All Bright Sanitation of Colorado, Inc. v. US Citizenship & Immigration Services
Filing
29
ORDER granting in part 23 the Plaintiff's Motion for Summary Judgment; and denying 24 the Government's Motion for Summary Judgment. The decision under review is VACATED and REMANDED to the Agency for further consideration in light of this ORDER. See attached ORDER for additional details. The Clerk shall CLOSE this case. Signed by Judge Robert N. Scola, Jr. on 9/11/12. (jky)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
Case No. 10-cv-21808-SCOLA
ALL BRIGHT SANITATION
OF COLORADO, INC.,
Plaintiff,
vs.
U.S. CITIZENSHIP AND
IMMIGRATION SERVICES,
Defendant.
_____________________________________/
ORDER ON CROSS MOTIONS FOR SUMMARY JUDGMENT
THIS MATTER is before the Court upon the Plaintiff’s Motion for Summary Judgment
[ECF No. 23], filed by All Bright Sanitation of Colorado, Inc. (“All Bright”), and the
Defendant’s Cross-Motion for Summary Judgment [ECF No. 24], filed by United States
Citizenship and Immigration Services (the “Agency”).
For the reasons explained below,
Plaintiff’s Motion is granted in part, while Defendant’s Cross-Motion is denied. The Court
vacates the Agency’s decision and remands this matter for further consideration, consistent with
this Order.
Introduction
In this case, All Bright seeks a determination under the Administrative Procedure Act
(“APA”), 5 U.S.C. §706 et seq., that the Government improperly denied its petition for a foreign
national to receive United States Non-Immigrant Investor Status pursuant to the Immigration and
Nationality Act, 8 U.S.C. § 1101(a)(15)(E), and certain Federal Regulations, 8 CFR §214.2(e).
All Bright requested that the Agency change the nonimmigrant visa status of its sole owner and
shareholder, Simon Geisler, to “E-2 Treaty Investor” from “F-1 Student,” the visa classification
Geisler previously enjoyed. The Agency denied All Bright’s application principally because it
found Geisler, the treaty investor, had not satisfied the requirements of an “investment” under 8
C.F.R. § 214.2(e)(12).
The question before the Court is whether the Agency properly
determined that Geisler was not eligible for the “E-2 Treaty Investor” classification.
Background1
A. Requirements For Treaty Investor Status
The “E-2 Treaty Investor” visa classification was established by Congress in order to
encourage capital inflow by foreign investors and to create additional employment opportunities
for United States citizens. A treaty investor is someone admitted to the United States “solely to
develop and direct the operations of an enterprise in which he has invested, or of an enterprise in
which he is actively in the process of investing, a substantial amount of capital.” 8 U.S.C.
§ 1101(a)(15)(e)(ii). The governing requirements for obtaining this visa classification are set
forth in 8 U.S.C. § 1101(a)(15)(e)(ii), and the implementing regulations, 8 C.F.R. § 214.2(e)(12)
and 22 C.F.R. § 41.51, as well as in the U.S. Department of State Foreign Affairs Manual.
Of relevance here, the regulations require the treaty investor to have made an
“investment,” which is defined as:
[T]he treaty investor’s placing of capital, including funds and other assets (which
have not been obtained, directly or indirectly, through criminal activity), at risk in
the commercial sense with the objective of generating a profit. The treaty
investor must be in possession of and have control over the capital invested or
being invested. The capital must be subject to partial or total loss if investment
fortunes reverse. Such investment capital must be the investor’s unsecured
personal business capital or capital secured by personal assets. Capital in the
process of being invested or that has been invested must be irrevocably committed
to the enterprise. . . .
See 8 C.F.R. § 214.2(e)(12) (emphasis supplied); see also 22 C.F.R. § 41.51(b)(7).
So long as the funds or assets are received by legitimate means and are in the treaty
investor’s possession and control, they may qualify as an “investment,” even if received as a gift.
See, e.g., 9 FAM 41.51 N8.1-1. The value of equipment invested into the treaty enterprise may
also be counted towards an “investment.” See, e.g., 9 FAM 41.51 N8.2-2. Likewise, loans may
qualify, but not if they are secured with the assets of the treaty enterprise:
Loans secured by the assets of the investment enterprise, such as mortgage debt or
commercial loans, may not be used to meet the investment requirement. On the
other hand, acceptable investment funds include such personal assets as a second
mortgage on a home, unsecured or unencumbered loans or assets, and loans on
the alien’s personal signature.
See 62 Fed. Reg. 48138-01 (Sept. 12, 1997); see also 9 FAM 41.51 N8.1-2.
1
The material facts in this case are not in dispute, as both parties concede. The Court
draws the above factual and procedural background from the administrative record and the
parties’ summary judgment papers.
