events surrounding its ownership unfolded. The Council also sought additional information and 

guidance in dealing with the situation. In January, the City Council reviewed and discussed the 

hangar project and specifically sought "additional input from the Federal Aviation Administration 

regarding Venice Jet Center's request to constmct additional hangar space on its leasehold and 

constraints of the Airport Layout Plan." City Exhibit 11. (Excerpt from City Council minutes 

(January 13, 2009 City Council Regular Meeting)). As a result, as discussed more fully below, the 

City Attomey wrote to the ADO for guidance on this issue on Febmary 4, 2009, specifically 

inquiring whether constmction of the hangars would violate Assurance 29, Compliance with Airport 

Layout Plan, since the hangar development appeared to be inconsistent with the ALP, and the City 

is obliged to comply with Assurance 29, as well as the other Assurances. City Exhibit 12 (Febmary 

4, 2009 Letter from City Attomey Robert Anderson to R. Henry, FAA ADO). 

At the Febmary 10, 2009 City Council Meeting, the Council discussed the City Attomey's 

Febmary 4, 2009 letter to the FAA, negotiating with the Receiver, whether the City is a creditor, 

how to preserve the rights of the City, signing or subletting of the lease without the consent of the 

Council, involuntary assignment, contacting the FAA regarding other designated hangar locations, 
whether the City has the right to deny the VJC request for more hangars, clarifying issues with the 

FAA, new circumstances because of the receivership, additional hangars triggering new lease 

negotiations, providing additional information to the FAA, information provided to outside council 

to assist in rendering his opinion, and other issues relating to the hangar project, as well as 

scheduling a City Council Workshop on long range vision for the Airport. City Exhibit 11 (Excerpt 

from City Council minutes (Febmary 10, 2009 City Council Regular Meeting)). 

At the Workshop, on March 5, 2009 the City Council, the City Council discussed relocation 

of the VJC, funding to move existing facilities, development of an emergency plan if the VJC is not 

in operation, working with the VJC receiver, the City possibly operating the VJC, aviation fiiel 

sales, airport leases and vertical improvement issues, addressing adherence of the ALP, and contact 

with the FAA regarding VJC. City Exhibit 11 (Excerpt from City Council minutes (March 10, 2009 

City Council Airport Workshop)). 

At its March 10, 2009 regular meeting, the City Council discussed "concems regarding the 

hangars being proposed on a location identified for other purposes, guaranteeing the applicant had 

financial resources to build hangars, and the city having a valid lease with VJC." City Exhibit 11 

(Excerpt from City Council minutes (March 10, 2009 City Council Regular Meeting)). The 

Receiver also spoke before the Council and questioned whether a financial viability clause was 

included in the building codes. He also said that it was unlikely he would use investor funds to 

constmct hangars, and pointed out that financing may be forthcoming from a potential new user. A 

motion to approve the VJC proposed hangars was defeated. Id. 

The Council then discussed the validity of the existing VJC lease, if the lease allowed 

hangar constmction, whether or not the lessee defaulted on the lease, and possible fraud during 

procurement of VJC, and financial viability of a VJC purchaser. There was consensus to direct the 

City Attomey to seek an opinion from local outside counsel expert in commercial leases to provide 

-10-
an opinion on whether the VJC lease is valid and entitles VJC to constmct hangars, if fraudulent 

fiinds negate the lease, and the city's ability under the minimum standards for financial viability. 

Id 

In response to the City's concems about the effect of the receivership on the VJC lease and 

other related issues, the City Attomey reported at the March 24, 2009 meeting that he, the City 

Manager, and the Mayor had formulated questions for outside counsel. City Exhibit 11 (Excerpt 

from City Council minutes (March 24, 2009 City Council Regular Meeting)). On April 30, the 

Council discussed fiinding the purchase of VJC, and receiving a VJC marketing packet from the 

Receiver. City Exhibit 11 (Excerpt from City Council minutes (April 30, 2009 Strategic Plan 

Workshop)). 

At the May 12, 2009 meeting, the City Council discussed a number of topics related to the 

VJC situation, including: a letter and information packet from the Receiver; issues relating to a 

possible appraisal of the leasehold; delaying any appraisal until after issues regarding hangar 

constmction were explored and outside local counsel provided an opinion on the VJC lease; a 

possible right of first refusal in the purchase of VJC; the confidentiality agreement sought by the 

Receiver; the possible conflict between Florida's sunshine laws and the confidentiality agreement; 

protecting the City's interests and avoiding potential lawsuits. City Exhibit 11 (Excerpt from City 

Council minutes (May 12, 2009 City Council Regular Meeting)). 

At its May 26, 2009 meeting, the City Council discussed recent developments, including: 

outside local counsel's opinion; Section 45 of the VJC lease conceming demolition and constmction 

of improvements; additional facts that had been discovered subsequent to Ms. Henry's letter; 

requirements for submitting specifications prior to hangar constmction; submittal of concept plans; 

the need for demonstrating financial viability; City Council approving hangars subject to 

subsequent verification of financial viability; lease affording the discretion to promote VJC's self 

-11-
interest; good faith obligations; the City purchasing VJC; claims of the City intentionally lowering 

the value of the VJC; demonstrating a need for additional hangars; approving additional hangars as 

part of the Joint Automated Capital Improvement Program (JACIP); hangar utilization; FAA 

acknowledging the need for additional hangars; the lease not being clear in defining obligations of 

parties; and the Receiver not responding to the City's request for financial data. City Exhibit 11 

(Excerpt from City Council minutes (May 26, 2009 City Council Special Meeting)). 

At the June Council Meeting, the Council discussed Part 16 and Part 13 procedures; the 

validity of the VJC lease; proposed hangar location and the lack of communication with Mr. Wiand; 

informal communications with a VJC official, Mr. Jemigan, on proposed hangar locations, with no 

definitive response; a staff technical review of conceptual plans, although final drawings would be 

requested and submitted to Council for approval; submitting a hangar concept to FAA including 

information on why the City did not favor approval; lessening the city's exposure to potential 

lawsuits; dealing with the actual purchaser versus conditional approval for proposed constmction to 

enhance property value; Mr. Wiand's lack of communication with the City; and FAA directives 

regarding hangar approval. City Exhibit 11 (Excerpt from City Council minutes (June 9, 2009 

Regular Meeting)). 

Also at the June 9 City Council meeting, a motion to rescind the Council action of March 

10, 2009 denying hangar constmction failed. City Council then directed the City Manager and the 

City Attomey to engage in good faith negotiations with the Receiver in an attempt to resolve 

conflicts and reach a mutually beneficial outcome. Id. City Officials met with the Receiver, Mr. 

Wiand, on June 19, 2009 to discuss potential amicable resolution of the dispute. See Complaint ^ 

67. 

At the July 14 Meeting, the Council discussed engaging counsel to assist in defending 

against a potential Part 16 complaint; the fact that the Complaint had not been served on the City, 

-12-
the meeting between the Receiver and the City Manager and City Attomey, with a report by the 

City manager that Mr. Wiand may possibly show interest in settlement terms that include 1) the city 

approving constmction of the four hangars and related constmction as submitted on the site plan, 2) 

the VJC demonstrating financial capability prior to the issuing of building permits, 3) consideration 

of a specific land swap proposal to constmct hangars on the opposite side of the taxiway, and 4) 

consideration of giving the City the right of first refusal regarding sale of the VJC. The City 

Manager stated that the Receiver advised that he was going to file the Part 16 complaint and would 

litigate for damages due to hangar constmction not being approved. The City Manager requested 

specific direction from Council regarding the proposed settlement terms. City Exhibit 11 (Excerpt 

from City Council minutes (July 14, 2009 City Council Regular Meeting)). 

The City further discussed its interest in acquiring the VJC leasehold; the appraisal being on 

hold; settling this issue; settlement discussions with Mr. Wiand; including the value of the hangars 

in a settlement offer; validity of the hangar constmction request; the Receiver stating he has no 

intention of building hangars; financial documentation not being provided by the Receiver; 

problems with the lease; the eventual owner of the VJC constmcting the hangars; acquiring 

additional options from Mr. Wiand; consideration of a specific land swap proposal to constmct 

hangars on the opposite side of the taxiway; and considering giving the city the right of first refusal 

regarding sale of the VJC. Id. 

The Council voted to engage outside counsel to assist in the Part 16 defense, and did not 

approve a motion to authorize the City Manager and City Attomey to discuss with the Receiver 

pursuing constmction of the four hangars as submitted and VJC demonsfrating financial capability 

prior to issuance of the building permits. The Council also did not approve a motion to authorize 

the City Manager and the City Attomey to discuss with the Receiver approving constmction of the 

four hangers as submitted, demonstrating financial capability prior to issuance of the building 

-13-
permit, and a land swap proposal to constmct hangars on the opposite side of the taxiway, with the 

intent to come to a mutually acceptable agreement for approval by the City Council. The Council 

approved a motion to discuss litigation strategy and settlement at a private Attomey-Client session 

if the Part 16 Complaint is served. Id. 

As this summary of the City Council deliberations and actions shows, the Council, in 

addressing the highly unusual circumstances surrounding VJC and its hangar proposal, engaged in a 

series of thoughtfiil, deliberative discussions and sought critical information and guidance on how 

to navigate through the thicket of complex issues. The City Council was entitled - and duty-bound -

to explore the various circumstances options, and their implications for the City, rather than acting 

rashly. And throughout the process, the Council sought to achieve a mutually agreeable resolution 

with the VJC/Receiver. 

City Officials also met with Mr. Wiand on August 10, 2009 and made a specific proposal to 

resolve the issue. The City has not yet heard back from Mr. Wiand in response to the City's 

proposal. 

III. ARGUMENT 

A. APPLICABLE LAW 

(1) The FAA is Concerned with an Airport Sponsor's Current Compliance. 

In investigating allegations of grant assurance violations, FAA is concemed with the airport 

sponsor's current compliance or lack of compliance. Richard E. Steere v. County of San Diego, 

FAA Docket No. 16-99-15 (Dec. 7, 2004), 2004 WL 3198209 at *9, *16, *21, *22. Thus, even if 

an airport sponsor has, in the past, violated a grant assurance, as long as it has corrected it by the 

time FAA makes its determination, the airport will not be found in violation. Id. at *9, *16 (^citing 

Wilson Air Center LLC, v. Memphis and Shelby County Airport Auth., FAA Docket No. 16-99-10, 

-14-
2001 WL 1085348 at *4 (Final Agency Decision and Order, Aug. 30, 2001) (action by the airport to 

cure any violation of federal obligations is grounds for dismissal of the case against the airport). 

(2) The FAA's Airport Compliance Program seeks to ensure safe airports, properly 

maintained. 

The Airport Compliance Program is "designed to ensure the availability of a national system of 

safe and properly maintained public-use airports operated in a manner consistent with the airport 

owners' Federal obligations and the public's investment in civil aviation." Pacific Coast Flyers, Inc., v. 

County of San Diego., FAA Docket No. 16-04-08, 2005 WL 1900515 at *20 (Director's 

Determination, July 25, 2005). 

