Archer v. Eiland , 64 F. App'x 676 ( 2003 )

F I L E D
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
APR 15 2003
FOR THE TENTH CIRCUIT
PATRICK FISHER
Clerk
JOHN T. ARCHER; VELMA J.
ARCHER; SHELBY CHARLES
ROAD PARTNERSHIP,
Plaintiffs-Appellants,
v. No. 02-5026
(D.C. No. 98-CV-889-K)
ROSS D. EILAND; WILLIAM (N.D. Oklahoma)
EILAND; DANIEL EILAND;
NADINE EILAND,
Defendants-Appellees.
ORDER AND JUDGMENT *
Before LUCERO , McKAY , and BALDOCK , Circuit Judges.
John and Velma Archer brought this diversity suit in connection with their
purchase and ownership of real property. They sued Nadine Eiland, the seller of
the land, alleging breach of warranty deed, and against Daniel, Ross, and Billy
*
The case is unanimously ordered submitted without oral argument pursuant
to Fed. R. App. P. 34(a)(2) and 10th Cir. R. 34.1(G). This order and judgment is
not binding precedent, except under the doctrines of law of the case, res judicata,
and collateral estoppel. The court generally disfavors the citation of orders and
judgments; nevertheless, an order and judgment may be cited under the terms and
conditions of 10th Cir. R. 36.3.
Eiland on a nuisance theory. None of the Eilands appeared before the court, and
the Archers filed a motion for default judgment. In reviewing the motion, the
district court denied default judgment against Nadine and Daniel, but granted
default judgment against Ross and Billy on the nuisance claim, awarding damages
in the amount of $1,375.00. On appeal, the Archers argue that they were entitled
to a default judgment against Nadine on the breach of warranty claim, and that the
district court erred in limiting the nuisance damages. Exercising jurisdiction
under 28 U.S.C. § 1291, we affirm in part and reverse in part.
I
Plaintiffs John and Velma Archer and their Missouri partnership, Shelby
Charles Road Partnership (collectively “the Archers”) are the owners of several
tracts of land along the Kansas/Oklahoma border, one of which, an eighty-acre
tract (“the Eiland tract”), was purchased in 1993 from Joe Eiland and his widow,
defendant Nadine Eiland. 1
The warranty deed conveying the Eiland tract to the
Archers excepted from the conveyance a parcel which had been previously
conveyed to an individual named Tommy Lewis. The deed further acknowledged
a non-recorded agreement which granted a limited right of ingress and egress over
a portion of the Eiland tract to the parcel belonging to Tommy Lewis. This
easement was described as a “limited and exclusive right granted as access
1
Joe Eiland died before the Archers’ complaint was filed.
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appertaining solely to said tract, which is limited to the said twenty eight feet in
width, must be protected by a closed gate at all times, . . . for the sole access to
that specific tract, and . . . run[ning] with the land.” (Appellant’s App. at 58.)
The deed further contained a covenant of warranty and quiet enjoyment whereby
the grantors promised to defend the Archers against any third party who lawfully
claimed any part of the estate conveyed.
Sometime after the conveyance of the Eiland tract to the Archers, Brenda
Brock succeeded to the title of Tommy Lewis. Brock planned to locate a mobile
home on her property and approached the Archers claiming an express easement
in excess of the right to ingress and egress referred to in the warranty deed. 2
There is no evidence that Brock claimed that her right to a more generous
easement emanated from the Eilands. When the Archers approached Joe and
Nadine Eiland regarding Brock’s claim, the Eilands refused to defend the
Archers’ title.
Brock then sued the Archers over the matter of the easement. Before the
state of her title could be legally determined, however, the Archers settled with
Brock by purchasing her tract. The Archers then sued Nadine Eiland for breach
of the warranty in the deed. In addition, they sued Nadine’s son Daniel and
2
The only evidence in the record of a demand in excess of the easement
described in the warranty deed is Brock’s apparent refusal to tolerate the gate on
the easement. (Appellant’s App. at 82.)
