United States Court of Appeals 

for the Federal Circuit 

__________________________ 

INNOVAIR AVIATION LIMITED, 

Plaintiff-Appellee, 

v. 

UNITED STATES, 

Defendant-Appellant. 

__________________________ 

2010-5025 

__________________________ 

Appeal from the United States Court of Federal 

Claims in case no. 96-CV-408, Senior Judge Loren A. 

Smith. 

_________________________ 

Decided: January 25, 2011 

_________________________ 

H. CHRISTOPHER BARTOLOMUCCI, Hogan Lovells US 

LLP, of Washington, DC, argued for plaintiff-appellee. 

With him on the brief were TY COBB and JOSHUA D.

HAWLEY. 

SHERYL L. FLOYD, Senior Trial Counsel, Commercial 

Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendantappellant. With her on the brief were TONY WEST, Assistant Attorney Director, JEANNE E. DAVIDSON, Director. Of 

 
INNOVAIR AVIATION LIMITED v. US 2

counsel on the brief was MARK A. MELNICK, Assistant 

Director. 

__________________________ 

Before GAJARSA, LINN, and PROST, Circuit Judges. 

GAJARSA, Circuit Judge. 

The issue before this court is whether or not a contract right was extinguished as part of a seizure pursuant 

to 21 U.S.C. § 881. The United States (“Government”) 

appeals the final decision of the United States Court of 

Federal Claims (“Court of Federal Claims”), which held 

that the Government had taken Innovair Aviation Limited’s (“Innovair”) property without just compensation 

under the Fifth Amendment. Innovair Aviation, Ltd. v. 

United States (Innovair III), 72 Fed. Cl. 415, 416 (2006). 

Because we find that the Court of Federal Claims lacked 

subject matter jurisdiction, we reverse the judgment. 

BACKGROUND

Innovair’s Fifth Amendment takings claim against 

the Government arises from a lengthy procedural history 

spanning the past three decades and involving litigation 

in various federal courts. In order to place the issues in 

proper perspective, we must review the background and 

each of the proceedings in historical sequence. 

A. 

In the mid-1980s, Bryan Carmichael and Barry Wilson investigated a method of upgrading DC-3 planes, 

which had been in service for many decades, by replacing 

the planes’ piston engines with turboprop engines. Innovair III, 72 Fed. Cl. at 417. Mr. Carmichael and Mr. 

Wilson partnered with the Basler Group, a family-owned 

business, to perform the conversions. Id. The partnership subsequently established two corporations: one was 
3 INNOVAIR AVIATION LIMITED v. US

Innovair, a Hong Kong corporation, formed to perform all 

foreign sales and conversions, except for those under the 

Foreign Military Sales Act (“FMSA”), and the other was 

Basler Turbo Conversions, Inc. (“BTC”), a domestic corporation, formed to perform all domestic sales and conversions, plus those under the FMSA. Id. The two 

corporations had a cross ownership where Mr. Carmichael 

and Mr. Wilson owned 51% of Innovair and 49% of BTC, 

while the Basler Group owned 51% of BTC and 49% of 

Innovair. Id. 

The Federal Aviation Administration (“FAA”) requires 

a Multiple Supplemental Type Certificate1 (“MSTC”) to 

perform an unlimited number of plane conversions commercially. Id. On June 24, 1988, in anticipation that the 

FAA would issue an MSTC to BTC, Innovair and BTC 

executed a Technology License Agreement (“TLA”) for 

Innovair’s exclusive right “to market, manufacture, sell, 

and use the [MSTC] and conversion kits based upon it” in 

exchange for $1,675,000. Innovair paid BTC $300,000 by 

July 1, 1988 and the remaining balance of $1,375,000 on 

or after April 15, 1989. In February of 1990, the FAA 

granted BTC an MSTC on the DC-3 plane conversion 

technology. Innovair III, 72 Fed. Cl. at 417. 

