UNITED STATES DEPARTMENT OF TRANSPORT4WI 

FEDERAL AVIATION ADMINISTRATION 

WASHINGTON, D.C. 

\D}MM 

2010 

AIRFORi/ENVIRONMENTAL 

LAiV, AGC-600 

li£/ 

Venice Jet Center, LLC, 

Complainant, 

V. 

City of Venice, Florida, 

Respondent. 

FA A Docket No. 16-09-05 

72. 

RESPONDENT CITY OF VENICE'S MEMORANDUM OF POINTS AND 

AUTHORITIES IN SUPORT OF ITS MOTION TO DISMISS AND OPPOSITION TO 

TRISTATE AVIATION GROUP OF FLORIDA LLC'S MOTION TO INTERVENE AND 

FOR JOINDER AS CO-COMPLAINANT 

Designation of persons to receive service for the City of Venice, Florida: 

Robert C. Anderson 

City Attorney 

Hall & Anderson, P.A. 

1314 East Venice Avenue, Suite E 

Venice, Florida 34285 

randerson(5lhall-anderson. com 

Telephone: (941) 480-0999 

Facsimile: (941)480-1446 

Thomas R. Devine 

W. Eric Pilsk 

Kaplan Kirsch & Rockwell LLP 

1001 Connecticut Ave NW, Suite 800 

Washington, DC 20036 

tdevine(atkaplankirsch. com 

epilsk(%kaplankirsch.com 

Telephone: (202) 955-5600X568 

Facsimile: (202) 955-5616 

Arthur P. Berg 

Kaplan Kirsch & Rockwell LLP 

445 Park Ave., 9th Floor 

New York, New York 10022 

aberg@kaplankirsch. com 

Telephone: (212) 836-4048 

Facsimile: (646) 514-5440 
TABLE OF CONTENTS 

INTRODUCTION 1 

UPDATED STATEMENT OF FACTS 3 

ARGUMENT 5 

A. The Complaint Should Be Dismissed Because VJC Is No Longer a Tenant or 

User of the Airport and Its Claims Are Moot 4 

B. Tristate Should Not Be Permitted to Intervene or Join the Complaint Because 

Part 16 Does Not Permit Intervention or Joinder and Because There Is No 

Actual Controversy Between Tristate and the City 9 

1. Part 16 Does Not Permit Intervention of a New Party Prior to Issuance 

of a Director's Determination or Joinder at Any Time 9 

2. Any Claim Tristate May Try to Assert is Unripe as There Is No Actual 

Controversy Between Tristate and the City 11 

a. Tristate Has Not Sought City Approval of Any Hangar Project, 

and the City Has Not Prohibited Tristate from Any Aeronautical 

Activity 11 

b. Tristate Has Not Satisfied the Requirements of Part 16 to 

Attempt Informal Resolution with the City 14 

3. Tristate Cannot Rely on Common Law Rules Regarding Assignment of 

Contract Claims or Choses in Action to Establish Standing to Assert the 

Moot Claims of VJC or Its Own Premature Claims 17 

CONCLUSION 24 
TABLE OF AUTHORITIES 

Cases 

Am. Med. Ass 'n v. United Healthcare Corp., 2007 WL 1771498 

(S.D.N.Y. June 18, 2007) 18 

Arrow Airways, Inc. v. Dade County, 749 F.2d 1489, 1491 (11th Cir. 

1985) 18 

Data Consultants. Inc. v. Traywick, 593 F.Supp. 447 (D. Md. 1983) 18 

Esposito V. CPMIns. Serv., Inc., 922 A.2d 343 (Conn. Super. Ct. 

2006) 18 

New England Legal Found, v. Mass. Port Auth., 883 F.2d 157, 168-

69 (1st Cir. 1989) 18 

Northwest Airlines, Inc. v. County of Kent, 955 F.2d 1054, 1058-59 

(6th Cir. 1992), afTdon other grounds, 510 U.S. 355, (1994) 18 

Otlier Authorities 

Boca Airport, Inc. v. Boca Raton Airport Authority, FAA Docket No. 

16-04-02, Order of Dismissal (March 21, 2004) 14 

Boca Raton Jet Center, Inc. v. Boca Raton Airport Auth. 1999 WL 

732710 at *3, fii. 1 (FAA Docket No. 16-97-06 Aug. 20, 1999) 9 

Flightline Aviation, Inc. v. City ofShreveport, 2008 WL 5955355 at 

*17 (FAA Docket No. 16-07-05, Mar. 7, 2008) 2 

J & B Enters., Inc. v. Metro. Nashville Airport Auth., 2009 WL 

1800821, at *16 (FAA Docket No. 16-08-07, May 5, 2009) 19 

Jet I Center, Inc. v. Naples Airport Auth., FAA Docket No. 16-04-03 

(Director's Determination, Jan. 4, 2005) 20 

Jetaway Aviation, LLC v. Bd. of County Comm 'rs, 2006 WL 

4393155, at *12 (FAA Docket No. 16-06-01, Nov. 6, 2006) 15 

Northwest Airlines, Inc. v. Indianapolis Airport Auth., 2008 WL 

3976461, at *18 (FAA Docket No. 16-07-04, Aug. 19, 2008; 12 

u 
Platinum Aviation and Platinum Jet Center BMI v. BloomingtonNormal Airport Authority, (FAA Docket No. 16-06-09, 2007 WL 

4854321 9, 12, 19, 20 

Richard E. Steere v. County of San Diego, 2004 WL 3198209, at *16 

(FAA Docket No. 16-99-15, Dec. 7, 2004) 12 

Rick Aviation Inc. v. Peninsula Airport Cmm 'n, FAA Docket No. 16-

05-18 20 

Santa Monica Airport Ass 'n v. City of Santa Monica, 2003 WL 

1963858, at *14 (FAA Docket No. 16-99-21, February 4, 2003) 15 

Santa Monica Airport Ass 'n v. City of Santa Monica, 2000 WL 

1824463 at *21 (FAA Docket No. 16-99-21, Nov. 22, 2000) (Dir. 

Det.), affd 2003, WL 1963858 (Feb. 4, 2003) 2 

Thermco Aviation, Inc. v. County of Los Angeles at 15, 25-26 (FAA 

Docket No. 16-06-07, Dec. 17,2007) 12, 18, 19 

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

Auth., 2001 WL 1085348, at *4, *15 (FAA Docket No. 16-99-10, 

Aug. 30, 2001) 12 

Regulations 

14 C.F.R. § 16.109 4 

14C.F.R. § 16.21 14, 16 

14 C.F.R. § 16.23(a) 9 

14 C.F.R. § 16.31 4 

14 C.F.R. §§ 16.23(b)(3), 16.29(b)(1) 13 

111 
INTRODUCTION 

Due to new circumstances brought about by the Complainant in this case, the FAA is 

faced with a situation in which (1) the original Complainant, the Receiver for the Venice Jet 

Center ("VJC/Receiver"), no longer has any legal interest in the case because it has sold the 

assets of VJC, specifically all assets related to VJC's FBO business at Venice Municipal Airport 

(the "Airport") to a third party, Tristate Aviation Group of Florida, LLC ("Tristate"), and 

assigned its Airport lease to Tristate , ; and (2) the buyer of those assets, Tristate, does not have a 

ripe claim to pursue before the agency. 

Perhaps aware of the fact that neither VJC/Receiver nor Tristate individually has standing 

to pursue the complaint at this point, Tristate tries the novel, and unauthorized, gambit of seeking 

to "intervene" in the case and for "joinder as a co-complainant." Apparently Tristate believes 

that two entities that, alone, have no standing now to pursue a Part 16 Complaint against the City 

can somehow be cobbled together into one joint entity that meets the requirements that the 

airport sponsor has taken an action directly and substantially affecting the Complainant, the party 

pursuing the Complaint has first attempted to resolve the dispute between the parties informally 

before pursuing the Part 16 case, and there is a current dispute between the parties that warrants 

FAA consideration. 

' The City's consent to the assignment of the lease from VJC to Tristate was subject to the condition that the 

assignment of the lease by VJC, "shall not release or relieve [VJC] from any duty, obligation or liability under the 

terms and conditions of the [VJC] lease." Tristate Motion to Intervene and For Joinder As Co-Complainant 

("Tristate") at Exhibit B. This condition does not reserve any rights to VJC with respect to the leasehold, but rather 

continues VJC's obligations under the lease. 

^ Note that Tristate's Motion contains three lettered exhibits (A, B, and C) but that in addition, its Exhibit A 

("Receiver's Motion") contains internal exhibits also designated by letter: A (the Asset Purchase Agreement) and B 

(a promissory note). To minimize confusion, when the City cites to any of the documents foimd in Exhibit A to 

Tristate's Motion, it will cite both Exhibit A, the name of the document referred to (e.g., "Receiver's Motion" or 

"Asset Purchase Agreement" or "Promissory Note"), and the internal page number of the document, as shown on the 

top right hand comer of Tristate's exhibits. For example: Tristate Exhibit A (Promissory Note) at X of XX. 
However, this attempt by Tristate to vicariously benefit from VJC's request to the City to 

build hangars on the VJC site, as well as VJC's attempts at informal resolution, because Tristate 

"agrees with" VJC's position, must fail. There is, in fact, no party that has standing to pursue 

this complaint before the FAA at this time. VJC/Receiver's time to do so ran out when it sold 

VJC's assets to Tristate. Tristate's time to do so has not yet arrived, because it has not shown 

how it has been directly affected — it has not presented a proposal to the City to build hangars on 

the site or given the City an opportunity to evaluate the proposal based on the facts and 

circumstances as they relate to Tristate, for instance, whether Tristate meets the Airport's 

minimum standards to build the hangars."' 

Not only is Tristate's attempt to inject itself into the case at this point in the proceedings 

wholly unauthorized by Part 16 Rules, but it would waste agency resources to analyze the case 

and make a determination based on briefs and evidence that relied on the facts that have been 

superseded by fiindamental changes in the circumstances surrounding the leasehold in question. 

Moreover, it would violate FAA's well-established principle that it is concerned with an airport 

sponsor's current compliance in a Part 16 proceeding if the agency were to make a determination 

based on facts pleaded by a party that no longer has any interest in the airport, or on the claims of 

^ The fact that the City consented to the assignment of the lease from VJC to Tristate, based on the limited time 

available to perform due diligence by the City under the District Court's Order, does not mean that the City 

investigated, much less determined, whether Tristate met the minimum standards for building hangars on the site. 

For instance, Tristate's purchase price to acquire VJC was $300,000 cash and a promissory note for $250,000, with 

a possible credit of up to $50,000. Tristate Exhibit A (Receiver's Motion) at p. 11-12 of 22. Tristate has not 

provided the City with any evidence that it has the capacity to raise the $1.3 million estimated cost to build the 

hangars and still maintain a viable FBO. Especially in light of the checkered history of the VJC site, the City is 

entitled to make this investigation, pursuant to its minimum standards. See Flightline Aviation, Inc. v. City of 

Shreveport, 2008 WL 5955355 at *17 (FAA Docket No. 16-07-05, Mar. 7, 2008) (Dir. Det.) ("FAA has upheld an 

airport sponsor's 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.") (citations omitted). See also Santa 

Monica Airport Ass 'n v. City of Santa Monica, 2000 WL 1824463 at *21 (FAA Docket No. 16-99-21, Nov. 22, 

2000) (Dir. Det), afd, 2003, WL 1963858 (Feb. 4, 2003) (Fin. Dec. & Ord.). 
a party that has not even provided the airport sponsor with an opportunity to evaluate its proposal 

before jumping into a Part 16 proceeding against the sponsor. 

VJC/Receiver told the FAA in its pleadings that the entity with a legal interest in the case 

was, and would continue to be, VJC as a corporate entity, and that the Receiver would either 

maintain control of VJC or sell VJC. Instead, the Receiver sold the assets of VJC, leaving VJC 

with no legal interest in the outcome of the case.'* Moreover, the Receiver told the Court that it 

was going to "assign" the right to pursue this Part 16 case to Tristate. Instead, VJC has 

apparently attempted to remain in the case, despite having no legal interest in its former Airport 

assets or the purported right of the leaseholder to build hangars on the former VJC leasehold, 

which is the crux of the case. 

Tristate's xmauthorized attempt to conjure standing based on some combination of two 

entities that each fail to meet the standing requirements of Part 16 should be rejected by the 

FAA. For the reasons, set forth above, and, more fully, below, the complaint of VJC/Receiver 

should be dismissed, and the motion of Tristate to "intervene" and for "joinder as a cocomplainant" should be denied. 

UPDATED STATEMENT OF FACTS 

VJC/Receiver filed a Part 16 Complaint against the City of Venice (the "City") on or 

about July 2, 2009. Tristate Exhibit A, Receiver's Motion for Approval of the Sale of the Assets 

of the Venice Jet Center ("Receiver's Motion") at 6 of 12. FAA docketed this complaint on July 

10, 2009. In doing so, FAA necessarily relied on representations that VJC had attempted to 

informally resolve the issue with the City. (Complaint at 21-22; FAA Docketing Notice, Docket 

^ VJC's otily remaining fmancial interest that is tied to the case is its obligation to provide a credit of up to $50,000 

to Tristate for actual costs incurred by Tristate in seeking to resolve any differences with the City, including costs 

incurred in pursuing this Part 16 case. Tristate Exhibit A (Receiver's Motion) at p. 11 of 22 and (Promissory Note) 

at p. 2 of 10. VJC's obligation is not dependent on the outcome of the case, but rather, on the amount Tristate 

spends in resolving issues with the City. Thus, if anything, VJC has a financial interest in this case not proceeding. 
No. 16-09-05). In fact, the local airports district office had reviewed an informal complaint filed 

by VJC and, on May 18, 2009 stated in an email to the Receiver that "we were imsuccessfiil in 

assisting Venice Jet Center with an informal Part 13 resolution to their complaint...." VJC 

Complaint at Exhibit 21. 

Based on the facts and circumstances presented by the Complaint and the City's 

responsive pleadings, the case has been fiilly briefed and is awaiting a Director's Determination.^ 

However, there have been material changes in the circumstances surrounding this case brought 

about by actions of the Complainant. Specifically, (1) the Complainant entered into an Asset 

Purchase Agreement with Tristate (Tristate Motion at Tf 3; Tristate Exhibit A (Asset Purchase 

Agreement)); (2) the Complainant sought approval of the agreement by the federal district court 

overseeing the Receivership (Tristate Motion at ^ 5; Tristate Exhibit A (Receiver's Motion)); (3) 

the City approved the assignment of the VJC lease to Tristate (Tristate Exhibit B), but filed an 

objection to VJC's attempt to assign the right to pursue this Part 16 case to Tristate (Exhibit I 

(City Response to Receiver's Motion in District Court) at 13-20; and (4) the Court approved the 

Asset Purchase Agreement on January 10, 2010, but explicitly stated that it did not confer 

standing on Tristate to participate in the Part 16 proceeding (Tristate Motion at f8; Tristate 

Exhibit c m 1-3). 