B. Geisler’s Request For Treaty Investor Status
On September 30, 2009, All Bright filed its petition seeking to qualify Geisler, a citizen
of Austria, as an “E-2 Treaty Investor.” Geisler formed and incorporated All Bright, a Colorado
corporation of which he is the sole owner and shareholder. The application indicated that
Geisler, through All Bright, had invested a total of $653,329 in order to purchase an existing
garbage collection business, Canyon Waste & Recycling, Inc. (“Canyon”).
The claimed
investment was comprised of $226,690 in equipment, $375,000 in loans, and the rest in cash.
The cash had allegedly been given to Geisler by his father, who owned and operated another
waste management company in North Carolina. Geisler’s father had also gifted the garbage
collection equipment, for $1, directly to All Bright. There were two loans: one from Canyon’s
owners to All Bright for $175,000; and another from LEAF Funding, Inc., a third party lender, to
All Bright for $200,750. Although there was no collateral on the $175,000 loan, Geisler signed a
personal guaranty for payment. The garbage collection equipment, gifted by Geisler’s father,
was pledged as collateral on the $200,750 loan. That loan was also backed by a personal
guaranty from Geisler.
C. The Agency’s Decision
The Agency denied All Bright’s petition on March 15, 2010, finding that it failed to
establish the necessary statutory and regulatory requirements for Geisler to receive the
“E-2 Treaty Investor” visa classification. Thereafter, All Bright filed a motion to reopen, which
the Agency denied on May 5, 2010, leaving the earlier decision undisturbed.
On June 2, 2010, All Bright filed a Complaint in this Court, challenging the Agency’s
decision under the APA. Subsequently, on July 31, 2010, the parties informed the Court that the
Agency had agreed to receive further evidence from All Bright in support of its petition. The
Court therefore administratively closed the case on August 5, 2010, to allow the Agency
sufficient time to consider any new evidence. On August 11, 2010, the Agency vacated its
previous decision and granted All Bright’s motion to reopen.
On January 7, 2011, after All Bright submitted additional information, the Agency issued
a new decision that again denied All Bright’s petition. According to the Agency, All Bright
failed to show that the capital invested in the treaty enterprise met all of the requirements for an
“investment” under 8 U.S.C. § 1101(a)(15)(ii) and 8 C.F.R. § 214.2(e)(12). The Agency found
that Geisler failed to show he was “in possession of and ha[d] control over the capital invested or
being invested,” as required by the regulations. See 8 C.F.R. § 214.2(e)(12). The Agency
explained that the record showed the equipment, worth $248,689, had been transferred directly
from Geisler’s father to All Bright in exchange for $1, but that the equipment was never in the
“possession” or “control” of Geisler himself. It reached this conclusion notwithstanding that
Geisler was the sole owner and shareholder of All Bright, because corporations are legal entities
separate from their principals and shareholders.
In addition, the Agency found that All Bright’s loans could not be counted because
Gaiesler was not personally and primarily liable on either of them. See 8 C.F.R. § 214.2(e)(12)
(“investment” must consist of “unsecured personal business capital or capital secured by
personal assets”).
The Agency concluded that the $200,750 loan did not qualify for
“investment” treatment because the loan was secured with All Bright’s assets, namely the
equipment that Geisler’s father had gifted to the corporation. The Agency also did not count the
$175,000 loan because it was made without collateral. With respect to the cash, the Agency
recognized that there was evidence Geisler’s father had given money to his son, but found no
documentation demonstrating that Geisler invested such funds into All Bright.
On February 8, 2011, All Bright filed a motion to reconsider the January 7, 2011
decision. The Agency denied that request on April 19, 2011, finding that All Bright failed to
establish the decision was based on an incorrect application of law or policy. The Agency
reiterated that All Bright had not shown that the capital at issue met the requirements for an
“investment,” as defined by 8 C.F.R. § 214.2(e)(12).
Jurisdiction
This Court has jurisdiction to review the Agency’s denial of an “E-2 Treaty Investor”
petition under the APA, 5 U.S.C. § 706, and the federal question statute, 28 U.S.C. § 1331.2
2
Although the Agency does not raise the issue, this Court has an independent obligation
to satisfy itself of its own subject matter jurisdiction. See Mirage Resorts, Inc. v. Quiet Nacelle
Corp., 206 F.3d 1398, 1400-01 (11th Cir. 2000). There is a strong presumption favoring judicial
review of administrative action that applies especially “to legislation regarding immigration, and
particularly to questions concerning the preservation of federal-court jurisdiction.” See Kucana
v. Holder, 130 S. Ct. 827, 839 (2010). Congress, in 8 U.S.C. § 1252(a)(2)(B), stripped the
federal courts of the power to review certain discretionary immigration decisions, but this Court
is unaware of any authority, from the Eleventh Circuit or elsewhere, applying that provision to
the Agency’s denial of a treaty investor status petition. Nor has the Agency argued that section
1252(a)(2)(B) applies here. The Court therefore does not find the provision applicable to this
case. See Beyond Mgmt., Inc. v. Holder, 778 F. Supp. 2d 1375, 1379 (N.D. Ga 2011) (section
1252(a)(2)(B) did not strip district court of jurisdiction to review denial of I-129 petition).