In December of 1988, Innovair and BTC contracted to 

sell six planes to Air Colombia. Id. at 418. Air Colombia 

 1 Before a developer can make a significant modification to an aircraft, the developer must obtain a “one-off 

supplemental type certificate” from the FAA that allows 

for the modification of a limited number of aircraft. 

Innovair III, 72 Fed. Cl. at 417 n.2. The developer must 

also perform safety testing and provide the testing data to 

the FAA. Id. If the FAA determines that the modification 

is safe, the FAA issues a “multiple supplemental type 

certificate” that allows for the modification of an unlimited number of aircraft. Id.
INNOVAIR AVIATION LIMITED v. US 4

presented itself as a legitimate cargo carrier from Colombia, South America, id., but the Government began to 

expose the airline’s ties to a drug cartel around the time 

the contracts were executed, Innovair Aviation, Ltd. v. 

United States (Innovair II), 58 Fed. Cl. 560, 560 (2003). 

Two of the plane contracts were later canceled, and one of 

the four remaining contracts was for the conversion and 

sale of Aircraft N95BF for $2,800,000. Innovair III, 72 

Fed. Cl. at 418.

In 1990 and 1991,2 Innovair contracted with United 

Technology Corporation (“UTC”), a United States airplane 

parts manufacturer. Id. Pursuant to the agreement, 

Innovair granted UTC the exclusive right to sell the plane 

conversion technology in most of Asia. Id. In return, 

UTC committed to purchase from Innovair at least five 

conversion kits per year for seven years. Id. 

B. 

On August 2, 1990, the Government seized the four 

Air Colombia planes pursuant to 21 U.S.C. § 881 because 

the Government alleged that Air Colombia was under the 

control of a drug cartel and that the money Air Colombia 

used to pay for the four planes was traceable to drug 

proceeds. Id. at 418, 422. Two of the seized planes were 

still in the conversion process, including Aircraft N95BF. 

Id. at 418. 

On November 29, 1990, the Government brought an 

in rem action (“Arizona Litigation”) against the four 

planes in the United States District Court for the District 

of Arizona (“Arizona Court”). Id. The in rem action was 

brought in the Arizona Court because the seizure of the 

 2 In 1990, Innovair and UTC had a preliminary 

agreement, and in 1991, they had a seven-year agreement. Innovair III, 72 Fed. Cl. at 418 n.6. 
5 INNOVAIR AVIATION LIMITED v. US

aircraft stemmed from the Government’s investigation of 

Burton Golb, who was convicted of money laundering in 

the Arizona Court. United States v. Basler Turbo-67 

Conversion DC-3 Aircraft, 906 F. Supp. 1332, 1336 (D. 

Ariz. 1995); see 21 U.S.C. § 881(j) (“[A] proceeding for 

forfeiture under this section may be brought . . . in the 

judicial district in which the criminal prosecution is 

brought.”). The evidence presented at Mr. Golb’s trial 

established that “all of the money received on behalf of 

the contracts in the name of Air Colombia . . . was the 

proceeds of illegal drug or money laundering transactions.” Basler, 906 F. Supp. at 1336. 

On July 12, 1991, the controller of Basler Flight services, also owned by the Basler family, informed the 

Government that Innovair used part of the Air Colombia 

proceeds to pay for a portion of the TLA. Innovair III, 72 

Fed. Cl. at 418. Because of this information, the Government added the TLA to the in rem action on July 16, 

1991. Id. 

After the TLA was seized, Innovair offered to post a 

substitute res bond of $1,250,000 in the Arizona Litigation 

to obtain the right to operate under the TLA. In a related 

action (“Wisconsin Litigation”) brought in the United 

States District Court for the Eastern District of Wisconsin 

(“Wisconsin Court”),3 Innovair had requested a preliminary injunction requiring BTC to transfer the conversion 

technology to Innovair pursuant to the TLA; however, the 

injunction was denied by the Wisconsin Court. Because of 

the denial of the injunction, Innovair withdrew its substitute res bond offer in the Arizona Litigation on September 

17, 1991. On October 18, 1991, Innovair, however, again 

offered to post a substitute res bond on terms that Inno-

 3 The specifics of the Wisconsin Litigation are discussed hereinafter. 
INNOVAIR AVIATION LIMITED v. US 6

vair contends were “strikingly similar” to terms BTC later 

offered. Innovair alleged that the Government ignored its 

second proposal that was characterized by the Government as “far too little and far too late.” 