The Court Order specifically stated that "as the Receiver has acknowledged in his 

Reply. .. the approval of this assignment of the VJC's interest in the Part 16 proceeding 

presently pending before the FAA does not divest the FAA of the independent right to determine 

' Inexplicably, the Receiver told the District Court that "[a]lthough the [Part 16] action is now fiilly briefed, the 

parties have the opportunity to engage in limited discovery and to then present their case in an evidentiary hearing 

before the FAA." Tristate Exhibit A (Receiver's Motion) at 6 of 22. There is no discovery or hearing at this stage 

of the proceeding, prior to the issuance of the Director's Determination. Compare 14 C.F.R. § 16.31 with 14 C.F.R. 

§ 16.109. 
the issue of standing in that proceeding nor is the Court's approval intended to confer standing 

on Tristate .. . in that proceeding." Tristate Exhibit C at ^ 3. 

ARGUMENT 

A. The Complaint Should Be Dismissed Because VJC Is No Longer a Tenant or User of 

the Airport and Its Claims Are Moot 

The original facts upon which FAA docketed the complaint by VJC/Receiver have been 

overtaken by events. VJC has sold all of its assets to Tristate (Tristate Exhibit A (Receiver's 

Motion) and Exhibit C (Court Order Approving Sale and Transfer to Tristate ("Court Order"))), 

and has assigned its leasehold interest at the Airport to Tristate. Id. According to the Receiver's 

Motion to the District Court, VJC "will have no assets and no continuing business other than the 

collection of the promissory note that is a part of this sale." Tristate Exhibit A (Receiver's 

Motion) at 10of22, n. 7. 

The requirement of Tristate to make pajonents to VJC is not contingent in any way upon 

Tristate being granted the right to construct hangars at the Airport. Based on the terms of the 

agreement filed with, and approved by, the Court, VJC will not receive any additional fiinds 

from Tristate if Tristate is allowed to build the hangars. Tristate Exhibit A (Asset Purchase 

Agreement). Nor will VJC receive any less funds from Tristate if Tristate is not permitted to 

build the hangars.^ In fact, pursuant to the Asset Purchase Agreement between the Receiver and 

Tristate: 

* Indeed, the only financial implications of this case for VJC are related to a credit of up to $50,000 that VJC is 

obligated to provide to Tristate as reimbursement for costs Tristate incurs in pursuing this case or other efiforts to 

resolve issues with the City. See note 3, above. Thus, if Tristate's motion, discussed in Section B, is granted, VJC 

may ultimately receive less funds from Tristate. VJC's obligation is not dependent on the substantive outcome of 

the case, but only to the amount of money Tristate spends in pursuing the case. 
The [VJC] Assets are sold [to Tristate] on an "AS IS" "WHERE IS" BASIS, 

WITH ALL FAULTS AND WITHOUT REPRESENTATIONS, EXPRESS OR 

IMPLIED, OF ANY TYPE, KIND, CHARACTER OR NATURE, INCLUDING 

BUT NOT LIMITED TO, SUITABILITY OF THE ASSETS FOR ANY USE, 

AND WFTHOUT WARRANTIES, EXPRESS OR IMPLIED, OF ANY TYPE, 

KIND, CHARACTER OR NATURE, INCLUDING BUT NOT LIMITED TO, 

SUITABILITY OF THE ASSETS FOR ANY USE, AND WITHOUT 

RECOURSE, EXPRESS OR IMPLIED, OF ANY TYPE, KIND, CHARACTER 

OR NATURE EXCEPT FOR THE EXPRESS REPRESENTATIONS AND 

WARRANTIES SET FORTH IN SECTION 10 HEREOF. 

Id. at §1 (Capitalization in original). See also id. at §10(b)(ii) (containing virtually the same 

language). Thus, the Receiver has made no representations to Tristate as to whether the parcel is 

suitable for the construction of the hangars at issue in this Part 16 proceeding. 

As pointed out in the City's previous pleadings, the Receiver, who confrolled VJC prior 

to the filing of the Complaint, and still controls what little remains of VJC, has a legal obligation 

to marshal as many assets as possible for the benefit of the defrauded investors in Nadel's 

schemes. See City's Memorandum of Points and Authorities in Support of Its Answer and 

Motion to Dismiss, Exh. 3 ("Receiver's Second Interim Report") at 4-5 of 41; Tristate Exhibit A 

(Receiver's Motion) at p. 3 of 22, citing Order Appointing Receiver at 1-2. The Receiver 

asserted to the Court that the sale of assets to Tristate fiilfilled this obligation with respect to 

VJC.'' /^. at 8-9 of 22. 

Perhaps because of this, the Receiver told the Court that he was seeking to assign VJC's 

interest to pursue this Part 16 case to Tristate. Id. at 7, 10-11, including n. 9, and 21 of 22.^ As a 

result, the court approved the assignment of VJC's interest in this case, subject to FAA's 

Thus, if the Receiver were to continue to pursue this Part 16 case, he would arguably violate his obligations to the 

Court and to the victims of the Nadel fraud, as he would be expending Receivership fiinds with no prospect of a 

benefit to the Receivership. 

* The Receiver asserted that "VJC will also assign its rights in the Part 16 proceeding that will be continued by 

Tristate," (Receiver's Motion at p. 11 of 22, n. 9), and fiirther stated that "die pursuit of that [Part 16] proceeding by 

the proposed purchaser alleviates the fiiture litigation expenses [of VJC/Receiver] and the risk of a negative outcome 

in the litigation." Id. at 7 of 22. 
independent determination that Tristate has standing to participate. Tristate Exhibit C at p. 3 of 

4, TI3 ("Said rights shall include the right of Tristate Aviation Group of Florida, LLC, to be 

substituted in the VJC's stead in the proceeding before the FAA") (emphasis added). However, 

the Receiver has not done what he told the Court he would do and what the Court ordered. Id. at 

Tff 2-3. Instead, Tristate has sought to add itself to the case while VJC/Receiver remains in the 

case. 

VJC/Receiver, the Complainant, is no longer "directly and substantially affected" by the 

City's refrisal to approve the construction of the hangars, because VJC, through the Receiver, has 

sold all of its airport assets to Tristate, is no longer a tenant or user of the Airport, and 

VJC/Receiver has no financial interest in the outcome of this case.^ Thus, any basis the FAA 

may have had for finding that VJC/Receiver met the standing requirements of Part 16 (§§ 

16.23(a) and (b)(4) (complainant must be directly and substantially affected by respondent's 

actions)) has been eliminated by the Complainant's own actions. 

Tristate's Motion to Intervene asserts that VJC's Complaint in this proceeding, as well as 

subsequent pleadings, "discussed the Receiver's intent to sell the assets of the VJC." Tristate 

Motion Tf2. This assertion is incorrect. In fact, the Complainant stated that that the Receiver is 

"interested in selling VJC" and "intends to sell the VJC to a willing and able purchaser." VJC 

Complaint ^ 58, 59. Selling VJC as a corporate entity is quite different from selling the assets 

of VJC, and the Complainant has previously placed a great deal of reliance on this distinction. 

The Complainant's pleadings asserted that VJC as an entity would remain the same regardless of 

whether the Receiver sold VJC or kept it in Receivership. When the City challenged the right of 

' As noted in footnotes 3 and 5, above, VJC's only financial interest in this case is not dependent on the outcome, 

but rather relates to a credit of up to $50,000 that VJC is obligated to apply to Tristate's fiiture payments to VJC 

based on amounts Tristate actually spends in trying to resolve issues with the City. 
VJC/Receiver to bring this case,'" the Complainant stated that the applicant for permission to 

build the hangars was the corporate entity, VJC: 

It is, therefore, irrelevant whether the party that currently confrols the VJC, the 

Receiver, sells the VJC for maximum profit or keeps the company in receivership 

and constructs the hangars. The Complainant is not the Receiver, but the VJC, an 

entity that is separate and apart from the Receiver (and that was separate and apart 

from Nadel). VJC Reply at 6." 

Of course, VJC is also an entity that is separate and apart from Tristate. Confrary to the 

Receiver's repeated claims in this proceeding that it intended to sell VJC as an entity, the sale to 

Tristate was only for the assets of VJC; not for the corporate entity itself See Exh. A to Tristate 

Motion (Asset Purchase Agreement) and (Receiver's Motion at 3, 10-11 of 22, including n. 7, 

and 21 of 22). Tristate has, therefore, acquired VJC's assets, including the leasehold with the 

City, but not VJC's corporate identity. 

Thus, while the Receiver had stated that the party in interest was and would remain VJC 

- even though the case was brought by the Receiver, and a new entity may purchase VJC - in 

fact, Tristate is a separate entity from VJC, and VJC no longer has an interest in the assets it 

conveyed to Tristate. VJC is not a tenant nor, apparently, even a user of the Airport. VJC has no 

legal rights relating to the leasehold, the leasehold site, or any alleged rights to make 

improvements thereon. Accordingly, the Part 16 Complainant, VJC/Receiver, lacks standing to 

continue to pursue the case. It has no more right to participate in this proceeding at this point 

'" The City's prior challenge of the Receiver's right to bring this case on behalf of VJC in the first place would 

remain if the FAA denied the City's current Motion to Dismiss based on new facts that have arisen since the briefing 

was completed in this case. 

" See also Complainant's Reply at 5, where VJC/Receiver insisted that "[t]he VJC is the True Party at Issue" and 

VJC Reply at 7: "[w]hether the Receiver sells the VJC to another party who will build the hangars or decides to keep 

the VJC in receivership for additional time and construct the hangars himself is completely irrelevant because the 

VJC's rights as a corporate entity are not affected; it has the right to construct hangars on its leasehold regardless of 

who controls it or who wants to buy it." (emphasis added). 
than does the previous leaseholder, Triple Diamond,'^ from whom VJC had purchased the FBO 

assets. Because the Complainant can no longer show that there is a dispute between the airport 

sponsor and Complainant regarding alleged grant assurance violations that directly and 

substantially affect the Complainant, the Complaint should be dismissed.'^ 

B. Tristate Should Not Be Permitted to Intervene or Join the Complaint Because Part 

16 Does Not Permit Intervention or Joinder and Because There Is No Actual 

Controversy Between Tristate and the City 

1. Part 16 Does Not Permit Intervention of a New Party Prior to Issuance of a 

Director's Determination or Joinder at Any Time 

Pursuant to Part 16, a complaint is the means for a particular individual or entity to assert 

a claim that it has been "directly and substantially affected by any alleged noncompliance" by an 

airport sponsor. 14 C.F.R. § 16.23(a). Under Part 16, FAA investigates the allegations in the 

complaint, and the response of the sponsor, before issuing its first, and non-final, decision in a 

Director's Determination. See id. at §§16.3 and 16.31. The Director may dismiss a complaint if 

the complainant lacks standing. Id. at § 16.25(c). 

Reflecting the nature of a Part 16 complaint and subsequent investigation, Part 16 makes 

no provision for intervention prior to the issuance of a Director's Determination. Part 16 is 

explicit that requests to intervene will be entertained only after issuance of the Director's 

Determination and after the airport sponsor has requested a hearing pursuant to Section 16.201. 

Id. at § 16.207. See also Boca Raton Jet Center, Inc. v. Boca Raton Airport Auth. 1999 WL 

732710 at *3, fii. 1 (FAA Docket No. 16-97-06 Aug. 20, 1999) (Final Director's Determination) 

'^ As noted in the City's previous pleadings, before selling its assets to VJC, Triple Diamond proposed to construct 

t-hangars on the site - a different hangar project than proposed by VJC. City's Memorandum in Support of Its 

Answer and Motion to Dismiss at 5. The new leaseholder of the site may similarly propose a different project than 

VJC did. 

'^ See, e.g.. Platinum Aviation and Platinum Jet Center BMI v. Bloomington-Normal Airport Authority, (FAA 

Docket No. 16-06-09, 2007 WL 4854321 at •5, June 4, 2007) (Dir. Det.) (noting that FAA does not address past 

compliance issues and dismissing claim in part because it had become moot). 
(denying motions to intervene by Boca Aviation in a Part 16 proceeding because intervention is 

not permitted prior to issuance of a Director's Determination and request for a hearing). 

Similarly, there is no provision for the joinder of separate claims into a single Part 16 proceeding 

at any time. Applying the same logic to joinder as the Director applied to intervention in Boca 

Raton, joinder of claims is also not permitted under Part 16. 

Allowing an exception to the rule in this case is inappropriate because any claim Tristate 

may have will depend on different facts than those asserted by VJC. If Tristate believes it has a 

claim against the City, despite having never requested City approval for any action or project 

other than consent to the lease assignment - which the City provided - it should file its own 

complaint, demonstrate that it has standing to do so, and set forth the means by which it 

attempted to resolve the underlying issue informally with the City. Because adding Tristate 

would require analysis of new facts and issues, adding Tristate's claims to VJC's case would 

short-circuit the carefiilly-crafted procedures of the Part 16 process, and prejudice the City's 

right to defend itself.'"* 

Here, Tristate seeks to intervene in a previously filed Part 16 complaint and join its 

claims with those of VJC, before a Director's Determination has been issued (and therefore 

before the airport sponsor has requested a hearing under Section 16.201). This is not, therefore, 

a simple substitution of parties, and indeed Tristate is carefiil not to phrase its motion as a 

substitution of complainants. Rather Tristate seeks to assert its own claim in addition to the 

claim of VJC. Because Part 16 does not permit intervention at this stage of the process or 

joinder at any time, the motion must be denied. 

'•* Of course, if FAA grants the City's concurrently-filed Motion to Dismiss, there would be no ongoing case in 

which Tristate could intervene or "join." In such event, FAA should dismiss Tristate's motion as moot. 

10 
2. Any Claim Tristate May Try to Assert Is Unripe as There Is No Actual 

Controversy Between Tristate and the City 

a. Tristate Has Not Sought City Approval of Any Hangar Project, and 

the City Has Not Prohibited Tristate from Any Aeronautical Activity 

Tristate has not presented the City with a plan for Tristate to build hangars on the 

leasehold nor requested that the City approve any such plan. As a result, the City has neither 

approved nor denied any Tristate hangar request. The City must be given an opportunity to 

evaluate and respond to any Tristate plan before Tristate can bring a Part 16 action against the 

City. Tristate's assertion that it "agrees and joins with VJC in the allegations and legal positions 

contained in the Part 16 Complaint and VJC's subsequent pleadings" (Tristate Motion ^ 10) does 

not eliminate the need for Tristate to allege a current violation of federal obligations that has a 

current adverse impact on itself Fvmdamental requirements for standing and ripeness cannot be 

satisfied merely by agreeing with an existing party's allegations and legal positions. Tristate 

must demonsfrate that it independently meets these requirements, and it has failed to do so. 

Moreover, the managing director of Tristate told the City, on the record, in a January 5, 

2010 meeting of the City Council, that Tristate has no current plans to build new hangars on the 

site.'' Indeed, Tristate refrained from making any concrete proposal regarding hangar 

construction. Thus, it is premature for the City to rule on any speculative assumption as to a 

hangar project that Tristate may or may not propose to the City. And it is certainly premature for 

the FAA to determine whether the City has complied with applicable grant assurances, because 

" Tristate's Managing Director, Marty Kretchman (Tristate Exhibit A, (Receiver's Motion) at p. 9 of 22) made it 

clear that Tristate had not even made a decision yet on whether or not it should build hangars on the leasehold, but 

wanted to keep its options open. "However, we want to leave open the possibility of building new hangars, if we 

find the demand is there. I understand the demand for t-hangars is down, but we haven't done any independent 

determination to find that so we want to leave that door open until we know it's time to close it. .. . just not limiting 

our potential return on our investment going forward." City Exhibit II; In light of this, it is not surprising that he 

indicated that Tristate did not have any immediate plans to build hangars. ".. . I don't have any intention to break 

ground tomorrow on those hangars. One step at a time. There's a very linear process here. The lease transfer is 

what we need to focus on ... " City Exhibit III. 