(3) Burden of proof 

It is well established that the Complainant in a Part 16 proceeding has the burden of 

pleading and proving its case. Adventure Aviation v. City of Las Cruces, FAA Docket No. 16-01-

14, 2003 WL 22696923 at *15 (Final Decision and Order, Sept. 9, 2003); see also Rick Aviation, 

Inc V. Peninsula Airport Comm'n., FAA Docket No. 16-05-18, 2007 WL 1450398 at *14 

(Director's Determination, May 8, 2007) ("The proponent of a motion, request, or order has the 

burden of proof ") 

(4) Requirement to Submit with the Complaint All Evidence Upon Which 

Complainant Relies 

14 C.F.R. § 16.23 requires that the complainant submit all documents then available to 

support his or her complaint. "Pursuant to 14 CFR § 16.23(b)(2), the Complainant was required to 

submit all of its pleadings and other documentation in support of its case so that in rendering the 

Director's Determination, the FAA would have the entire record before it." Roadhouse Aviation v. 

City of Tulsa, FAA Docket No. 16-05-08, 2007 WL 1966160 at *11 (Final Decision and Order June 

26, 2007). See also Boca Airport, Inc. v. Boca Raton Airport Auth., FAA Docket No. 16-04-02, 

2004 WL 5284751 at *10 (Final Decision and Order, Nov. 29, 2004). Also, 14 C.F.R. § 16.29(b)(1) 

•15-
requires each party to file documents that it considers sufficient to present all relevant facts and 

argument necessary for the FAA to determine whether the sponsor is in compliance. That 

subsection specifically provides that in rendering the Director's Determination "the FAA may rely 

entirely on the complaint and the responsive pleadings provided under this subpart." Id. Boca 

Airport, Inc., 2004 WL 5284751 at *10. The Director is under no obligation to investigate beyond 

the pleadings. Adventure Aviation, 2003 WL 22696923 at *15. 

B. PRELIMINARY ISSUES 

(1) The Complainant Relies on Analyses of Applicable Federal Law That Were 

Based on Circumstances That are Different Than the Actual Facts. 

a) Kaplan Kirsch & Rockwell LLP Memorandum 

At the outset, it is important to understand that the Kaplan Kirsch & Rockwell LLP 

memorandum (Complainant's Exhibit 13) provides a very general explanation of the City's 

obligations under the Grant Assurances but does not address the particular issues presented by 

VJC's complaint. Specifically, the memorandum does not address the specific issue raised here as 

to whether the City is in violation of the Grant Assurances by refusing to approve a proposed 

project that does not comply with the City's minimum standards. Indeed, the memorandum 

explicitly states that it is not addressing whether the proposed project does or does not comply with 

those minimum standards. 

While the memorandum reaches the unremarkable conclusion that airport proprietors must 

generally permit aeronautical development on an airport leasehold, it does not address (and counsel 

was not asked to address) the more particular question of whether an airport proprietor must 

approve an leasehold improvement that does not comply with the applicable minimum standards. 

As detailed below, the Grant Assurances impose no such requirement and the City acted 

appropriately in refiasing to approve VJC/Receiver's request. 

•16-
Moreover, as more information has become available, it has become clear that at least three 

important factual assumptions upon which the memorandum rests are in fact materially different 

than assumed. 

First, the memorandum assumed that a ready, willing, and able FBO, with the ability to 

comply with all of the applicable requirements, including the City's Minimum Standards, was 

prepared to build the proposed hangars in question. We now know that VJC/Nadel could not 

accurately represent that it had the financial resources to build the hangars. Thus, as discussed in 

more detail below, VJC/Nadel could not comply with the City's minimum standards for the hangar 

project. Moreover, VJC/Receiver has stated unequivocally that it does not intend to build the 

hangars (Complaint ^ 59, City Exhibit 3), and in any event has not satisfied the City that it has 

available the necessary financial resources to do so. 

Second, the memorandum assumed that the current ALP designated the area where VJC 

intended to build the hangars as available for "general aeronautical development." Complainant's 

Exhibit 13 at p. 8 and p. 12 of 14. The memorandum went on to say that, "if the ALP already 

depicted some other aeronautical use, the City would have a potential justification for refiising to 

allow development that conflicts with the use shown on the ALP." Id. at p. 12 of 14. As we now 

know, the proposed hangar site is designated as "Terminal Area" on the ALP, except for a portion 

of the site designated as "Future Apron." City Exhibit 13 (Current FAA-approved ALP).^ In fact, 

one of the proposed hangars would encroach significantly on the area shown on the ALP as "Future 

Apron." City Exhibit 14 (Schematic of VJC Proposed Hangars overlaid on ALP) 

^ The City has made numerous requests to the ADO for a signed copy of the ALP. As of the date of this filing, it has 

not been provided to the City. The City believes that the ALP attached as City Exhibit 13 is the ALP that the FAA 

ultimately signed. 

-17-
Third, the memorandum was based on the premise that other operators had or would be 

given the right to build and lease out to other aeronautical users the types of hangars that VJC 

sought to build and lease out. Id., at p 8-9 of 14. There is, in fact, no evidence that other entities 

have or will be given this right. 

b) Statements from an Official at the local FAA ADO That the Citv Should 

Approve the VJC/Nadel Hangar Proposal 

The initial determinations by the ADO official (Complainant's Exhibits 12 and 14) were, 

most likely, based on the same ultimately discredited premise that VJC/Nadel had the ability to 

comply with the Airport Minimum Standards applicable to the project, including sufficient financial 

resources to carry out the project. While this assumption was not unreasonable, it simply tumed out 

not to be tme. Therefore, the advice that the airport should approve the proposed hangars tumed out 

to be incorrect. 

The ADO official's response to the inquiry from the City Attomey conceming the apparent 

conflict between the FAA-approved ALP and the proposed hangar development is more perplexing. 

When the Venice City Attomey asked whether approval of the hangars contrary to the current FAAapproved Airport Layout Plan (ALP), which depicts "Terminal Area" and "future apron area" uses 

for the proposed hangar site, would raise a potential problem of compliance with Grant Assurance 

29, which precludes airport sponsors from allowing development inconsistent with the ALP (City 

Exhibit 12 (Febmary 4, 2009 Letter from R. Anderson to R Henry), the ADO official stated that 

"we assume this constmction would also be approved" if presented to FAA for an ALP amendment, 

and that "FAA has even processed a 'pen and ink' change to the 2000 ALP incorporating hangars in 

the vicinity" of the proposed hangar cite, and further stated that the City "this proposal should be 

forwarded to this office without further delay." Complainant's Exhibit 16 at 2. 

-18-
This was a peculiar response in light of the fact that FAA Order 5190.6A, Airport 

Compliance Requirements, October 2, 1989 ("Compliance Handbook") in discussing the need to 

avoid constmction that is inconsistent with the approved ALP in violation of Grant Assurance 29, 

gave as an example of prohibited development, a very similar circumstance, i.e., placement of a 

corporate hangar on a site dedicated on the ALP for future apron and taxiway. Compliance 

Handbook at ^ 4-17(f), cited in City Exhibit 12 (Febmary 4, 2009 City Attomey letter to R. Henry). 

Moreover, in light of the fact that FAA "does not build airports" or tell sponsors how to mn their 

airports, the FAA presumably cannot force an airport to seek a revision to its ALP to allow 

constmction of hangars to be rented out to individual users on a site is labeled "terminal area" or 

"fliture apron" — especially when the approved ALP depicts an area for fiiture hangars on the 

interior of the airport, across a taxiway from the VJC site. Exhibit 13, (FAA Approved ALP). 

Given the similarity between the situation at the Airport and the example in the Compliance 

Handbook of proposed development that could not be undertaken in light of the current FAAapproved ALP (hangar on area reserved fiiture apron and terminal area vs. corporate hangar on area 

reserved for future apron and taxiway), it is difficult to understand why the ADO official did not at 

least analyze the circumstances and explain, if possible, how they were materially different. The 

fact that the FAA may approve an ALP revision if the City sought one begs the question of what 

happens if the City does not seek such an ALP revision. 

In any event, the City believes that the advice received from the ADO official was 

inconsistent with FAA's published guidance, and believes that FAA must apply the guidance to the 

current circumstances at the Airport, as it has in other cases. For instance, FAA has held that: 

the ALP reflects the agreement between the FAA and the airport owner as to the 

specific operational and support functional usage. It also reflects the agreement 

between FAA and the airport owner as to the proposed allocation of areas of the 

-19-
airport to specific operational and support functional usage. The approved ALP thus 

becomes an important instrument for controlling the subsequent development of 

airport facilities. Any constmction, modification, or improvement that is 

inconsistent with such a plan requires FAA approval of a revision to the ALP. 

[FAA Order 5190.6A, Sec. 4-17(a)] 

Boca Airport, Inc. v. Boca Raton Airport Auth., FAA Docket No. 16-00-10, 2001 WL 438619 at 

*23 (Director's Determination Apr. 26, 2001), aff'd. Final Decision and Order Mar. 30, 2003. 

This indicates that the ALP designations are, in fact, significant, and should not be dismissed 

as casually as the ADO official did. FAA has stated as much: 

Continued adherence to an ALP is a compliance obligation of the airport owner. The 

conversion of any area of airport land to a substantially different use from that shown 

in an approved layout plan could adversely affect the safety, utility, or efficiency of 

the airport. [FAA Order 5190.6A, Sec. 4-17(f)] 

Id 

And it is up to the airport sponsor to determine the course of airport development, within 

the context of the approved ALP. "Airport sponsors retain the prerogative to develop their airports 

in any manner that meets their federal obligations and is consistent with the approved Airport 

Master Plan and Airport Layout Plan for that airport." Thermco Aviation, Inc. v. County of Los 

Angeles., FAA Docket No. 16-06-07, 2007 WL 1893821 at *25 (Director's Determination, Jun. 21, 

2007) aff'd. Final Decision and Order Dec. 17, 2007. 

FAA should follow its own precedent and Airport Compliance guidance to determine here 

that the conflict between the VJC proposed constmction of hangars on the property with the uses 

shown on the FAA approved ALP requires dismissal of the Complaint. 

-20-
(2) City Actions that the Complaint Calls "Delay" or "Stall Tactics" Are Simply the 

Reasonable, Deliberative Actions of a Conscientious Public Body Addressing 

Unusual Circumstances 

The VJC/Receiver complains at various points in the complaint of supposedly improper 

delay by the City in not approving the hangars as quickly as VJC/Receiver would like. Complaint 

at TfTI 49, 56, 66. VJC/Receiver characterizes as "stall tactics" the City's inquiries into whether 

involuntary receivership of VJC invalidated its lease with the City, and whether the apparent 

conflict between the proposed hangar development and the current, FAA-approved ALP caused any 

compliance issue with respect to Grant Assurance 29. However, these are legitimate concems, and 

in fact, if the City had not explored them, it could well be considered not to have fulfilled its duties 

with respect to its stewardship of the Airport property and its federal obligations, respectively. 

The one delay that is inexplicable, however, is the 7-month gap between (a) the time the 

ADO official informed VJC/Nadel that the ADO could not assist in the informal resolution of the 

case, and VJC was therefore free to file a formal Part 16 complaint at any time, and (b) the date in 

July 2009 when VJC/Receiver actually filed the complaint.'* Moreover, the Receiver filed his 

motion to extend the Receivership to include VJC in January 26, 2009, so he has delayed 6 months 

in filing the Part 16 claim. Any assertions by VJC/Receiver that delays in addressing the hangar 

issue constitute an "intentional interference" with a receivership asset, as well as assertions that 

"* It is difficult to determine when VJC/Receiver actually filed the Complaint, because, conU-ary to Part 16 rules, it 

submitted an undated Certificate of Service, which merely states that on "this day" the Complaint was mailed. Section 

16.15(a) requires that all filings include a signed certificate of service, specifying the date and manner of service. The 

Complaint itself, which incorporated the Certificate of Service, was also undated. Section 16.13(e) requires that each 

document be signed by the person filing the document or an authorized representative. 