Legal Standards
This case requires the Court to apply an amalgamation of legal standards informed by the
summary judgment rule, the standard of review under the APA, and the deference accorded
administrative agency action.
A. Summary Judgment Standard
Under Federal Rule of Civil Procedure 56, “summary judgment is appropriate where
there ‘is no genuine issue as to any material fact’ and the moving party is ‘entitled to a judgment
as a matter of law.’” See Alabama v. North Carolina, 130 S. Ct. 2295, 2308 (2010) (quoting
Fed. R. Civ. P. 56(a)). Here, as the parties agree, the material facts are not in dispute and the
Court’s review is limited to the administrative record before the agency. Thus, this case is suited
for summary disposition under Rule 56. See Mahon v. U.S. Dep’t of Agric., 485 F.3d 1247, 1253
(11th Cir. 2007) (“Summary Judgment is particularly appropriate in cases in which a district
court is asked to review a decision rendered by a federal administrative agency.”); Fla Fruit &
Veg. Ass’n v. Brock, 771 F.2d 1455, 1459 (11th Cir. 1985) (“The summary judgment procedure
is particularly appropriate in cases in which the court is asked to review . . . a decision of a
federal administrative agency,” especially where “the court considers the record that was before
the agency”); see also Occidental Eng’g Co. v. INS, 753 F.2d 766, 769 (9th Cir. 1985)
(“summary judgment is an appropriate mechanism” for the district court “to determine whether
or not as a matter of law the evidence in the administrative record permitted the agency to make
the decision it did”).
B. APA Standard Of Review
When reviewing agency action under the APA, the district court must determine whether
the agency’s decision was arbitrary, capricious, or an abuse of discretion. See Mathews v.
USCIS, 458 F. App’x 831, 833 (11th Cir. 2012). This standard “provides the reviewing court
with very limited discretion to reverse an agency decision, and is exceedingly deferential,”
especially “in the field of immigration.” See id. (citations omitted). The relevant inquiry is
“whether an agency’s decision was based on consideration of the relevant factors and whether
there has been a clear error of judgment.” See Mahon, 485 F.3d at 1253 (citation omitted).
Review is limited to the material before the agency – that is, the administrative record.
See Preserve Endangered Areas of Cobb’s History, Inc. v. U.S. Army Corps of Eng’rs, 87 F.3d
1242, 1246 (11th Cir. 1996). “[A] court does not consider any evidence that was not in the
record before the agency at the time that it made the decision or promulgated the regulation,” see
United States v. Guthrie, 50 F.3d 936, 944 (11th Cir. 1995), because “the focal point for judicial
review should be the administrative record already in existence, not some new record made
initially in the reviewing court,” see Fla Power & Light Co. v. Lorion, 470 U.S. 729, 743 (1985).
In making its decision, “[t]he agency is not required to discuss every piece of evidence, so long
as it gives reasoned consideration to the evidence submitted.” Xunbing Liu v. U.S. Attorney
Gen., 440 F. App’x 718, 719 (11th Cir. 2011).
The Eleventh Circuit has held that “an agency fails to give reasoned consideration to the
record evidence when it misstates the contents of the record, fails to adequately explain any
illogical conclusions, or provides justifications for its decision which are unreasonable or do not
respond to any arguments in the record.” See id. “If the record before the agency does not
support the agency action, if the agency has not considered all relevant factors, or if the
reviewing court simply cannot evaluate the challenged agency action on the basis of the record
before it, the proper course, except in rare circumstances, is to remand to the agency for
additional investigation or explanation.” Lorion, 470 U.S. at 744.
C. Deference To Agency Action
Since 1984, the Supreme Court has accorded high deference, commonly called Chevron
deference, wherever it appears Congress generally delegated authority to an agency to make
rules carrying “the force of law,” and the agency’s interpretation claiming deference is
promulgated in the exercise of that authority. See Chevron, USA, Inc. v. Natural Res. Def.
Council, Inc., 467 U.S. 837, 842 (1984); see also Astrue v. Capato, 132 S. Ct. 2021, 2033-34
(2012) (discussing Chevron deference). This deference is at its apex when an agency engages in
notice-and-comment rulemaking or formal, adjudicative decisionmaking. See United States v.
Mead Corp., 533 U.S. 218, 230 (2001).