11 
the City has not made any decision; in fact, it has not even been asked to make any decision by 

Tristate. 

Because Tristate has not yet presented a proposal to the City, and it has stated to the City 

Council that it has no current intent to build hangars, there is no current compliance issue for 

FAA to adjudicate. The purpose of FAA's compliance program, including Part 16, is to ensure 

current airport sponsor compliance with its federal obligations. FAA Order 5190.6B at 2-1; 

Thermco Aviation, Inc. v. County of Los Angeles at 15, 25-26 (FAA Docket No. 16-06-07, Dec. 

17, 2007) (Final Agency Decision). In evaluating a Part 16 complaint, FAA is concerned only 

with a sponsor's current compliance with its federal obligations, not alleged past noncompliance. 

Platinum Aviation, FAA Docket No. 16-06-09, Director's Determination at 46, n. 255. Failure to 

demonstrate current noncompliance is grounds for dismissal of a Part 16 Complaint. Richard E. 

Steere v. County of San Diego, 2004 WL 3198209, at *16 (FAA Docket No. 16-99-15, Dec. 7, 

2004) (Final Dec. & Ord.); Wilson Air Center, LLC v. Memphis and Shelby County Airport 

Auth., 2001 WL 1085348, at *4, *15 (FAA Docket No. 16-99-10, Aug. 30, 2001) (Final Dec. & 

Ord.). 

Until Tristate demonsfrates that it has sought to build hangars and been prevented from 

doing so, any claim by Tristate relating to hangar construction is unripe. See Northwest Airlines, 

Inc. V. Indianapolis Airport Auth., 2008 WL 3976461, at 18 (FAA Docket No. 16-07-04, Aug. 

19, 2008; (Dir. Det.) affd. Final Agency Decision and Order, Oct. 27, 2009 ("The Director 

agrees with the Authority that Amendment No. 3 has yet to adversely affect the 

Complainants .. . [T]he issue is not yet ripe for review since the rent Credit has not been applied 

and the Complainants have not been harmed.") Similarly here, Tristate has not demonsfrated 

that it has been harmed at this point; it has not alleged, must less demonstrated, that it has any 

12 
current plans to develop hangars on the site, proposed such development to the City, and been 

prevented from implementing its plans. FAA should deny Tristate's motion on this basis. 

In Indianapolis, the FAA fiirther stated, "the Director will not speculate regarding the 

fiiture rate making methodology that the Complainants and the Authority may negotiate for the 

replacement of the Lease Agreement." Id. Similarly, the FAA should not speculate here as to 

whether the City and Tristate could work out a mutually agreeable solution if Tristate were to 

make an actual proposal to the City. This is a primary reason that FAA requires complainants to 

attempt informal resolution before they may file a complaint, and Tristate's failure to do so not 

only fails to satisfy § 16.21, but it also demonsfrates that any claim Tristate asserts at this point is 

unripe. In Indianapolis, the Director found that, as the costs for the disputed rental credit "will 

not be imposed, if at all, until at least the expiration of the Lease Agreement in December 

2010 .. . there is no controversy ripe for review for FAA." Id. at 29. Accordingly, the 

complaint was dismissed. For the same reasons, FAA should reject Tristate's motion. 

Tristate attempts to solve its inherent lack of standing by alleging that it has been 

"directly and substantially affected by the City's non-compliance because it purchased the VJC's 

assets and interest, including the right to develop the property and the City's efforts to restrict 

development on the leasehold are in violation of these rights." Tristate Motion 1[ 10. However, 

Tristate has not pleaded, much less demonsfrated, that it has attempted to build the hangars or 

has any plans to do so in the near future. Merely saying it has been harmed is not sufficient to 

demonsfrate that a proposed complainant has, in fact, been harmed. See 14 C.F.R. §§ 

16.23(b)(3), 16.29(b)(1) (complainants must "[p]rovide a concise but complete statement of the 

facts relied upon to substantiate each allegation" and must also "file documents .. . sufficient to 

13 
present all relevant facts and argument necessary for the FAA to determine whether the sponsor 

is in compliance.") 

Indeed, the terms of the Asset Purchase Agreement undercut Tristate's claim. Tristate 

purchased VJC's assets and interests "'AS IS' 'WHERE IS'" with no representations as to the 

suitability of the leasehold for any particular use. Tristate Exhibit A (Asset Purchase 

Agreement) at §§1, 10. Tristate's assertion that it has been harmed by a restriction on its use 

simply as a result of having purchased VJC's assets, is, thus, implausible on its face. 

Moreover, the City's reasons for turning down VJC's request to build the hangars were 

related to the specific circumstances relating to VJC, as set forth in the City's pleadings in this 

proceeding, along with the City's plans for development of the airport pursuant to the ALP 

agreed upon by the FAA and the City. Neither Tristate nor the FAA are entitled to assume that 

the City would make the same decision were Tristate to submit a proposal to build hangars 

consistent with the ALP, if Tristate were to meet the Airport's Minimum Standards for the 

project. See Indianapolis at 18. 

b. Tristate Has Not Satisfied the Requirements of Part 16 to Attempt 

Informal Resolution with the City 

While VJC engaged in informal attempts to resolve its dispute with the City, thus 

meeting the requirement of 14 C.F.R. §16.21, Tristate cannot piggyback on VJC's actions. In 

light of the circumstances relating to Tristate, which are different from the circumstances 

surrounding the VJC/Receiver Complaint filed with the FAA, Tristate has obviously not 

attempted informal resolution of a dispute that has not yet arisen. As such, it fails to meet a 

fundamental requirement for initiating a Part 16 complaint. See §16.21. See also Boca Airport, 

Inc. V. Boca Raton Airport Authority, FAA Docket No. 16-04-02, Order of Dismissal (March 21, 

2004). 

14 
In a case where the Director found that complainants had not engaged in attempts at 

informal resolution before filing a complaint, but the Director nonetheless made a determination 

to dismiss the Complaint on the merits, the Final Agency Decision criticized the Director for not 

dismissing the case for failure to engage in informal resolution. In the decision, FAA explained 

the reasons for § 16.21 and why complaints should be dismissed if informal resolution has not 

been attempted by the complainant: 

If the Director believed that the Complainant's [sic] had not engaged in good faith 

efforts to informally resolve this Complaint, a more appropriate action would 

have been to dismiss the Complaint, without prejudice, to allow the opportunity 

for the Complainants' [sic] to correct this procedural deficiency. 

Nothing in 14 CFR § 16 prevents the Director's [sic] from making a finding 

regarding the procedural requirements of the rule in his Director's 

Determinations. Rather, it is my opinion that the Director's decision to address 

the merits of this case after affirming a basis for a procedural dismissal 

undermines the express intent of the Part 16 rule as an expedited procedure. 

The intent of Part 16 is to expedite substantially the handling and disposition of 

airport-related complaints. 14 CFR § 16.21(a) is designed to ensure that the FAA 

does not expend its limited resources considering complaints that are later 

withdrawn because the parties resolve the issues on their own. Fully considering 

the merits of the allegations without ensuring that the requirements of 14 CFR § 

16.21(a) have been met could result in the inefficient use of limited FAA 

resources.... 

Santa Monica Airport Ass 'n v. City of Santa Monica, 2003 WL 1963858, at *14 (FAA Docket 

No. 16-99-21, February 4, 2003) (Final Dec. & Ord.) (footnote omitted). 

For the reasons expressed in Santa Monica, the FAA should reject Tristate's motion to be added 

as a Co-Complainant, because it has failed to engage in attempts to resolve informally its 

purported dispute with the City. 

In another case, FAA found that a complainant's efforts to engage in good faith precomplaint resolution may have been inadequate because the complainant gave the airport 

sponsor inadequate time to respond to its proposal. Jetaway Aviation, LLC v. Bd. of County 

Comm 'rs, 2006 WL 4393155, at *12 (FAA Docket No. 16-06-01, Nov. 6, 2006) (Dir. Det.). 

15 
However, FAA proceeded to decide the case on the merits because the respondent sought a 

decision on the merits, and thus, chose not to file a motion to dismiss based on complainant's 

failure to attempt informal resolution.'^ 

In this case, Tristate has made no attempt at informal resolution prior to seeking to join in 

the case as a "co-complainant." Unlike the complainant in Jetaway, Tristate has not demanded a 

City response to its proposal within an unreasonable timeframe {id at *12); rather, Tristate has 

not even made a specific proposal to the City to build hangars, including such fiandamental 

information as scope, timing, and fiinding of the project. Thus, Tristate's pre-complaint action 

(or inaction) is even more unreasonable than the pre-complaint actions of Jetaway, and the FAA 

should deny Tristate's motion on this basis. 

By objecting to Tristate's motion for joinder as a co-complainant, the City, unlike the 

airport sponsor in Jetaway, has made it clear that the City believes that Tristate's motion should 

be denied and Tristate should not be allowed to participate in the instant case. Again, unlike the 

airport sponsor in Jetaway, the City does not believe it is best to address the issues in this case 

now, on the merits. Among the reasons are that VJC has no current interest in the leasehold, 

Tristate has not made a proposal to the City, thus giving the City no opportunity to review and 

respond to any such proposal, and the circumstances upon which the parties based their 

pleadings in this case have materially changed. 

'* "While the County contends that the Part 16 filing was premature, it elected not to file a Motion to Dismiss, and 

believes that it is best to address the matters now and on the merits. Therefore, although Complainant may have 

failed to conduct adequate pre-complaint resolution for meeting the requirements of 14 C.F.R. § 16.21, the Director 

will proceed with deciding the matter now on the merits as submitted by the parties in this proceeding." Id. 

16 
3. Tristate Cannot Rely on Common Law Rules Regarding Assignment of 

Contract Claims or Choses in Action to Establish Standing to Assert the 

Moot Claims of VJC or Its Own Premature Claims 

Tristate attempts to gloss over the unique factual and legal bases that distinguish its 

potential fiiture claims from VJC's past claims, as detailed above, as well as Part 16's 

proscription against intervention at this stage of the proceeding and the unavailability of joinder, 

by invoking the common law confractual doctrine of assignment of a chose in action. See 

Tristate Motion fTf 4 & 9. Tristate argues that because VJC assigned its lease with the City to 

Tristate, "Tristate is entitled to all rights and interests arising from [that Lease], including its 

right to maintain this action." Id. \ 9. This argument is unavailing, however, even under the 

authority cited by Tristate. 

First, the Lease itself is silent regarding this, or any. Part 16 proceeding, so the mere 

assignment of the Lease does not automatically confer any "rights" on Tristate with regard to 

this, or any. Part 16 proceeding. In approving the Asset Purchase Agreement, the District Court 

was carefiil not to intrude on FAA's prerogative as the agency adjudicating the Part 16 case. 

Thus, it is clear that neither the VJC lease assigned from the Receiver to Tristate nor the Court's 

approval of the Asset Purchase Agreement confers an automatic right to fransfer or assign the 

pursuit of the Part 16 complaint to which the FAA must defer. Accordingly, there is no 

contractual basis for any claimed assignment. As noted above, although Tristate chose not to 

mention it, the District Court, in approving the sale of VJC's assets to Tristate, specifically held 

that its approval did not confer standing on Tristate to pursue this Part 16 action, because 

Tristate's standing was a question reserved to the FAA. Tristate Exhibit C (Court Order) ^ 3. 

Second, and more fiindamentally, the concept of an assignment does not apply to a 

request for adminisfrative investigation and enforcement action; the principle is generally limited 

to claims relating to injuries to property, including contract and tort claims. 6A C.J.S. 

17 
Assignments § 43 (2009). The cases cited by Tristate all involved assignments of confractual or 

tort rights to recover money or property. Esposito v. CPMIns. Serv., Inc., 922 A.2d 343 (Conn. 

Super. Ct. 2006) (assignees of accident victims sought tort damages in connection with car 

accident); Am. Med. Ass 'n v. United Healthcare Corp., 2007 WL 1771498 (S.D.N.Y. June 18, 

2007) (assignment of claims to recover medical benefits under insurance or benefit plans); Data 

Consultants, Inc. v. Traywick, 593 F.Supp. 447 (D. Md. 1983) (assignment of stock purchase 

agreement). In each of those cases, the assignees sought to enforce the confractual or tort rights 

that were assigned to them; none involved an attempt to invoke the powers of a regulatory 

agency to take enforcement action. 

Here, in contrast, Tristate does not seek to enforce the Lease, which was the only confract 

assigned to it, but rather, seeks FAA enforcement of certain federal obligations that only the 

FAA can enforce. Because there is no private right of action to enforce federal airport grant 

obligations,'^ there is no private claim, or chose in action, that could have been assigned to 

Tristate. 

The inapplicability of common law assignment cases is seen fiirther in the fimdamental 

difference between a Part 16 claim and an assignable chose in action or right to enforce a 

contract or tort claim. The purpose of FAA's compliance program, including Part 16, is to 

ensure airport sponsor compliance with its federal obligations, not to provide relief to the 

complainant. Thermco Aviation, Inc. v. County of Los Angeles, FAA Docket No. 16-06-07, 

(Dec. 17, 2007) (Final Agency Decision), pps. 15, 25-26. A Part 16 claim is, in essence, a 

'^ Arrow Airways, Inc. v. Dade County, 749 F.2d 1489,1491 (11th Cir. 1985); Northwest Airlines, Inc. v. County of 

Kent, 955 F.2d 1054, 1058-59 (6th Cir. 1992), affdon other grounds, 510 U.S. 355, (1994); New England Legal 

Found V. Mass. Port Auth., 883 F.2d 157, 168-69 (1st Cir. 1989). 

18 
request that the FAA exercise its enforcement powers, not a petition to confer specific property 

rights on the complainant: 

The FAA Compliance program is designed to achieve voluntary compliance with 

federal obligations accepted by owners and/or operators of public-use airports 

developed with FAA-administered assistance. Therefore, in addressing 

allegations of noncompliance, the FAA will make a determination as to whether 

an airport sponsor is currently in compliance with the applicable federal 

obligations. Consequently, the FAA will consider the successful action by the 

airport to cure any alleged or potential past violation of applicable federal 

obligation to be grounds for dismissal of such allegations. . . . 

As it is, Thermco would not be due any preferential treatment over any other 

aeronautical user for the lease of Airport property. Id. at 25-26 (emphasis in 

original.) See also id. at 15. 

Nor is a Part 16 complaint a petition to confer damages on the complainant. FAA has no 

authority to award money damages in a Part 16 case. J& B Enters., Inc. v. Metro. Nashville 

Airport Auth., 2009 WL 1800821, at *16 (FAA Docket No. 16-08-07, May 5, 2009) (Dir. Det.). 

