Unibank for Sav. v. 999 Private Jet, LLC.

31 F.4th 1

UNIBANK FOR SAVINGS, Plaintiff, Appellee,

v.999 PRIVATE JET, LLC.; Elina Sargsyan; Edgar Sargsyan, Defendants, Appellees.

SBK Holdings USA, Inc. Intervenor, Appellant.

Nos. 19-1990

21-1184

United States Court of Appeals, First Circuit.

April 11, 2022

Mark J. Geragos, with whom Geragos & Geragos APC, was on brief, for appellant.

Eric Magnuson, with whom Gabriel Rossman and Nutter McClennen & Fish, LLP were on brief, for appellee.

Before Lynch, Kayatta, and Gelpí, Circuit Judges.

GELPÍ, Circuit Judge.

Unibank for Savings ("Unibank") originally brought this action against Edgar Sargsyan ("Sargsyan"), his spouse Elina Sargsyan, and 999 Private Jet, LLC ("999 Private Jet") for breach of their obligations under a promissory note secured by a Gulfstream aircraft. After the district court granted Unibank's unopposed motion for a preliminary injunction to repossess the aircraft, SBK Holdings USA, Inc. ("SBK") intervened, asserting an alleged superior security interest in said aircraft. The district court entered summary judgment against SBK and subsequently denied its motion to set aside the judgment. SBK appeals both rulings. We affirm.

I. Background ¹

SBK is an investment company specializing in real and personal property. Sargsyan was its president and legal counsel from December 2013 until July 2016, when he was terminated for breaching his fiduciary duties. Sargsyan's relevant actions date back to 2015, when SBK was negotiating the purchase of a 1997 Gulfstream aircraft, Model G IV-SP, Serial No. 1315, FAA Registration No. N999SE (the "aircraft"). Sargsyan was required to report all current and potential investments and properties, as well as compile a status account of all SBK transactions. Additionally, he was required to ensure that title to all property acquired by SBK was held in its name. Sargsyan oversaw the purchase of the aircraft with SBK funds, but as the negotiations for the same took place, he created a new company independent from SBK. Instead of transferring the aircraft to SBK, he registered its title in the name of his newly created corporation, Regdalin Aviation LLC ("Regdalin"). Around February 2016, Sargsyan, on behalf of Regdalin, obtained a loan from Huntington National Bank (the "Huntington loan" and "Huntington Bank"), which perfected a security interest in the aircraft.

In September 2016, SBK discovered that the aircraft's title was registered to Regdalin rather than to itself. As a result, in December 2016, SBK's Chief Executive Officer ("CEO"), Dan McDyre, requested the Federal Aviation Administration ("FAA") to place a preliminary lien on the aircraft in the amount of $6,227,250. The FAA maintained the claim-of-lien letter in a suspense file.

On February 3, 2017, SBK brought an action in Los Angeles Superior Court against Sargsyan, Regdalin, and others seeking damages for breach of fiduciary duties, fraud, and embezzlement.² After the California case had commenced, Sargsyan created yet another new company, 999 Private Jet, and transferred the ownership of the aircraft from Regdalin thereto. In May 2017, Sargsyan, Elina Sargsyan, and 999 Private Jet issued a $4,348,334.01 promissory note payable to Unibank in order to refinance the Huntington loan. Unibank, in turn, accepted the aircraft as a security interest on the note and, on May 4, 2017, disbursed $4,348,334.01 to Huntington Bank to discharge the aircraft lien. On May 9, 2017, Unibank registered its security interest. By June 2018, Sargsyan, his spouse, and 999 Private Jet defaulted on their obligations towards Unibank.

A. Procedural History

In August 2018, Unibank brought an action in the United States District Court for the District of Massachusetts against Sargsyan, his spouse, and 999 Private Jet, based on their nonpayment of the May 2017 promissory note. On September 7, 2018, the district court found that Unibank had a perfected secured interest in the aircraft, and thus granted Unibank's unopposed motion for a preliminary injunction authorizing it to repossess the aircraft. The court further entered default judgment on September 14, 2018 in favor of Unibank. Since then, Unibank has been in possession of the aircraft.

On October 31, 2018, SBK moved to intervene, claiming ownership of the aircraft by virtue of an alleged senior security interest in the same.³ The district court allowed SBK's intervention. Unibank subsequently moved for summary judgment as to SBK, arguing that it, rather than SBK, had the senior perfected interest in the aircraft. On September 12, 2019, the district court granted Unibank's motion. SBK next filed a motion on November 12, 2020 under Fed. R. Civ. P. 60(b) to set aside the judgment and conduct discovery, based on Sargsyan's criminal felony plea in the United States District Court for the Central District of California for conspiracy to commit identity theft and fraud against several national and multinational banks.⁴ The district court determined that Sargsyan's criminal case was unrelated to the controversy before it, and thus, denied SBK's motion. SBK timely appealed.