Yet, not all types of agency action are entitled to this high degree of deference. See, e.g.,
Gonzales v. Oregon, 546 U.S. 243, 258 (2006) (“Chevron deference . . . is not accorded merely
because the statute is ambiguous and an administrative official is involved.”). The appropriate
level of deference depends upon the type of agency action at issue, and the procedure utilized by
the agency to arrive at its conclusions. See Mead Corp., 533 U.S. at 227-30; Christensen v.
Harris Cnty., 529 U.S. 576, 58 (2000). As noted above, Chevron deference typically applies
only when an agency’s decision is the product of a formal agency process, such as notice-andcomment rulemaking, or where the decision is formal and has precedential value beyond the
facts and parties to a particular case. See Mead Corp., 533 U.S. at 230, 232.
In Mead, the Supreme Court addressed the level of deference owed to tariff classification
rulings issued by the United States Customs Service. The Court held that the rulings were not
entitled to Chevron deference because:
Customs does not generally engage in notice-and-comment rulemaking when
issuing them, and their treatment by the agency makes clear that a letter’s binding
character as a ruling stops short of third parties; Customs has regarded a
classification as conclusive only as between itself and the importer to whom it
was issued[.]
See id. at 233 (citations omitted). The Supreme Court also relied upon the fact that many
thousands of the letter rulings were issued each year, by 46 different Customs offices throughout
the Country. See id. at 233-34 (“Any suggestion that rulings intended to have the force of law
are being churned out at a rate of 10,000 a year at an agency’s 46 scattered offices is simply selfrefuting.”). The Court therefore concluded that “[tariff] classification rulings are best treated like
interpretations contained in policy statements, agency manuals, and enforcement guidelines.
They are beyond the Chevron pale.” See id. at 234 (citations omitted).
Rulings of this kind, and the agency interpretations therein, are “entitled to respect” only
to the extent they have the “power to persuade.” See Skidmore v. Swift & Co., 323 U.S. 134, 140
(1944); see also Mead Corp., 533 U.S. at 235 (tariff classification ruling may “at least” qualify
for “respect proportional to its ‘power to persuade’”). As Justice Jackson explained long ago:
The weight [given to] such [an administrative] judgment in a particular case will
depend upon the thoroughness evident in its consideration, the validity of its
reasoning, its consistency with earlier and later pronouncements, and all those
factors which give it power to persuade, if lacking power to control.
See Skidmore, 323 U.S. at 140; see also Mead Corp., 533 U.S. at 235 (under Skidmore, an
agency’s decision “may [at least] claim the merit of its writer’s thoroughness, logic, and
expertness, its fit with prior interpretations, and any other sources of weight”).
Since Mead, the Eleventh Circuit has applied these principles in the context relevant
here – agency decisionmaking in the field of immigration. In Quinchia v. U.S. Attorney General,
552 F.3d 1255, 1259 (11th Cir. 2008), for example, the Court of Appeals refused to accord
Chevron deference to decisions of the Board of Immigration Appeals that are issued by a single
member, do not rely upon existing agency or federal court precedent, and are themselves not
precedential. In addition, and particularly relevant here, at least one district court has also
considered what level of deference applies to a written denial of a petition for change in
nonimmigrant status – which is precisely the situation in this case. See Youssefi v. Renaud, 794
F. Supp. 2d 585 (D. Md. 2011). In Youssefi, the court found “[t]he agency’s review of Plaintiff’s
change-of-status application did not involve notice-and-comment procedures or the trial-type
procedures that are characteristic of formal agency adjudication,” and therefore “the agency’s
interpretation [should be accorded only] the low level of deference that is given to the informal
interpretive decisions of low-level agency officials.” See id. at 592.
Consistent with these decisions, the Court finds that the Agency’s denial of Geisler’s
application is not deserving of high deference. The decision is geared only to the facts presented,
does not purport to bind parties beyond All Bright and Geisler, and does not rely upon prior
decisions or interpretations of the regulations at issue on the key points of decision. The decision
was issued and signed by the Director of the Agency’s California Service Center, a government
bureaucrat; it does not come from an adjudicative arm of the Agency and does not bear any
indicia of formal agency rulemaking or adjudication. See Mead Corp., 533 U.S. at 235; see also
Youssefi, 794 F. Supp. 2d at 592. Plainly, this is not the sort of administrative action designed to
carry “the force of law.” See id. at 229. Instead, the Agency’s decision merits only Skidmore
deference and, thus, must be evaluated based upon its overarching “power to persuade,”
considered in light of “its writer’s thoroughness, logic, and expertness, its fit with prior
interpretations, and any other sources of weight” that may apply. Mead Corp., 533 U.S. at 235.