As such, "prosecution" of a Part 16 case, unlike a case for money damages or choses in 

action, is not a property right that is transferrable as an "asset." Although Tristate and 

VJC/Receiver have, at various times, referred to VJC having property rights to build hangars on 

the site (e.g., Tristate Motion at 3), in fact, VJC/Receiver did not file an action to enforce its 

supposed rights under the Lease. Indeed, Part 16 is not the appropriate forum for adjudicating 

lease or contract rights. See Northwest Airlines v. Indianapolis Airport Authority, Director's 

Determination at p. 29 ("[T]he Director concludes that the claim regarding adverse 

impact involves a confract dispute between the Authority and the Complainants and that Part 

16 is not the proper venue to adjudicate contract disputes when no action has yet to be taken to 

implement the confract terms that are in a maimer confrary to the grant assurances.") See also id. 

at 44 ("If the parties have a dispute regarding their signatory Lease Agreement, Part 16 is not the 

proper venue for resolving these types of confract disputes....") Platinum Aviation, 2007 WL 

19 
4854321, at *18 (Final Dec. 8c Ord.) (citing Je? / Center, Inc. v. Naples Airport Auth., FAA 

Docket No. 16-04-03 (Director's Determination, Jan. 4, 2005)). 

The only agreements enforced in a Part 16 proceeding are agreements between the 

federal government and the airport sponsor, such as AIP grant agreements and Surplus Property 

Act instruments of fransfer, not agreements between airports and their tenants. Thus, Tristate's 

argument that it has a legal right to enforce an agreement to which VJC (and now Tristate) is a 

party, in this Part 16 proceeding, is misplaced, because Part 16 proceedings are not the proper 

forum for enforcing such agreements in any event, regardless of whether or not there is a 

limitation of assignability in the agreement: 

The FAA neither approves nor monitors terms of agreements between airport 

sponsors and airport tenants. The FAA does not arbitrate disputes through the Part 

16 complaint process. Nor does the FAA enforce confract terms between parties 

to an agreement when the FAA is not a party to that agreement. Rather, the FAA 

enforces the grant agreements it enters into with airport sponsors. 

Platinum Aviation, 2007 WL 4854321, at *18 (Final Dec. & Ord). 

Had the Receiver filed an action to assert VJC's supposed leasehold rights, i.e., an action 

to enforce the Lease, Tristate's argument and the cases it cites might be relevant. However, such 

a case would have to be filed in state court, not before the FAA. See, e.g.. Northwest Airlines, 

FAA Docket No. 16-07-04, Director's Determination at 29 (contract disputes between airport 

sponsor and tenant are matters "to be resolved in state court" (citing Rick Aviation Inc. v. 

Peninsula Airport Cmm 'n, FAA Docket No. 16-05-18 (Final Decision and Order, Nov. 6, 

2007))). The Receiver did not file a state court action to enforce VJC's lease. Instead, he filed a 

much different type of action'^ - seeking an FAA determination of a violation by the City of its 

" In seeking to initiate the Part 16 action, the Receiver acknowledged that it was different fi-om the type of action 

typically undertaken, or authorized, by a receiver pursuant to the Court's order on extending the receivership: 

20 
federal grant assurance commitments.'^ Tristate's arguments and cited cases are completely off 

the mark in this Part 16 proceeding. 

Tristate cites no authority to support the proposition it is really seeking to advance, that 

one can assign the right to pursue an adminisfrative proceeding that seeks agency enforcement 

action against a third party in the same manner that one can assign a contractual or tort property 

right. Indeed, to allow such an assignment would be confrary to public policy in this case 

because it would essentially allow Tristate to pursue VJC's moot claim without having to present 

facts of its own that demonstrate a current violation of the City's federal obligations. Tristate's 

attempt to adjudicate what is at best (assuming that VJC's allegations showed a violation, which 

they did not) a past but now moot violation, is contrary to purpose of Part 16, which focuses on 

current violations. Accordingly, the doctrine of assignment does not apply, by its own terms, to 

Tristate's attempt to adopt VJC's allegations that the City violated its federal obligations. 

Pursuant to the Order Appointing Receiver (Dkt. 8), the Receiver has the duty and authority to: 

"[i]nstitute such actions and legal proceedings, for the benefit and on behalf of the Defendants and 

Relief Defendants and their investors and other creditors as the Receiver deems necessary. .. ." 

Dkt. 8 at Tl 2. The discretion provided to the Receiver to initiate actions pursuant to the Order 

Appointing Receiver does not clearly encompass the institution of a Part 16 Complaint. Therefore, 

the Receiver brings this matter to the Court's attention for approval prior to proceeding. 

City Exhibit IV (Receiver's Unopposed Request for Leave to File Complaint Pursuant to Title 14 C.F.R. 

Part 16), at pps 2-3, n. 2. 

While it was reasonable for the Receiver to seek leave of the Court prior to filing the Part 16 complaint, once the 

action was filed, procedural determinations relating to that action are within the jurisdiction of the FAA, not the 

Court. The District Court tacitly acknowledged this by specifically providing that its order approving the sale of 

VJC's assets did not divest the FAA of the independent right to determine the issue of standing nor was it intended 

to confer standing on Tristate in this Part 16 proceeding. Tristate Exhibit C ^ 3. 

" As fiirther evidence of the fact that a Part 16 proceeding is concerned with determining compliance with an 

airport sponsor's federal obligations, rather than the provision of relief to any individual complainant, if the initial 

decision in the Part 16 process, the Director's Determination, is adverse to the respondent, and the respondent 

exercises its right to a hearing, the party asserting a grant assurance violation by the respondent at the hearing stage 

of the proceeding would not be the complainant, but rather the FAA, and an FAA attorney would serve as the 

"prosecutor" for the agency. 14 C.F.R. 16.203(b). 

21 
Moreover, if, as Tristate seems to argue in Paragraph 9, Tristate rests its claim of 

assignment on the Lease, its argument fails for the additional reason that the Lease requires City 

approval of any assignment, and the City specifically withheld its consent to any purported 

assignment of the Part 16 complaint. Exh. I (City's Response to the Receiver's Motion to Sell 

VJC Assets) at 13-20. Accordingly, Tristate is barred by the terms of the Lease upon which it 

purports to rely from claiming an assignment of the Part 16 complaint under the Lease. 

As the cases cited by Tristate make clear, an assignment involves one party transferring 

its right to recover on a specified contract or tort claim to another party. Tristate Motion ^ 2. 

That is not what Tristate seeks here, as evidenced by the fact that VJC intends to remain in this 

case as a party and Tristate seeks to intervene and join with VJC. Indeed, Tristate has styled its 

motion as one to intervene and join, rather than substitute or assume. Thus, Tristate is not 

attempting to enforce VJC's claim as an assignee, and the assignment cases Tristate cites are 

simply inapposite. 

Tristate attempts to explain away this problem by claiming that, because the validity of 

the assignment of the Part 16 complaint is in dispute, it is appropriate to have both VJC and 

Tristate as complainants. Id. ^ 9, citing Data Consultants, 593 F.Supp. at 458. As explained 

above, however, a Part 16 complaint cannot be assigned because each complainant must 

establish its own standing to pursue a claim. Moreover, in Data Consultants, there was no 

dispute that there was a valid stock purchase agreement; rather, the dispute was which of the two 

'"' Tristate recognizes this fact in footnote one of its motion, and makes the alternative argument that the Lease's 

anti-assignment clause does not bar VJC's assignment of "VJC's right to assign its interest and claim in this 

proceeding to a third-party." Tristate Motion at 2, Fn. 1. As detailed above, however, there is no "right" to assign a 

Part 16 complaint because is not a private property right and there is no personal remedy; it is request for 

enforcement action by a regulatory agency. In any event, Tristate cannot have it both ways. Either (1) Tristate's 

assignment claim based on the Lease fails because the Lease does not make such an assignment or the City withheld 

its consent, or (2) its non-contractual assignment claim fails because requests for regulatory enforcement action are 

not assignable. 

22 
plaintiffs could enforce it. Other than the question of who would enforce the agreement, 

however, the facts and legal bases for enforcing the agreement were identical. 

Here, however, there are two separate sets of factual and legal assertions: (1) the now 

moot assertions relating to the City's past actions with respect to VJC and (2) the prospective and 

speculative assertions relating to the City's potential fiiture actions with respect to a possible 

proposal by Tristate. Even if it were relevant for Tristate to rely in part on the City's past actions 

regarding VJC, the FAA's final decision would necessarily turn on the additional (prospective 

and speculative) circumstances regarding a fiiture Tristate proposal. As discussed above, 

because approval of any development on the Airport under the Minimum Standards and 

applicable City procedures depends on the specifics of both the proposed project and the entity 

proposing the project, the City must consider any proposal for hangars or other facilities Tristate 

may make based on the particulars of that proposal and Tristate's capabilities and qualifications. 

Those facts would form the basis of any complaint by Tristate that FAA could entertain, if, in 

fact, the City turned down a proposal by Tristate and Tristate attempted to resolve the issue 

informally. Absent such circumstances, it is premature for FAA to entertain a complaint by 

Tristate. 

23 
CONCLUSION 

For the reasons set forth above and in the City's concurrently filed Motion to Dismiss and 

Opposition to Tristate's Motion, the FAA should dismiss the Complaint filed by VJC/Receiver 

and deny Tristate's motion. 

th Respectfiilly submitted this 18 day of February, 2010 

Robert C. Anderson, Esq. 

City Attorney 

Hall & Anderson, P.A. 

1314 East Venice Avenue, Suite E 

Venice, Florida 34285 

randerson(a),hall-anderson.com 

Telephone: (941) 480-0999 

Facsimile: (941)480-1446 

Thomas R. Devine 

W. Eric Pilsk 

Kaplan Kirsch & Rockwell LLP 

1001 Connecticut Avenue, NW, Suite 800 

Washington, DC 20036 

epilsk(a),kaplankirsch. com 

tdevine(2).kaplankirskch. com 

Telephone: (202) 955-5600 X568 

Facsimile: (202)955-5616 

Arthur P. Berg, Esq. 

Kaplan Kirsch & Rockwell LLP 

445 Park Ave., 9th Floor 

New York, New York 10022 

aber g(g),kaplankirsch. com 

Telephone: (212) 836-4048 

Facsimile: (646)514-5440 

24 
CERTIFICATE OF SERVICE 

I hereby certify that I have served the foregoing RESPONDENT CITY OF VENICE'S 

MEMORANDUM OF POINTS AND AUTHORITIES IN SUPORT OF ITS MOTION TO 

DISMISS AND OPPOSITION TO TRISTATE AVIATION GROUP OF FLORIDA LLC'S 

MOTION TO INTERVENE AND FOR JOINDER AS CO-COMPLAINANT on the following 

party at the following address by overnight delivery on February 18, 2010: 

Office of the Chief Counsel 

Attii: 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 by overnight delivery 

I also hereby certify that I have served the foregoing RESPONDENT CITY OF VENICE'S 

MEMORANDUM OF POINTS AND AUTHORITIES IN SUPORT OF ITS MOTION TO 

DISMISS AND OPPOSITION TO TRISTATE AVIATION GROUP OF FLORIDA LLC'S 

MOTION TO INTERVENE AND FOR JOINDER AS CO-COMPLAINANT on the following 

persons at the following addresses by overnight delivery and elecfronic mail on February 18, 

2010: 

Gianluca Morello, Esq. 

Dominique Pearlman, Esq. 

WIAND GUERRA KING P.L. 

3000 Bayport Drive, Suite 600 

Tampa, FL 33607 

Fax No. (813)347-5199 

1 copy 

Richard L. Richards, Esq. 

RICHARDS & ASSOCIATES 

232 Andalusia Avenue, Suite 202 

Coral Gables, FL 33134 

Fax No. (305) 448-2229 

1 copy 

25 
I also hereby certify that I have served the foregoing RESPONDENT CITY OF VENICE'S 

MEMORANDUM OF POINTS AND AUTHORITIES IN SUPORT OF ITS MOTION TO 

DISMISS AND OPPOSITION TO TRISTATE AVIATION GROUP OF FLORIDA LLC'S 

MOTION TO INTERVENE AND FOR JOINDER AS CO-COMPLAINANT on the following 

persons via elecfronic mail at the following addresses on February 18, 2010: 

Jonathan Cross 

Manager 

Airports Law Branch, AGC-610 

Office of the Chief Counsel 

Federal Aviation Adminisfration 

800 Independence Avenue, S.W. 

RM900E 

Washington, DC 20591 

Fax No. (202) 267-5769 

jonathan.cross@faa.gov 

ICopy 

Raymond Veatch 

Senior Attorney 

Airports Law Branch, AGC-610 

Office of the Chief Counsel 

Federal Aviation Administration 

800 Independence Avenue, S.W. 

RM 900E 

Washington, DC 20591 

Fax No. (202) 267-5769 

raymond.veatch@faa.gov 

ICopy 

>th Dated this 18"* day of February, 2010: 

26 
Exhibit I 
C00038-1359S1 

UNITED STATES DISTRICT COURT 

MIDDLE DISTRICT OF FLORIDA 

TAMPA DIVISION 

SECURITIES AND EXCHANGE 

COMMISSION, 

Plaintiff, 

ARTHUR NADEL, 

SCOOP CAPITAL, LLC, 

SCOOP MANAGEMENT, INC., 

Defendants. 

SCOOP REAL ESTATE, L.P., 

VALHALLA INVESTMENT PARTNERS, L.P., 

VALHALLA MANAGEMENT, INC., 

VICTORY FUND, LTD., 

VIKING IRA FUND, LLC, 

VIKING FUND, LLC, and 

VIKING MANAGEMENT, LLC 

Relief Defendants. 

Case No.: 8:09-cv-0087-T-26TBM 

/ 

THE CITY OF VENICE'S RESPONSE TO RECEIVER'S MOTION FOR APPROVAL 

OF SALE OF THE ASSETS OF THE VENICE JET CENTER 

AND AGREEMENT WITH NORTHERN TRUST. N.A. (Doc No. 254) 

THE CITY OF VENICE ("City"), pursuant to this Court's order entered on December 

22, 2009 (Doc. No. 274), files this response to the Receiver's Motion for Approval of Sale of 

The Assets of the Venice Jet Center and Agreement with Northern Trust, N.A. (Doc. No. 254) 

(the "Sale Motion") and states as follows: 

I. BACKGROUND 

1. Pursuant to a lease agreement dated May 23, 2006 ("Lease"), the City leased 

certain real property at the Venice Municipal Airport ("Airport") to Venice Jet Center, LLC 

("VJC"). Pursuant to the Lease, VJC assumed possession of real property formerly leased to 

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Triple Diamond, a separate fixed-based operator ("FBO") at the Airport. During its tenancy. 

Triple Diamond intended to build so-called "t-hangars" on the site. 

2. According to the Receiver, VJC, through Mr. Nadel, established VJC for the 

purpose of owning the Triple Diamond assets, entered into an agreement to purchase Triple 

Diamond, and then consummated a deal in May, 2006 to buy those assets using funds derived 

from his fraudulent endeavors. Two years later, VJC sought to build "box hangars" on the site. 

3. The Venice City Council, in evaluating the VJC hangar proposals, faced highly 

unusual circumstances that changed significantly over time, raising fundamental questions about 

the City's rights and responsibilities regarding the proposed development. 