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her grandsons, Ross and William, on a nuisance theory, alleging acts of theft,
vandalism, and intimidation. The Archers claimed damages arising from the
value of the stolen property, lost rental value, and their alleged forced evacuation
from their home. When the Eilands failed to appear to defend the action, the
Archers’ filed a motion for default judgment. In response, the district court held
an evidentiary hearing, denied default judgment against Nadine and Daniel, and
granted default judgment against Ross and William in the amount of $1,375.00.
As none of the defendants appeared before the court, there is no question
here that defendants were in default. As to the district court’s response to the
Archers’ motion for default judgment, the district court properly took as true all
factual allegations in the complaint, except those pertaining to the amount of
damages. See Charles Alan Wright & Arthur R. Miller, Federal Practice and
Procedure § 2688 at 58-59 (3d ed. 1998). “Decisions to enter judgment by default
are committed to the district court’s sound discretion, and our review is for abuse
of discretion. However, a decision based on an erroneous view of the law is an
abuse of discretion.” Dennis Garberg & Assocs., Inc. v. Pack-Tech Int’l Corp. ,
115 F.3d 767, 771 (10th Cir. 1997) (citation omitted).
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II
The Archers argue that the district court erred in finding that Nadine Eiland
was not liable for breach of warranty deed. In reaching this conclusion, 3
the court
stated:
Nothing in the record suggests that Ms. Brock asserted the Eilands
had granted her a broader easement, which assertion would have been
contrary to the warranty. Plaintiffs have not provided any authority
for the proposition that a duty to defend in a warranty deed means
that the grantor must defend any and all claims which a creative
third-party plaintiff might fashion. The Eilands warranted that they
could convey good title to the property and that they had granted no
other easements. These warranties were not implicated by the Brock
suit, so far as the record reflects. Plaintiffs’ claim under Count I
fails.
(Appellant’s App. at 68.) We agree.
In order to establish their claim, the Archers were required to show that
Brock’s claim was superior to their title or possessory rights, see Lewis v. Jetz
Serv. Co. , 9 P.3d 1268, 1270 (Kan. Ct. App. 2000), and that Brock’s paramount
title was in existence at the time the warranty was made, see Wood v. Stewart ,
3
Contrary to statements in the Archers’ brief, the district court did not conclude
that the Archers had failed to state a claim; it concluded that the Archers could
not prevail on the claim stated. (Appellant’s App. at 68.)
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150 P.2d 331, 333 (Kan. 1944). 4
This showing requires more than the presence of
a third party asserting a hostile claim.
In Lewis , 9 P.3d at 1270, the plaintiffs settled with a third party who had
claimed an allegedly superior lease which was later found by a court to be
unenforceable. In a suit against the grantor, the court denied recovery on the
plaintiff’s claim for breach of warranty deed. “A grantor’s covenant of title in a
warranty deed is limited to lawful claims.” Id. “An entry by an intruder, or by
any one else, without lawful right and superior title is not a breach of the
covenants, and in such case the remedy of the grantee is against the wrong-doers
and not the covenantor.” Id. (quotation omitted).
There is no evidence in the record that Brock’s claim was paramount to that
of the Archers—that she somehow was the true owner of the unrestricted
easement she apparently demanded. By settling with Brock, the Archers
precluded the possibility that her claim could be tested for its legality and,
if found lawful, could be the basis for a breach of warranty claim against
Nadine Eiland.
4
Kansas law controls the outcome of this diversity case because the property at
issue is located in Cherokee County, Kansas. See Anschutz Land & Livestock
Co. v. Union Pac. R.R. , 820 F.2d 338, 341 (10th Cir. 1987) (citing Williams v.
North Carolina , 317 U.S. 287, 294 n.5 (1942)).