Even a cursory review of the Complaint reveals that VJC has not complied with these requirements. The Complaint is 

not separately signed. The only signature appears under the Certificate of Service. Because Sections 16.13(e) and 

16.15(a) each require a signature, the single signature under the Certificate of Service is inadequate. The absence of a 

signature is not trivial. The signature serves as a formal certification of the fiindamental accuracy and propriety of the 

complaint under the law and facts of the case. Like Federal Rule of Civil Procedure Rule 11, Section 16.13(e) serves to 

protect the integrity of the Part 16 process. 

Given these defects, it appears that FAA should not have docketed the Complaint, and instead should have required 

VJC/Receiver to correct these defects before FAA docketed it. 

-21-
more than a 30-day extension of time for the City to respond to the Complaint, therefore ring 

hollow. 

a) Allegations of Block Voting and "Improper" Motivations of Citv Council 

Members 

Many paragraphs of the Complaint (e.g., ^ 3-7, 23-24, 27, 29-33, 62-63), and a 

considerable amount of the attached exhibits, which include emails and reports of public statements 

by individual Council members, explore the purported motivations of a supposed four-member 

voting block of the City Council. These are largely extraneous to the fiindamental issues of this 

case. However, the City is compelled to address them in brief 

First, as discussed more thoroughly below in Section C(l)(d), under Florida law, the City 

Council, as the duly elected goveming body of the City of Venice acts officially as a body, by 

recorded vote. Thus, the statements of individual Council members outside of their formal roles as 

voting members are not legally significant. 

Second, the Complaint implies that there is something improper about the fact that some of 

the Council members live somewhat near the Airport. Some members do live in the general vicinity 

of the Airport, although there is no evidence in the record that the members cited in the Complaint 

all live within a mile of the Airport, as alleged. Complaint at ^ 29. While some Council members 

have campaigned on platforms that directly addressed Airport issues, others did not. As simply one 

example, there is no evidence in the record that one of supposed members of the alleged voting 

block. Council Member Moore, ever ran on a platform advocating limitations on Airport 

development. 

Moreover, even if other Council Members did mn on platforms relating to airport 

development issues, there is no evidence in the record that the Council members have not taken 

-22-
their official duties seriously or that they have acted improperly. Indeed, in dismissing a complaint 

against actions by one of the Council members, the State of Florida Commission on Ethics put the 

issue into proper perspective: 

"While reasonable minds may differ as to whether reducing airport fiinctionality is 

good public policy, it is unquestionably public policy, and as such is within the 

purview of the City Council to Determine. Accordingly, the allegations regarding 

Respondent's votes and other efforts, as a Council member, regarding the Airport 

Master Plan, the Change in engineering firms, and the like, are legally insufficient to 

allege a violation of Section 112.313(6), Florida Statutes." 

City Exhibit 15 (In re: Sue Lang, Public Report and Order Dismissing Complaint, December 

10, 2008) at 3. 

With respect to the implication in the Complaint that those Council members who lived near 

the airport took action for their personal benefit, the Commission stated that "The change in Airport 

activities cannot be said to be personal to the Respondent, because the perceived benefit—reduction 

in noise and air traffic—would be shared by everyone in the surrounding area. Indeed, according to 

the Complainant, The Respondent campaigned, and was elected, on this platform." Id. at 4. 

"Nothing in the complaint suggests that the effect of Airport Development on traffic, noise, or 

property values will be any different for the Respondent than for any of the residents in the 

surrounding neighborhoods." Id. at 5. 

Thus, the City's compliance with its grant assurances must be judged on the actions, or lack 

of actions, of the City Council as a whole, not by the actions or statements of any particular 

individual Council members. See Boca Airport, Inc. v. Boca Raton Airport Auth., FAA Docket No. 

16-04-02, 2004 WL 5284751 at *15 (Final Decision and Order, Nov. 29, 2004). 

-23-
C. THE CITY'S RESPONSE TO SPECIFIC COUNTS 

(1) Count I: Venice Jet Center Has Failed To State A Claim That the City Has 

Violated Grant Assurance 1. 

In Count I of its Complaint, Venice Jet Center (VJC) alleges that Respondent, City of 

Venice, has violated Grant Assurance 1, compliance with Federal Law. VJC's theory is that the 

City's reftisal to grant VJC permission to build additional hangars on VJC's leasehold is an illegal 

restraint of trade in violation of unspecified provisions of federal antitmst law, and therefore a 

violation of Grant Assurance 1. This claim fails for four independent reasons. 

First, Grant Assurance 1 only applies to federal laws relating to the "application, acceptance 

or use of Federal fiinds" for a particular project. Because the City's reflisal to approve VJC's 

hangar project did not relate in any way to the application, acceptance or use of federal fiinds. Grant 

Assurance 1 simply does not apply. Second, even if Grant Assurance 1 somehow does apply to this 

matter, VJC's claim must still fail because, as a governmental entity exercising its governmental 

authority the City is immune from any alleged violation of the antitmst laws. Third, even if Grant 

Assurance 1 applies and even if the City is not immune, VJC has failed to state a claim that the City 

has violated the antitmst laws by not approving VJC's request to build additional hangars on its 

leasehold. Fourth, even assuming VJC can surmount those barriers, it has failed to provide 

sufficient evidence to support its claim. 

a) Grant Assurance 1 Does Not Apply To This Case Because The Dispute 

Regarding VJC's Hangars Does Not Relate To the Application. Acceptance 

and Use of Federal Funds For Any Project. 

Grant Assurance 1 provides that the Airport Sponsor "will comply with all applicable 

Federal laws, regulations, executive orders, policies, guidelines, and requirements as they relate to 

the application, acceptance and use of Federal funds for this project " Complainant's Exhibit 

2 at p. 1. (Emphasis added). By its terms, Grant Condition 1 does not apply to every federal law 

-24-
that may be violated. It applies only to federal laws that relate to "the application, acceptance and 

use of Federal fiinds for this project." Indeed, the list of illustrative statutes in Grant Assurance I 

itself does not include the Sherman Act or any other antitmst law; the examples all relate to the 

actual use of fiinds or to project-specific requirements, such as complying with National 

Environmental Policy Act (NEPA). 

The FAA has confirmed this limited applicability of Grant Assurance 1 in Boca Airport, 

Inc., 2004 WL 5284751. In that case, a complainant alleged that criminal activity, including the 

receipt of bribes in violation of 18 U.S.C. §§ 666 and 201(b), improperly influenced the airport's 

selection of an entity to develop part of the airport. The complainant alleged that members of the 

airport authority had violated certain federal laws prohibiting the acceptance of bribes. The FAA 

affirmed the Director's decision to dismiss the complaint, including specifically the alleged 

violation of Grant Assurance 1 based on violations of the anti-bribery statute. The FAA found that 

Grant Assurance 1 incorporates only those laws that are a "requirement for any program or activity 

receiving Federal financial assistance." Id. at 12. Because a general statute barring bribery is not a 

specific requirement for any program receiving federal fiinding, the FAA determined that 

allegations of bribery were beyond the jurisdiction of a Part 16 complaint. Id.^ 

Count I of VJC's complaint suffers the same fatal flaw as the bribery claim in Boca Raton. 

Compliance with the Sherman Act or other federal antitmst laws is not a "requirement for any 

program or activity receiving federal financial assistance." Nor do they fall within the limited 

' Similarly, in connection vrith a proposed set of modifications to the grant assurances, the FAA proposed to make Grant 

Assurance 1 a grant condition applicable only to the specific grant. Notice of Modification of Airport Improvement 

Program Grant Assurances and of the Opportunity to Comment, 69 Fed. Reg. 52057, 52058 (Aug. 24, 2004). The 

Notice made clear that the proposed changes were "not intended to change the manner in which grant agreement 

obligations are enforced." Id. Although the proposed changes were never adopted, the proposal reflects the FAA's 

imderstanding that Grant Assurance 1 applies only with respect to a particular grant award and is not a restriction on all 

conduct by a grant recipient. 

-25-
jurisdictional scope of Part 16 as set forth in 14 C.F.R. § 16.1. They are general economic 

regulation that is simply beyond the scope of Part 16. 

Moreover, even if the Sherman Act or other federal antitmst laws conceivably could be 

constmed as falling within the scope of Part 16, VJC has not and cannot allege facts that would 

bring the alleged violation here within the scope of Grant Assurance 1. VJC's complaint relates 

solely to the City's refiisal to approve certain hangars VJC proposed to constmct on its leasehold. 

Nothing about that action relates to the City's application, acceptance or use of Federal funds. 

Indeed, no aspect of VJC's hangar project was to be funded with Federal fiinds and no aspect of the 

lease with VJC involves the use of Federal funds. The City's action was a discretionary decision 

regarding a private lessee and did not relate in any way to the City's use or receipt of Federal funds. 

On this basis alone. Count 1 should be dismissed. 

As with the complainant in Boca Raton, VJC attempts to use Grant Assurance 1 as a tool to 

convert the narrow Part 16 process into an unbounded fomm for the litigation of any alleged 

violation of any federal statute by an airport sponsor, even if there is no connection between the 

alleged misconduct and the application, receipt or use of federal grant fiands. The express terms of 

Grant Assurance 1 and Part 16 prohibit such a result. For the same reasons the Director and FAA 

dismissed the bribery claims in Boca Raton, the Director should dismiss VJC's antitmst claims in 

Count I of its Complaint. 

b) Even If A Sherman Act Claim Were Within Part 16's Jurisdiction, Count I of 

VJC's Complaint Still Must Be Dismissed Because The City's Actions Were 

Governmental Acts That Are Immune From The Sherman Act. 

Even if VJC/Receiver's federal antitmst claim were justiciable in a Part 16 proceeding. 

Count I must be dismissed because the City is immune from suit under the Sherman Act. As a 

matter of law, therefore, the FAA should dismiss Count I of VJC's Complaint. 

-26-
Here, the City is clearly immune from antitmst claims. The City is immune from any claim 

for damages pursuant to the Local Government Antitmst Act, 15 U.S.C. §§ 34-36. The City is also 

immune from claims for injunctive or other relief pursuant to the state action immunity doctrine, 

which provides that actions by or pursuant to State law are immune from challenge under the 

antitmst laws. As the Supreme Court stated " 'any action that qualifies as state action is Upso facto' 

. . . exempt from the operation of the antitmst laws.' " City of Columbia v. Omni Outdoor 

Advertising, Inc., 111 S. Ct. 1344, 1353 (1991) (quoting Hoover v. Ronwin, 104 S. Ct. 1989, 1995 

(1984)). 