4. When Mr. Nadel indicated that VJC mtended to build box hangars, which are 

different from t-hangars, on the site, the City Manager explicitly informed VJC in June 2008, 

that the proposed hangar project would require approval by the Mayor and City Council and 

directed VJC to submit a "concept plan" to City staff with sufficient technical detail to allow 

City staff to determine if there were any "fatal technical flaws" with the plan prior to City 

Council consideration. 

5. Between June 2008 and August 2008, in a series of letters from VJC and its 

attorneys, the VJC hangar request evolved from one, to two, then four hangars. Through the 

requirement that VJC submit a conceptual plan for the entire parcel, the City's Fire Marshal was 

able to study the plan and determine that the VJC's plan ultimately to build five hangars was not 

viable on that site. Therefore, VJC proposed to build four hangars rather than five. On August 

18,2008, VJC sent a letter to the City indicating that the proposal was for 4 hangars. 

6. The City scheduled an informational presentation by VJC on its hangar proposal 

for the August 26,2008 meeting of the City Council. While VJC's attorneys argued that the City 

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should approve the VJC hangar proposal at that time, the City did not do so, as it had scheduled 

the presentation as an infomiation item only, not an action item. 

7. Rather than pursuing an action item for the next City Council meeting, VJC 

submitted an informal complaint to the Federal Aviation Adminisfration's (FAA's) local 

Airports Disfrict Office (ADO) on September 2, 2008. On September 3, the ADO advised the 

City that VJC had filed the informal complaint. The City filed a response on September 15, 

2008. 

8. In November, 2008, VJC submitted proposed plans to construct hangars to the 

City's Building and Engineering Departments. 

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

determined that informal resolution was not possible, and advised VJC that it was free to file a 

formal Part 16 complaint, if it chose. In the meantime, the City obtained a legal memorandum 

from Kaplan Kfrsch & Rockwell LLP, concerning its obligations under the federal Airport 

Improvement Program ("AIP") grant assurances with respect to the hangar proposal, based on 

certain assumed facts. The factual premise upon which the memorandum was based later proved 

to be incorrect in several material aspects. 

10. In January, 2009 the fimdamental nature of the project, and indeed of VJC itself, 

changed dramatically when Mr. Nadel was arrested and indicted on several charges. Many of 

Mr. Nadel's assets, including VJC, were seized by the Receiver. 

11. The appointment of the Receiver for VJC 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 

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relating to VJC as the unusual events surrounding its ownership unfolded. The Council also 

sought additional information and guidance in dealing with the situation. 

12. In January, 2009, the City Council reviewed and discussed the hangar project and 

specifically sought additional input from the ADO concerning Venice Jet Center's request to 

construct additional hangar space on its leasehold and the potential consframts of the Airport 

Layout Plan. The City Attorney asked the ADO on February 4, 2009, specifically whether 

construction of the hangars would violate grant 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 along v^dth other Assurances. 

13. Over the course of the next several months, the City Council dealt with various 

aspects of the VJC situation including the City Attorney's February 4, 2009 letter to the FAA, 

negotiating with the Receiver, seeking to determine whether the City is a creditor of VJC, how to 

preserve the rights of the City, contacting the FAA regarding other designated hangar locations, 

whether the City has the right to deny the VJC request for more hangars, new circumstances 

because of the receivership, additional hangars triggering new lease negotiations, potential 

relocation of the VJC, funding to move existing facilities, development of an emergency plan if 

VJC ceased operation, working with the VJC receiver, the City possibly operating the VJC, 

issues regarding aviation fuel sales, airport leases and vertical improvement and addressing 

adherence to the ALP. 

14. At its March 10, 2009 meeting, the City Council discussed concerns that the 

hangars were proposed for a location identified for other purposes, seeking confirmation that 

VJC had financial resources to build the hangars, and whether VJC had a valid Lease with the 

City, The Receiver also spoke before the Coimcil and questioned whether a financial viability 

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

investor funds to construct hangars, and pointed out that financing may be forthcoming from a 

potential new user. A motion to ^prove the VJC proposed hangars was defeated, 

15, The Coimcil then discussed the validity of the existing VJC Lease, if the Lease 

allowed hangar construction, 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 Attorney to seek an opinion from local outside counsel expert in commercial 

leases on whether the VJC Lease is valid and entitled VJC to construct hangars. At this meeting, 

the City Council voted not to approve the VJC request to build 4 box hangars on its lease site. 

16, At subsequent meetings, the Council discussed potentially funding the purchase 

of VJC, and receiving a VJC marketing packet from the Receiver; issues relating to a possible 

appraisal of the leasehold; obtaining the outside local counsel 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; the results of outside 

local counsel's opinion; Section 45 of the VJC Lease concerning demolition and construction of 

improvements; additional facts that had been discovered subsequent to the ADO's letter; 

requirements for submitting specifications prior to hangar construction; submittal of concept 

plans; the need for demonsfrating financial viability; potentially approving hangars subject to 

subsequent verification of financial viability; good faith obligations; claims that the City was 

intentionally lowering the value of the VJC; whether a need for additional hangars was 

demonsfrated; hangar utilization issues; the Lease not being clear in defining obligations of 

parties; and the Receiver having not responded to the City's request for financial data. 

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17, The Council also discussed Part 16 and Part 13 procedures before the FAA; 

informal communications with a VJC official 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; dealing with the actual purchaser versus 

conditional approval for proposed construction to enhance property value; Mr, Wiand's lack of 

communication with the City; and FAA dfrectives regarding hangar approval. 

18, At the June 9, 2009 City Council meeting, a motion to rescind the Coimcil action 

of March 10, 2009 denying hangar construction failed. City Council then dfrected the City 

Manager and the City Attorney to engage in good faith negotiations with the Receiver in an 

attempt to resolve conflicts and reach a mutually beneficial outcome. City officials met with the 

Receiver on June 19,2009 to discuss potential amicable resolution of the dispute, 

19, The Council subsequently discussed the meeting between the Receiver and the 

City Manager and City Attorney, with a report by the City Manager that Mr. Wiand may 

possibly show interest in settlement terms that include: 1) the city approving construction of the 

four hangars and related construction as submitted on the site plan; 2) the VJC demonsfrating 

financial capability prior to the issuing of building permits; 3) consideration of a specific land 

swap proposal to construct hangars on the opposite side of the taxiway; and 4) consideration of 

giving the City the right of first refiisal regarding sale of the VJC. The City Manager stated that 

the Receiver advised that he was going to file a Part 16 admmisfrative complaint before the FAA 

(the "Part 16 Action) and would litigate for damages due to hangar construction not being 

approved. The City Manager requested specific direction from the City Council regarding the 

proposed settlement terms. 

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20. The City had further discussions relating to the Receiver's statement that he has 

no intention of actually building hangars; financial documentation not being provided by the 

Receiver; problems with the Lease; the eventual owner of the VJC constructing the hangars; 

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

construct hangars on the opposite side of the taxiway; and consideration of obtaining a right of 

first refusal regarding sale of the VJC. 

21. The Council voted to engage outside counsel to assist in defending the Part 16 

Action, In light of the Receiver's anticipated filing of a Part 16 Action, the Council declined to 

authorize the City Manager and City Attorney to discuss with the Receiver the settlement 

proposal described in Paragraph 19, above. The Council approved a motion to discuss litigation 

strategy and settlement at a private Attorney-Client session if the Part 16 Complaint was filed, 

22. The Part 16 Complaint was filed before the FAA by tiie Receiver July 7, 2009. 

The City filed its Answer, Motion to Dismiss and Memorandum in Support Thereof on 

September 2, 2009, The Receiver filed a Reply on September 30, 2009, and the City filed its 

Rebuttal on October 28, 2009. City Officials also met with Mr. Wiand on August 10, 2009 and 

made a specific proposal to resolve the issue. 

n . THE SALE MOTION AND THE CITY'S CONSENT TO ASSIGNMENT OF THE 

LEASE AND SUBLEASES 

23. In the Sale Motion, the Receiver characterizes the City's efforts in seeking to 

determine and protect its legal interests as described above as constituting "overtly 

obstructionist" conduct and that such actions constituted "interference with [VJC's] property 

rights," all v^dth an apparent view towards trying to convince this Court that the City would 

unreasonably refuse its consent to the proposed lease assignment to Tristate, The Receiver 

alleges various purported improper actions by the City (Sale Motion at p, 12-14) and asserts that 

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these provide a basis for concluding that the City may unreasonably withhold consent from the 

proposed lease assignment. Id. at p. 20-21. 

24, After this Court entered its order giving the City additional time within which to 

undertake appropriate due diligence and otherwise comply with the notice requirements 

applicable to municipalities under Florida law. City staff and the attorneys for the City conducted 

an interview with one of the principals for Tristate, reviewed certain confidential financial 

information, and checked business references. The City Council then met on January 5, 2010 

and heard presentations from City staff and the attorneys for the City as well as from Tristate and 

the public at large. Thereafter, the City Council voted, 5 to 2, to approve VJC's request to assign 

the lease agreement to Tristate, provided that Tristate should be deemed to be responsible to 

faithfully perform all of VJC's obligations under the Lease and, fiirther, that VJC was not 

relieved of any duty, liability or obligation under the Lease. A true and correct copy of the 

City's consent is attached hereto as Exhibit A and has been provided to the Receiver. 

25, Under Florida law, a lessee's assignment of a lease to a third party does not 

relieve the lessee from its financial or other obligations to the lessor, Kornblum v. Henry E. 

Mangels Co., 167 So.2d 16 (Fla.3d DCA 1964). As such, VJC should remain liable for its 

obligations under the Lease, notwithstanding the assignment to Tristate. 

26. In addition to approving the assignment of the VJC Lease, the City Council also 

voted to approve the assignment to Tristate of the sub-lease agreements between VJC and Hertz, 

and VJC and Cockpit Cafe, LLC (the "Subleases"). See Exhibits B and C 

27. The fact that the City has consented to the Lease demonsfrates that the Receiver's 

assertions with respect to potential action or inaction by the City concerning the approval of the 

lease assignment are inappropriate and misguided. However, because the Receiver has made 

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these allegations on the record in this proceeding, the City is compelled to respond on the record, 

briefly, as to the substance of the allegations, 

28. The Receiver asserts that the City denied "VJC's request to construct 4 box 

hangars in July 2008, even though the proposed construction complied with all applicable 

planning and building code provisions and met all Minimum Standards for the Venice Municipal 

Airport and Fixed Based Operations (the 'mmimum standards')," Sale Motion at 12-13. The 

City Council scheduled an informational meeting to hear a presentation from Mr. Nadel on the 

proposal, but did not vote either way on the proposal. Moreover, the project did not meet all 

minimum standards, as there was no demonsfration of financial viability or compliance with 

other minimum standards for the Airport which are a part of the Lease', 

29. Receiver asserts that the City denied the request to build hangars in August 2008 

and required VJC to submit a concept plan "even though the VJC had not previously been 

required to produce a concept plan when it built its first hangars on the leasehold." Sale Motion 

at 13. In fact, the City did not turn down the project until March 2009. Moreover, the hangars 

that VJC first built on its leasehold fulfilled a requirement in the Lease imposed by the City that 

VJC tear down and reconstiiict existing hangars. Sale Motion Exhibit 3A-B (VJC's Lease). 

There would be no reason for the City to approve a concept plan of a project that it required VJC 

to undertake to replace dilapidated hangars on the site. 

30. Confrary to Receiver's assertion (Sale Motion at 13), the City did not 

misrepresent to the FAA in September 2008 that VJC's request was denied because it made no 

' As the Receiver is aware, the City's position on these points is discussed extensively in its rebuttal to Venice Jet 

Center Reply; Venice Jet Center v. City of Venice. Fl, FAA Docket No. 16-09-05, at Section V, pp. 28-46 and at 

pages 41-45 of the City's Memorandum of Points and Aufliorities in Support of its Answer and its Motion to 

Dismiss the Receiver's Part 16 Complaint. In the interest of brevity, the City is not appending its filings in the Part 

16 Action to this Response but will make those papers available if requested. 

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formal request to build the hangars. Evidence supplied by the City in the Part 16 Action 

indicates that VJC applied for building permits in November, 2008, 

31, * The Receiver seems to imply that there is something wrong with the City 

"seeking legal advice as to whether the City could terminate the VJC's Lease", It was 

reasonable and prudent for the City to investigate whether VJC's being forced into receivership 

was an event of default under the Lease. 

32, The Receiver criticizes the City for "ignoring three separate letters from the FAA 

encouraging approval of the VJC's hangars project and warning that denying the request would 

be confrary to federal grant assurances," Sale Motion at 13. The referenced letters constitute 

informal guidance from the local FAA Airports Disfrict Office, not an official determination by 

FAA, Although an official at the FAA ADO did encourage approval of the hangar project, this 

was done in ignorance of the facts related to VJC's receipt of stolen funds and its inability to 

demonsfrate that it could fund the project without relying on stolen funds, either dfrectiy or 

indfrectly. Moreover, one of the ADO letters referenced in the Sale Motion relating to the 

Airport Layout Plan (ALP) issue, discussed below, also appeared to be confrary to FAA's 

official, published guidance that airports not allow development inconsistent with an approved 

ALP. 

33, The Receiver also complains that the City ignored advice from counsel that 

"warned the City would likely be exposed to liability if it continued to deny the VJC's request to 

build the hangars," Sale Motion at 13, As discussed extensively in its Part 16 filings, the 

referenced guidance by outside counsel was based on several critical erroneous factual 

assumptions, A further assessment of the actual facts surrounding the VJC and its operation and 

funding by the infusion of illegal funds by Mr, Nadel results in a different analysis. Moreover, 

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the City Council did follow the memorandum's advice that if the approved ALP depicted future 

development on the site incompatible with the proposed hangars, the City would have a basis for 

denying approval for the hangars. However, the Receiver also objects to the City's position on 

the ALP issue, thus simultaneously criticizing the City for "ignoring" advice from outside 

counsel and for following that advice with respect to the ALP issue. Sale Motion at 13. In any 

event, a client is, of course, under no obligation to follow counsel's advice and may, instead, 

assert its position in the appropriate adjudicatory forum, such as a Part 16 proceeding. 

34. As for the City "ignoring the FAA's communication indicating that the ALP 

presented no such barrier to the project and again encouraging the City to approve construction," 

{id. at 13-14), this was one of the three FAA ADO letters the Receiver already referenced, and 

the ADO's opinion appears to confradict published FAA guidance. The ALP issue is the subject 

of the pending Part 16 Action, which will provide an official FAA determination on the matter. 

35. The Receiver includes three separate assertions that appear to relate to the same 

action taken by the City Council on March 10, 2009: "denying VJC's written request dated 

February 2009 to build the hangars," (Sale Motion at 13), "denying VJC's written request dated 

February 25, 2009 to build the hangars," (Sale Motion at 14) and "formally denying the VJC's 

request on March 10, 2009 at a City Council meetmg and contending the VJC's Lease was void 

because the company is in receivership" {id.). Peculiarly, after asserting that the City Council 

contended the Lease was void, the Receiver asserts that the City sought "yet another legal 

opinion to determine whether the City could terminate the VJC's Lease because the company is 

in receivership." Id. Thus, it is clear that the City Council had not, in fact, made a determination 

on this issue, but rather sought to investigate the issue further given the unusual circumstances 

surrounding VJC and the advent of the receivership. 

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36. Given the allegations of Mr. Nadel's fraud, his funding of VJC with the proceeds 

of that fraud (as alleged by the Receiver in his motions and filings before this Court), Mr. 