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While we recognize the law’s general preference for settlement, it is clear
that in the case of suit on a title warranty, more than the fact of settlement with its
attendant costs must be shown. In Roper v. Elkhorn at Sun Valley , 605 P.2d 968(Idaho 1980), the court denied recovery on a warranty to plaintiffs who had
settled a claim that later proved invalid. The court rejected the plaintiffs’
argument that the defendants should be liable for their loss because the plaintiffs
had acted reasonably and prudently in compromising a bona fide dispute. The
court noted that
[t]he mere showing of a cloud on the grantee’s title is insufficient to
establish a breach, for the warrantor is not bound to protect his
grantor against a mere trespasser or against an unlawful claim of
title. In other words, a covenant of warranty of title does not extend
to apparent or unfounded titles in land, but only against hostile titles,
superior in fact to those of the grantor.
Id. at 972 (quotation omitted). Similarly, in Green v. Ayres , 535 P.2d 762(Oreg. 1975) (en banc), the plaintiffs had paid to remove portions of a building
thought to encroach on adjoining property. The building was later deemed not to
be an encumbrance because of a presumption of adverse possession. In an action
to recover on a title warranty, the plaintiffs failed to recover because they failed
to show the existence of another’s right in detriment to their title. Id. at 764.
The instant case presents a similar situation. In the warranty, the Eilands
promised to defend against any third party who lawfully claimed any part of the
estate conveyed. The Archers have not shown that Brock’s claim was lawful and
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paramount to theirs, thus precluding their recovery. Because the unchallenged
facts alleged in the complaint are insufficient to constitute a legitimate cause of
action, the district court did not abuse its discretion in denying the motion for
default judgment against Nadine Eiland.
III
As their second issue on appeal, the Archers argue that they should have
been awarded damages in an amount far greater than the $1,375.00 awarded by
the district court. Specifically, they contend they should have been compensated
for property stolen by defendants Ross and William Eiland valued at $1,515.00,
and for damages arising from having to evacuate their property due to the
nuisance created by defendants generally. 5
“It is well established that the amount
of damages in a nonjury case is within the discretion of the trial court and cannot
be overturned unless clearly erroneous.” Taylor v. Pre-Fab Transit Co. , 616 F.2d
374, 375 (8th Cir. 1980).
The Archers contend that the district court erred in failing to award them
damages for the “forced evacuation” of their property. Those damages include
loss of rental income from various tracts and residences on the property as well as
the cost of purchasing and maintaining an alternative residence in Baxter Springs,
5
For purposes of this section, the term “defendants” will not include Nadine
Eiland.
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Kansas, and for maintaining the residence on one of the vacated tracts. In
denying damages for these items, the district court concluded there was
insufficient causation between the actions of the defendants and the Archers’
decision to vacate the property and, further, that the Archers “failed to show that
vacating the property in question was a necessity.” (Appellant’s App. at 69.)
Alternatively, the court reasoned that, even if vacating the property was
legally justified, “such a finding does not grant carte blanch[e] to recover for
purchasing and maintaining a new home.” Id. The court denied recovery on the
lost rental because it found the damage claim to be “largely speculation, and
excessive.” Id. at 70. We agree with this determination, as well.
While it is probable that defendants’ actions were sufficient to establish
a private nuisance, we take the district court’sview that the damage claims for
loss of rental value and for the costs of relocation cannot be sustained. “The
successful plaintiff in a nuisance action may always recover such damages as he
can prove, measured by loss of rental value for a temporary nuisance or by loss of
market value for a permanent nuisance.” Roger A. Cunningham, et al., The Law
of Property §7.2 at 421 (2d ed. 1993) (citation omitted).
Where the injury is temporary or remediable, the measure of damages
is not the depreciation of the value of the property, but the
depreciation of the rental or usable value during the continuance of
the injury . . . ; and damages as for a permanent injury cannot be
allowed where the injury is temporary or the nuisance removable.
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Alexander v. Arkansas City , 396 P.2d 311, 315 (Kan. 1964) (quotation omitted).
The Archers do not argue that the nuisance here is anything but temporary.