Actions by local govemments are considered "state action" as long as the activity at issue 

was authorized by state law. Here, Florida law clearly authorizes cities to lease land at or for 

airports and to manage the use of airport property. Fla. Stat. § 332.08(2)(a) ("To adopt and amend 

all needful mles, regulations, and ordinances for the management, govemment, and use of any 

properties under its control...."); § 332.08(3) ("to lease or assign for a term not exceeding 30 

years to private parties, any municipal or state govemment or the national govemment, or any 

department of either thereof, for operation or use consistent with the purposes of §§ 332.01-332.12, 

space, area, improvements, or equipment on such airports .. . and to confer the privileges of 

concessions of supplying upon its airports goods, commodities, things, services, and facilities 

....") . 

The key issue under the state action immunity doctrine is whether the allegedly 

anticompetitive conduct is the exercise of a "'clear articulation of a state policy to authorize 

anticompetitive conduct'. . ." Omni Outdoor Advertising, 111 S.Ct. at 1350 (quoting Haillie v. Eau 

Claire, 105 S.Ct. 1713, 1717 (1985)). It is not necessary that the state specifically or expressly 

permits anticompetitive conduct; it is sufficient if "suppression of competition is a 'foreseeable 

result' of what the statute authorizes." Id. (quoting Haillie, 105 S.Ct. at 1718). In Omni Advertising 

-27-
the Court concluded that zoning laws necessarily limit the ability to compete, including specifically 

the ability of new entrants to locate in their desired location, and are therefore immune from 

challenge under the antitmst laws. Id. at 1350-51. 

Courts have found that decisions by airports regarding the use of airport facilities by lessees 

and other users are immune from antitmst liability because State law empowers the airport 

proprietors to lease land, set terms and conditions for the use of the airport and otherwise exercise 

the powers of an airport proprietor. E.g., Interface Group, Inc. v. Massachusetts Port Auth., 816 

F.2d 9, 13 (1st Cir 1987) (authority to set terms and conditions for use of airport facilities 

authorized restrictions on which airlines could use which terminals); Rectrix Aerodrome Centers, 

Inc. V. Barnstable Municipal Airport Comm 'n, 534 F.Supp.2d 201, 204-5 (D. Mass. 2008) (general 

authority to control use of airport included authority to restrict number of entities selling aviation 

fuel); Susquehanna Area Reg'I Airport Auth., 423 F. Supp. 2d 472, 478 (M.D. Pa. 2006) (authority 

to acquire land implied power to limit competition by controlling locations for competing 

businesses); Hillman Flying Serv., Inc. v. City of Roanoke, 652 F. Supp. 1142, 1145-46 (W.D. Va. 

1987) (same). These cases all recognize that it is reasonably foreseeable that the general power to 

lease land, regulate the use of an airport and in general operate an airport will lead to decisions that 

may tend to suppress competition. Because any such result flowed directly from a grant of state 

authority, such conduct was immune from the antitmst laws. 

Here, Florida law expressly authorizes the City to rent portions of the airport, to regulate the 

use of the airport and to grant concessions for the provision of various aviation-related services and 

products. Fla. Stat. §§ 332.08(2)(a) & 332.08(3). It is reasonably foreseeable that decisions of the 

City under those grants of power may suppress competition. Moreover, to VJC's allegation that the 

City favored its own hangar operations over VJC's proposed hangars, Florida statutes expressly 

permit the City to lease all or portions of the Airport to municipal, state or federal agencies. 

-28-
Clearly, it is reasonably foreseeable that a public lessee might enjoy rights that a private entity does 

not. Indeed, the FAA has long recognized that airport proprietors may exercise a proprietary power 

to provide categories of aeronautical services on an exclusive basis, thereby foreclosing competition 

by others. Jet 1 Center, Inc. v. Naples Airport Authority, FAA Docket No. 16-04-03 (Final Agency 

Decision July 15, 2005) at 14-16. Accordingly, the City is immune from antitmst liability and 

Count 1 of VJC's Complaint must be dismissed. 

c) Even if AAS has Jurisdiction Over VJC's Antitmst Claim, And Even If The 

City Is Not Immune From Any Antitmst Claim, Count I Must Still Be 

Dismissed Because VJC Has Failed To Properly Plead A Violation Of The 

Sherman Act. 

VJC/Receiver's antitmst claim is so vague and poorly described that it must be dismissed. It 

is axiomatic that the fundamental purpose of a pleading is to put the respondent on notice of the 

claims asserted against it so the respondent may prepare its defense. This is particularly important 

in the context of a Part 16 complaint because, in the absence of discovery and pretrial proceedings, 

the respondent must base its defense solely on what is set forth in the complaint and supporting 

documents. A vaguely stated complaint makes it all but impossible for a respondent to mount an 

appropriate defense. 

First, VJC/Receiver's antitmst claim states on that the City's "refiisal to grant VJC the right 

to constmct and rent the hangars is predatory conduct and an illegal restraint of trade in violation of 

15 U.S.C. ^\,e t seq." Complaint at Tf 75. On its face, this claim is so vague and broad as to 

preclude the ability to respond. First, VJC does not indicate what antitmst laws it believes the City 

has violated. The blanket citation to "15 U.S.C. § 1, etseq." encompasses all federal antitmst laws, 

including combinations in resfraint of trade, monopolization claims, tying claims, predatory pricing 

claims, violations of the Robinson-Patman Act and every other possible antitmst theory cognizable 

under federal law. Each of the many theories of antitmst violation requires certain factual showings 

and has its own body of common law that must be applied to each case. Without being informed as 

-29-
to which theory or theories VJC is relying on, the City is unable to develop a reasoned response to 

the Complaint. Unless this claim is dismissed, the City would be placed in the impossible position 

of having to identify every potentially applicable antitmst theory, articulate what it surmises VJC's 

argument would be under each such theory, and then provide a legal and factual response to each 

such theory. Neither Part 16 nor fiindamental principles of faimess and due process allow such a 

result, which would only encourage future disgmntled airport tenants to include such vaguelyworded claims in their Part 16 complaints. 

Second, VJC/Receiver's simple assertion that the City's refiisal to approve hangars violates 

some antitmst law fails to state a claim under any antitmst law. Without delving into the particulars 

of every antitmst theory, it is clear that VJC has not and cannot make key allegations of fact: 

• VJC/Receiver has not alleged, or provided facts showing, that the City is a party to a 

combination in resfraint of trade necessary for a claim under Section 1 of the 

Sherman Act. See 15 U.S.C. § 1. 

• VJC/Receiver has not alleged, or provided facts showing, that the City is a 

monopolist in the relevant market or that it has engaged in exclusionary conduct as 

defined in Section 2 of the Sherman Act as necessary to show a monopolization 

claim. See III P. Areeda & H. Hovencamp Antitrust Law ff 500 et seq. (2002). 

Indeed, VJC asserts that the City already competes with VJC in the provision of 

hangars for smaller aircraft, but that VJC, through the hangar project, intends to 

expand into a new area, where the City does not compete - provision of hangars to 

medium sized aircraft. (Complaint at ^ 96 and Complainants Exhibit 10). 

• Although VJC/Receiver uses the word "predatory," VJC/Receiver does not allege, or 

provide facts showing, that the City has priced any lease or other good or service 

below cost as required to articulate a predatory pricing scheme. HI P. Areeda & 

Hovencamp Antitrust Law at ^ 723. 

• VJC/Receiver has not alleged, or provided facts to support an allegation of, any 

antitmst injury (i.e. injury to competition). II A P. Areeda & H. Hovencamp 

Antitrust Law ^ 337. 

Because VJC/Receiver's allegation that the City has somehow violated the antitmst laws is so 

vague and overbroad, and omits key allegations necessary to support any antitmst theory, Count I 

should be dismissed. 

-30-
d) Even if VJC/Receiver Can Overcome All of Those Hurdles. Count I Must 

Still Be Dismissed Because VJC/Receiver Has Failed To Present Facts to 

Support Its Vague Antitmst Claim. 

In addition to failing to articulate a valid claim under any antitmst theory, VJC/Receiver 

presents almost no facts in support of its antitmst claim. The only evidence that VJC has presented 

in purported support of its antitmst claims are documents quoting individual council members 

regarding the possibility of the City acquiring VJC/Receiver's leasehold and operating its own 

hangars. This evidence shows nothing, however. First, those allegations, even if taken as tme, 

could not in themselves support an antitmst violation. Not only are they insufficient for the reasons 

discussed above, but in this case the Receiver admits he is trjdng to sell VJC to a buyer who will 

operate hangars on the leasehold. Thus, even if the City did intend to acquire the lease, it would 

only be trying to buy the very thing VJC/Receiver is attempting to sell. That cannot be an antitmst 

violation. 

Second, and independently, VJC/Receiver's exclusive reliance on statements of individual 

council members fails as a matter of law because Florida law is clear that municipal bodies such as 

the City act only through formal decisions of the duly enacted goveming body and can be bound 

only by the official acts of such bodies. Turk v. Richard, 47 So.2d 543, 544 (Fl. 1950); Betts v. City 

ofEdgewater, 646 F. Supp. 1427, 1435 (M.D. Fl. 1986). The FAA recognizes this principle too. 

One reason for dismissing the Part 16 complaint in Boca Airport. Inc. was that the allegations of 

bribery related only to a single board member when "[t]he Authority only acts as a collective body, 

not through the statements or actions of individuals." Boca Airport Inc., 2004 WL 5284751 at 14. 

Here, VJC/Receiver has not and cannot present any evidence that the City has attempted to 

acquire VJC's lease or to establish hangars in competition with VJC.^ No such action has been 

* Moreover, FAA unequivocally allows airport sponsors to provide any aeronautical services they desire to provide. Jet 

I Center, supra, at 14-16. Thus, federal law would not preclude the City fi"om building hangars even if they competed 

with VJC's hangars. 

-31-
approved or authorized by the City Council. Because VJC/Receiver's antitmst theory relies entirely 

on statements of individual Council members and not on any official act of the Council itself. Count 

I is fatally flawed and must be rejected. 

(2) Count II: The City Has Not Violated Assurance 5, Preserving Rights and 

Powers 

a) Substantive Standard 

Grant Assurance 5, Preserving Rights and Powers, prohibits airport sponsors from taking 

action that would deprive them of the rights and powers necessary to perform the terms of the grant 

agreements. It requires the airport sponsor not to sell, lease, encumber, or otherwise transfer or 

dispose of any part of its title or other interests in its property without the prior approval of the 

FAA. In particular. Grant Assurance 5 prohibits the granting of property interests to entities on the 

airport that could restrict the airport sponsor's ability to preserve its rights and powers to operate the 

airport in compliance with the Federal obligations. Complainant's Exhibit 2 at 4. 

It is fundamental that a violation of Grant Assurance 5 requires that the sponsor transfer 

some right or power to another party. A mere proposal, or issuance of request for bids, does not 

transfer rights, and so cannot violate Grant Assurance 5: 

A request-for-proposals does not create a transfer of rights or powers. 

Even if the request-for-proposals included an option to buy airport 

real property .. . the request-for-proposals, itself, would not transfer 

rights and powers in violation of grant assurance 5. 

Thermco Aviation, Inc., 2007 WL 1893821 at *13 (emphasis added). To show a violation of Grant 

Assurance 5, a complainant must allege that some entity has an outstanding right or claim of right 

that would interfere with the airport sponsor's ability to fulfill its obligations imder the grant 

assurances. Boca Airport, Inc. v. Boca Raton Airport Auth., FAA Docket No. 16-00-10, 2003 WL 

1963859 at *38 (Final Decision and Order, Mar. 20, 2003). 