Legal Analysis
The Agency denied the “E-2 Treaty Investor” petition in this case principally because All
Bright failed to demonstrate that Geisler had “possession” and “control” of the investment
capital put into the treaty enterprise. The Agency also concluded that the loans could not be
counted because they were not secured by Geisler’s personal assets. The Court finds that the
Agency’s decision was arbitrary and capricious and an abuse of discretion on several levels, as
explained below.
Therefore, the decision must be vacated and remanded for further
consideration.
A. The Garbage Collection Equipment: Did Geisler “Possess” And “Control” It?
In the January 2011 decision, the Agency found that the garbage collection equipment did
not count as an “investment” because it was not in Geisler’s “possession” and “control.” See
Jan. 7, 2011 Decision at 3-5. The Agency reached that conclusion because Geisler’s father gifted
$248,689 in equipment directly to All Bright, not to Geisler. The Agency rejected the argument
that Geisler’s 100% ownership of All Bright made any difference, noting “a corporation and its
shareholder are considered two separate entities ‘apart and distinct’ from each other[.]” See id.
at 4. In the April 2011 reconsideration decision, the Agency further emphasized this point:
Regulations governing what constitute a proper ‘investment’ specifically state that
the treaty investor must be in possession of and have control over the capital
invested or being invested. In this case, although [Geisler] may own 100% of the
corporation, a corporation and its shareholder are considered two separate entities.
A corporation’s property cannot be seen as owned or in the possession of the
single shareholder regardless of whether he or she is a single shareholder.
See Apr. 19, 2011 Decision at 2-3.
The Court holds that the Agency acted arbitrary and capriciously, and abused its
discretion, in finding Geisler did not have “possession” and “control” over the equipment in
question. The regulation at issue does not define what it means to “possess” and “control” the
assets under investment. Nor does the Agency identify (either in the decisions under review or
in its summary judgment papers) any precedent interpreting the words, or any other authoritative
agency position discussing their meaning.3
In the absence of any definition in the regulations or any controlling agency
interpretation, the Court must judge the persuasiveness of the Agency’s decision by reference to
the ordinary meaning of the words employed. See Schwarz v. City of Treasure Island, 544 F.3d
1201 (11th Cir. 2008) (where “there is no statutory or administrative definition of [the word in
question], we look to its ordinary, everyday meaning”); Molloy v. Allied Van Lines, Inc., 267 F.
Supp. 2d 1246, 1252 (M.D. Fla. 2003) (“Undefined terms used in the regulations are given their
ordinary practical meaning.”).
3
Generally speaking, an agency is entitled to “substantial deference” in interpreting its
own regulations. See Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 512 (1994). Where “‘the
meaning of [regulatory] language is not free from doubt,’ the reviewing court should give effect
to the agency’s interpretation so long as it is ‘reasonable,’” – meaning, “so long as the
interpretation ‘sensibly conforms to the purpose and wording of the regulations.” Martin v.
Occup’l Safety & Health Review Comm’n, 499 U.S. 144, 150-51 (1991) (citations omitted).
In its summary judgment papers, the Agency advocates for deference under this rule, but has not
identified or cited any authoritative agency interpretation, position, or construction of the words
“possession” and “control,” as used in the regulation. The federal courts “have never applied
[deference] to agency litigating positions that are wholly unsupported by regulations, rulings, or
administrative practice.” See Bowen v. Georgetown Univ. Hosp., 488 U.S. 204 (1988); see also
Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 168 (1962) (“The courts may not
accept appellate counsel’s post hoc rationalizations for agency [orders]”). Even if the rule of
deference applied, the Agency’s construction of the terms would still not pass muster because, as
discussed infra, it is contrary to the plain meaning of the words. Cf. Thomas Jefferson Univ., 512
U.S. at 512 (agency’s interpretation will generally control “unless an ‘alternative reading is
compelled by the regulation’s plain language’”) (citations omitted).
“In order to determine the common usage or ordinary meaning of a term, courts often
turn to dictionary definitions for guidance.” CBS Inc. v. PrimeTime 24 Joint Venture, 245 F.3d
1217, 1223 (11th Cir. 2001).
According to Merriam-Webster’s Dictionary, the term
“possession” means “the act of having or taking into control,” or “ownership,” or “control or
occupancy of property without regard to ownership.”
See Merriam-Webster.com,
http://www.merriam-webster.com/dictionary/ possession (last visited Sept. 6, 2012). Thus, while
“possession” may connote actual ownership, its meaning is broader – it may also mean “control
or occupancy of property without regard to ownership.” See id. (emphasis supplied). Resort to
Black’s Law Dictionary confirms this understanding: “possession” may refer to “[s]omething
that a person owns or controls,” but it may also mean “[t]he fact of having or holding property in
one’s power; the exercise of dominion over property,” or “[t]he right under which one may
exercise control over something to the exclusion of all others; the continuing exercise of a claim
to the exclusive use of a material object.” See Black’s Law Dictionary 1281 (9th ed. 2009).
