Bucheit, B. J. v. Palestine Liberation ( 2004 )

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United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued October 4, 2004 Decided November 2, 2004
No. 03-5264
B. J. BUCHEIT,
APPELLEE/CROSS–APPELLANT
v.
THE PALESTINE LIBERATION ORGANIZATION AND
THE PALESTINIAN AUTHORITY,
APPELLANTS/CROSS–APPELLEES
Consolidated with
03-5293
Appeals from the United States District Court
for the District of Columbia
(No. 00cv01455)
Maher Hanania argued the cause and filed the briefs for
appellants/cross-appellees.
Bills of costs must be filed within 14 days after entry of judgment.
The court looks with disfavor upon motions to file bills of costs out
of time.
2
Michael H. Selter argued the cause and filed the briefs for
appellee/cross-appellant.
Before: ROGERS, TATEL, and GARLAND, Circuit Judges.
Opinion for the Court filed by Circuit Judge GARLAND.
GARLAND, Circuit Judge: This appeal arises from a conver-
sion action brought by plaintiff Bernard J. Bucheit in the
United States District Court for the District of Columbia.
Bucheit alleges that the defendants, the Palestine Liberation
Organization (PLO) and the Palestinian Authority (PA), con-
verted property and money associated with a concrete plant
that his company operated in Gaza. After a bench trial, the
district court found the defendants liable for over $1.5 million,
basing its valuation in part on offers to buy the converted
property. At the same time, the court denied Bucheit’s
request for prejudgment interest. The defendants now ap-
peal the court’s valuation of the converted property, while the
plaintiff cross-appeals the court’s denial of prejudgment inter-
est. We affirm the judgment of the district court.
I
Bucheit is the president of Bucheit International Limited
(BIL), a construction firm with offices in the United States
and Great Britain.1 In 1994, BIL built and began to operate
a precast concrete plant in Gaza. During the plant’s first
year of operation, BIL imported equipment and materials
into Gaza via Haifa, Israel. The equipment included a Grove
crane, two high trailers, a lowboy trailer, and a tractor truck.
At the border, BIL filed customs declarations totaling $56,200
for these items. By contrast, in November 1995, BIL valued
the same items at $542,590 for insurance purposes.
In 1994, Bucheit appointed a Gaza resident, Ghassan Abdel
Aziz Abu Ramadan, as manager of the concrete plant. In
January 1996, BIL dismissed Ramadan due to disagreements
concerning his management and representation of BIL in
1The facts set forth in this Part are taken from the district
court’s findings of fact.
3
Gaza. Notwithstanding his dismissal, Ramadan continued to
contract with the PA for BIL’s services and the use of BIL’s
equipment. In August 1997, for example, the PA’s Military
Financial Administration leased BIL’s Grove crane for use in
Gaza Emergency Harbor, paying a total of $77,000 to Rama-
dan rather than to BIL.
BIL had obtained financing for the concrete plant from the
Overseas Private Investment Corporation (OPIC), a U.S.
government agency that provides loans and political risk
insurance to U.S. companies for private investments abroad.
BIL obtained a $1,100,000 loan from OPIC, which it secured
with BIL’s Gaza assets. In addition, Bucheit’s three children,
through the Bucheit Children’s Trust, guaranteed the loan
with real estate located in the District of Columbia.
In May 1997, after experiencing financial and other difficul-
ties operating in Gaza, BIL defaulted on the OPIC loan. In
order to repay OPIC, BIL began efforts to liquidate its Gaza
assets. A company named Avi Cranes offered BIL $105,000
for the Grove crane and lowboy trailer, but BIL was unable
to complete the sale because the PA’s Military Financial
Administration was using the crane in Gaza Emergency Har-
bor — pursuant to the lease with Ramadan. Another compa-
ny, Gulf Global, submitted a bid of $1,630,000 for all of BIL’s
assets in Gaza, but that sale could not be completed, both
because the crane was still being used at the harbor, and
because the defendants would not provide the necessary
documentation for the plant and other assets. Later, Gulf
Global made another bid of $106,000 for the crane alone, but
that sale fell through as well: the crane needed repairs after
its detour to the harbor project.
Finally, in the fall of 1999, a non-profit corporation called
Builders for Humanities (BFH) submitted a letter of intent to
purchase BIL’s plant and machinery for $1,600,000. BIL
accepted the letter of intent. But that deal failed as well,
again because BIL could not obtain the necessary authorizing
documentation from the defendants.
Because BIL was unable to liquidate its Gaza assets, the
Bucheit Children’s Trust had to satisfy its guarantee of the
4
OPIC loan by selling its District of Columbia real estate.
The Trust did so in December 1999, and wired the proceeds
to OPIC. OPIC declared the loan paid in full and assigned
all rights arising out of the interference with its secured
collateral to the Trust, which, in turn, assigned its rights to
Bucheit.