-32-
In Boca Airport, the FAA found no violation of Grant Assurance 5 where complainant failed 

to allege that "any entity has an outstanding right or claim of right that would interfere with the 

Authority's performance. There is nothing to indicate the Authority has taken or permitted an action 

that would operate to deprive it of any of the rights and powers necessary to perform any or all of 

the terms, conditions, and assurances in its grant agreements." Id. 

b) No Action or Lack of Action by the Citv Cited bv VJC/Receiver Has 

Diminished the Citv's Rights and Powers Necessary to Ensure its Ability to 

Comply with its Airport Sponsor Grant Assurances. 

None of the City's actions that VJC/Receiver alleges are violations of Assurance 5 would 

diminish or undercut the Airport Sponsor's rights and powers necessary to carry out its grant 

assurance obligations. In fact, the actions or failure to act asserted by VJC/Receiver preserve the 

City's powers, and do not give them away to any other entity. Decisively, VJC does not allege or 

provide any evidence showing that the City has transferred any right or power to any party. On its 

face, therefore, VJC's claim under Grant Assurance 5 fails and should be dismissed. 

VJC/Receiver specifically asserts that the City's alleged actions including "its attempts to 

downgrade the Airport to a B-II classification,^ repeatedly denying VJC the right to improve its 

leasehold, and constming VJC lease narrowly as not permitting constmction of the hangars is a 

violation of Grant Assurance No. 5." In other words, VJC/Receiver argues that the City, by 

determining that it, rather than VJC/Receiver, can establish the future development and operation of 

the Airport, has deprived itself of its rights and powers. Even if the City had taken the actions 

alleged by VJC/Receiver, this is the exact opposite of depriving the City of its rights and powers - it 

is the exercise of those powers. 

' VJC's allegation about "downgrading" the airport to a B-II classification is both irrelevant and unsubstantiated. There 

is no evidence in the record that any desire to "downgrade" the Airport to a B-II classification played any role in any 

City decision regarding VJC. Indeed, there is no evidence of any official City action to attempt any such "downgrade." 

-33-
The fallacy in VJC/Receiver's argument can be seen by applying Assurance 5(a) in its 

entirety. That provision states that the airport sponsor "will act promptly to acquire, extinguish or 

modify any outstanding rights or claims of right of others which would interfere with such 

performance [of the grant assurance obligations] by the sponsor." VJC/Receiver has not and cannot 

identify any "others" to whom the City has conferred the powers the City supposedly has given 

away, and from whom the City would be obligated to recapture such powers. The only entity 

seeking to take away powers from the City, as airport proprietor, is VJC/Receiver. The City has not 

allowed VJC/Receiver to do so. There is no violation of Assurance 5. 

To the confrary, FAA has found that Grant Assurance 5 specifically allows the airport 

sponsor to require evidence that a potential commercial operator has the resources to operate a 

going commercial enterprise at the airport: 

Assurance 5 reinforces the [airport sponsor's] rights and responsibilities to 

plan and allocate property according to use that reflects the interest of all 

users. It also provides for the airport sponsor to choose its own manner to 

protect its revenue stream and maximize its control of airport commercial 

services. This means that the sponsor can require evidence that a potential 

commercial operator has the resources to operate a going commercial 

enterprise on the airport. 

Buffalo Jet Ctr., Inc. v. Niagara Frontier Transp. Auth., FAA Docket No. 16-98-07, 1998 WL 

1083383 at *16 (Record of Determination, August 19, 1998). FAA found no violation of Grant 

Assurance 5 when the airport sponsor required proof of a prospective commercial operator's ability 

to obtain financing for constmction of new facility. Id. Similarly here, there can be no violation of 

Grant Assurance 5 because the City has insisted that VJC comply with the City's Minimum 

Standards, including demonstrating to the City's satisfaction that a financially and technically 

capable entity with constmct and operate the hangars. 

That is the case here; the City has not taken or permitted any action that deprives it of its 

necessary rights and powers. 

-34-
In contrast, the FAA has found sponsors in violation of Grant Assurance 5 when, for 

example, they have entered into leases that limit the sponsor's ability to provide utility easements or 

to maintain and install easements on leaseholds if necessary to serve other parts of the airport: 

A sponsor must have control of its land in order to support 

development and growth of the airport. .. . failure to retain the 

absolute right of access and the right to grant utility easements and to 

maintain and install utilities [violates Grant Assurance 5]. These are 

essential rights integral to the operation and development of any 

public use airport. 

Boston Air Charter v. Norwood Airport Comm'«., FAA Docket No. 16-07-03, 2008 WL 4186034, 

at '''18, * 19 (Final Decision and Order, August 14, 2008). Disposing of airport property without 

FAA's permission is also violation of Grant Assurance 5. M. Daniel Carey and Cliff Davenport v. 

Afton-Lincoln County Mun. Airport Joint Powers Bd.. FAA Docket No. 16-06-06, 2007 WL 430630 

at *40-41 (Director's Determination, Jan. 19, 2007). 

A violation of Grant Assurance 5 may also be found where the airport sponsor gives veto or 

approval authority for airport decisions to local or community groups, if the sponsor actually 

relinquishes decision-making power to other entities. Here, although VJC/Receiver alleges that 

certain members of the City Council ran on a platform suggesting slower growth for the Airport, 

and have sought to implement their platform once they were elected, there has been no allegation, 

and certainly no evidence, that they tumed any decision-making authority over to an outside group. 

In contrast, the City Council abolished an airport advisory group, thus making clear that authority 

over the Airport resides with the City Council - the goveming body of the City of Venice, the 

airport sponsor. In light of these circumstances, the Director should follow the finding made in Port 

of Anacortes: 

[T]here is insufficient evidence in the administrative record to suggest 

the Port actually relinquished any decision-making powers to the 

City, local community, or special interest group. Therefore, the 

Director finds the Respondent is not in violation of Federal Grant 

Assurance No. 5, Preserving Rights and Powers. However, the 

-35-
Director would advise the Port to exercise care in placing 

contingencies for Airport development on approval from outside 

sources, such as community special interest groups. 

Jim Martyn v. Port of Anacortes, FAA Docket No. 16-02-03, 2003 WL 21002099 at *26 (Director's 

Determination April 14, 2003). 

In addition to veto or approval authority, airport sponsors may violate Grant Assurance 5 by 

entering into agreements that result in requiring the sponsor take actions that place it in 

noncompliance with its Federal obligations. Pacific Coast Flyers, Inc., 2005 WL 1900515 at *15. 

Again, there is no allegation, and certainly no proof, that this happened in the instant case. 

Not issuing a permit for hangar constmction simply does not constitute transfer of a right or power 

that the City is obligated to retain in order to support and control development and growth of the 

airport. 

c) Lease for Non-Airport Property. 

In Paragraph 54 of the Complaint, VJC/Receiver alludes to a letter sent from FAA to the 

Airport manager informing him "that Respondent had improperly entered into a non-aeronautical 

lease for Airport property without obtaining prior approval from the FAA." VJC/Receiver asserts 

that "Respondent's execution of the lease without FAA approval was in violation of FAA law." 

Complaint at ^ 54. 

VJC/Receiver has not indicated how it has been "directly and adversely affected" by the 

non-aeronautical lease issue. Boca Airport, Inc. at 10. The only "evidence" submitted by 

VJC/Receiver is a letter from the ADO raising certain concems with a lease of airport property for 

non-aeronautical use. Complainant's Exhibit 18 (3/3/09 ADO Letter). That letter offered 

comments by the ADO requesting that the City provide further information regarding the method to 

determine the lease rate, include certain "standard clauses, designed to protect airport interests in 

the lease, and execute an agreement with the Airport detailing the amount of lease proceeds to be 

-36-
transferred to the Airport Enterprise Fund, and stating what responsibility, if any the Airport has to 

maintain their portion of the leasehold." Id. 

First, VJC/Receiver does not have standing to raise this issue - it is not an aeronautical user 

seeking to use the subject parcel for aeronautical use. Even if there were an improper conversion of 

an aeronautical parcel to non-aeronautical use - which is not the case, based on the evidence in the 

record - it would only serve to artificially inflate other aeronautical use parcels, such as 

VJC/Receiver's, because the same level of aeronautical demand would be spread across fewer 

parcels of land. Thus, not being able to demonstrate that it has been harmed, VJC/Receiver does 

not have standing to raise the issue. 

VJC/Receiver makes a weak attempt to establish standing. Although ^ 8 of the Complaint is 

labeled "Jurisdiction and Standing," the paragraph, in fact, does not address standing. Later in the 

complaint, ^ 68-69 appear to assert standing because VJC pays rent to the airport. However, this 

establishes standing to assert an allegation of revenue diversion - which is not at issue here. 14 

C.F.R. § 16.23(a). Although ^ 68 includes the term "revenue diversion," it appears to be cited as 

one of the "legal duties" of the City, and, in any event, the Complaint sets forth no facts or specific 

allegation of revenue diversion. 

Secondly, the City is working with the FAA ADO to address the issues identified in the 

letter. "[G]rant assurances are not violated when the airport sponsor takes action to correct current 

or potential violations of its federal obligations due to one or more provisions of its agreements with 

a tenant, and taking such action is the very nature of complying with grant assurance 5." Platinum 

Aviation, 2007 WL 4854321 at *29. Thus, even if VJC/Receiver were entitled to bring an action 

relating to this issue, which it is not, the fact that the Airport sponsor is working with the ADO to 

resolve the issues removes it from the realm of a Part 16 enforcement action. See also Thermco 

"VJC .. . is directly and substantially affected by the City's noncompliance with its legal duties under the AIP and 

revenue diversion." Complaint ^ 68. 

-37-
Aviation, FAA Docket No. 16-06-07 at 26 (Director was correct in using his discretion not to find 

City non-compliant when corrective action us under way; citing Part 16 decisions that "speak to the 

import of current compliance"). 

d) The VJC Lease Was Not Approved by the FAA. 

On the face of Assurance 5, the only potential violation committed by the City is the VJC 

lease itself, which the City executed without FAA approval (arguably contrary to 5(b)). If 

VJC/Receiver seeks an FAA determination that the VJC lease was improperly entered into because 

it was not approved by FAA, the City requests that FAA provide guidance on whether termination 

of the VJC lease would render as moot any such compliance concems. 

(3) Count III: Operating and Maintaining the Airport in Safe Condition 

Count III of the Complaint alleges that Venice's refiisal to permit the constmction of 

hangars violates Grant Assurance 19 pertaining to Operations and Maintenance. This argument is 

frivolous on its face, since it is well established that Grant Assurance 19 has no applicability to the 

constmction of new facilities and only applies to the operation and maintenance of existing 

facilities. 

Grant Assurance 19 provides, in pertinent part, that: 

"The airport and all facilities which are necessary to serve the aeronautical users of 

the airport ... shall be operated at all times in a safe and serviceable condition and in 

accordance with the minimum standards as may be required or prescribed by 

applicable Federal, state and local agencies for maintenance and operation." 

(emphasis added.) 

Complainant's Exhibit 2 at p. 7-8. 