Thus, “[a]lthough the two terms are often confused, possession is not the same as ownership.”
See West’s Encyclopedia of American Law (2d ed. 2008), available at: http://legaldictionary.thefreedictionary.com/possession (last visited Sept. 6, 2012).
Nor does “control” mean, exclusively, title and ownership. The ordinary meaning of that
term is “to exercise restraining or directing influence over,” or “to have power over.” See
Merriam-Webster.com, http://www.merriam-webster.com/dictionary/control (last visited Sept. 6,
2012). It is synonymous with “regulate” and “rule,” but not necessarily with title or ownership.
See id. In the legal sense, “control” may refer to “[t]he direct or indirect power to govern the
management and policies of a person or entity, whether through ownership of voting securities,
by contract, or otherwise,” as well as “the power or authority to manage, direct, or oversee.”
Black’s Law Dictionary 378 (9th Ed. 2009).
It would seem, therefore, to encompass the
situation we confront here – a corporate officer and shareholder’s power to govern corporate
property and affairs.
Yet in this case, rather than employing the plain meaning of the terms “possession” and
“control,” the Agency proceeded as though the words absolutely required actual title and
ownership. That is, the Agency found Geisler ineligible for treaty investor status simply because
All Bright, rather than he, had ownership and title to the garbage collection equipment. But the
regulation requires “possession” and “control” over the assets; it does not say anything about
“title” or “ownership.” That those terms could have been written into the regulation, but were
not, is strong indication that the Agency, in promulgating it, did not mean to impose a
requirement of title or ownership. See Lee v. Flightsafety Servs. Corp., 20 F.3d 428, 433
(11th Cir. 1994) (“A court should presume regulations mean what they say. If the executive
branch wishes to reconsider them, it is free to do so.”); cf. Conn. Nat’l Bank v. Germain, 503
U.S. 249, 253-54 (1992) (“We have stated time and again that courts must presume that a
legislature says in a statute what it means and means in a statute what it says there.”); see also
Clark Reg’l Med. Ctr. v. Shalala, 136 F. Supp. 2d 667, 676, 677 (E.D. Ky. 2001) (“The
defendant’s proposed construction tortures the plain language of the regulation. The regulation
does not say [the words advocated]. . . . [I]f the defendant intended the regulation to simply
mean [those words], it could have directly and easily said so, but it did not.”).
The fact of All Bright’s ownership and title does not exclude the possibility that Geisler
nonetheless “possessed” and “controlled” the equipment, given his position as 100% owner and
sole shareholder of All Bright. The Agency’s only rationale for discounting Geisler’s position is
that “a corporation and its shareholder are considered two separate entities,” and “[a]
corporation’s property cannot be seen as owned or in the possession of the single shareholder
regardless of whether he or she is a single shareholder.” See Apr. 19, 2011 Decision at 2-3.
Such reasoning fails to persuade. Although a corporation and its sole shareholder are
legally distinct, it does not follow that the shareholder, for that reason, fails to have “possession”
and “control” over corporate assets and property. In fact, in this case, it appears that just the
opposite is true. Indeed, All Bright contends that its equipment was at all times under the direct
dominion of Geisler, who held the keys to it and who, as sole company shareholder, pledged it as
collateral for a corporate loan. The Agency ignores these facts and, instead, insists that only All
Albright “possessed” and “controlled” the equipment. The Agency’s conclusion, though, is
contrary to the “axiomatic” principle that “a corporation . . . cannot act other than through its
officers, employees, and agents.” See United Techs. Corp. v. Mazer, 556 F.3d 1260, 1271 (11th
Cir. 2009); see also Coryell v. Phipps, 317 U.S. 406, 410 (1943) (“A corporation necessarily acts
through human beings.”). In other words, it fails to acknowledge that corporate property must
always be “possessed” and “controlled” by some person; the corporation itself, a fictitious entity,
cannot do so on its own. Accordingly, the Agency’s point that a corporation is legally separate
from its shareholders does not exclude the possibility that Geisler nonetheless had “possession”
and “control” over the equipment.
Indeed, the Agency seems to recognize this fact in stating that “[Geisler], as the only
‘owner’ of the treaty enterprise, has the absolute power to ‘direct the use of the equipment, repair
it, sell it for cash, donate it to charity, or even discard it into a landfill[.]’” See Jan. 11, 2011
Decision at 5. Yet, the Agency goes on to use this against Geisler because the equipment was
pledged as collateral on the $200,750 loan:
[Geisler] may not sell, donate, or discard the equipment or assets used as
collateral for a loan. In essence, the equipment belongs to Leaf Funding, Inc.,
until the treaty enterprise pays its $200,000 [sic] loan. Accordingly, [Geisler] has
never ‘possessed’ or ‘controlled’ the equipment.
See id.