On December 9, 1991, the Government and BTC 

stipulated to a substitute res bond transferring the TLA to 

BTC and extinguishing the rights of all other claimants. 

In exchange, BTC posted a substitute res bond amount of 

$1,375,000 representing the amount Air Colombia paid to 

Innovair and Innovair paid to BTC. Innovair III, 72 Fed. 

Cl. at 418. BTC also agreed to finish the conversion of 

Aircraft N95BF, which BTC would sell in the open market 

with the proceeds being paid to the Government in the 

amount equal to Air Colombia’s interest in Aircraft 

N95BF. Id. at 418–19. 

Innovair objected to the substitute res bond alleging 

eight different reasons: (1) it was willing to post a substitute res bond for the TLA on the same terms as BTC, but 

was not afforded the opportunity to do so; (2) the value of 

the TLA would be irreparably harmed if it was used by 

BTC who lacked international marketing experience; (3) 

its contract with UTC would be impaired and potentially 

irreparably damaged if BTC was allowed to sell conversions internationally; (4) if it prevailed on its claim for the 

return of the TLA, the TLA would not be returned in the 

same condition as at the time of seizure because BTC 

could have established contractual relationships in Innovair’s exclusive territory; (5) it would be severely damaged 

if BTC were allowed to retain profits from international 

sales, including from Aircraft N95BF; (6) the bond would 

interfere with the Wisconsin Litigation; (7) the bond 

amount was miscalculated and artificially inflated; and 

(8) the Arizona Court lacked authority to allow BTC to 

post bond. 
7 INNOVAIR AVIATION LIMITED v. US

Over Innovair’s objection, the Arizona Court approved 

the substitute res bond finding that: (1) BTC had standing 

to post the bond; (2) Innovair’s standing to object to the 

bond was questionable, but the Arizona Court assumed 

Innovair had standing for the purpose of deciding the 

motion to approve the bond; (3) no equitable ground for 

refusing to approve the bond existed; (4) approval of the 

bond would not interfere with the Wisconsin Litigation; 

(5) the Government’s best interest was protected; and (6) 

the “compromise” proposal4 suggested by Innovair had no 

merit and would result in a windfall for Innovair. The 

Arizona Court granted summary judgment for the Government in the civil forfeiture action, permitting the 

Government to seize, inter alia, the TLA and Aircraft 

N95BF. Basler, 906 F. Supp. at 1334. 

Innovair appealed the Arizona Court’s “determin[ation] that Innovair lacked standing” to “assert[] a 

claim to both assets.” United States v. Basler Turbo-67 

Conversion DC-3 Aircraft, No. 94-16876, 1996 WL 88075, 

*1 (9th Cir. Feb. 29, 1996). The Ninth Circuit reversed 

the Arizona Court and found that Innovair had standing 

as to both the TLA and Aircraft N95BF and was an innocent owner that did not have any knowledge of the source 

of Air Colombia’s money. Id. at *1–2. The court also 

found that the Government’s transfer of the TLA to BTC 

terminated Innovair’s rights in the TLA. Id. at *2. 

 4 Innovair’s “compromise” proposal suggested that 

the substitute res bond be replaced with an agreement 

that granted BTC only the right to market Aircraft 

N95BF and Aircraft N510NR, another seized plane. 