The discussion of the sponsor's duty to maintain and operate its airport in FAA Order 

5190.6A, Airport Compliance Requirements, makes it clear that the duty only applies to existing 

facilities. Grant Assurance 19 "applies to all airport facilities shown on a current Airport Layout 

Plan (ALP) which were initially dedicated to aviation use." Id. at p. 14. Not only are the proposed 

-38-
hangars not shown on the current ALP, but the ALP depicts non-compatible aeronautical 

development on the proposed hangar site. Further, "the obligation to maintain the airport does not 

extend to major rehabilitation of a facility that has become unusable due to normal and 

unpreventable deterioration or through acts of God." Id. at p. 15. Clearly, if an airport sponsor is 

not required to rebuild existing facilities pursuant to Grant Assurance 19, it is not required to 

approve entirely new facilities under the assurance. 

In a case involving an allegation similar to the claim here, that the airport was violating 

Grant Assurance 19 by "not constmcting, developing and operating the facilities deemed necessary 

by the Authority and its consultants...which indicated that all remaining aviation use development 

property on the airport should be focused on providing additional hangar space," the FAA 

responded by stating the Complainant had "a basic misunderstanding of the Respondent's Federal 

obligations established by Grant Assurance No. 19. The purpose of Grant Assurance No. 19(a) is to 

ensure existing facilities that serve the aeronautical users of the airport will be operated, at all times, 

in a safe and serviceable condition." (emphasis added.) Boca Airport, Inc., 2001 WL 438619 at 

*21 -22. See also Platinum Aviation, 2007 WL 4854321. 

Another proceeding directly on point is Adventure Aviation, 2003 WL 22696923 at *12. 

There, the FAA held that: "...the responsibilities under Grant Assurance 19, Operation and 

Maintenance, for an airport owner to preserve and maintain airport facilities in a safe and 

serviceable condition... is a continuing obligation but is restricted to only airport facilities shown on 

a current Airport Layout Plan (ALP) that were initially dedicated to aviation use. " (emphasis 

added). Here, not only are the hangars which Complainant desires to be approved not on the current 

ALP, but they conflict with other aeronautical uses depicted on the current, FAA-approved ALP. 

Accordingly, Count 3 of the Complaint should be dismissed. 

-39-
(4) Count IV: Unjust Economic Discrimination 

a) Substantive Standard 

Grant Assurance No. 22, Economic Nondiscrimination implements the provisions of 49 

U.S.C. § 47107(a)(1) through (6), and requires the airport sponsor to "make the airport available 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." 

In order to sustain a claim of unjust discrimination in violation of Grant Assurance 22, 

Economic Nondiscrimination, a complainant "must provide persuasive evidence that a similarly 

situated user based at the Airport or one wanting to provide the same service the complainant is 

proposing has received preferential treatment vis-a-vis the complainant." Platinum Aviation, 2007 

WL 4854321, at *51. 

Similarly, FAA's Airport Compliance Requirements Order 5190.6A (1989) ("Compliance 

Handbook") Chapter 4, Section 4 ("Availability on Fair and Reasonable Terms"), which provides 

guidance on Grant Assurance No. 22, states that the owner of a federally-assisted airport must 

operate the airport "for the use and benefit of the public," and make it available "to all types, kinds, 

and classes of aeronautical activity on fair and reasonable terms and without unjust discrimination." 

Compliance Handbook at Paragraph 4-13. A fiindamental principle is "the obligation to treat in a 

uniform manner those making the same or similar use of the airport." Steere, 2004 WL 3198209 at 

*11, citing Compliance Handbook ]| 4-14(a)(2) and 3-1. 

Compliance Handbook 14-15 covers availability and use of leased space: 

The prime obligation of the owner of a federally-assisted airport is to operate it for the use 

and benefit of the public. ... While the owner is not required to constmct hangars and 

terminal facilities, it has the obligation to make available suitable areas or space on 

-40-
reasonable terms to those who are willing and otherwise qualified to offer flight services to 

the public ... or support services to aircraft operators. This means that unless it undertakes 

to provide these services itself, the airport owner has a duty to negotiate in good faith for the 

lease of such premises as may be available for the conduct of aeronautical activities. 

Id. ^ (emphasis added). 

Remarkably, VJC/Receiver provides no evidence to support its assertion in Paragraph 93 

that "Respondent has permitted other tenants to build and lease out hangars to aircraft operators." It 

has not identified any other tenant that has been allowed to build and lease out hangars to aircraft 

operators, much less provided evidence to demonstrate that this is the case. Since the complainant 

has an obligation to provide persuasive evidence of such discriminatory treatment, the utter lack of 

any evidence on this point means that VJC/Receiver's claim of unjust economic discrimination 

must fail. 

b) VJC is Not Willing And Otherwise Qualified to Build and Lease Hangars at 

the Airport. 

VJC/Receiver echoes the Compliance Handbook in stating that "Respondent has an 

obligation to make suitable areas or space available on reasonable terms to those who are willing 

and otherwise qualified to offer the needed services." Complaint at ^ 89. The Complaint cites the 

fact that its lease allows it to "conduct any commercial aeronautical activity permitted under the 

Minimum Standards for Commercial Aeronautical Activities at Venice Municipal Airport ... " 

Complaint at ^f 13. However, because the "minimum standards documents [are] incorporated into 

the lease," (Complaint at T) 14, Complainant's Exhibit 3 (VJC Lease at p. 8 § 14)), all of the terms 

of the Minimum Standards apply. 

c) VJC Must Comply with the Airport's Minimum Standards. Which Include 

Demonsfrating to the City's Satisfaction, the Financial Capability to Carry 

Out the Project and City Approval of the Location for Hangar Development. 

-41-
In its informal complaint, VJC/Nadel, quoted extensively from the Airport's minimum 

standards, but not the provisions requiring proof of financial viability and allowing the City to select 

the location for different types of aeronautical improvements. Similarly, the Complaint selectively 

cites to provisions in the City's Minimum Standards. Complaint at THI13, 14, and 19. 

However, the Minimum Standards incorporated by reference into the lease, and upon which 

VJC/Nadel and VJC/Receiver rely for other purposes, clearly state in § 7A that "No person shall use 

the airport or any portion thereof or any of its improvements or facilities for commercial, business, 

or aeronautical activities without first complying with these Standards and obtaining the required 

approval and written consent associated with those activities by entering into such agreement as 

may be prescribed by the City of Venice." Complainant's Exhibit 4 at p. 6 of 17. 

VJC/Nadel took the position in its informal complaint that use of term "City of Venice" in § 

5 of the Minimum Standards, relating to a requirement that "[a]ny proposed constmction or 

facilities developed by the Operator will be approved by the Venice Municipal Airport and the City 

of Venice," "clearly .. . is a standard "boilerplate provision that pertains to the City's various 

departments having jurisdiction over constmction," and not to the City Council (Complainant's 

Exhibit 11 at p. 2). However, it is not a tenant's prerogative to determine what its landlord, the 

airport proprietor, meant by reference to itself in its minimum standards. VJC's contention that the 

City, by referencing itself by the general term "the City of Venice" in its Minimum Standards had 

somehow stripped Authority from the City Council in favor of individual, unspecified City 

Departments is absurd on its face. Moreover, the use of the term "City of Venice elsewhere in the 

Minimum Standards clearly includes the City Council. For instance, the requirement in Section 7A 

that an operator enter into such agreement "as may be prescribed by the City of Venice" clearly 

indicates that the policymaking arm of the City, i.e., the City Council, is to be involved. This is 

consistent with the use of the term "City of Venice" elsewhere in the Minimum Standards, as in the 

-42-
passage quoted by VJC/Receiver "It is the intent of the City of Venice ... " and "The City of Venice 

will provide a fair and reasonable opportunity without unjust discrimination ... " Complainant's 

Exhibit 4 at § 3(A) and (B), referenced in Complaint t [14].^ 

Finally, neither VJC/Nadel nor VJC/Receiver acknowledged § 8(A) of the Minimum 

Standards, which provides that "Proposed or existing Operators, may be required to provide 

evidence of past experience, financial capability and technical ability to perform the proposed 

services." Id. at p. 6 of 17. The paragraph that follows provides that: 

Regarding evidence of financial capability to perform and provide the services, the 

City of Venice shall be the sole judge of what constitutes adequate finances and the 

procedure to base financial information. If the Operator or proposed Operator does 

not, in the opinion of the City of Venice, exhibit adequate financial responsibility to 

undertake the proposed services, the City of Venice may deny any requested activity. 

Id., § 8(B) at p. 7 of 17. Even if a requirement of reasonableness is read into this provision, there 

can be no doubt that neither VJC/Nadel nor VJC/Receiver has provided sufficient evidence of 

financial capability to build and operate the hangars. As discussed more fully below, VJC/Nadel 

could not and did not provide evidence of legitimate financial resources. VJC/Receiver, after 

disavowing any intent to build the hangars, simply made an unsupported assertion that he had 

resources available. Complaint at ^ 59-60. 

Moreover, in the Minimum Standards provide: "The City of Venice further reserves the 

right to designate from time-to-time the specific areas where an individual aeronautical service or a 

combination of aeronautical services may be conducted and determine whether or not there is 

sufficient appropriate or adequate space at the proposed site to meet the minimum requirements 

Not surprisingly, in light of his own actions that Mr. Nadel was well aware at the time, but others were not, 

the informal complaint signed by Mr. Nadel neglected to mention that the Minimum Standards also require 

that the "Operator shall adhere to the highest ethical and aviation service community standards in the conduct 

of its activities." Id. at Section 6 G, p. 4 of 17. Using stolen fiinds for the purchase of an FBO and 

subsequent diversion of stolen fiinds into the business (City Exhibit 2 at THJ15-23), does not qualify as 

adherence to the "highest ethical standards." 

-43-
established. Such determination shall consider the nature and extent of the proposed operation and 

the site available for such a purpose that can be performed orderly, safely, consistently, and be an 

efficient operation for the airport." 

The Minimum Standards for FBO's provide fiirther: "No constmction of any kind shall be 

done at the Venice Airport without the prior approval of the City and, if necessary in the opinion of 

the City, the Federal Aviation Administration, or its successor governmental agency, and no such 

approval shall be granted unless such constmction and design is consistent with the architecture and 

the master plan Section 7-lb for the development of the Venice Airport." Minimum Standards for 

Venice Municipal Airport Venice, Florida, § 3(c), pg. 2-3 of 17. "A fixed base operator in any 

category may, if sufficient land and area is leased from the City, constmct such a hangar or hangars 

in a location satisfactory to the City and engage in the business of rental of space for aircraft 

storage." Id. At § 10, p. 2 at 7. 

Thus, under the Minimum Standards for FBOs, the right of an FBO to build and rent out 

hangars is not absolute - it may only be done in an area acceptable to the City. As demonstrated by 

the current, FAA-approved ALP, the area designated by the City for current and proposed fiiture 

hangars to be rented out to the public for aircraft storage is not along the border of the airport where 

the VJC site is located, but across a taxiway, away from the Airport boundary. City Exhibit 13 

(ALP). As reflected in City Council discussions, this is still the preferred area for such activities. 

An airport need not develop its facilities in accordance with the wishes of any individual user or 

tenant. Rather, the airport is entitled to exercise its proprietary powers to provide for the orderly 

development of the airport: 

As the FAA held in Santa Monica Airport Association v. City of Santa Monica, FAA 

Docket 16-99-21 Final Decision and Order (Feb. 4, 2003), "a sponsor is not required to 

develop any and all parcels of land in a manner consistent with the wishes of any one party, 

but rather may exercise [its] proprietary rights and powers to develop and administer the 

Airport's land in a manner consistent with the public's interest and that "is exactly what the 

County is doing at CRQ consistent with its FAA-approved Airport layout Plan." 