II. Standard of Review

"We review an order granting summary judgment de novo." Perea v. Ed. Cultural, Inc., 13 F.4th 43, 50 (1st Cir. 2021) (quoting Irobe v. U.S. Dep't of Agric., 890 F.3d 371, 377 (1st Cir. 2018) ). We will affirm the entry of summary judgment only if the record discloses no genuine dispute of material fact and demonstrates that the moving party is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(a). A fact is material when it has the potential to change a case's outcome. See Cherkaoui v. City of Quincy, 877 F.3d 14, 23 (1st Cir. 2017). "A dispute is ‘genuine’ when ‘the evidence about the fact is such that a reasonable jury could resolve the point in favor of the nonmoving party.’ " Doe v. Trs. of Bos. Coll., 892 F.3d 67, 79 (1st Cir. 2018) (quoting Rivera-Muriente v. Agosto-Alicea, 959 F.2d 349, 352 (1st Cir. 1992) ). We now turn to the record before us. We first address the issue of FAA registration, examining whether Unibank had record or actual notice of SBK's claim to the aircraft. We then discuss the state law issues as to the validity of Unibank's interest in the aircraft. Lastly, we examine SBK's Rule 60(b) motion.

III. Discussion

A. FAA Registration

We begin with the federal-law issue of the interpretation of 49 U.S.C. §§ 44107 - 44108, which governs the recordation and validity of conveyances, leases, and security interests for civil aircraft in the United States. As the Supreme Court stated concerning the predecessor statute⁵ in Philko Aviation, Inc. v. Shacket, 462 U.S. 406, 413, 103 S.Ct. 2476, 76 L.Ed.2d 678 (1983), "[a]lthough state law determines priorities, all interests must be federally recorded before they can obtain whatever priority to which they are entitled under state law." Aiming for a clear and uniform registration system for civil aircraft, Congress codified the procedure for perfecting an interest in aircraft, requiring interest holders to duly record any such interest with the FAA. 49 U.S.C. §§ 44107 - 44108 ; see also Philko Aviation, 462 U.S. at 411, 103 S.Ct. 2476. Congress's purpose was to give uniformity to the recordation of titles "so that a person, wherever he may be, will know where he can find ready access to the claims against, or liens, or other legal interests in an aircraft." Philko Aviation, 462 U.S. at 411, 103 S.Ct. 2476 (quoting To Create a Civil Aeronautics Authority: Hearing on H.R. 9738 Before the H. Comm. on Interstate and Foreign Com., 75th Cong. 407 (1938) (statement of F. Fagg, Director of Air Commerce, Department of Commerce)). Therefore, unless the interest is recorded with the FAA, the conveyance is valid only against "(1) the person making the conveyance, lease, or instrument; (2) that person's heirs and devisees; and (3) a person having actual notice of the conveyance, lease, or instrument." 49 U.S.C. § 44108(a).

The FAA outlines the requirements for recording an interest in aircraft, as delegated to the agency under 49 U.S.C. § 44107(a), in its Aircraft Registration and Recordation Processes Guide. See U.S. Dep't of Transp., Fed. Aviation Admin., Aircraft Registration and Recordation Processes (2018) ("Aircraft Registration and Recordation Guide"). We take judicial notice of the Aircraft Registration and Recordation Guide, and SBK does not dispute that we should follow that guide. See, e.g., Or. Nat. Desert Ass'n v. Bureau of Land Mgmt., 625 F.3d 1092, 1112 & n.14 (9th Cir. 2010) (taking judicial notice of agency handbook).⁶

1. Record Notice

SBK admits that it presented the district court with only two pieces of evidence in support of its claim of recordation. The first was a declaration from its CEO, Dan McDyre, asserting that

[i]n December 2016, [he] contacted the FAA by letter (the ‘Aircraft Claim of Lien Letter’) and requested a lien in the amount of $6,227,250 be placed on the Aircraft (which, at the time, had tail number N580KF). On or about December 30, 2016, the FAA Aircraft Registration Bureau filed the Aircraft Claim of Lien Letter.

The FAA filed said claim-of-lien letter in a suspense file. The second was a purported title-search document that referred to the claim-of-lien letter given to the FAA. The aircraft title-search was not conducted by the FAA but rather a third party. No letter was attached to the title-search document submission to the district court.

For a number of reasons, SBK's submissions do not satisfy its burden of showing that its claim-of-lien letter met the recordation requirements to perfect a security interest under Philko Aviation. 462 U.S. at 413, 103 S.Ct. 2476. SBK never presented the claim-of-lien letter to the district court. Further, according to the Aircraft Registration and Recordation Guide, any letter that remains in a FAA suspense file holds unrecorded status, and thus is invalid until all recording requirements are met. See Aircraft Registration and Recordation Guide §§ 4.6.2, 5.12 (2018); see...