Innovair contended that the Government would receive 

$1,827,807 from the sale of Aircraft N95BF, which would 

secure Air Colombia’s funds intended as progress payments for the plane and would give the Government no 

basis for keeping the TLA as security for the funds. 
INNOVAIR AVIATION LIMITED v. US 8

On remand, the Arizona Court granted summary 

judgment for Innovair, finding the Government’s seizure 

of the TLA and Aircraft N95BF wrongful because Innovair was an innocent owner of the assets. Innovair III, 72 

Fed. Cl. at 419. However, because the TLA had already 

been transferred to BTC by the Government and could not 

be retransferred to Innovair, the Arizona Court awarded 

Innovair $1,939,310 plus prejudgment interest as compensation for the wrongful seizure of the TLA. According 

to the Arizona Court, $1,939,310 represented Innovair’s 

share of the cost of obtaining another MSTC. 

The Government appealed and argued that the Arizona Court lacked jurisdiction to award any amount in 

excess of the substitute res bond amount, while Innovair 

cross-appealed and argued that the Arizona Court undervalued the TLA. In the case’s second appeal, the Ninth 

Circuit vacated in part and remanded in part because it 

determined that the Arizona Court had jurisdiction over 

the TLA only up to the amount of the substitute res bond, 

which was $1,375,000, plus prejudgment interest. United 

States v. Basler Turbo-67 Conversion DC-3 Aircraft, Nos. 

99-15369, 00-15090, 2000 WL 1770611, *1 (9th Cir. Nov. 

30, 2000). 

On remand for the second time, in the third proceeding the Arizona Court awarded Innovair the substitute res

bond amount plus prejudgment interest, totaling 

$1,783,879.25, for the TLA. The order resulting from this 

third proceeding was not appealed by Innovair. 

C. 

In May of 1991 while the Arizona Litigation was 

pending, Innovair and BTC brought separate actions 

against each other in the Wisconsin Court. The parties 

asserted numerous causes of action against each other, 

including breach of fiduciary duty and breach of contract. 
9 INNOVAIR AVIATION LIMITED v. US

Innovair moved for a preliminary injunction requiring 

BTC to provide Innovair with information about DC-3 

plane conversion technology. Carmichael v. Basler Turbo 

Conversions, Inc., No. 91-3278, 1992 WL 9867, *1 (7th Cir. 

Jan. 24, 1992). The court denied the motion and consolidated the two actions. Innovair appealed the Wisconsin 

Court’s denial of a preliminary injunction. Id. The Seventh Circuit vacated the Wisconsin Court’s denial for lack 

of detailed findings and remanded the matter to the 

district court for further proceedings. Id. at *5. 

On September 23, 1993, Innovair and BTC settled all 

of their claims against each other in the Wisconsin Litigation. The settlement agreement required BTC to pay 

$2,750,000 to Innovair in exchange for Innovair relinquishing its rights to the TLA. As part of the agreement, 

Innovair retained the right to assert a claim against the 

Government for the seizure of the TLA.

D. 

Following the settlement of the Wisconsin Litigation, 

but concurrent with the then-pending Arizona Litigation, 

Innovair filed the present action in the Court of Federal 

Claims on July 10, 1996. Innovair III, 72 Fed. Cl. at 419. 

Innovair alleged that the Government’s seizure of the 

TLA without just compensation violated its Fifth 

Amendment property right. Id. The trial court stayed the 

action pending resolution of the second Ninth Circuit 

appeal in the Arizona Litigation. Id. 

Upon lifting the stay, the trial court requested briefing on “why this case should not be dismissed in light of . . 

. the Federal Circuit’s . . . decision in Vereda LTDA v. 

United States, 271 F.3d 1367 (Fed. Cir. 2001).” Innovair 

Aviation, Ltd. v. United States (Innovair I), 51 Fed. Cl. 

569, 569 (2002). Vereda held that the Court of Federal 

Claims’ Tucker Act jurisdiction was preempted by the 
INNOVAIR AVIATION LIMITED v. US 10

comprehensive statutory scheme in the Controlled Substances Act (“CSA”) for reviewing an in rem forfeiture. 