-44-
Pacific Coast Flyers, 2005 WL 1900515 at *29. 

d) Requiring Assurance of Financial Capability is a Legitimate Exercise of 

Proprietary Powers and Does Not Violate the Prohibition Against Unjust 

Economic Discrimination. 

It is legitimate to assure that proposed builder/operator of hangars has the financial resources 

and other capabilities necessary to carry out the project. FAA has recognized that including 

assurance of "financial capability" is an appropriate aspect of an airport's minimum standards. 

Flightline Aviation, Inc. v. City of Shreveport, Docket No. 16-07-05, 2008 WL 5955355 at *17 

(Director's Determination Mar. 7, 2008) ("FAA has upheld an airport sponsors right to protect itself 

from financial and/or litigation risk...It appears that Respondent's requirements for financial 

information in the Amended Minimum Standards are simply a way of protecting itself and the 

aeronautical community operating on the Airport from financial risk."). 

In light of the circumstances in this case - the massive fraud perpetrated by Mr. Nadel, and 

the Receiver's subsequent efforts to get as much money as possible from a buyer of VJC, then take 

that money off-airport—FAA should not make an exception to its policy of allowing the airport 

sponsor to make a financial inquiry to protect itself from financial risk. Simply put, the Receiver's 

interests are not aligned with either the City's or FAA's. Once the Receiver has extracted all it can 

from the buyer, the Receiver will be indifferent as to whether the buyer has any resources left to 

develop and operate the VJC site. 

In the context of selecting lessees for aeronautical land, FAA has found no violation of the 

prohibition against unjust discrimination where the airport sponsor to required, and made decisions 

based on, information demonstrating that a prospective tenant had the financial capability to carry 

out aeronautical development: 

It is within an airport proprietor's discretion to select financially secure tenants, 

especially for new development in an area of the Airport where there were no 

existing general aviation services. The fact that the City selected tenants who were 

-45-
able to finance the development of their FBO businesses is not unreasonable and 

does not constitute unjust discrimination. If anything, it shows that the City was 

acting in a pmdent manner. 

Santa Monica Airport Ass'n v. City of Santa Monica, Cai, FAA Docket No. 16-99-21, 2000 WL 

1824463 at *21 (Director's Determination Nov. 22, 2000), aff'd, 2003 WL 1963858 (Final Decision 

and Order Feb. 4, 2003).'° 

As noted above, regarding the VJC hangar proposal at the Airport, the Acting Associate 

Administrator for Airports acknowledged that it is legitimate for the City to verify the financial 

capabilities of the entity seeking to build heingars. City Exhibit 4. There is no evidence in the 

record that VJC/Nadel ever provided the necessary financial information to the City, and it is clear, 

as described above, that it could not demonstrate that it had legitimate resources (that is, funds that 

were not stolen or supported by stolen funds) to build the hangars. 

As for VJC/Receiver, a flat statement that "the receivership has the financial ability to 

constmct the four hangars" coupled with an assertion that "the receivership fiind contains over $ 10 

million in assets and approximately $4 million in case in bank accounts" (Complaint at Tf 60) does 

not suffice to demonstrate sufficient financial resources available to apply to the project. First, the 

Receiver's assertion of total receivership assets (that is, not just those assets attributable to VJC) is 

'" See also Lytton v. Sheridan County Bd. Of County Comm 'rs, Docket No. 16-01-16, 2002 WL 

32002471 at *11 (Director's Determination Dec. 20, 2002) (Airport did not unjustly discriminate 

against Complainant when it reflised a lease where Complainant failed to supply adequate 

information, including documentation meant to assure financial capability. "It is reasonable for the 

sponsor to verify the financial capability of a prospective tenant to meet the fee and rental structure 

established."). 

NDC. Inc. V. City of Beverly, Mass., FAA Docket No. 13-93-04 (Record of Decision Jan. 12, 2001) 

(Airport did not unjustly discriminate against Complainant by denying its proposal based on a failure 

to submit financial data). 

House V. Kingman Airport Auth., FAA Docket No. 13-94-10 (Record of Decision Apr. 3, 1997). 

(Airport acted reasonably and therefore did not violate Grant Assurance 22 by denying 

Complainant's application to purchase property at the Airport, where Complainant failed to submit 

financial data as required by Airport policy). 

-46-
not home out by the report he enclosed with his June 25, 2009 letter to City Attomey Robert 

Anderson. City Exhibit 3. Indeed, that attachment. The Receiver's Second Interim Report, filed 

June 9, 2009 indicated that for the reporting period ending 4/30/09, the receivership had Total Net 

Assets of $1,557,431.16 (with a notation "Doesn't include $ 1.5m Scoop Capital CD/will be paying 

$1.5m loan). Id. at Document 141-2 (Standardized Fund Accounting Report for Consolidated 

Nadel Entities - Cash Basis, Reporting Period 03/01/09 to 4/30/09, Attachment to Receiver Report). 

The Receiver's Third Interim Report, filed on August 17, 2008, listed Total Net Assets of 

$2,151,211.35 as of 6/30/09, with the same notation conceming the Scoop Capital CD/loan. City 

Exhibit 16 at Document 176-2 (Standardized Fund Accounting Report for Consolidated Nadel 

Entities - Cash Basis, Reporting Period 05/01/09 to 6/30/09, Attachment to Receiver Report). 

Moreover, the mere fact that the Receivership has some assets does not mean that they are 

available to fund the development of the proposed hangars at Venice Airport. As noted, these are 

total assets of the receivership, not just those related to VJC. The Receiver is to "administer such 

assets as is required in order to comply with the directions contained in this Order [Reappointing 

Receiver] and to hold all other assets pending fiirther order of this Court. Id. at p. 3 of 8. The 

Receiver's mission is to marshal the assets derived from Mr. Nadel's illegal schemes and put them 

in a fiind for the benefit of the victims of Mr. Nadel's fraud. Complainant's Exhibit 1 (Order 

Reappointing Receiver) at ^ 1, 7, 17, 23. City Exhibit 3 at 7. In light of these circumstances, the 

Receiver's assertions that VJC/Receiver has sufficient funds available to carry out the proposed 

hangar project do not satisfy the requirement of Minimum Standards § 8(B) that the City of Venice 

be convinced that VJC/Receiver demonstrates that it has sufficient financial resources to undertake 

the proposed constmction and leasing out of the hangzirs. 

In addition, the Receiver asserts that VJC/Receiver does not intend to constmct or operate 

the hangars. Complaint at ^ 59, Exhibit 3 (Receiver letter to R. Anderson). To date, the receiver 

-47-
has not identified the entity to whom he intends to sell VJC. As a result, the financial resources of 

the ultimate buyer of VJC have not been presented to the City, and the City has not, and cannot, 

evaluate those financial resources. Thus, the City has not discriminated unjustly against any 

VJC/Nadel, VJC/Receiver or VJC/Unnamed Buyer. Rather, none of these entities have 

demonstrated to the City's satisfaction that it satisfies the City's legitimate minimum standards 

conceming financial resources necessary to carry out the proposed project. 

e) There is No Current Proposal to the Citv by an Entity That Will Build and 

Operate the Hangars. 

Because FAA is concemed with an airport sponsor's current compliance with its grant 

assurance obligations, it is important to keep in mind that there is no proposal currently before the 

Airport by an entity that says it will build and operate the hangars. VJC/Receiver explicitly states 

that it will not build the hangars. Complaint at ]| 59. VJC/Receiver does not reveal who the real 

party in interest is, and asserts that this has not yet been determined. The City is entitled to know 

who will carry out the project before being asked to approve the project. Only then can the City 

assure itself of the FBO's financial fitness and ability to carry out the project. 

As noted above, the requested City approval has evolved to date from 1 to 2, and then to 4 

box hangars. The prior leaseholder intended to build t-hangars, an entirely different form of 

development. At this point, there is obviously no way of knowing whether or how the ultimate 

owner of VJC will seek to develop the VJC leasehold—if it will want to develop the hangars as VJC 

Nadel proposed, or if it may seek to change or modify the project. The Airport is entitled to see the 

actual project by the actual entity that seeks to build it before granting any approvals, rather than 

being forced to give a blind approval. 

There is simply no federal aviation interest in forcing the City to give a blind approval to an 

unknown entity to build hangars, simply so that the Receiver can realize an incrementally greater 

amount of money from the buyer of VJC and take those funds off airport. Simply put, the 

-48-
Receiver's interests and the federal aviation interests are not aligned, and there is no reason to 

deviate from the process that FAA has allowed in other cases - where the airport sponsor deals 

directly with the entity that seeks to develop aeronautical facilities, and the airport sponsor ensures 

that the proposed developer complies with all airport minimum standards, including financial 

responsibility. 

As for the previous statements by the local ADO official that the City should approve the 

hangars, that determination was made based partly on factual assumptions that the ADO could not 

reasonably have known to be false (i.e., the assumption that VJC/Nadel had legitimate resources 

available to build the hangars) and partly on a misinterpretation of FAA's ALP guidance. In any 

event, this would not be the first time an ADO has given advice that was not sustained in a formal 

Part 16 proceeding. See Pacific Coast Flyers at * 28 and * 42. 

In fact, even when FAA headquarters officials give informal guidance to airport sponsors 

and aeronautical users, they typically include caveats to the effect that such advice does not 

necessarily indicate how the FAA would mle if the issue came before it in a formal Part 16 

complaint, with a full development of the facts and argument by the interested parties. Thus, FAA 

is free to reach a conclusion, based on the unusual facts of this case, that is different from the 

informal determination made by an official at the local ADO. 

The facts as they have developed demonsfrate that there is not, and has not been, any 

violation of Grant Assurance 22, and this count of the Complaint should be dismissed. 

(5) Count V: Exclusive Rights 

a) Standard 

The exclusive rights doctrine is articulated differently in different sources but generally 

refers to the same proscribed conduct. The relevant part of 49 U.S.C. § 40103(e) provides, "A 

person does not have an exclusive right to use an air navigation facility on which Govemment 

-49-
money has been expended." Section 47107(a)(4) provides in relevant part, "A person providing, or 

intending to provide, aeronautical services to the public will not be given an exclusive right to use 

the airport ... " 

Grant Assurance No. 23, '"Exclusive Rights, " implements the provisions of 

47107(a)(4). It requires that an airport "permit no exclusive right for the use of the airport 

by any persons providing, or intending to provide, aeronautical services to the public," and 

that the airport "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." It also 

provides that "it will terminate any exclusive right to conduct an aeronautical activity now 

existing at such an airport before the grant of any assistance under Title 49, United States 

Code." 

"An exclusive rights violation occurs when the airport sponsor excludes others, either 

intentionally or unintentionally, from participating in an on-airport aeronautical activity." Advisory 

Circular 150/5190-6, Exclusive Rights At Federally-Obligated Airports, dated January 4, 2007. In 

addition, FAA has taken the position that the application of "any unreasonable requirement or any 

standard that is applied in an unjustly discriminatory manner may constitute the constmctive grant 

of an exclusive right." 41 North 73 West Inc. v. Westchester County, New York, FAA Docket No. 