As such, they would be able to recover the loss of rental value of the property,
had they provided more competent evidence of the measure of that damage.
While they were not required to provide expert testimony as to these damages, see
Hare v. Wendler , 949 P.2d 1141, 1143 (Kan. 1997), the Archers were required to
demonstrate the best evidence under the circumstances in order to give the court
a reasonable basis for the computation of the loss of rental value, Cott v.
Peppermint Twist Mgmt. Co. , 856 P.2d 906, 917 (Kan. 1993). Alleged damages
are not recoverable if they are too conjectural or too speculative to form a basis
for measurement. McKissick v. Frye , 876 P.2d 1371, 1389 (Kan. 1994).
Here, the Archers presented the court with a summary of damages,
indicating a rental return of twelve percent for damages from lost rental on the
subject property totaling $192,310.87. There is no evidence to substantiate the
value of the Archer tract (although Mr. Archer testified to the purchase prices of
the Eiland tract and the Newby tract) or the accuracy of the twelve percent figure
as a legitimate rental rate. The district court concluded that the Archers’ proof on
this matter was “largely speculation, and excessive” and declined to arrive at its
own damage amount absent appropriate evidence. (Appellant’s App. at 70.) We
find no error in this conclusion.
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With regard to the claim for damages arising from the purchase of the new
house in Baxter Springs and its maintenance, we conclude that the district court
also properly denied recovery. Defendants, as tortfeasors, are generally liable for
any injury and loss that is the natural and probable result of their wrongful acts.
Ettus v. Orkin Exterminating Co. , 665 P.2d 730, 737 (Kan. 1983). Nonetheless,
plaintiffs are not entitled to damages that are too remote from a defendant’s
conduct. Arrow Constr. Co. v. Camp , 827 P.2d 378, 384 (Wyo. 1992). Implicitly
concluding that this item of damage was too remote from defendants’ tortious
conduct, the district court noted that, even if “defendants’ actions rose to the level
that plaintiffs were legally justified in vacating the property, such a finding does
not grant carte blanch[e] to recover for purchasing and maintaining a new home.”
(Appellant’s App. at 69.)
We do not fault the district court’s conclusion. Moreover, we find
compelling support in the fact that this measure of damages is tantamount to the
appropriate recovery in a case of a permanent nuisance, where the measure of
damages is the depreciation of the value of the property as a whole. See
Alexander , 396 P.2d at 315. Allowing the Archers to recover the cost of an
entirely new residence is roughly the same as allowing them to recover the full
market value of their property—a remedy reserved for cases of permanent
nuisance. See , Cunningham, supra , § 7.2 at 421. The district court correctly
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denied the Archers’ claim for damages for the purchase and maintenance of their
new home.
The next item of claimed damages is for the cost of maintaining a house on
the property (“the Newby house”) which costs, according to the Archers’
summary of damages, include insurance, taxes, and interest. The record contains
no evidence to substantiate the charges listed on the summary except for an
insurance bill on the Newby house. Because this one aspect of the claim is not
speculative or conjectural, the district court should have awarded an additional
$1,146.00 to the Archers for the cost of insuring the Newby house, given the
absence of proof as to any offset to that amount.
Finally, while the district court awarded $1,375.00 in damages for
defendants’ vandalism to a well pump and for the removal of survey stakes, the
court did not address the Archers’ claim for damages from the loss of property
stolen by defendants Ross and William Eiland. Mr. Archer testified that he and
his wife witnessed those two defendants removing a well pump, an antique
Coca-Cola box, and an outboard motor from their barn. They estimated the
combined value of these objects at $1,515.00, and a proof of loss form submitted
by the Archers to their insurance company indicates loss of at least that amount.
The district court should have awarded an additional $1,515.00 to the Archers
from defendants Ross and William Eiland jointly and severally.
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The judgment of the district court is AFFIRMED in part and REVERSED
in part, and this case is remanded for further proceedings consistent with this
order and judgment.
Entered for the Court
Carlos F. Lucero
Circuit Judge
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