Vereda, 271 F.3d at 1375. The trial court “carefully 

reviewed the Court of Appeals’ Vereda opinion and [wa]s 

fairly well convinced it must dismiss this case.” Innovair 

I, 51 Fed. Cl. at 569. However, after briefing and oral 

argument, the court found that it had subject matter 

jurisdiction over Innovair’s Fifth Amendment takings 

claim because Innovair did not bring a substantive challenge to the Government’s seizure of the TLA. Innovair 

II, 58 Fed. Cl. 560. The court held that Innovair demonstrated “that the transfer of its TLA was a taking outside 

the scope of Vereda.” Id. at 563; see Vereda, 271 F.3d 

1367. 

After the trial court found it had jurisdiction over Innovair’s takings claim, the court granted summary judgment for Innovair because the forfeiture of the TLA, of 

which Innovair was an innocent owner, resulted in a 

taking due just compensation under the Fifth Amendment. Innovair III, 72 Fed. Cl. at 425. In reaching its 

holding, the trial court first found that Innovair held a 

valid property interest in the TLA in the form of contract 

rights as of the time of the seizure and maintained that 

interest until the property’s forfeiture. Id. at 421. The 

trial court also found that Innovair’s rights were not 

terminated by either a termination letter BTC sent to 

Innovair because BTC failed to complete the termination 

process, or by the settlement of the Wisconsin Litigation 

because Innovair expressly retained the right to bring suit 

against the Government on the TLA. Id. at 420–21. 

Second, the trial court determined that the Government’s 

actions constituted a per se taking because the Government permanently deprived Innovair of the TLA by 

transferring the TLA to BTC. Id. at 422–25. The court 
11 INNOVAIR AVIATION LIMITED v. US

further found that the substitute res bond amount did not 

justly compensate Innovair for the TLA. Id. at 425. 

After the trial court entered its summary judgment 

order, the Government filed a motion for reconsideration 

based on AmeriSource v. United States, 525 F.3d 1149 

(Fed. Cir. 2008). Innovair Aviation, Ltd. v. United States 

(Innovair IV), 83 Fed. Cl. 105, 106 (2008). In AmeriSource, this court held that the Government’s seizure and 

retention of property under its police power does not 

constitute a “public use” within the meaning of the Fifth 

Amendment Takings Clause, regardless of whether the 

property owner is innocent. 525 F.3d at 1152–57. The 

trial court denied the motion and distinguished AmeriSource because the seized TLA was not an instrument in 

the alleged criminal activity and was not subject to forfeiture as held by the Ninth Circuit. Innovair IV, 83 Fed. Cl. 

at 107. 

Next, the trial court determined what just compensation Innovair was due. Innovair Aviation, Ltd. v. United 

States (Innovair V), 83 Fed. Cl. 498 (2008). The court 

awarded damages to Innovair for the value of the TLA at 

the time of the taking based on the discounted cash flow 

method with a 10% discount rate. Id. at 502, 506. After 

the parties submitted calculations of the total damages in 

this case, the court awarded Innovair $16,100,741. The 

award amount consisted of $6,122,468, which is the 

$7,497,468 that represented the net income value of the 

discounted TLA as of the date of taking minus the 

$1,375,000 previously awarded to and received by Innovair, and $9,978,273, which is the interest through the 

date of final judgment on September 30, 2009. 

The Government appeals the trial court’s decisions, 

raising three specific issues: (1) whether the court erred in 

exercising subject matter jurisdiction over Innovair’s Fifth 
INNOVAIR AVIATION LIMITED v. US 12

Amendment takings claim, (2) whether the court erred in 

finding that the transfer of the TLA constituted a taking 

for public use without just compensation, and (3) whether 

the court erred in applying a 10% discount rate to calculate the fair market value of the TLA. We have jurisdiction under 28 U.S.C. § 1295(a)(3). 

DISCUSSION

In reviewing the judgments of the Court of Federal 

Claims, this court reviews legal conclusions de novo. 

Holland v. United States, 621 F.3d 1366, 1374 (Fed. Cir. 

2010); Suess v. United States, 535 F.3d 1348, 1359 (Fed. 

