Court Opinion

ID: 3174082
Source: CourtListenerOpinion
Date Created: 2016-02-05 08:30:20.009473+00
Date Added: 2024-06-11T14:22:41.406491
License: Public Domain

Case: 15-10303    Date Filed: 02/03/2016      Page: 1 of 5

                                                               [DO NOT PUBLISH]

               IN THE UNITED STATES COURT OF APPEALS

                        FOR THE ELEVENTH CIRCUIT
                          ________________________

                                 No. 15-10303
                           ________________________

           D.C. Docket Nos. 8:14-cv-01742-JSM; 8:13-bk-09719-CPM

In Re: AVANTAIR, INC.,
       f.k.a. Ardent Acquisition Corp.,

                                        Debtor.
____________________________________________________

CORRECTIONS CORPORATION OF AMERICA,
d.b.a. CCA of Tennessee, Inc.,

                                                  Plaintiff - Appellant,

versus

BETH ANN SCHARRER,
as Chapter 7 for the Bankruptcy Estate of Avantair, Inc.,
THE N169SL FRACTIONAL OWNERS,

                                                  Defendants - Appellees.

                           ________________________

                   Appeal from the United States District Court
                       for the Middle District of Florida
                         ________________________

                                (February 3, 2016)
                Case: 15-10303        Date Filed: 02/03/2016      Page: 2 of 5

Before TJOFLAT and ROSENBAUM, Circuit Judges, and RESTANI, * Judge.

PER CURIAM:

       Is my airplane still my airplane when all of its parts have been removed?

Or, as better characterized under the facts of this case, is your airplane now my

airplane after my airplane’s parts have been installed on yours?                      Appellant

Corrections Corporation of America (“CCA”) invites us to resolve this variation on

the Paradox of Theseus’s Ship by answering a resounding “yes” to the latter

question and, in doing so, to vacate the sales approach adopted by the Bankruptcy

Court in this case in favor of an approach that would recognize ownership interests

of every aircraft owner in one another’s planes. We decline CCA’s invitation to

drift into this philosophical turbulence, though, and affirm the well-grounded

rulings of the Bankruptcy Court.1

       This case arises out of the involuntary bankruptcy proceedings of Avantair,

Inc., a company that ran a fractional-owner aircraft operation under Subpart K of

Part 91 of the Federal Aviation Regulations, 14 C.F.R. §§ 91.1001 – 91.443. To

participate in Avantair’s program, CCA and others purchased at least one-sixteenth

shares in specific airplanes via a Purchase Agreement.                      Then, through a
       *
          Honorable Jane A. Restani, Judge for the United States Court of International Trade,
sitting by designation.
       1
         The N169SL Appellees filed a motion to dismiss the appeal, arguing that CCA was not
a “person aggrieved” by the Bankruptcy Court’s order. Because CCA’s ultimate financial
position remains speculative at this point, we find CCA sufficiently aggrieved to pursue this
appeal and deny the Appellees’ motion. See Atkinson v. Ernie Haire Ford, Inc. (In re Ernie
Haire Ford, Inc.), 764 F.3d 1321, 1325 (11th Cir. 2014).
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“Management and Dry Lease Agreement,” the owners leased their interests in the

planes back to Avantair, who was responsible for scheduling flights at the owners’

request and maintaining the planes in an airworthy condition. The interpretation of

the program documents is the crux of this appeal.

      When Avantair began experiencing financial troubles, the quality of its

maintenance operations took a nose dive. To keep as many planes as possible

flying, Avantair cannibalized parts from other planes in the fleet, effectively

grounding the donor planes. In addition, Avantair failed to keep adequate safety

records of the part transfers. When the Federal Aviation Administration caught

wind of Avantair’s activities, it grounded Avantair’s fleet, forcing the company to

cease operations and eventually enter bankruptcy.

      To prevent loss or theft of the planes and to maximize their value to the

estate, the Bankruptcy Trustee, in cooperation with some of the fractional owners,

developed a plan to sell the aircraft. The sales proceeds would first be distributed

to various categories of creditors, and any funds left over would then be distributed

to the shareholders of the particular plane sold.

      CCA objected to distributing the proceeds from the sale of a specific plane

to just that plane’s shareholders.       First, CCA argued that fractional-share

participants did not actually buy ownership interests in any plane but rather just

purchased flight time. And even if the shareholders owned their planes, CCA

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asserted, Avantair’s pervasive parts-swapping practice essentially gave each

participant an ownership interest in every other plane in the program.

Accordingly, CCA demanded a “pooling” approach to the distribution of sales

proceeds—proceeds would be held until every plane was sold, and then the entire

fund would be distributed among the owners. To do otherwise, in CCA’s view,

would unjustly enrich the owners of the maintained and airworthy planes at the

expense of the owners of the donor planes whose parts were used to maintain them.

The Bankruptcy Court overruled CCA’s objections, and the District Court affirmed

that determination.

      We review the Bankruptcy Court’s findings of law de novo and its findings

of fact for clear error. Piazza v. Nueterra Healthcare Physical Therapy, LLC (In re

Piazza), 719 F.3d 1253, 1260 (11th Cir. 2013).           The Bankruptcy Court’s

construction of contract language is a legal determination that we review de novo.

Equitable Life Assurance Soc’y v. Sublett (In re Sublett), 895 F.2d 1381, 1383–84

(11th Cir. 1990).

      In overruling CCA’s objections, the Bankruptcy Court concluded that the

program documents unambiguously designed a fractional-ownership program, with

each shareholder necessarily owning a share of a specific plane. The Bankruptcy

Court further found that the program documents executed by the participant-

owners authorized Avantair to swap parts between planes to maximize the

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efficiency of the program. To the extent that Avantair failed to replace parts or

maintain the donor planes, the Bankruptcy Court determined that the owners of

such planes have a claim against Avantair (or the estate) for breaching its

obligations to replace parts or maintain the donor planes but that the authorized

swapping of parts did not and could not commingle the participants’ ownership

interests. With the benefit of the parties’ arguments and after a de novo review of

the record, we discern no error in the Bankruptcy Court’s reasoning or rulings and

affirm the order of the District Court affirming the order of the Bankruptcy Court.

      AFFIRMED.

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