In June 2000, Bucheit sued the PA and the PLO in the
United States District Court for the District of Columbia.
Bucheit alleged that he had succeeded to all of OPIC’s
interest in the secured assets by virtue of the assignments,
and charged that the defendants had wrongfully converted
OPIC’s money and property by interfering with its lien on the
Gaza assets. The district court concluded that it had jurisdic-
tion over the matter under the commercial activity exception
to the Foreign Sovereign Immunities Act, 28 U.S.C. §§ 1330,
1605(a)(2). It further concluded that Bucheit was an ‘‘equita-
ble subrogee’’ of OPIC’s rights under the BIL loan, and that
he was entitled ‘‘to those remedies and damages’’ — but only
those remedies and damages — ‘‘that OPIC could have
asserted.’’ Bucheit v. Palestine Liberation Organization,
No. 00-1455, Findings of Fact and Conclusions of Law at 14
(D.D.C. Aug. 18, 2003). Pursuant to the parties’ stipulation
that District of Columbia law would apply unless it differed
from ‘‘the relevant Palestinian commercial law,’’ and finding
that the defendants had not identified any applicable portions
of the latter, the court relied on District of Columbia law
without objection by the parties. Id. at 12-13.
The district court conducted a two-day trial to determine
whether the defendants were liable for conversion for inter-
fering with OPIC’s rights to BIL’s assets, and, if so, the
amount of damages OPIC suffered as a consequence of such
conversion. With respect to liability, the court concluded that
the defendants had indeed converted OPIC’s property. Not-
ing that conversion is ‘‘any unlawful exercise of ownership,
dominion or control over the personal property of another in
denial or repudiation of his rights thereto,’’ id. at 14 (quoting
Duggan v. Keto, 554 A.2d 1126, 1137 (D.C. 1989)), the court
found that the defendants were ‘‘liable for conversion of any
funds paid [to Ramadan] under contracts for use of BIL
5
assets and for impeding liquidation sales’’ of those assets. Id.
at 18.
In calculating the amount of damages, the district court
‘‘rel[ied] primarily on documentary evidence of valuation and
on the amounts BIL was prepared to accept for the attempt-
ed sales of these assets.’’ Id. at 19. The court found that the
total value of the converted assets was $1,782,000 — $77,000
in lease payments to Ramadan, $105,000 for the crane and
lowboy (the amount of Avi Cranes’s accepted offer), and
$1,600,000 for the plant and machinery (the amount of BFH’s
accepted offer). The court declined to rely on either of Gulf
Global’s offers, noting that there were ‘‘problems’’ with the
proposed $106,000 sale of the crane, and that the $1,630,000
bid for the plant and other assets lacked documentary sup-
port. Id. at 20.
Finally, because Bucheit brought the conversion action as
the ‘‘subrogee of OPIC’s rights,’’ the court held that Bucheit
was ‘‘entitled only to those remedies and damages that OPIC
could have asserted.’’ Id. at 21. It thus reduced Bucheit’s
recovery from $1,782,000 to $1,531,053.34, the amount that
OPIC had accepted in satisfaction of BIL’s debt (including
interest and fees).2
Although the court awarded Bucheit damages for conver-
sion, it denied his request for prejudgment interest. The
court noted that ‘‘under District of Columbia law, courts have
a ‘wide range of discretion’ to determine whether prejudg-
ment interest should be awarded,’’ id. at 22 (quoting Edmund
J. Flynn Co. v. LaVay, 431 A.2d 543, 550 n.6 (D.C. 1981)), and
that in a conversion action, ‘‘pre-judgment interest may be
included as part of the damages TTT to the extent that it will
make the injured party whole.’’ Id. (quoting Duggan, 554
2 The district court appears to have included in its valuation of
BIL’s Gaza assets approximately $180,000 worth of equipment that
BIL leased but did not own. Although the parties dispute the
impact this had on the validity of the valuation, the defendants
concede that, even if the court’s $1,782,000 valuation were reduced
by that amount, the adjusted total would still exceed the amount at
which the court capped Bucheit’s recovery — and hence would not
affect the size of the plaintiff’s award.
6
A.2d at 1140). The court read D.C. law as providing that
‘‘plaintiffs bear the burden of proof that prejudgment interest
is necessary to compensate them fully,’’ and concluded that
Bucheit had failed to carry that burden. Id. Pursuant to
Federal Rule of Civil Procedure 59(e), Bucheit filed a motion
for reconsideration of the denial of prejudgment interest,
which the court denied.
On this appeal, the defendants do not challenge the court’s
determination that they converted the plaintiff’s Gaza assets.
They do, however, appeal the court’s calculation of damages.
Bucheit cross-appeals from the denial of prejudgment inter-
est. We consider these two appeals in Parts II and III,
respectively.