Cir. 2008); Bass Enters. Prod. Co. v. United States, 133 

F.3d 893, 895 (Fed. Cir. 1998); Columbia Gas Sys., Inc. v. 

United States, 70 F.3d 1244, 1246 (Fed. Cir. 1995). 

Whether the Court of Federal Claims has jurisdiction is a 

question of law. Vereda, 271 F.3d at 1374; Adkins v. 

United States, 68 F.3d 1317, 1321 (Fed. Cir. 1995). 

The Government contends that the trial court lacked 

jurisdiction over Innovair’s suit. For the following reasons, we agree. 

Initially, the trial court itself was “fairly well convinced it must dismiss this case.” Innovair I, 51 Fed. Cl. 

at 569. In the court’s show cause order requesting briefing on how this case was distinguishable from the Vereda

case, the trial court correctly explained: 

Congress created a comprehensive administrative 

and judicial review of government forfeitures under 21 U.S.C. § 881 and 18 U.S.C. § 981. In 

Vereda, the Federal Circuit made it clear that 

“[t]his statutory scheme evinces Congress’ intent 

to preempt any Tucker Act jurisdiction over a 

money claim that challenges the propriety of an in 

rem administrative forfeiture of property seized . . 
13 INNOVAIR AVIATION LIMITED v. US

. .” While the Plaintiff does not challenge the propriety of the administrative forfeiture, it instead 

challenges the award it received for the property 

taken. However, the Federal Circuit also made it 

clear in Vereda that this Court cannot “entertain a 

taking[s] claim that requires the court to ‘scrutinize the actions of another tribunal.’” While the 

Plaintiff here does not ask this Court to overturn 

the forfeiture proceedings of the [Arizona Court], 

it is asking the Court to find that the district court 

reached a wrong decision as to the value of the 

[TLA] that the government took from Innovair. 

This the Court cannot do, nor can it review the 

forfeiture decision of the district court. 

Id. (citations omitted); see Vereda, 271 F.3d 1367. 

However, after receiving the parties’ briefing and 

hearing oral arguments, the court found that it had 

subject matter jurisdiction. Innovair II, 58 Fed. Cl. at 

562–63. The trial court reviewed Vereda and the facts 

and allegations surrounding Innovair’s claim and found 

that the only distinguishing fact between the two cases 

was that Innovair was not bringing a substantive challenge to the Government’s seizure of the TLA, while the 

claimant in Vereda attacked the merits of the forfeiture. 

Id.; see Vereda, 271 F.3d at 1375. 

Contrary to the trial court’s finding, this court’s decision in Vereda is controlling and directly on point. See

Vereda, 271 F.3d 1367. In Vereda, the Drug Enforcement 

Administration (“DEA”) seized a plane in which Vereda, 

Ltda. (“Vereda”) had an interest because there was probable cause to believe that the plane was used to transport 

drugs and had been purchased with drug proceeds. Id. at 

1370. After the DEA declared the airplane administratively forfeited, Vereda brought suit alleging that the 
INNOVAIR AVIATION LIMITED v. US 14

DEA’s forfeiture constituted “a compensable taking under 

the Fifth Amendment.” Id. This court held that the trial 

court lacked jurisdiction in Vereda “because relevant 

statutes provide for a comprehensive administrative and 

judicial system to review the in rem administrative forfeiture of property seized pursuant to 21 U.S.C. § 881.” Id.

at 1375. Thus, the Court of Federal Claims’ “Tucker Act 

jurisdiction over the subject matter covered by the scheme 

[wa]s preempted.” Id. The court found that the CSA’s 

statutory scheme provided for complete review of “(i) the 

merits of a seizure and forfeiture of property initiated 

under 21 U.S.C. § 881 and (ii) any related due process 

claims.” Id. 

