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Outdoor Central, Inc. v. GreatLodge.com, Inc., 10-2282 (2011)

Court: Court of Appeals for the Eighth Circuit Number: 10-2282 Visitors: 41
Filed: Jul. 11, 2011
Latest Update: Mar. 02, 2020
Summary: United States Court of Appeals FOR THE EIGHTH CIRCUIT _ Nos. 10-2282/2401 _ Outdoor Central, Inc.; The Central * Trust Bank, * * Plaintiffs - Appellees, * * v. * * Appeal from the United States GreatLodge.Com, Inc., * District Court for the * Western District of Missouri. Defendant - Appellant, * * The Active Network, Inc., * * Cross-Defendant - Appellee. * * * _ Submitted: February 24, 2011 Filed: July 11, 2011 (corrected August 4, 2011) _ Before GRUENDER, BENTON, and SHEPHERD, Circuit Judges.
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                    United States Court of Appeals
                          FOR THE EIGHTH CIRCUIT
                                     ___________

                               Nos. 10-2282/2401
                                 ___________

Outdoor Central, Inc.; The Central   *
Trust Bank,                          *
                                     *
      Plaintiffs - Appellees,        *
                                     *
      v.                             *
                                     * Appeal from the United States
GreatLodge.Com, Inc.,                * District Court for the
                                     * Western District of Missouri.
      Defendant - Appellant,         *
                                     *
The Active Network, Inc.,            *
                                     *
      Cross-Defendant - Appellee.    *
                                     *
                                     *
                                ___________

                            Submitted: February 24, 2011
                               Filed: July 11, 2011 (corrected August 4, 2011)
                                ___________

Before GRUENDER, BENTON, and SHEPHERD, Circuit Judges.
                          ___________

BENTON, Circuit Judge.

       Central Trust Bank and its wholly-owned subsidiary Outdoor Central, Inc.
(collectively “Central Bank”), sued GreatLodge.Com, Inc., over the sale of an
automated hunting and fishing licensing system. GreatLodge counterclaimed, and
also cross-claimed against The Active Network, Inc. The district court awarded
Central Bank $965,000 in damages and certified several orders as final under Fed. R.
Civ. P. 54(b). Both GreatLodge and Central Bank appeal. This court dismisses in
part and affirms in part.

                                            I.

       In 2004, Central Bank was seeking a partner to provide automated licensing
services to state fish-and-game agencies. Central Bank purchased GreatLodge’s
assets for $965,000. By Section 7 of the purchase agreement, GreatLodge could
receive further “earnout” payments depending on future performance. After the
GreatLodge system showed signs of trouble, Central Bank spent significant resources
salvaging it. The Bank later sold the system and other assets to Active Network for
about $46.5 million.

      In 2008, Central Bank sued GreatLodge in state court, alleging it
misrepresented the capabilities and costs of its software system, as well as
information about key programming personnel. GreatLodge removed the case to
federal court, counterclaimed against Central Bank, and cross-claimed against Active
Network. The district court granted Active Network’s motion to dismiss. Central
Bank and GreatLodge each moved for summary judgment, which the district court
granted in part and denied in part.

       The case went to a bench trial on Central Bank’s Second Amended Complaint.
The three claims were styled: “Damages for Fraud in the Inducement,” “Damages for
Breach of Express and Implied Warranties,” and “Declaratory Judgment and
Equitable Relief.” The third claim centered on GreatLodge’s alleged breach of the
covenant of good faith and fair dealing. It sought restitution of the purchase price and
a declaration that Central Bank had no duty to pay earnouts to GreatLodge. The
district court and the parties agreed that the trial would center on the fraud issue, with
damages determined later. After trial, the district court found that GreatLodge had
committed fraud, and “since GreatLodge fraudulently induced Central Bank to enter


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into the Contract, Central Bank does not owe GreatLodge any ‘earnout’ payments
under the Contract and plaintiff Central Bank is entitled to judgment in its favor on
Count III.” The court further ordered “that all of defendant’s Counterclaims are
denied.”

       The district court awarded Central Bank $965,000, and designated its post-trial
Order as a final judgment pursuant to Rule 54(b). Included in the Rule 54(b)
certification was the dismissal of GreatLodge’s counterclaims and cross-claim. The
district court also designated as final its Order ruling for Central Bank on Count III.
According to the district court, the claims remaining to be adjudicated “are [Central
Bank]’s claims for breach of the implied warranty of fitness for the particular purpose
in Count II of [its] Second Amended Complaint and for breach of the implied
warranty of good faith and fair dealing in Count III.” (Although the court had granted
declaratory relief on Count III, the good-faith-and-fair-dealing issue remained.)
GreatLodge appealed and Central Bank cross-appealed.

                                           II.

       Though the parties agree that the case is properly before this court, they may
not create jurisdiction “by waiver or consent.” Ark. Blue Cross & Blue Shield v.
Little Rock Cardiology Clinic, P.A., 
551 F.3d 812
, 816 (8th Cir. 2009), citing 4:20
Commc’ns, Inc. v. Paradigm Co., 
336 F.3d 775
, 778 (8th Cir. 2003). This court
must independently ascertain its own jurisdiction, even on its own motion. Huggins
v. FedEx Ground Package Sys., Inc., 
566 F.3d 771
, 773 (8th Cir. 2009).