Nadel's subsequent arrest, the initiation of this proceeding by the SEC, and the extension of the 

Receivership to include VJC, it was reasonable for the City to investigate whether the 

involuntary receivership was an event of default under the Lease, as the City explained in the 

Part 16 Action. 

37. Confrary to the Receiver's assertion, the City did not ignore outside counsel's 

opinion that the Lease remains valid; in fact, the City has taken no action to void the Lease. The 

City's action in approving the assignment of the Lease as noted below now renders this assertion 

moot. Moreover, the outside counsel opinion also indicated that the City had a reasonable 

argument that the Lease did not permit additional hangars. 

38. Finally, the Receiver complains that the City denied "VJC's request to build 

hangars on the basis that the Receiver did not demonsfrate financial capability despite the fact 

that: (1) VJC had not previously been required to demonstrate financial capability to build 

hangars; (2) no other Airport tenants who have built hangars have been requured to show 

financial capability; and (3) the VJC has satisfied the financial capability reqmrement." Id. 

39. With respect to item (1), VJC's Lease, at Section 45, specifically requfred VJC to 

demolish existing dilapidated hangars on the leasehold and build a 10,000 square foot hangar on 

the site within five (5) years of executing the Lease. Failure to do so would constitute a default 

under the Lease and the City could terminate the Lease, among other remedies. Thus, the City 

was protected in case VJC did not fully carry out ih& prescribed hangar project because it had the 

option of terminating the Lease. The City did not need the additional protection of verifying the 

financial wherewithal of VJC to comply with Section 45 of the Lease. Moreover, the Receiver's 

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sworn statement to the Court that VJC's purchase of the assets of Triple Diamond was funded 

completely with stolen funds and that VJC had accepted at least $325,000 in additional stolen 

funds - and likely more, which had not been fracked down by the Receiver as of the date of the 

filing - raised legitimate questions as to the financial resources available to VJC to build the 

hangars. Thus, it was eminently reasonable for the City to inquire as to VJC's financial 

resources under the Receivership to complete the project. 

40. With respect to Item (2), the Receiver has provided no evidence that any other 

tenant had been forced into receivership (or was capitalized with stolen funds). This justifies 

freating the Receiver differently from other tenants seeking approval to fund projects. 

41. As for Item (3), Receiver clearly had not satisfied the financial capability 

requirement under any reasonable standard. The Receiver simply made flat assertions as to the 

total cash or cash equivalents on hand in the entire Receivership, which assertions were 

unsupported by the Receiver's Reports to the Court and did not indicate that the Receiver had 

applied for or received permission from the Court to expend Receivership funds to build such 

hangars. It would have been irresponsible for the City to rely on the bald assertions made by the 

Receiver under these cfrcumstances, and such unsupported assertions do not satisfy the financial 

viability requfrement contained in the applicable minimum standards, 

III. THE ASSIGNMENT OF THE PART 16 CLAIMS 

A. Determinations of Who is a Proper Party in a Part 16 

Proceeding Are Within the Purview of the FAA, Not the Court 

42. It would be iriappropriate for this Court to grant the Receiver's request for an 

order conferring on Tristate "the right to be substituted in the VJC's stead in the proceeding 

before the FAA (FAA Docket No, 16-09-05)" (Sale Motion at p, 21), because determinations of 

whether an entity is entitled to bring a Part 16 Complaint or take over a Part 16 Complaint before 

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the FAA is a matter for the agency to determine, pursuant to Rules of Practice it has issued 

governing such proceedings, subject to review in the U.S, Courts of Appeals, 

43. In the Sale Motion, the Receiver states that: 

(1) "The VJC will also assign its rights in the Part 16 proceeding that will be 

continued by Tristate" (Sale Motion at p, 11, n, 9)"; and 

(2) "Tristate agrees to , . , assume prosecution of the part 16 Complaint subject to 

an offset of the net obligations to the Receiver up to $50,000 for expenses and 

costs actually incurred in coimection with efforts to resolve all disputes with the 

City, including the Part 16 Complaint", (Sale Motion at p, 10-11), 

Under the Rules of Practice for Federally-Assisted Airport Enforcement Proceedings, 14 

C.F.R, Part 16, under which the referenced Part 16 case was filed by the Receiver, only the FAA 

may determine whether a person seeking to undertake a Part 16 proceeding is "directly and 

substantially affected by any alleged noncompliance by an airport sponsor" and has "engaged in 

good faith efforts to attempt to resolve the disputed matter informally" with the airport sponsor, 

and otherwise complies with requirements to confer standing. See 14 CF.R. § 16.25, citing 

§§ 16.23 and 16.3. See also 14 C.F.R. § 16.21. 

44. Final FAA determinations in Part 16 cases are reviewable exclusively in the U.S. 

Courts of Appeals, not in U.S. Distiict Courts. 49 U.S.C § 46110; 14 CF,R, § 16,247, Another 

Federal District Court has acknowledged this point: 

Fairview essentially seeks judicial review of the FAA's decision in the Part 16 

proceeding. The parties agree, however, that such a review is vested exclusively in 

the courts of appeals. See 14 CF.R. § 16.247 (a person may seek judicial review 

in the courts of appeals pursuant to 49 U.S,C, § 46110); Town of Fairview [v. City 

of McKinney, FAA Docket No. 16-99-04], 2001 WL 88072 at *[22] [(Final 

Decision and Order, Jan. 23, 2001)], (directing Fairview to file any appeal in the 

courts of appeals); 49 U.S.C. § 46110(c) (the courts of appeals have "exclusive 

jurisdiction" over an appeal from an order under this part). 

Town of Fairview v. Dep't ofTransp., 201 F. Supp. 2d 64,70 (D,D,C, 2002), 

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45. Because Congress has vested in the Secretary of Transportation (who has 

delegated to the FAA) the authority to adjudicate allegations of violations of federal airport 

improvement program ("AIP") grant assurances^ mandated by die Airport and Airway 

Improvement Act of 1982, as amended, 49 U,S,C, § 47101 et seq., tiiere is no private right of 

action for a party seeking enforcement action against an auport sponsor for such alleged 

violations. Arrow Airways. Inc. v. Dade County, 749 F.2d 1489, 1491 (11th Cir, 1985); 

Northwest Airlines, Inc. v. County of Kent, 955 F.2d 1054, 1058 (6th Cfr, 1992) affdon other 

grounds, 510 U.S. 355, 114 S. Ct. 855, 127 L.Ed,2d 183 (1994); New England Legal Found v. 

Massachusetts Port Auth, 883 F.2d 157,168-69 (1st Cir. 1989). 

46. Thus, a party must turn to the FAA, rather than a U,S, District Court, for relief 

As such, it is the FAA, not a disfrict court, that determines whether a purported party meets the 

standards for pursuing a case against an airport sponsor for alleged violation of the grant 

assurances. Indeed, the FAA is given exfremely wide latitude, even by the reviewing court (i.e., 

the Court of Appeals, not the Disfrict Court) in determining how to adjudicate such cases. 

^ The VJC Part 16 Complaint alleges violations of five grant assurances by the City of Venice. 

' The extent of the DOT/FAA control over the administrative adjudication of complaints of violations of grant 

assurances was well-expressed in a decision of the 1st Circuit in a case in which DOT exercised its discretion to hear 

the case rather than FAA: 

This Congressional anointment of the power "to insure compliance [with the grant assurances]" 

upon the Secretary, in our view, does more than merely exclude private parties fi-om the right to 

file an action in court. In terms of the issue before us it has the more significant effect of indicating 

the standard by which we should review the Secretary's enforcement actions. 

First of all, there should be little doubt that Congress has entrusted the administration of § 511 [the 

predecessor to 49 U.S.C. 47107] to the Secretary. If this be the case, as it is, even without more we 

are required by Chevron to give "considerable weight" to the Secretary's construction of § 511, 

and to the actions taken by him "to insure compliance" therewith 

There is more, however. The specific language of § 511(b) not only establishes that it is the 

Secretary that prescribes the requirements of sponsorship, but also that the requirements are those 

"as the Secretary considers necessary " (emphasis supplied). Additionally, the introductory 

paragraph to § 511(a) establishes that assurances shall be submitted which are "satisfactory to the 

Secretary " (emphasis supplied). In other words, in insuring compliance with § 511, it is up to the 

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B. The Court is Not Bound to Implement the Receiver's Request, Which is 

Based on Fundamental Misunderstandings of the Purpose and Procedures of 

Part 16 Cases. 

47. The Receiver has mischaracterized the status of the Part 16 case in his motion to 

the Court. The Receiver asserts that "Although the action is now fiilly briefed, the parties have 

the opportunity to engage in limited discovery and to then present thefr case in an evidentiary 

hearing before the FAA," Sale Motion at p, 6. This assertion is incorrect. There is no discovery 

or hearing provided prior to the issuance of the FAA's initial decision, 

48, As provided in 14 CF,R. § 16,31, "After consideration of the pleadings and other 

information obtained by the FAA after investigation, the Dfrector will render an initial decision 

and provide it to each party by certified mail within 120 days of the date the last pleading 

specified in §16,23 was due," The last pleading specified by § 16,23 was the City's Rebuttal, 

due and filed by the City on October 28, 2009, Sale Motion at 6, "In rendering its initial 

determination, the FAA may rely entfrely on the complaint and the responsive pleadings 

provided under this subpart. Each party shall 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."'* 

Secretary to decide what is necessary and satisfactory. This language establishes abuse of 

discretion review, the most deferential standard of review available for administrative appeals, 

with the exception of those rare instances in which there is of no judicial review at all. Davis, A 

Basic Guide to Standards of Judicial Review, 33 S.D.L.Rev. 469,480 (1988). 

New England Legal Found v. Mass. Port Auth., 883 F.2d 157, 169 (1st Cir. 1989). See 4969.5.47107. 

* Federal aviation regulations provide that: 

[FAA's] investigation may include one or more of the following, at the sole discretion of the FAA: 

(1) A review of the written submissions or pleadings of the parties, as supplemented by any 

informal investigation the FAA considers necessary and by additional information fluiiished by the 

parties at FAA request In rendering its initial determination, the FAA m(Q> rely entirely on the 

complaint and the responsive pleadings provided under this subpart. Each party shall 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. (2) Obtaining oral and documentary 

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49. To the City's knowledge, the FAA has not exercised its discretion to obtain 

fiirther information beyond that provided by the parties in their pleadings and exhibits attached 

thereto. Thus, the status of the case is that all pleadings are complete, and the parties are 

awaiting issuance of the initial determination by the Director. 

50. Moreover, contrary to the implication of the Receiver's representations to the 

Court (Sale Motion at 6), the Complainant in a Part 16 hearing is not entitled to a hearing. 14 

C,F.R. § 16,33, See also 1 Andrew Lange. Inc. v. FAA, 208 F.3d 389, 391-92 (2d Cir. 2000); 

Penobscot Air Servs., Ltd. v. FAA, 164 F.3d 713, 720 (1st Cir. 1999), Instead, a hearing is 

provided only in the instance where the initial determination is adverse to the airport sponsor, it 

is provided the opportunity for a hearing, and it does not waive the right to a hearing. See 14 

C,F.R. §§16,31,16,33 and 14 C,F,R, § 16,201, 

51. Finally, the administration of a Part 16 proceeding is fimdamentally different fi-om 

adjudication of a dispute between private parties. The purpose of FAA's compliance program, of 

which the Part 16 process is a part, is to ensure airport sponsor compliance with its federal 

obligations, not to provide relief to any specific complainant. Thermco Aviation, Inc. v. County 

of Los Angeles. FAA Docket No. 16-06-07, (Dec, 17, 2007) (Final Agency Decision), pps, 15, 

25-26, 

The FAA Compliance program is designed to achieve voluntary compliance with 

federal obligations accepted by owners and/or operators of public-use airports 

developed with FAA-administered assistance. Therefore, in addressing 

allegations of noncompliance, the FAA will make a determination as to whether 

an airport sponsor is currently in compliance with the applicable federal 

obligations. Consequently, the FAA will consider the successful action by the 

evidence by use of the agency's authority to compel production of such evidence .. . (3) 

Conducting or requiring that the sponsor conduct an audit of airport financial records and 

transactions... 

14 C.F.R. § 16.29 (Emphasis added). 

SLK_SAR:#21397v4 l y 
C00038-135951 

airport to cure any alleged or potential past violation of applicable federal 

obligation to be grounds for dismissal of such allegations.... 

Not only does the FAA policy stand for 'current compliance,' but it also stands 

for the concept of voluntary compliance. 

The voluntary actions taken by the City in corrective action are appropriate and 

the Director was correct in using his discretion declining to find the City noncompliant when corrective action is under way or, perhaps, completed. As it is, 

Thermco would not be due any preferential treatment over any other aeronautical 

user for the lease of Airport property. 

Id. at 25-26 (emphasis in original.) See also id. at 15. 

52, As such, "prosecution" of a Part 16 case, unlike a case for money damages or 

choses in action, is not a property right that is transferrable as an "asset," The FAA has no 

authority to award money damages in a Part 16 case, J& B Enters., Inc. v. Metro. Nashville 

Airport Auth., FAA Docket No, 16-08-07, 2009 WL 1800821 at "^16 (Director's Determination, 

May 5, 2009), Had the receiver filed an action for money damages or a chose in action in a state 

or federal civil court, he might be able to make a case for seeking to transfer the right to continue 

the action to Tristate, However, the Receiver did not do so. Instead, he filed a much different 

type of action^ - seeking an FAA determination of a violation by the City of its federal grant 

In seeking to initiate the Part 16 action, the Receiver acknowledged diat it was different fi-om the type of action 

typically undertaken, or authorized, by a receiver pursuant to the Court's order on extending the receivership: 

Pursuant to the Order Appointing Receiver (Dkt. 8), the Receiver has the duty and authority to: 

'[ijnstitute such actions and legal proceedings, for the benefit and on behalf of the Defendants and 

Relief Defendants and their investors and other creditors as the Receiver deems necessary . . . .' 

Dkt. 8 at ^ 2. The discretion provided to the Receiver to initiate actions pursuant to the Order 

Appointing Receiver does not clearly encompass the institution of a Part 16 Complaint. Therefore, 

the Receiver brings this matter to the Court's attention for t^proval prior to proceeding. 

Receiver's Unopposed Request for Leave to File Complaint Pursuant to Title 14 C.F.R. Part 16, at pps 2-3, n. 2. 

While it was reasonable for the Receiver to seek leave of the Court to file the Part 16 complaint, once the action is 

filed, procedural determinations relating to that action are within the jurisdiction of the FAA, not the Court. 

SLK_SAR: #21397v4 I g 
C00038-135951 

assurance commitments.^ The Receiver is not entitled to transfer the right to pursue such a case 

without leave of the agency that is adjudicating the matter pursuant to its congressional mandate. 