But to acknowledge that the equipment was pledged as collateral also ultimately requires
the acknowledgement that Geisler “possessed” and “controlled” the equipment in the first place,
because only through Geisler – as sole owner of All Bright – was the equipment able to be
pledged. Put differently, if the equipment had not been in Geisler’s “possession” and “control,”
as those terms are understood in their ordinary sense, then it never could have been pledged on
the loan. No one else could have pledged it because no one else owns, runs, or holds stock in All
Bright.
The Agency turns all of this on its head. Geisler’s act of pledging the equipment as
collateral, as All Bright’s owner and sole shareholder, cannot serve as proof that he does not
currently “possess” or “control” the equipment, and simultaneously as proof that he never
“possessed” or “controlled” it in the first place. The Agency cannot have it both ways. Either he
had “possession” and “control” of the equipment and, therefore, the ability to pledge it as
collateral, or he did not.
Moreover, just because the equipment was pledged as collateral on a loan does not
necessarily mean that Geisler no longer “possesses” or “controls” it now. The Agency offers no
explanation for this logical leap, beyond the conclusory remark that “[i]n essence, the equipment
belongs to Leaf Funding, Inc.,” until the loan is repaid. See id. This finding appears to once
again rest on the faulty assumption that “possession” and “control” are somehow synonymous
with principles of title and ownership. But when something is pledged as collateral, it does not
automatically become the property of the lienholder, nor does it necessarily fall into the
lienholder’s “possession” and “control.”
Indeed, “[t]ypically, the creditor does not take
possession of the property on which the lien has been obtained.” See Black’s Law Dictionary
1006 (9th ed. 2009). Only in the event of default does that happen. See Leaf Loan Agreement
[ECF No. 19-4, p. 42] at ¶ 5 (“Upon the occurrence of any Event of Default, Lender may . . .
require Borrower to assemble all Collateral,” and “remove any physical obstructions for removal
of the Collateral from the place where [it] is located and [may] take possession of any or all
items of Collateral”).
The Agency’s construction not only ignores the plain meaning of
“possession” and “control,” but also evinces a mistaken understanding of a lienholder’s rights in
collateral. See, e.g., Garavito v. U.S. I.N.S., 901 F.2d 173, 174 (1st Cir. 1990) (Breyer, J.)
(agency abused its discretion in denying treaty investor status because “one important reason that
[it] gave for denying the visa change rest[ed] upon an obviously false factual premise”);
In short, the Agency has not cited any regulation, decision, or case law holding that the
person seeking treaty investor status must hold legal title to the assets at issue in order to be
deemed in “possession” and “control” of them. The Agency’s decision, moreover, is thin on
reasoning – a fact that further undercuts its persuasiveness and the deference owed to it.
See Mead Corp., 533 U.S. at 235 (under Skidmore, agency decisionmaking is evaluated for its
“power to persuade” in light of “its writer’s thoroughness, logic, and expertness, its fit with prior
interpretations, and any other sources of weight”). The decision provides no explanation for its
conclusions, but instead just repeats, over and over, the same conclusory finding that Geisler
failed to show he was in “possession” and “control” of the equipment at issue. But saying
something again and again does not make it so. The Agency’s failure to acknowledge or give
reasoned consideration to the matters above constitutes an abuse of discretion, and renders its
decisionmaking arbitrary and capricious. The Agency’s interpretation is at war with the plain
language of the regulation and, therefore, must be reconsidered.
B. The Loans: Were They Secured By Geisler’s Personal Assets?
In the January 2011 decision, the Agency concluded that neither the $200,750 loan with
Canyon, nor the $175,000 loan with Canyon’s former owners, could be counted as an
“investment” because neither was secured by Geisler’s personal assets. See Jan. 11, 2011
Decision at 5. The $200,750 loan did not count, the Agency found, because All Bright’s
equipment was pledged as collateral. See id. As the Agency explained, “commercial loans
secured by the assets of the enterprise cannot count toward the investment, as there is no
requisite element of risk.” See id. As for the $175,000 loan, the Agency found it did not qualify
because “this loan was made without collateral.” See id.
These conclusions cannot be sustained because they do not take into account that Geisler
signed personal guarantees on both loans. See Xunbing Liu, 440 F. App’x at 719 (“agency fails
to give reasoned consideration to the record evidence when it misstates the contents of the
record, fails to adequately explain any illogical conclusions, or provides justifications for its
decision which are unreasonable or do not respond to any arguments in the record”); see also
Dong In Chung v. U.S. I.N.S., 662 F. Supp. 474, 476 (W.D. Wash. 1987) (agency abused its
discretion in denying treaty investor status by not expressly considering certain evidence and
explaining what impact, if any, it had on applicant’s request).