16-07-13 at *18 (June 12, 2008). 

A complainant seeking to establish a violation of Grant Assurance 23 must demonstrate that 

the airport sponsor granted special rights or privileges to others making the same or similar use of 

the airport while denying the same to the complainant. Jim Martyn v. Port of Anacortes, 

Washington, 2003 WL 21002099 at *24. 

The FAA recognizes several exceptions to, and limitations on, the prohibition on exclusive 

rights. See generally FAA Advisory Circular 150/5190-6 § 1.3(b); FAA Order 5190.6A § 3-9. 

-50-
Most relevant to the Complaint, the FAA has advised, "What is an exclusive rights violation is the 

denial by the airport sponsor to afford other qualified parties an opportunity to be an on-airport 

aeronautical services provider." FAA Advisory Circular 150/5190-6 § 1.3(b)(2). 

b) Grant Assurance 23 Does Not Prevent the City From Exercising an Exclusive 

Right to Provide Aeronautical Service 

The Complaint makes assertions about a potential airport role in building or operating 

hangars, but provides no evidence, except for newspaper clippings of quotes from a few individual 

Council members. This is not evidence of the granting of an exclusive right. It is just talk. There is 

no evidence that the City has acted to do so. Moreover, even if the City were to build or operate 

hangars, that would not constitute an exclusive rights violation; an airport sponsor is not prohibited 

from exercising, with its own facilities and personnel, an exclusive right to provide an aeronautical 

service. It is simply prohibited from granting such an exclusive right to a third party. Id. at § 

1.3(b)(1); see also discussion in Jet I Center. Inc. v. Naples Airport Authority, FAA Docket No. 16-

04-03 (Final Agency Decision July 15, 2005) at 16-18. 

c) Complainant Has Provided No Evidence That Other Tenants Have Been 

Given Exclusive Rights To Build and Lease Hangars 

The Complaint makes vague assertions (paragraphs 34, 101 and 103) about other tenants 

being given rights to build hangars and lease them out to the public in competition with 

VJC/Receiver, but it provides no evidence to support this assertion, and does not even identify who 

those other tenants are. Fundamental to proving an exclusive rights claim is the identification of the 

other entity to whom the exclusive right has been granted. Moreover, the fact that VJC/Receiver 

states that these unnamed other tenants are in competition with VJC indicates that VJC has not been 

denied the right to build hangars and lease them out to the public. In fact, by the explicit terms if its 

lease, it has been allowed to build and lease out hangar space at the airport. Thus, it has not been 

excluded from providing hangar rental service at the airport. 

-51-
Because of the total lack of evidence that the airport has granted an exclusive right to any 

other entity to build hangars that has been denied to VJC/Receiver, this count of the Complaint 

should be dismissed. 

D. AFFIRMATIVE DEFENSES 

(1) First Affirmative Defense: The Complaint Fails To State A Ripe Claim For 

Relief 

Part 16 authorizes the Director to dismiss a complaint if it fails to state claim that warrants 

and investigation or fiirther action by the Director. 14 C.F.R. § 16.25 (b). As discussed above, the 

focus of the Part 16 process is on the airport sponsor's current compliance or lack thereof Steere, 

2004 WL 3198209 at =^9, *16, *21, *22. Wilson Air Center, 2001 WL 1085348 at *4; purported 

past violations and potential future violations are not proper matters for a Part 16 proceeding. 

Accordingly, the Director has found Part 16 complaints not ripe for adjudication when the claim 

depends on the uncertain fliture actions of the parties based on uncertain fiiture facts. Northwest 

Airlines, Inc. et al. v. Indianapolis Airport Auth., et al, FAA Docket 16-07-04 2008 WL 3976461 at 

*23 (FAA) (Aug. 19, 2008) (dismissing complaint as unripe when lease amendment had not yet been 

applied and it was uncertain how application of lease amendment would affect complainants). 

It is clear that VJC has failed to alleged a ripe set of facts upon which the Director could 

issue a decision. As detailed above, VJC/Receiver seeks a declaration that the City must approve 

the development of certain hangars on its leasehold, even though VJC/Receiver admits that it will 

not build those hangars and that it does not know who will build those hangars. Complaint at ^ 58-

59, City Exhibit 3 (6/25/09 Letter from Receiver to R. Anderson). VJC/Receiver cannot know if the 

ultimate builder will in fact want to build any hangars, much less (1) the same number of hangars 

VJC has proposed, (2) in the same locations as VJC has proposed, (3) in the same time frame VJC 

has proposed, or (4) in the same size and configuration as VJC has proposed. Nor can 

VJC/Receiver know if the ultimate building will have the financial capability to build and operate 

-52-
the hangars or be capable of otherwise complying with the City's Minimum Standards. It is entirely 

possible that even if the City approved the plan as proposed by VJC, it would ultimately deny the 

project because the ultimate developer could not meet the City's Minimum Standards. Moreover, it 

is possible that the ultimate developer will ask the City to approve a different project than VJC 

proposes. 

Two points are clear, therefore. First, the absence of the actual builder means that there are 

insufficient facts on which the FAA could ever determine that the City has acted in a manner 

inconsistent with the City's Minimum Standards regarding, inter alia, the financial capability of 

airport users. It therefore cannot possibly determine that the City has violated its grant obligations 

on the current record. Indeed, even if the FAA were to agree generally that the City should approve 

a hangar project, that would not mean that a specific developer could not be tumed down by the 

City if it failed to meet the City's Minimum Standards and the City would properly deny any 

request to build them. 

Second, the absence of the actual developer raises such fundamental doubts regarding the 

nature and extent of the hangar project that it is simply impossible to find any impropriety of the 

City's actions. In short, it is impossible to determine now what will actually be proposed for 

constmction by whom. Given the fundamental absence of a concrete project that an identifiable 

entity actually intends to build, it is simply impossible to know (1) whether the City would or would 

not approve an actual project, (2) the grounds for such future City action, and (3) whether that 

future City action would or would not comply with the City's federal obligations. In short, in the 

absence of those fundamental facts, the FAA cannot find the City in violation of its federal 

obligations. 

-53-
(2) Second Affirmative Defense: VJC Lacks Standing To Pursue This Case 

Part 16 requires that a Complainant show that it was "directly and substantially affected" by 

any noncompliance with FAA requirements. 49 CFR 16.23(a), (b)(4). It also requires the Director 

to dismiss a complaint if the complainant lacks standing to file a complaint under 16.23. Id. at 

16.25(c). The FAA has made clear that this standing requirement mandates a direct link between 

the alleged violation and a denial of aeronautical access. Thermco Aviation Inc., 2007 WL 

1893821. In Thermco, the Associate Administrator agreed with the Director's finding that the 

Complainant lacked standing to challenge an airport sponsor's use of land for non-aeronautical 

purposes because: 

the record does not support that the City was or is required to provide Thermco with 

a long-term lease specifically for Hangar #3 in order to ensure reasonable 

aeronautical access. The record shows and Thermco admits that it has had a shortterm lease to Hangar #3. Thermco has failed to show that it does not enjoy a longterm hangar lease at the Airport because of the City's past land-use practices. In 

fact, Thermco fails to show that it has proposed a specific long-term lease of any 

Airport property other than Hangar #3. Finally, Thermco fails to show it was denied 

a lease in favor of a non-aeronautical use. 

Id at *25. 

The situation is analogous here. VJC/Receiver has admitted that it does not intend to build 

the hangars and that it does not know who will build the hangars. It certainly has not revealed the 

identity of the ultimate developer to the City. 

City approval of the proposed hangars is not necessary to ensure VJC any aeronautical 

access. VJC continues to enjoy its leasehold and has not been deprived of any ability to conduct 

any aeronautical activity. It is obvious, therefore, that VJC is not directly and substantially affected 

by the City's inability to approve any hangars at this time. Simply stated, the hangar project is not 

VJC/Receiver's project, and VJC lacks standing to complain on behalf of an unknown future owner 

who may or may not want to build the same (or any) hangar project. 

-54-
The Receiver's only claim of injury is that it may not receive as much money for the sale of 

VJC if the hangar project is not approved. But VJC/Receiver does not offer a shred of proof that 

the value of its assets would be greater or that a buyer would pay more for the property if the 

hangars were approved. Even under the terms of its own Complaint, VJC/Receiver has failed to 

show that it is directly and substantially affected by the City's alleged non-compliance." 

More fundamentally, the FAA's compliance program in general, and the Part 16 process in 

particular, is designed to protect the aviation system and the rights of aeronautical users to conduct 

aeronautical activities on airports. VJC admittedly does not seek to conduct any aeronautical 

activity; it seeks only to sell a leasehold on an airport for as much money as possible in order to take 

that money off the airport and refund the victims of Mr. Nadal's fraud. Part 16 is simply not 

intended to protect the non-aeronautical financial interests of entities that happen to lease land on an 

airport. Because the purely financial non-aeronautical interests VJC seeks to pursue in this matter 

are not the kind of interests Part 16 is intended to protect, VJC is not directly and substantially 

affected by any alleged non-compliance by the City, and the Complaint should be dismissed. 

" The fact that VJC is a lessee paying rent to the City does not itself confer any standing. 14 C.F.R. § 16.23(a) makes 

clear that paying rent to an airport only confers standing with respect to revenue diversion claims. Since VJC does not 

allege revenue diversion in its Complaint, the fact that it pays rent to the City does not itself confer standing to pursue 

these claims. 

-55-
IV. CONCLUSION 

For the reasons set forth above, the City's Motion to Dismiss should be granted. 

nd Respectfully submitted this 2 day of September, 2009 

y 

Robert Anderson, Esq. 

City Attomey 

Hall & Anderson, P.A. 

1314 East Venice Ave., Suite E 

Venice, FL 34285 

Telephone: (941) 480-0999 

Facsimile: (941)480-1446 

Thomas Devine 

W. Eric Pilsk 

KAPLAN KIRSCH & ROCKWELL LLP 

1001 Connecticut Ave NW, Suite 905 

Washington, DC 20036 

Telephone: (202) 955-5600X568 

Facsimile: (202) 955-5616 

Arthur P. Berg 

KAPLAN KIRSCH & ROCKWELL LLP 

641 Lexington Ave. Suite 1409 

New York, NY 10022 

Telephone: (212) 328-9515 

Facsimile: (646)514-5440 

Counsel for Respondent City of Venice, FL 

-56-
CERTIFICATE OF SERVICE 

I hereby certify that I have this day served the foregoing Respondent City of Venice, 

Florida's Memorandum of Points and Authorities in Support of its Answer and its Motion to 

Dismiss, on the following persons at the following addresses by overnight Federal Express: 

Office of the Chief Counsel 

Attn: FAA Part 16 Airport Proceedings Docket, AGC-610 

Room 925 

Federal Aviation Administration 

800 Independence Avenue, S.W. 

Washington, DC 20591 

Original and 3 copies VIA Federal Express No. 

Gianluca Morello, Esq. 

Dominique Pearlman, Esq. 

Fowler White Boggs, P.A. 

501 E. Kennedy Blvd., Suite 1700 

Tampa, FL 33602 

Fax No. (813)229-8313 

One Copy VIA Federal Express No. 

,nd Dated this 2"" day of September, 2009: 

Thomas R. Devine 

-57-