In addition, this court held in Allustiarte v. United 

States, 256 F.3d 1349, 1351 (Fed. Cir. 2001) that the 

Court of Federal Claims lacked jurisdiction to entertain a 

takings claim that “would have to determine whether 

appellants suffered a categorical taking of their property 

at the hands of the . . . courts.” In Allustiarte, debtors 

who filed for bankruptcy alleged that “the losses they 

suffered as a result of the bankruptcy courts’ approval of 

the actions of the [court-appointed] bankruptcy trustees 

constitute[d] takings of which they [we]re entitled to just 

compensation.” Id. at 1350–51. This court found that 

exercising jurisdiction “would require the court to scrutinize the actions of the bankruptcy trustees and courts.” 

Id. at 1352. 

In this case, the CSA’s comprehensive statutory 

scheme vested in the Arizona Court exclusive jurisdiction 

to approve the substitute res bond, which necessarily 

included the extinguishing clause. See Vereda, 271 F.3d 

at 1375 (“Congress created a statutory scheme that provides a claimant . . . with the ability to challenge the 

merits of an in rem forfeiture . . . before a district court.”) 
15 INNOVAIR AVIATION LIMITED v. US

Before the Arizona Court, Innovair had the opportunity to object to the substitute res bond and did object on 

numerous grounds. However, Innovair did not object to 

the clause in the substitute res bond that extinguished all 

of the rights of other claimants. See J.A. 69–70 (“[A]ny 

claimant or potential claimant receiving notice of this 

Stipulated Substitute Res Bond[] shall have no claim to 

the Technology Licensing Agreement.”). Innovair’s failure 

to object is particularly telling because Innovair clearly 

anticipated that it might be found “entitled to return of 

the [TLA]” when it objected to the substitute res bond on 

the ground that “if BTC [wa]s allowed to post a bond for 

the [TLA], the government w[ould] not be able to return 

Innovair’s asset in the same condition as it was at the 

time of the seizure.” Because Innovair anticipated that it 

might later prevail as an innocent owner after BTC 

posted bond, it was on notice that it should contest the 

approval of the bond on the ground that the approval 

would permanently deprive Innovair of the TLA. Thus, 

any potential relief for Innovair should have been brought 

through the Arizona Court, where Innovair could have 

objected to the extinguishing clause and then appealed if 

the objection was overruled. 

Innovair argues that it was deprived of its interest in 

the TLA when the Arizona Court approved the substitute 

res bond. If the Arizona Court’s approval allowed a taking 

of the TLA to occur, Innovair should have appealed that 

approval to the Ninth Circuit to protect its interest in the 

TLA. However, Innovair failed to appeal the Arizona 

Court’s approval of the substitute res bond, including the 

extinguishing clause, to the Ninth Circuit. See Basler, 

1996 WL 88075, at *1. Innovair limited its first appeal to 

the Arizona Court’s finding that Innovair lacked standing 

to challenge the substitute res bond, id., and its second 

appeal to the Arizona Court’s valuation of the TLA, Ba-
INNOVAIR AVIATION LIMITED v. US 16

sler, 2000 WL 1770611, at *1. Innovair’s failure to appeal 

the approval of the bond to the Ninth Circuit is dispositive of its claim and extinguished jurisdiction of the Court 

of Federal Claims over Innovair’s claim. 

As this court held in Vereda, the Court of Federal 

Claims “does not have jurisdiction to review the decision 

of district courts” and “cannot entertain a taking[s] claim 

that requires the court to ‘scrutinize the actions of’ another tribunal.” Vereda, 271 F.3d at 1375 (quoting Allustiarte, 256 F.3d at 1352). Indeed, the Court of Federal 

Claims “does not have jurisdiction over [a] taking[s] claim 

requiring a determination of the correctness of the administrative forfeiture.” Id. at 1375. Innovair admits that in 

this action against the Government it is seeking just 

compensation for the full value of the TLA. Consideration 

of Innovair’s claim necessarily involves a collateral attack 

on the Arizona Court’s approval of the substitute res bond, 

which encompassed determining whether the amount was 

the fair value of the TLA. See 19 U.S.C. § 1606 (“The 

appropriate . . . officer shall determine the domestic value, 

at the time and place of appraisement, of any . . . merchandise . . . seized . . . .”); 21 C.F.R. § 1316.98 (“Where a 

conveyance is being forfeited in a judicial proceeding for a 

drug-related offense, the owner may obtain release of the 

property by filing a substitute res bond with the seizing 

agency. The conveyance will be released to the owner 

upon the payment of a bond in the amount of the appraised value of the conveyance . . . .”). In fact, it is clear 

from the trial court’s opinion that its holding is premised 

on its belief that the bond amount did not reflect the fair 

market value of the TLA. Innovair, 72 Fed. Cl. at 425. 

