Fitzgerald Railcar v. Chief Transportation

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 04-1949
___________
Fitzgerald Railcar Services of Omaha, *
Inc., an Illinois Corporation, *
*
Plaintiff – Appellee, * Appeal from the United States
* District Court for the District
v. * of Nebraska.
*
Chief Industries, Inc., * [UNPUBLISHED]
*
Defendant – Appellant. *
___________
Submitted: February 18, 2005
Filed: May 17, 2005
___________
Before BYE, HEANEY, and MELLOY, Circuit Judges.
___________
BYE, Circuit Judge.
Chief Industries, Inc., the parent company of Chief Transportation Products,
Inc. (Chief), appeals an adverse decision from the district court1 following a bench
trial on Fitzgerald Railcar Services of Omaha, Inc.’s (Fitzgerald) declaratory
judgment action. Fitzgerald, Chief’s commercial tenant, sought a declaration from
the district court that the lease agreement between the parties was valid, enforceable
and has not been breached. Chief counterclaimed, seeking a declaration of breach,
1
The Honorable Joseph F. Bataillon, United States District Judge for the
District of Nebraska.
an order of forcible entry and detainer as a remedy for the alleged breach, and
monetary damages.
Following the adverse ruling from the district court, Chief filed this timely
appeal, alleging the district court (1) erred by exercising jurisdiction over the case;
(2) erred in finding the lease agreement had not been breached; (3) erred in finding
Chief did not give proper notice; (4) erred in finding Chief was not entitled to
restitution of the premises; and (5) erred in failing to award money damages. In
evaluating these allegations of error, we review the district court’s factual findings
for clear error and its legal conclusions de novo. Tadlock v. Powell, 291 F.3d 541,
546 (8th Cir. 2002).
As a threshold matter, we conclude the district court properly exercised federal
subject matter jurisdiction over this case pursuant to the diversity of citizenship
jurisdictional provision of 28 U.S.C. § 1332. See Capitol Indem. Corp. v. Russellville
Steel Co., 367 F.3d 831, 835 (8th Cir. 2004) (“Diversity jurisdiction exists where the
amount in controversy is greater than $75,000 and where there is complete diversity
of citizenship.”). Chief does not dispute Fitzgerald’s citizenship is diverse from its
own, but rather contends the amount in controversy here is less than the requisite
jurisdictional amount of $75,000. According to Chief, the value of the object of
litigation–the lease agreement in alleged default–is somewhere between $38,211.55,
the amounts accrued solely during Fitzgerald’s occupancy, and $60,000, the amount
certified as owing by the previous lessor. See James Neff Kramper Family Farm
P’ship v. IBP, Inc., 393 F.3d 828, 833 (8th Cir. 2005) (quoting Hunt v. Wash. State
Apple Adver. Comm’n, 432 U.S. 333, 347 (1977) (“In actions seeking declaratory or
injunctive relief, it is well established that the amount in controversy is measured by
the value of the object of the litigation.”)).
Assuming, arguendo, the object of litigation is the amount owed under lease,
Chief overlooks, in addition to the possible $60,000 amount due, that the lease
-2-
agreement also provides for recovery of double rent in the event of holdover and rent
during the period the property remains vacant. This oversight notwithstanding, the
value of the object of litigation is not measured simply by the amount in alleged
default, as Chief contends, but also by the value of the lease agreement if terminated.
See Hunt, 432 U.S. at 347 (stating the value of the object of litigation is measured by
the losses that will follow from enforcement); City of Moore v. Atchison, Topeka, &
Santa Fe Ry. Co., 699 F.2d 507, 509 (10th Cir. 1983) (“To determine the amount in
controversy, we look to the pecuniary effect an adverse declaration will have on
either party to the lawsuit.”). As the district court stated, had Chief prevailed,
Fitzgerald’s profitable business, operating at $100,000 annual net profit, would likely
cease and need to be relocated to another location, forcing Fitzgerald to forfeit,
among other things, its right under the lease agreement to renew and continue
operations on the premises until October 2016 at a rate of $22,500 per month. We are
therefore convinced Fitzgerald has a significant economic stake in continuing the
lease that well exceeds the jurisdictional requirement of $75,000.
Next, we move to the heart of the controversy–whether Fitzgerald materially
breached the lease and whether Chief was entitled to retake possession of the
premises. In regards to the merits, some variety of the word “confusing” has been
used to describe the stature of this case. Despite the confusing stature of the case, the
district court was able to conclude in a thoughtful and well-reasoned opinion, after
conducting a bench trial, that Fitzgerald did not materially breach the lease, Chief did
not give proper notice of default, and Chief was not entitled to restitution of premises.
We reviewed these findings for clear error and found none. Tadlock, 291 F.3d at 546
(“A factual finding supported by substantial evidence on the record is not clearly
erroneous.”).
The sole remaining issue involves Chief’s contention the district court erred by
failing to award money damages on its counterclaim against Fitzgerald, the liability
for which Chief labels as uncontroverted. Initially, we note there is some dispute
-3-
whether Chief may maintain a counterclaim for money damages in a forcible entry
and detainer action. See Cummins Mgmt., L.P., v. Gilroy, 667 N.W.2d 538, 542-43
(Neb. 2003). We need not resolve this issue, however, because the district court
found “[n]either side has shown to the court’s satisfaction what amounts, if any, are
owed under the lease.”
Chief claims this finding was in error, and a new trial warranted, because
everyone involved, including the district court, acknowledged Fitzgerald owed some
amount. Chief, however, does not appear to understand the distinction between
recognizing an amount may be due and proving what amount is due. While the
district court may have recognized Fitzgerald’s liability for the debt, it concluded
Chief utterly failed to prove the amount due and owing with the required degree of
legal certainty. In our careful review of the conflicting testimony and cryptic
documents contained in the record, we can identify no clear error in the district
court’s conclusion. See Cumpiano v. Banco Santander Puerto Rico, 902 F.2d 148,
159 (1st Cir. 1990) (“Here, as is so often true in appeals following bench trials,
appellant’s claim ‘reduces to the assertion that, had the facts been judged properly,
[it] would have prevailed.’ Unless the evidentiary scales are seriously miscalibrated,
we must turn a deaf ear to such siren songs.”).
For the foregoing reasons, the judgment of the district court is affirmed.
______________________________
-4-