Valentine Sugars, Inc. v. Sudan ( 1994 )

United States Court of Appeals,
Fifth Circuit.
No. 94-30233.
VALENTINE SUGARS, INC., et al., Plaintiffs,
Valentine Sugars, Inc., Plaintiff-Appellant,
v.
Krishan K. SUDAN and Donau Corporation, Defendants-Appellees.
Oct. 10, 1994.
Appeal from the United States District Court for the Eastern
District of Louisiana.
Before REAVLEY, DAVIS and DeMOSS, Circuit Judges.
W. EUGENE DAVIS, Circuit Judge:
Valentine Sugars, Inc., (Valentine) appeals the district
court's order dismissing its petition for a declaratory judgment
seeking relief from an earlier judgment enforcing an arbitration
award. We affirm.
I.
The relationship between appellant Valentine and appellees
Donau Corporation and Sudan is set forth in our opinion from the
earlier appeal in this case:
The parties executed a number of agreements on June 29, 1984,
under which Sudan was to provide his secret formula for liquid
resin; Valentine then would produce the resin and sell it to
Valdon. Valentine was to purchase and install a spray dryer
on its property, which Valdon was to lease and use to spray
dry the liquid resin. Sudan was to provide technical
assistance for spray drying and then market the powder through
Donau.
Valentine Sugars, Inc. v. Donau, 981 F.2d 210, 211-12 (5th
Cir.1993).
1
When disputes arose under the contracts, Valentine initially
filed a civil action but the district court stayed the proceedings
pending arbitration, as called for by the contracts. The
arbitration panel issued its award in September 1991 and gave
essentially the following relief: (1) it terminated all agreements
between the parties; (2) it determined that Valentine Sugars owned
the spray drying equipment; (3) it directed Valentine Sugars to
pay Valdon $600,000 in a lump sum; and (4) it directed Valentine
Sugars to pay Sudan three cents per pound for all "spray dried
products produced after January 1, 1991, on the spray drying
equipment formerly owned by Valdon."
The district court confirmed the award and entered judgment on
the award. We affirmed the district court judgment. Id. Several
months after our decision was announced, or in September 1993,
Valentine filed the instant declaratory judgment action seeking
relief from the payment of the three cent royalty as required by
the earlier judgment. Valentine alleged that it had sold the spray
dryer to a third party, Lockport Thermosets (LTI). Valentine
ceased making royalty payments when it filed suit and sought a
declaration that the sale terminated Valentine's royalty obligation
to Sudan and Donau.1
1
The complaint also sought a declaration that: (1) the
plaintiff, LTI, as buyer of the spray dryer is not obligated to
pay the three cent royalty and (2) the plaintiff, Georgia Pacific
Resins, Inc., may purchase the spray dryer from LTI free and
clear of any obligation to pay royalties under the judgment.
Georgia Pacific has dismissed its suit and the district court did
not consider LTI's action. The district court entered a Rule
54(b) judgment after dismissing Valentine's action.
2
The district court ordered Valentine to continue making the
royalty payments pending resolution of this action. It also
rejected Valentine's petition for relief from the former judgment.
The district court concluded that the judgment clearly required
Valentine "to pay defendants three cents per pound for products
produced after January 1, 1991, on the spray drying equipment
formerly owned by Valdon and does not condition Valentine's future
obligation on its ownership of the machine...." This appeal
followed.
II.
Taking the allegations of Valentine's declaratory judgment
complaint as true, we agree with the district court that it
presents no ground for relief from the earlier judgment. While the
sale of the spray drying equipment is a change in circumstances,2
the change occurred entirely through the actions of Valentine and
LTI, the parties seeking relief from the judgment. This is not the
kind of unforeseen change in circumstances that merits relief from
a judgment.
Rule 60(b)(5), Fed.R.Civ.P., allows a court to grant relief
from a judgment where "it is no longer equitable that the judgment
should have prospective application." By its terms, this
subsection of Rule 60 authorizes relief where conditions have
changed such that continued enforcement of the judgment is
2
Because of the conditions placed on the sale, the district
court observed that "the permanency of this alleged sale to LTI
has not been established."
3
inequitable. According to Wright & Miller3, the following
quotation from United States v. Swift & Co., 286 U.S. 106, 119, 52
S. Ct. 460, 464, 76 L. Ed. 999 (1932), describes the type of change
in condition that merits relief:
Life is never static, and the passing of a decade has brought
changes to the grocery business as it has to every other. The
inquiry for us is whether the changes are so important that
dangers, once substantial, have become attenuated to a shadow.
No doubt the defendants will be better off if the injunction
is relaxed, but they are not suffering hardship so extreme and
unexpected as to justify us in saying that they are the
victims of oppression. Nothing less than a clear showing of
grievous wrong evoked by new and unforeseen conditions should
lead us to change what was decreed after years of litigation
with the consent of all concerned.
This is consistent with the standard we articulated for
modification of a judgment for changed circumstances in Roberts v.
St. Regis Paper Co., 653 F.2d 166, 173 (5th Cir. Unit B 1981):
Modification is only cautiously to be granted; that the
dangers which the decree was meant to foreclose must almost
have disappeared; that hardship and oppression, extreme and
unexpected are significant; and that the movant's task is to
provide close to an unanswerable case. To repeat: caution,
substantial change, unforeseenness, oppressive hardship, and
a clear showing are the requirements.
Id. (quoting Humble Oil & Refining Co. v. American Oil Co., 405
F.2d 803, 813 (8th Cir.1969) (Blackmun, J.)); see also Ruiz v.
Lynaugh, 811 F.2d 856, 860-61 (5th Cir.1987).
Valentine has not alleged a change in circumstances brought
about by new and unforeseen conditions. Appellant not only foresaw
the changed conditions, it created them. The district court
correctly denied relief from the judgment.
3
Wright & Miller, Federal Practice and Procedure: Civil §
2863 p. 208 (1973).
4
III.
While this appeal was pending, we stayed the district court's
order directing Valentine to pay the royalty to LTI and directed
Valentine to pay the royalty into the registry of the court. We
now vacate that stay order and direct the clerk of the district
court to remit the royalty payments on deposit to appellees.
AFFIRMED; STAY ORDER VACATED.
REAVLEY, Circuit Judge, dissenting:
Our problem is that the arbitral award does not provide the
answer to present circumstances, nor may it be reasonably construed
to do so. Neither the original licensing agreements nor the
arbitral award provided for Valentine to pay a royalty if the
machine should be sold and Valentine cease to produce resin.
Presumably, Donau is entitled to some additional compensation to
replace the royalty, or Donau may perhaps claim some intellectual
property right in the machine itself. But how can we promote an
order for Valentine to pay royalty for resin produced by a third
party and sold to other parties? This dispute should be referred
for further arbitration.
5