Although the United States Attorney’s Office never formally appraised the TLA, the Arizona Court’s approval of 

the substitute res bond necessarily included a finding that 

the bond amount was the fair value of the TLA. Thus, the 
17 INNOVAIR AVIATION LIMITED v. US

trial court’s finding that the bond amount was not just 

compensation is a collateral attack on the Arizona Court’s 

approval of the bond amount. Vereda prohibits precisely 

such a collateral attack. 

Vereda challenged “the substantive validity of the forfeiture,” but “the Court of Federal Claims does not have 

authority to determine whether the airplane . . . met the 

criteria for forfeiture.” Vereda, 271 F.3d at 1374–75. 

Innovair argues that Vereda is distinguishable because 

the merits of the Government’s forfeiture are not at issue 

in this case, as Innovair has already challenged the 

Government’s forfeiture and prevailed at the Ninth Circuit. See Basler, 1996 WL 88075. Although Innovair is 

correct that the TLA was forfeited despite not being 

forfeitable, Innovair was already granted appropriate 

compensation for the wrongful forfeiture when the Arizona Court awarded Innovair the substitute res bond 

amount. See 21 U.S.C. § 881(a)(4)(C) (“A party who is 

innocent of wrongdoing [may] not have its interest in 

property forfeited.”). 

Innovair’s disagreement with the Arizona Court’s 

valuation of the TLA in the substitute res bond is a separate issue. The substitute res bond amount was what the 

Government had in its possession in exchange for the TLA 

as a result of the Arizona Court’s valuation of the TLA. 

The Ninth Circuit found that the Arizona Court had 

jurisdiction only up to the bond amount, and its belief 

concerning the fair value of the TLA is irrelevant. Basler, 

1996 WL 88075, at *1–*2 (“[W]hat Innovair paid [for the 

TLA] is not necessarily, or even particularly, a proper 

measure of what its rights were worth.”). Further, although Innovair argued that the Arizona Court undervalued the TLA in the second appeal to the Ninth Circuit, 

Innovair previously argued in its objection to the substitute res bond at the Arizona Court that the bond amount 
INNOVAIR AVIATION LIMITED v. US 18

was “artificially inflated.” It cannot now complain that 

the TLA was undervalued by the Arizona Court. 

Notwithstanding Innovair’s failure to object to the 

substitute res bond’s extinguishing clause at the Arizona 

Court or to appeal the bond’s approval to the Ninth Circuit, the CSA’s comprehensive statutory scheme limits 

Innovair’s relief to that obtainable through the district 

court, not the Court of Federal Claims. See Vereda, 

271 F.3d at 1375. Innovair’s failure to challenge the 

extinguishing clause of the TLA is dispositive and limits 

its recovery. 

For the foregoing reasons, we conclude that Innovair 

has not asserted a claim within the Court of Federal 

Claims’ jurisdiction. Because the trial court improperly 

exercised jurisdiction over Innovair’s claim, we reverse. 

Thus, we need not consider the Government’s other 

appeal grounds, namely whether the transfer of the TLA 

constituted a taking for public use without just compensation and whether a 10% discount rate used to calculate 

the fair market value of the TLA was improper. 

CONCLUSION

Because Congress provided a comprehensive administrative and judicial system in the district courts to review 

the in rem forfeiture of property seized pursuant to 

21 U.S.C. § 881, we hold that the Court of Federal Claims 

did not have subject matter jurisdiction over this case and 

reverse. 

REVERSED 

No costs.