53, Moreover, the Receiver has not provided any reason, legal or otherwise, in 

support of his motion to transfer the Part 16 action fi:om VJC to Tristate and offers no authority 

for the proposition that this Court can entertain issues which are within the exclusive jurisdiction 

of the FAA and the Court of Appeals. Instead, he simply asserts that the Court should issue an 

order because tiie Receiver and Tristate have agreed to the transfer. Of course, this leaves two 

important parties out of the equation - the FAA and the City. The desires of the Receiver and 

the prospective buyer of VJC's assets are insufficient to warrant the Court's intruding on the 

prerogatives of the agency charged by Congress with adjudicating alleged violations of the grant 

assurances. Thus, the Court should not grant the Receiver's motion as to the transfer of the 

authority to pursue the Part 16 case, 

54. Although the City believes that it is not appropriate to order that the right to 

pursue die Part 16 case be transferred to Tristate, the City has no objection to the Receiver 

providing a credit of up to $50,000 to Tristate for actual costs it incurs to resolve all disputes 

with the City. This can be accomplished by deleting the reference to the Part 16 case in the 

Receiver's proposed order. Nor would the City object to the Court making clear in its order that 

the Court has no objection to the transfer, if the Receiver and Tristate are able to obtain FAA 

permission to do so. Of course, the City, as the Respondent to that action, would be given an 

opportunity by the FAA to respond to any such proposed transfer. 

As further evidence of the fact that a Part 16 proceeding is concerned with determining compliance with an airport 

sponsor's federal obligations, rather than the provision of relief to any mdividual complainant, if the initial decision 

in the Part 16 process, the Director's Determination, were adverse to die City, and the City exercised its right to a 

hearing, the party asserting a grant assurance violation by the City at the hearing stage of the proceeding would not 

be the Complainant, but rather die FAA, and an FAA attorney serves as the "prosecutor" for the agency. 14 C.F.R. 

§ 16.203(b). 

SLK SAR: #21397v4 19 
C00038-135951 

55. In conclusion, the City submits that this Court need not and cannot adjudicate any 

of the procedural or substantive aspects of the Part 16 Action including the entry of an order 

which substitutes Tristate for VJC in that action. Rather, this Court should find and order that it 

is not ruling on any issues with respect to the ability of Tristate to be substituted in the stead of 

VJC in the Part 16 Action as the result of any approval of the sale Motion, Such a finding would 

be consistent with the terms of the Asset Purchase Agreement whereby Tristate is agreeing to 

purchase VJC's rights, title and interest in the Part 16 Action and the other VJC assets on an "as 

is", "where is" basis "with all faults and vwthout representations of any type, kind, character or 

nature.,." (See Exhibit A to Sale Motion at 1fl,(a) and (b) and ^11 ,(g). Including this provision 

would uphold the bargains reached between the Receiver and Tristate and preserve the rights of 

the City in the Part 16 Action as well as recogni2dng the appropriate jurisdiction of the FAA over 

such a proceeding. 

WHEREFORE, the City respectfiilly requests this Court to enter its order (1) approving 

the transfer of the Lease and Subleases to Tristate in accordance with the consents approved by 

the City Council in the forms attached hereto as Exhibits A, B, and C, and (2) find and order that 

the Court is not nding on any procedural or substantive aspects of the Part 16 Action including 

any claim that Tristate is authorized to be substituted for VJC in the Part 16 Action. 

Respectfiilly submitted. 

SHUMAKER, LOOP & KENDRICK, LLP 

240 Soutii Pineapple Av, P.O. Box 49948 

Sarasota, FL 34230-6948 

(941) 366-666p/m 11366-3999 Facsimile 

Attopmys fojl^GttV^l^y'enice 

Mark D. Hildreth, Esquire 

Florida Bar No. 454893 

SLK_SAR: #21397v4 2 0 
C00038-135951 

-andThomas R. Devine, Esquire 

KAPLAN KIRSCH & ROCKWELL, LLP 

1001 Connecticut Ave NW, Ste, 905 

Washington, DC 20036 

(202) 955-5600/(202)955-5616 Facsimile 

Attorneys for City of Venice 

CERTIFICATE OF SERVICE 

I HEREBY CERTIFY that on this y _ day of January, 2010, a tiiie copy of the foregoing 

City of Venice's Response to Receiver's Motion for Approval of Sale of the Assets of the Venice 

Jet Center and Agreement with Northern Trust, N.A. (Doc No. 254) has been fiimished by 

electronically filing the foregoing with the Clerk of the Court using the CM/ECF system, I 

fiirther certify that a true and correct copy has been fiimished via First Class United States Mail, 

postage pre-paid, to the following non-CM/ECF participant: 

Arthur G, Nadel 

Register No. 50690-018 

MCC New York 

Metropolitan Correctional Center 

150 Park Row 

New York, NY 10007 

SLK_SAR: #21397v4 2 1 
CONSENT TO ASSIGNMENT AND ASSUMPTION OF LEASE 

The CITY OF VENICE, as lessor under the May 23, 2006 Lease, hereby consents to the 

assignment and assumption of the lease to and by TRISTATE AVIATION GROUP OF FLORIDA 

LLC upon the following terms and conditions: 

1, TRISTATE AVIATION GROUP OF FLORIDA LLC shall utilize the leased premises 

only for the uses authorized by the May 23,2006 Lease and shall faithfiilly perform all of the lessee's 

duties and obligations under said lease. 

2. As between the CITY OF VENICE and VENICE JET CENTER, LLC, the assignment 

and assumption of the lease to and by TRISTATE AVIATION GROUP OF FLORIDA LLC shall 

not release or relieve VENICE JET CENTER, LLC from any duty, obligation or liability under the 

terms and conditions of the May 23,2006 Lease. 

Dated this & ^ day of <TAAJ/j/i/Si, 2010. 

CITY OF VENICE 

Ed Martin, Mayor 

.AFTEST: 

ori Stelzer, City ©ferk 

Approved By City Council 

Date: ZT^JU/.J^A-^. ^.-^DI O 
CONSENT TO ASSIGNMENT AND ASSUMPTION OF SUBLEASE AGREEMENT 

TTie CITY OF VENICE, as lessor under the May 23, 2006 Lease, hereby consents to the 

assignment and assumption of the HERTZ CORPORATION sublease dated October 22,2009 to and 

by TRISTATE AVL\TION GROUP OF FLORIDA LLC upon the following terms and conditions: 

1. HERTZ CORPORATION, as subleasee, shall abide by all of the terms and conditions 

contained within the May 23, 2006 Lease and shall not acquire any greater rights in the use and 

enjoyment of the leased premises than those possessed by the original lessee. 

2. TRISTATE AVIATION GROUP OF FLORIDA LLC shall remain liable for the 

performance of all of the lessee's duties and obligations contained within the May 23,2006 Lease, 

Dated this if-% day of JAJJU/^/ S f-

_,2010, 

CITYOFVENI 

By: 

lartin. Mayor 

ATTEST: 

By:. 

ri Stelzer, City Clerk Approved By City Council 

Date: '^/Jonfu^ ^ '^ot'o 
CONSENT TO ASSIGNMENT AND ASSUMPTION OF SUBLEASE AGREEMENT 

The CITY OF VENICE, as lessor under the May 23, 2006 Lease, hereby consents to the 

assignment and assumption of the COCKPIT CAFt, LLC sublease dated February 26,2008 to and 

by TRISTATE AVIATION GROUP OF FLORIDA LLC upon the following terms and conditions: 

1. COCKPIT CAF6, LLC, as subleasee, shall abide by all of the terms and conditions 

contained within the May 23, 2006 Lease and shall not acquire any greater rights in the use and 

enjoyment of the leased premises than those possessed by the original lessee. 

2. TRISTATE AVIATION GROUP OF FLORIDA LLC shall remain liable for the 

performance of all of the lessee's duties and obligations contained within die May 23,2006 Lease. 

Dated this ^-f/i day of VmV/?/2^ 2010. 

CITY OF VENICE 

[Martin, Mayor 

ATTEST: 

5ri Stelzer, City 

Approved By City Council 

Date: \J^j^u^*^Cf s, 3o/o 
Exhibit II 
VENICE CITY COUNCIL MEETING - JANUARY 5,2010 

VERBATIM PORTIONS 

3:28:42 

Council member Sue Lang: You stated that, you know, it's not your intention to come 

here and grow the airport or increase traffic coming in here just to buy fuel etc. that 

you're basically building a business on, you know, what would be the normal traffic 

coming into this destination, but then on the other hand, you're talking about building 

hangars. You know, our experience is the waiting list here for t-hangars is way down, 

there's other larger hangars for sale, so I'm trying to reconcile your two statements that, 

you know, so what exactly is your plan here for the business, other than just to pick up 

what the Jet Center had b^n doing. 

Marty Kretchman: Our, there are essentially two separate issues and I'll explain 'em for 

you. The projections were made very conservatively based on traffic patterns. We've 

been in this business long enough. We don't do pie in the sky numbers, especially when 

we personally have skin in the game. So, we came up with projections saying here's the 

current traffic levels, what can we do to increase, uplift and maximize profitability, 

increase operational efficiencies and things like that. And then the projections, the 

proforma estimates, what we gave Mr. Snyder was based on those. However, we want to 

leave open the possibility of building new hangars, if we find the demand is there. 1 

understand the demand for t-hangars is down, but we haven't done any independent 

determination to find that so we want to leave that door open until we know it's time to 

close it. So, there's essentially two different concepts, one is based on historical data 

trying to make the projection whether or not we should make the purchase and then the 

other is just not limiting our potential return on our investment going forward. 
CIT Y O F VENIC E 

401 W. Venice Avenue Venice, FL 34285 

(941) 486-2626 Fax (941) 480-3031 

Suncom: 516-4382 

"City on the Gulf" 

CERTIFICATIO N 

I, Lori Stelzer, MMC, City Clerk of the City of Venice, Florida, a municipal corporation in 

Sarasota Coun^, Florida, do hereby certify an excerpt of a verbatim transcript of the Venice City 

Council Meeting held on January 5, 2010, consisting of one page, attached hereto is a true and 

conect copy, and which original is on file in the office of the City Clerk's Office of the City of 

Venice. 

WITNESS my hand and the official seal of said City this 17th day of February, 2010. 

Lori Slfelzer, MMC, Ci 

(SEAL) 
Exhibit III 
VENICE CITY COUNCIL MEETING - JANUARY 5, 2010 

VERBATIM PORTION 

3:11:41 

Mayor Martin: Let me ask you a couple of the questions that I've mentioned before. I 

think, let's start with the question of the location of the hangars - what's your thinking 

about that? 

Marty Kretchman: Following Mr. McKeon's train of thought, I don't want to get too 

deep into those issues. But I did tell Mr. Turner he asked that question, matter of fact, 

one of his first questions in our initial meeting last week, how do I feel about the 

hangars? It's, it's, as a matter of fact, not opinion, the hangars do not hold the same 

intrinsic value if they are moved to an interior portion of the airport vs. where they have 

been permitted and planned currently. So, as the business owner, my feeling would be 

they hold more value in their current location where they have been permitted and 

planned. That's where I would intend to build them, but I don't have any intention to 

break ground tomorrow on those hangars. One step at a time. There's a very linear 

process here. The lease transfer is what we need to focus on and I spoke with you briefly 

following a council meeting, you asked the same question, and I think this is pretty much 

the same response. It's the same thing I told Mr. Turner. 
CIT Y O F VENIC E 

401 W. Venice Avenue Venice, FL 34285 

(941) 486-2626 Fax (941) 480-3031 

Suncom: 516-4382 

City on the Gulf" 

CERTIFICATION 

I, Lori Stelzer, MMC, City Clerk of the City of Venice, Florida, a municipal corporation in 

Sarasota County, Florida, do hereby certify an excerpt of a verbatim transcript of the Venice City 

Council Meeting held on January 5, 2010, consisting of one page, attached hereto is a true and 

correct copy, and which original is on file in the office of the City Clerk's Office of the City of 

Venice. 

WITNESS my hand and the official seal of said City this 17th day of February, 2010. 

Lori/Stelzer, MMC, €fty Clerk 

(SEAL) 
Exhibit IV 
UNITED STATES DISTRICT COURT 

MIDDLE DISTRICT OF FLORIDA 

TAMPA DIVISION 

SECURITIES AND EXCHANGE 

COMMISSION, 

Plaintiff, 

v. 

ARTHUR NADEL, 

SCOOP CAPITAL, LLC, 

SCOOP MANAGEMENT, INC. 

Defendants, 

SCOOP REAL ESTATE, L.P. 

VALHALLA INVESTMENT PARTNERS, L.P., 

VALHALLA MANAGEMENT, INC. 

VICTORY IRA FUND, LTD, 

VICTORY FUND, LTD, 

VIKING IRA FUND, LLC, 

VIKING FUND, LLC, AND 

VIKING MANAGEMENT, 

Relief Defendants. 

Case No. 8:09-cv-87-T-26TBM 

/ 

RECEIVER'S UNOPPOSED REQUEST FOR LEAVE TO FILE COMPLAINT 

PURSUANT TO TITLE 14 CFR PART 16 

Burton W. Wiand, as Receiver, seeks leave to file a Part 16 Complaint before the 

Federal Aviation Administration ("FAA") pursuant to Title 14, Code of Federal Regulations, 

Part 16 (Rules of Practice for Federally Assisted Airport Enforcement Proceedings) against 

the City of Venice ("the City"). The purpose of this proposed action is to protect and 

preserve the rights and value of the Venice Jet Center, LLC ("VJC"), an asset of the 

Receivership. 
INTRODUCTION 

The SEC instituted this action to "halt [an] ongoing fraud, maintain the status quo, 

and preserve investor assets...." (Dkt. 1, Compl., ^ 7.) Burton W. Wiand was appointed by 

this Court as the Receiver for Defendants Scoop Capital, LLC and Scoop Management, Inc. 

and all Relief Defendants by Order Appointirig Receiver (Dkt. 8) entered January 21, 2009. 

The Receivership was expanded to include VJC by order entered January 27, 2009 (Dkt. 

17).' VJC has applied for and been denied permits by the City to build aircraft hangars. The 

Receiver believes the denial, in violation of federal law, has diminished VJC's value and 

seeks to pursue the appropriate administrative remedy to obtain relief The Receiver is 

currently soliciting offers for the sale of VJC and hopes to recover a significant sum of 

money through the transaction. The City is actively attempting to frustrate the Receiver's 

efforts to maximize the proceeds of a sale of the VJC. As detailed below, the City's actions 

to impede the sale appear to be part of the City's attempts to acquire VJC itself and terminate 

VJC's lease. VJC's rights to develop its business is guaranteed by its lease agreement and 

federal regulations. It is the Receiver's view that the institution of a proceeding with the 

FAA will be an efficient and economical means of enforcing VJC's rights and this 

proceeding will inure to the benefit of the defrauded investors. 

' VJC is a Florida limited liability company, organized on April 18, 2006, of which Arthur 

Nadel was previously a managing member. 

^ Pursuant to the Order Appointing Receiver (Dkt. 8), the Receiver has the duty and authority 

to: "[i]nstitute such actions and legal proceedings, for the benefit and on behalf of the 

Defendants and Relief Defendants and their investors and other creditors as the Receiver 

deems necessary . . . ." Dkt. 8 at ^ 2. The discretion provided to the Receiver to initiate 

actions pursuant to the Order Appointing Receiver does not clearly encompass the institution 

(footnote cont'd) 
BACKGROUND 

1. In June of 1947 and pursuant to the Surplus Property Act of 1944, the federal 

government conveyed Venice Municipal Airport ("the Airport"), a general aviation facility, 

to the City of Venice, Florida. As a result, the City is bound by the terms of a quitclaim deed 

incorporating legal duties that arise from the Surplus Property Act. See 49 U.S.C. § 47151, 

et seq. 