The Agency simply dismisses the $200,750 loan as ineligible for consideration because
the equipment gifted to All Bright was used as collateral, without analyzing in any way the
implications of Geisler’s personal guaranty.4 Likewise, the Agency baldly concludes that the
$175,000 loan does not qualify because no collateral was pledged, without any discussion of
Geisler’s personal guaranty. These analytic failures by the Agency draw into question the
conclusion that “there is no element of risk” for Geisler here. See Jan. 11, 2011 Decision at 5. In
failing to give reasoned consideration to Geisler’s personal guarantees, the Agency abused its
discretion and acted arbitrarily and capriciously.
C. The “Real” Investor: Was It Geisler or His Father?
In its summary judgment papers, the Agency contends that the only person who did any
real investing is Geisler’s father. See, e.g., Agency’s Resp. [ECF No. 26] at 4 (“the record
establishes that the only person who possessed and controlled the capital before it was invested
into All Bright was Simon Geisler’s father”). Therefore, according to the Agency, Geisler is
merely a “front” for someone else’s investment and is not personally eligible for treaty investor
status. See id. at 5, 8 (fact that “George Geisler, Simon Geisler’s father, sold the equipment
directly to All Bright, underscores the fact that Simon Geisler did not invest his own personal
capital into All Bright”).
4
The significance of Geisler’s personal guaranty on the $200,750 loan vis-à-vis the
equipment as collateral is an issue best suited for the Agency on remand. The Court expresses
no opinion on the matter, other than to note that Geisler may conceivably bear personal risk,
even though the company’s equipment was pledged as collateral. The equipment is, of course, a
depreciating asset – everyday it is worth less than the day before, and with time it will inevitably
be damaged or destroyed to the point of uselessness. Were All Bright to default on the loan, it is
conceivable that the equipment may not be sufficient to satisfy the outstanding balance on the
loan. Under such circumstances, Geisler may be liable for the remaining balance as a
consequence of signing the personal guaranty.
This argument fails to persuade because it ignores that Geisler, on behalf of All Bright,
also entered into an agreement to buy Canyon separate and apart from his father’s contributions
to All Bright. The Agency’s position conflates the investment made in All Bright with the
investment made in Canyon. Geisler formed All Bright, and his father gifted the equipment to
that enterprise. Thereafter, Canyon was purchased. Thus, there are two separate aspects to the
investment here. The Agency cannot focus myopically on Geisler’s father’s contributions to All
Bright, while ignoring that the purchase of Canyon was a separate aspect of the investment.
The Agency’s argument that Geisler was a mere “front” for his father’s investment is
also unpersuasive because the regulations permit gifts to be counted towards an investment, so
long as the gifts come from a legitimate source and are in the “possession” and “control” of the
treaty investor. Thus, the fact that the equipment originated with Geisler’s father (thereby
arguably making him a “front” for the investment) would appear irrelevant, if the equipment was
thereafter “possessed” and “controlled” by Geisler and used in his investment with Canyon.
In this regard, the Agency’s reliance on Nice v. Turnage, 752 F.2d 431 (9th Cir. 1985), is
misplaced. There, the concern was where the funds had originated, not whether the investor
“possessed” and “controlled” them. See id. at 432 (noting “several irregularities surrounding the
[investment]” and uncertainty as to its source). That is not an issue here. The Agency does not,
in its decision, question the source or legitimacy of Geisler’s assets; it only finds that they were
not in his “possession” and “control” – a determination that the Court has found arbitrary and
capricious, for the reasons discussed above.
Conclusion
For the reasons explained above, the Agency’s determination that Geisler did not have
“possession” and “control” over certain of the assets under investment constitutes an abuse of
discretion and is arbitrary and capricious. So, too, is the Agency’s finding that Geisler had
nothing at risk with respect to the two loans. While these are serious deficiencies, one point
must be stressed: the significance of the problems discussed herein to the ultimate outcome of
this case is not for this Court to decide. The Agency is in the best position to apply its
regulations to the facts, and the Court does not intend to interfere with that task. The Court
therefore expresses no opinion on the proper disposition of All Bright’s petition on remand. The
Court simply holds that the Agency’s decision does not pass muster under the relevant legal
standards and, as such, must be set aside. The Agency must issue a new decision on All Bright’s
petition consistent with this Order.
Accordingly, it is hereby ORDERED and ADJUDGED that All Bright’s Motion for
Summary Judgment is GRANTED IN PART, and the Agency’s Cross-Motion for Summary
Judgment is DENIED. The Agency’s decision is VACATED and this matter REMANDED for
further consideration consistent with this Order. The Clerk is directed to CLOSE this case.
DONE and ORDERED in chambers, at Miami, Florida on September 11, 2012.
________________________________
ROBERT N. SCOLA, JR.
UNITED STATES DISTRICT JUDGE
Copies to:
Counsel of record
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