II
The ‘‘traditional standard for calculating damages for con-
version is the fair market value of the property at the time of
the conversion.’’ Bowler v. Joyner, 562 A.2d 1210, 1213 (D.C.
1989) (quoting Duggan, 554 A.2d at 1137). ‘‘Fair market
value,’’ in turn, ‘‘is generally defined as that price at which a
willing seller and a willing buyer will trade.’’ Williams v.
United States, 376 A.2d 442, 444 (D.C. 1977); see Reservation
Eleven Assocs. v. District of Columbia, 420 F.2d 153, 155
(D.C. Cir. 1969). Under District of Columbia law, ‘‘ ‘[a]n
injured party will not be precluded from recovering damages
because he cannot prove his exact damages’ so long as there
is a reasonable basis for approximation.’’ Bowler, 562 A.2d at
1214 (quoting R.S. Willard Co. v. Columbia Van Lines Mov-
ing & Storage Co., 253 A.2d 454, 456 (D.C. 1969)). This court
regards damage awards as ‘‘findings of fact’’ governed by
Federal Rule of Civil Procedure 52(a), ‘‘which will not be
disturbed unless clearly erroneous.’’ Eureka Inv. Corp. v.
Chicago Title Ins. Co., 743 F.2d 932, 940 (D.C. Cir. 1984); see
Safer v. Perper, 569 F.2d 87, 100 (D.C. Cir. 1977); see also
Bowler, 562 A.2d at 1213–14 (D.C. 1989).
In this case, the district court relied upon accepted offers to
purchase property (by Avi Cranes and BFH) as the measure
of the property’s fair market value. As a theoretical matter,
7
it would be difficult to conclude that such offers represent a
clearly erroneous basis for valuing the ‘‘price at which a
willing seller and willing buyer’’ will trade, as that is exactly
what such accepted offers profess to be.3 While the defen-
dants suggest that the $56,200 BIL listed on its customs
declaration was a better measure of valuation for the crane
and lowboy than the $105,000 offered by Avi Cranes, the
court did not clearly err in accepting the plaintiff’s testimony
that ‘‘BIL purposely used low declaration values upon advice
of those familiar with Israeli and Palestinian customs prac-
tices.’’ Bucheit at 3. That is particularly so in light of BIL’s
subsequent valuation of the same equipment at $542,590 for
insurance purposes.
The defendants also challenge the court’s decision to rely
on BFH’s $1,600,000 offer for the concrete plant. That
challenge is based on the trial testimony of Leonard Loch,
who represented BFH in its bid. Loch testified that BFH
was not actually committed to purchasing the plant, and that
Bucheit had misrepresented its value. But the district court
discredited Loch’s testimony, noting that the defendants’
failure to include Loch on their witness list had deprived the
plaintiff of the opportunity to depose him, and that Loch had
sat in the courtroom listening to the testimony of the other
witnesses prior to taking the stand himself. Trial Tr. at 43-
44; cf. FED. R. EVID. 615 (authorizing the exclusion of wit-
3 See Basiliko v. Pargo Corp., 532 A.2d 1346, 1350 (D.C. 1987)
(holding that, to determine fair market value, ‘‘the trial court may
consider as evidence the price at which [appellant] had agreed to
sell the property’’); cf. Suitum v. Tahoe Reg’l Planning Agency,
520 U.S. 725, 741-42 (1997) (noting that ‘‘the very best evidence of
the value’’ of particular items ‘‘might be their actual selling price
(assuming, of course, that the sale were made in good faith and at
arm’s length)’’); Schonfeld v. Hilliard, 218 F.3d 164, 178 (2d Cir.
2000) (‘‘If, fortunately, the asset [to be valued] has a sales history,
then despite the lack of a traditional market, it is easier for the
court to determine the asset’s market value as of the time it was
lost. Indeed, it is well-established that a recent sale price for the
subject asset, negotiated by parties at arm’s length, is the ‘best
evidence’ of its market value.’’ (quoting Suitum, 520 U.S. at 742)).
8
nesses ‘‘so that they cannot hear the testimony of other
witnesses’’). The court further concluded that Loch’s testi-
mony was inconsistent with the documentary evidence, includ-
ing Loch’s October 13, 1999 letter of intent to purchase the
assets. Bucheit at 21 n.9. That letter did not qualify BFH’s
commitment in any way, stating instead that:
LML [Leonard M. Loch] TTT shall purchase the equip-
ment through a non-profit entity TTT called Builders for
Humanities (‘‘BFH’’)TTTT The purchase price of the
equipment from BFH to Bucheit TTT shall be determined
in coordination with OPIC and outside consultant, but in
no event shall it be less than $1,600,000.