2. As the sponsor for federal grants received by the Airport as part of the Airport 

Improvement Program ("AIP")^ the City is obligated to comply with federal law and related 

FAA sponsor assurances. See 49 U.S.C. § 47107 (2009). In connection with aeronautical 

operations, airport sponsors regularly lease space to Fixed Base Operators (FBOs) that in turn 

offer a range of services to the aviation community, including but not limited to: aircraft 

maintenance, fueling and line service, flight instruction, and hangar space. VJC is one such 

FBO that entered into a 25-year lease, containing a 5 year renewal option, with the City on 

May 23, 2006. Pursuant to the lease, VJC was obligated to pay the City approximately 

$9,500 per month, in addition to all taxes and assessments as they became due, in return for 

the right to "[c]onduct any commercial aeronautical activity permitted under the Minimum 

of a Part 16 Complaint. Therefore, the Receiver brings this matter to the Court's attention for 

approval prior to proceeding. 

^ The AIP was authorized by the Airport and Airway Improvement Act of 1982 ("AIAA"), as 

amended, 49 U.S.C. § 47101, et seq. The source of AIP funds is the Aviation Trust Fund 

("ATF"), which was established by Congress in 1970 to provide funding for aviation capital 

investment programs. AIP funds are discretionary and distributed annually by the FAA. 
Standards for Commercial Aeronautical Activities at Venice Municipal Airport . . . ." 

("Minimum Standards Document")''. 

3. The lease covers three separate parcels of land totalling approximately 9.7 

acres. One parcel is entirely vacant. A building and hangers were located on sections of the 

other two parcels. Pursuant to obligations under the lease, VJC was required to demolish and 

rebuild the old hangers and refurbish the existing building, which it did. The rebuilt hangers 

were filled upon completion in approximately the Fall of 2007. 

4. Subsequent to the construction, the need for new aircraft storage space grew 

to the extent that certain aircraft were stored in areas not designed or suitable for indoor 

storage. In May 2008, VJC applied to the City for approval to construct four new hangars 

on approximately 2.5 acres of vacant land. VJC sought to build four "box hangars," designed 

* This document is incorporated into the lease and discusses the general operational 

requirements for FBOs and the City's purported goals and philosophy concerning Airport 

operations: 

[T]he City of Venice's goal in adopting these standards it to encourage 

development of quality aeronautical services and to make the airport available 

for commercial aeronautical activities on a fair and reasonable term without 

unjust discrimination ... . It is the intent of the City of Venice to offer the 

maximum variety of aviation related services in order to maximize the choice 

of service providers to the public using the airport. 

Despite the above communicated goals and intent of the City, Venice has over the past year 

and a half discriminated against VJC and taken active measures to limit aviation related 

services to the public. 

^ The Minimum Standards Document specifies the FBO is responsible for supplying "storage 

and parking and area for utility and support facilities . . . ." It was, therefore, in part VJC's 

responsibility to ensure that sufficient storage and support facilities existed for its operations. 
to service medium-sized aircrafts, including smaller jets and turboprops. The site plan was 

reviewed by the City departments, and no flaws have been reported. By June 2008, VJC was 

ready to proceed to the final building stage. The City Council refused to permh the 

construction. 

5. In a letter dated December 4, 2008, directed to the Interim Manager of the 

City of Venice, the FAA unequivocally communicated that 'ftjhe FAA agrees that the City 

of Venice appears to be unnecessarily delaying the expansion of the Venice Jet Center. 

The FAA believes the airport sponsor's primary concern in the development of airport 

properties should be meeting aeronautical demand ... . These delays created by the city 

appear to be restricting aeronautical access to the Airport, which is inconsistent with federal 

grant assurances and the Surplus Property Deed restrictions." (emphasis added). The 

FAA has not waivered from its position that the actions of the City were and continue to be 

inconsistent with its federal obligations. 

6. The City also sought a legal opinion as to whether it had authority to deny 

VJC's request to construct hangars. City Attorney, Mr. Robert C. Anderson, in conjunction 

with outside counsel, Kaplan Kirsch & Rockwell, provided the City with a comprehensive 

legal opinion. This opinion is consistent with the position of the FAA and advised that "[t]he 

City of Venice would run a significant risk of being found in violation of its grant assurances 

if it denied the Jet Center's request to construct additional hangar space on its leasehold."^ 

^ The 13-paged legal memorandum explained that "[a]n airport sponsor's prime obligation is 

to operate the airport for aeronautical use, including the opportunity for leaseholders to 

develop airport property for aeronautical use" and provided examples of supporting case law. 

(footnote cont'd) 
7. Yet, the City continued to prevent construction of the hangars. On February 

19, 2009, the FAA wrote to the City once again and stated "In sum, the City of Venice may 

and should approve the construction of hangers in the area you mention. The land is 

designated for aeronautical use, and the FAA has even processed a 'pen and ink' change to 

the 2000 ALP incorporating hangers in this vicinity. . . . In accordance with my previous 

advice concerning airport compliance matters, this proposal should be forwarded to this 

office without further delay." (emphasis added). No action was taken on behalf of the City 

to conform to the FAA's request. 

8. City officials have more recently expressed the view that the establishment of 

the Receivership will allow the City an advantage in its quest to acquire VJC. On March 10, 

2009, the Receiver met with the City Council and again requested approval to build the 

hangars on behalf of VJC' The City formally denied the Receiver's request and intimated 

that VJC's lease was void now that the company is in receivership. Further, the City has 

The legal opinion further stated that "[t]he fact that the City has allowed other tenants to 

build and lease out hangars would make the City vulnerable to charges of unjust 

discrimination if it denied Jet Center the right to build hangars." The City incurred 

approximately $20,000 of tax payers' monies in legal fees to obtain the legal memorandum, 

which merely reinforced a conclusion already communicated by the FAA. 

^ The Receiver previously submitted a similar written request to City Mayor Ed Martin on 

February 2, 2009. The correspondence discussed that "it is essential and imperative and [the 

Receiver's] duty to do everything in [his] power to have the Venice Jet Center continue to 

operate so that the assets of the entity are preserved for future Order of the Court. [The 

Receiver] is further charged to operate the Venice Jet Center to move it forward so it 

increases in value or at least does not lose value." Another letter to the Mayor and Council 

Members followed on February 25, 2009, on behalf of the Receiver. The letter asked that the 

City release its hold on the hangars construction and cited to correspondence from the FAA 

that demonstrated any further delay was unreasonable. 
recently publically expressed its intent to buy VJC for a nominal amount, which would 

negatively effect the Receivership estate. 

9. As discussed below, the law concerning the filing of a Part 16 Complaint 

substantiates that such a proceeding against the City is well-founded. The Receiver has 

considered the potential expense of such an enforcement action and has determined that, in 

light of the benefit that would inure to the receivership, it is in the best interests of the 

receivership to institute a Part 16 Complaint to the FAA. The purpose of this proceeding 

would be to assure VJC's right to develop this property, maximizing its value. 

LEGAL BASIS FOR INSTITUTING A PART 16 PROCEEDING 

A. VJC Is Entitled To Bring A Part 16 Complaint Against The City Of 

Venice 

The federal government assists the development of civil aviation through various 

legislative acts that are designed to develop airport facilities. See BMI Salvage Corp. v. 

Federal Aviation Aviation Administration. 272 Fed. Appx. 842, 846 (11th Cir. 2008). The 

AIP permits the government to allocate federal funds to airports, contingent on certain 

assurances made by the airport "sponsors" who receive the federal funds. Id.; 49 U.S.C. § 

47101, et seq. After accepting an AIP grant, the sponsor's assurances become a binding 

obligation between the airport sponsor and the federal government. BMI Salvage Corp.. 272 

Fed. Appx. at 846. The FAA assigns broad responsibilities to the FAA Administrator to 

regulate air commerce in the interest of safety, security, and development of civil 

aeronautics. See 49 U.S.C. § 40101, et seq. It is the responsibility of the FAA Administrator 
to ensure airport sponsors comply with the assurances made when receiving federal funds. 

BMI Salvage Corp.. 272 Fed. Appx. at 846. 

The FAA promulgated a set of regulations that apply to "[a]ll proceedings involving 

Federally-assisted airports" including proceedings that concern failed federal obligations on 

behalf of an airport sponsor. 14 C.F.R. § 16.1(a) (Rules of Practice). A person "directly and 

substantially affected" by an airport sponsor's noncompliance with its legal duties under the 

AIP is entitled to file a complaint with the FAA ("Part 16 Complaint") and initiate an 

administrative enforcement action. See 14 C.F.R. § 16.23(a); see e.g.. Gravson v. DeKalb 

County. GA.. FAA Docket No. 16-05-13 (February 1, 2006) (Final Agency Decision)); 

Airborne Tactical Advantage Co.. LLC v. Peninsula Airport Commission. 2006 WL 753016, 

*1 (E.D. Vir. 2006) (discussing there is no private cause of action for a violation of 49 U.S.C. 

§ 47107 but a right to initiate an administrative enforcement action with the FAA). Any 

person "[d]oing business with an airport and paying fees or rentals to the airport shall be 

considered directly and substantially affected . . ." by any alleged violation of assurances 

made and/or obligations assumed by an airport sponsor under the AIP. See 14 C.F.R. § 

16.23(a); 49 U.S.C. § 47107. When filing a Part 16 Complaint, the complainant must 

demonstrate it made "good faith efforts to resolve the disputed matter informally prior to the 

filing" and that there is "[n]o reasonable prospect for timely resolution of the dispute." See 

14 C.F.R. § 16.21(b). 

VJC has paid approximately $228,000 in rent to the City, plus expended $100,000 in 

development costs, and has been denied the ability to develop its leasehold due to delay 

tactics taken by the City and its Council in direct contravention of assurances made under 
federal law. VJC, therefore, has standing to file a Part 16 Complaint with the FAA and 

instituting a proceeding may assist the potential sale of VJC.^ 

B. The Receiver Has A Good Basis To Submit A Part 16 Complaint 

The City is obligated as a sponsor receiving AIP funding 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." See Fed. Aviation Admin., Assurances, Airport 

Sponsors, Part C: Sponsor Certification, t 22(a)' (emphasis added); 49 U.S.C. § 47107(a)(1) 

(permitting approval of a grant application only if written assurance is provided that "the 

airport will be available for public use on reasonable conditions and without unjust 

discrimination"). Indeed, "[o]perating the airport for aeronautical use is a sponsor's primary 

obligation. Part of this primary obligation is the opportunity for leaseholders to develop 

airport property for aeronautical use." BMI Salvage Corp.. 272 Fed. Appx. at 852 (citing 

United States Constr. Corp. v. City of Pompano Beach. Fl.. FAA Docket No. 16-00-14, 2002 

WL 1821882 (July 10, 2002) (Final Agency Decision)). 

The Receiver submits this request for leave to file a Part 16 Complaint without waiving any 

right to seek equitable assistance from this Court in the future in bringing potential actions 

against the City and/or individual Council Members. The Receiver is also not waiving the 

right to seek potential damages for breach of the lease or under anti-trust laws for the City's 

apparent predatory conduct. 

' The assurances given by airport sponsors when receiving federal funding are available at: 

http://www.faa.gov/airports_airtraffic/airports/aip/grant_assurances/media/airport_sponsor_a 

ssurances.pdf 
The City also made assurances it would "[pjermit no exclusive right for the use of the 

airport by any person providing, or intending to provide, aeronautical services to the public." 

See Fed. Aviation Admin., Assurances, Airport Sponsors, Part C: Sponsor Certification, T[ 23. 

In fact, the City may not prohibit or limit a kind or class of aeronautical use of the airport 

unless such action "[i]s necessary for the safe operation of the airport or necessary to serve 

the civil aviation needs of the public." See Fed. Aviation Admin., Assurances, Airport 

Sponsors, Part C: Sponsor Certification, ]f 22(i) (emphasis added). Moreover, VJC's lease 

and incorporated documents therein explicitly state "[l]t is the intention of the City of Venice 

to offer the maximum variety of aviation related services in order to maximize the choice of 

service providers to the public using the airport." 

Despite the clear language in the lease and the sponsor's federal assurances, the City 

and its Council, have refused to permit hangar construction that would provide utilization of 

medium-sized aircraft and aviation services to the public. The City's refusal is an 

unreasonable denial of access to aeronautical development and a violation of grant assurance 

22 (Economic Nondiscrimination). The City has purposefully refused to allow the 

construction of hangars on usable land within the boarders of the Airport in contravention of 

the requirements of the FAA and the assurances it made under the AIP. In doing so, the City 

has undermined the Receiver's ability to effectively market VJC and receive a reasonable 

market value for this asset of the Receivership. 

CONCLUSION 

Pursuant to the Order Appointing Receiver, the Receiver is authorized to initiate 

actions and proceedings for the benefit of the Defendants, Relief Defendants, and their 

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investors and creditors. See Order Appointing Receiver (Dkt. 8 at ^ 2). While this paragraph 

gives the Receiver discretion to institute actions on behalf of the Receivership, because a Part 

16 proceeding differs from actions generally initiated by an equity receiver, the Receiver 

desires to bring this matter to the Court's attention for approval prior to proceeding. The 

Receiver believes institution of a Part 16 Complaint will enhance the viability of a sale of 

VJC and the expense incurred in instituting the proceeding if necessary will be reasonable in 

light of the potential benefit. 

WHEREFORE, the Receiver respectfully requests this Court grant leave to institute a 

Part 16 Complaint with the Federal Aviation Administration against the City of Venice, 

Florida. 

LOCAL RULE 3.01(g) CERTIFICATION OF COUNSEL 

The undersigned counsel for the Receiver is authorized to represent to the Court that 

the SEC has no objection to the Court's granting this motion. The undersigned counsel is 

unable to contact Arthur Nadel, who is incarcerated in New York and is not represented by 

counsel in this action. 

VERIFICATION 

The factual allegations stated in this Request are true and correct to the best of my 

knowledge, information, and belief. 

s/ Burton W. Wiand. Receiver 

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CERTIFICATE OF SERVICE 

1 hereby certify that on this 14* day of May, 2009,1 electronically filed the foregoing 

with the Clerk of the Court by using the CM/ECF system. 1 further certify that 1 mailed the 

foregoing document and the notice of electronic filing by first-class mail to the following 

non-CM/ECF participants: 

Arthur G. Nadel 

Register No. 50690-018 

MCC New York 

Metropolitan Correctional Center 

150 Park Row 

New York, NY 10007 

s/Carl R. Nelson 

Cari R. Nelson, FBN 0280186 

cnelson(^fowlerwhite.com 

Gianluca Morello, FBN 034997 

Gianluca.morello(^fowlerwhite.com 

Ashley B. Trehan, FBN 0043411 

Ashley.trehan@fowlerwhite.com 

Maya M. Lockwood, FBN 0175481 

mlockwood@fowlerwhite.com 

FOWLER WHITE BOGGS, P.A. 

501 E. Kennedy Blvd., Suite 1700 

Tampa, FL 33602 

Phone (813) 228-7411, Fax (813) 229-8313 

Attorneys for the Receiver, Burton W. Wiand 

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