Pl.’s Ex. 71. The district court, which was in the best
position to evaluate the credibility of the witnesses and to
compare their testimony to the documentary evidence, did not
clearly err in relying on the latter.
III
Bucheit’s complaint included a request for prejudgment
interest on the amount of any damages awarded for conver-
sion. Although the district court found that the defendants
had converted the plaintiff’s property, and that the plaintiff
was entitled to damages for that conversion, it denied the
request for prejudgment interest. We review that denial for
abuse of discretion. See Frederick County Fruit Growers
Ass’n, Inc. v. Martin, 968 F.2d 1265, 1275 (D.C. Cir. 1991).
The district court read an opinion of the District of Colum-
bia Court of Appeals, Duggan v. Keto, 554 A.2d 1126, 1140
(D.C. 1989), as holding that a court may include prejudgment
interest as part of the damages in a conversion case only to
the extent that such interest is required to make the injured
party whole, and declared that the plaintiff bears the burden
of proving the latter. See Bucheit at 22. Because Bucheit
had offered no evidence to prove that prejudgment interest
was necessary to compensate him fully, the court concluded
that interest was unwarranted. That conclusion was not an
abuse of discretion. Indeed, the court was generous in its
description of Bucheit’s litigation efforts: over two days of
9
trial, Bucheit not only failed to offer any evidence regarding
the need for prejudgment interest, he failed to mention the
subject at all.
On appeal, Bucheit argues that the district court employed
the wrong legal standard in ruling on the interest issue. In
support, he insists that the D.C. Court of Appeals’ decision in
Federal Marketing Co. v. Virginia Impression Products Co.,
823 A.2d 513 (D.C. 2003), supercedes Duggan. Under Feder-
al Marketing, he contends, the award of prejudgment interest
is presumptively warranted, unless there is an affirmative
reason that counsels against it.
Bucheit’s theory that Federal Marketing marks a new path
in the District of Columbia’s treatment of prejudgment inter-
est could be correct. While acknowledging that ‘‘the ‘general
rule’ may be that prejudgment interest is usually unavailable
in breach of contract cases involving unliquidated claims,’’ the
D.C. Court of Appeals stated:
[T]he court has ample discretion to include prejudgment
interest as an element in the damages awarded, if neces-
sary to fully compensate the plaintiff. The court usually
should award such ‘delay damages’ TTT absent some
justification for withholding such an award.
Federal Marketing, 823 A.2d at 532 (internal quotation marks
and citations omitted). This could suggest that courts should
award prejudgment interest more frequently, and that it is
the defendant’s burden to establish a justification for with-
holding such an award.
We need not conclusively divine the meaning of Federal
Marketing, however, because even if the plaintiff’s theory is
correct, he never drew that case to the attention of the trial
court. Although the D.C. Court of Appeals did not issue
Federal Marketing until after the parties completed their
briefing in the district court, five months passed between the
issuance of Federal Marketing and the release of the district
court’s decision. Bucheit did not take advantage of that
opportunity to advise the court of the decision — much less to
advance his theory that Federal Marketing supercedes Dug-
10
gan for prejudgment interest in conversion cases — by filing
a supplemental brief. Moreover, although Bucheit filed a
motion to reconsider the denial of prejudgment interest on
August 25, 2003, more than three months after Federal
Marketing was issued, that motion likewise failed to mention
his new theory of entitlement to prejudgment interest under
Federal Marketing.
In short, Bucheit never advised the district court of his
theory — which he presents for the first time on appeal —
that Federal Marketing changed the course of District of
Columbia law regarding prejudgment interest. As we have
previously held, ‘‘while a court may draw upon its own
knowledge of applicable precedents TTT, it is not required to
unearth theories and precedents not cited by a partyTTTT
Bringing those precedents and theories to the attention of the
district judge is the job of the party’s attorneys.’’ Ned
Chartering & Trading, Inc. v. Republic of Pakistan, 294 F.3d
148, 155 (D.C. Cir. 2002). In any event, given the district
court’s view that both parties’ ‘‘evidence of valuation’’ was
‘‘weak,’’ Bucheit at 19, it was hardly unreasonable for the
court to conclude that the damages award was sufficient to
fully compensate Bucheit. See Federal Marketing, 823 A.2d
at 532 (affirming the denial of prejudgment interest because
the ‘‘court reasonably could view an award without such
interest as sufficient to compensate’’ the plaintiff).
IV
We conclude that the district court did not clearly err in
calculating the value of the property converted by the defen-
dants, and that the court did not abuse its discretion in
denying the plaintiff’s request for prejudgment interest.4 Its
decision is therefore
Affirmed.
4 The district court’s ruling on Bucheit’s Rule 59(e) motion to
reconsider is also reviewable only for abuse of discretion, Ciralsky
v. CIA, 355 F.3d 661, 668 (D.C. Cir. 2004), and we find no such
abuse here.