      “Rule 54(b) permits the district court to ‘direct the entry of a final judgment as
to one or more but fewer than all of the claims or parties only upon an express
determination that there is no just reason for delay.’” Interstate Power Co. v. Kansas
City Power & Light Co., 
992 F.2d 804
, 806-07 (8th Cir. 1993), quoting Fed. R. Civ.
P. 54(b). “A district court must first determine that it is dealing with a final judgment
. . . . in the sense that it is an ultimate disposition of an individual claim.” Curtiss-


                                          -3-
Wright Corp. v. Gen. Elec. Co., 
446 U.S. 1
, 7 (1980) (quotation marks and citation
omitted). Then: “In determining that there is ‘no just reason for delay,’ the district
court must consider both the equities of the situation and ‘judicial administrative
interests,’ particularly the interest in preventing piecemeal appeals.” Interstate
Power 
Co., 992 F.2d at 807
, quoting Curtiss-Wright 
Corp., 446 U.S. at 8
.

       This court independently reviews whether a Rule 54(b) determination properly
conferred appellate jurisdiction. Matschiner v. Hartford Life & Acc. Ins. Co., 
622 F.3d 885
, 886 n.1 (8th Cir. 2010). Applying an abuse of discretion standard, this
court largely defers to the district court’s weighing of the equities, but more closely
scrutinizes the analysis of judicial administrative interests. Interstate Power 
Co., 992 F.2d at 807
. “A Rule 54(b) determination should not be made routinely; it is only the
special case that warrants an immediate appeal from a partial resolution of the
lawsuit.” 
Id. (quotation marks
and citation omitted).

       This court disfavors Rule 54(b) appeals “‘where [as here] the adjudicated and
pending claims are closely related and stem from essentially the same factual
allegations.’” 
Huggins, 566 F.3d at 775
(bracketing in Huggins), quoting Hayden
v. McDonald, 
719 F.2d 266
, 270 (8th Cir. 1983) (per curiam), and also citing
McAdams v. McCord, 
533 F.3d 924
, 928 (8th Cir. 2008). Where each claim
“requires familiarity with the same nucleus of facts and involves analysis of similar
legal issues,” the claims “should be resolved in a single appeal.” Interstate Power
Co., 992 F.2d at 807
. Central Bank’s unadjudicated claims (warranty-of-fitness-for-
particular-purpose and good-faith-and-fair-dealing) share the same facts as the
certified claims. Further, under Missouri law, fraud and breach of warranty share
similar elements, and the same conduct may support both theories. See Renaissance
Leasing, LLC v. Vermeer Mfg. Co., 
322 S.W.3d 112
, 122, 131-32 (Mo. banc 2010);
Morehouse v. Behlmann Pontiac-GMC Truck Serv., Inc., 
31 S.W.3d 55
, 59 (Mo.
App. 2000). Due to the close factual and legal relationship between the fraud,
warranty, and good-faith-and-fair-dealing claims, Rule 54(b) certification was
inappropriate.

                                          -4-
      Central Bank argues that regardless of Rule 54(b), the district court’s actions
amount to a final judgment under 28 U.S.C. § 1291. According to the Bank, its
unresolved warranty and good-faith-and-fair-dealing claims overlap with its
successful fraud claim. Because it may recover only once, Central Bank reasons that
the warranty and good-faith-and-fair-dealing claims are moot. Yet the Bank has not
abandoned these alternative claims in the event of a remand. Cf. Acton v. City of
Columbia, Mo., 
436 F.3d 969
, 974 n.3 (8th Cir. 2006). As its mootness argument
hinges on affirmance of the fraud claim, this court would have to reach the merits
before reaching jurisdiction. “[A] court may not assume ‘hypothetical jurisdiction’
to decide ‘contested questions of law when its jurisdiction is in doubt.’” Ark. Blue
Cross & Blue 
Shield, 551 F.3d at 816
, quoting Steel Co. v. Citizens for a Better
Env’t, 
523 U.S. 83
, 101 (1998).1

                                       III.

       The district court dismissed GreatLodge’s cross-claim against Active Network.
Rule 54(b) permits final judgment as to separate parties. Fed. R. Civ. P. 54(b). The
district court correctly identified the dismissal of the cross-claim as final, and its
assessment of the equities is not “clearly unreasonable.” Curtiss-Wright Corp., 446


      1
         The Seventh and First Circuits have deemed judgments granting all requested
relief as “final,” despite some unresolved claims. See Ind. Harbor Belt R.R. Co. v.
Am. Cyanamid Co., 
916 F.2d 1174
, 1183 (7th Cir. 1990), followed by Hamm v.
Ameriquest Mortg. Co., 
506 F.3d 525
, 527 (7th Cir. 2007), and United States v.
Rivera, 
55 F.3d 703
, 712 (1st Cir. 1995). Indiana Harbor and Rivera predate the
Supreme Court’s disapproval of hypothetical jurisdiction in Steel Co. Hamm
followed Indiana Harbor without further analysis and without mentioning Steel Co.
Central Bank also cites Blazak v. Ricketts, 
971 F.2d 1408
(9th Cir. 1992), which
accepted an appeal of habeas relief from a conviction, while sentencing-related claims
were unresolved. While several other circuits have agreed, this court has long taken
the opposite approach in habeas cases. Compare Sprosty v. Buchler, 
79 F.3d 635
,
645-46 & n.2 (7th Cir. 1996) (collecting cases), with Stewart v. Bishop, 
403 F.2d 674
, 680 (8th Cir. 1968) (no jurisdiction).

                                         -5-
U.S. at 10. As to judicial administrative interests, this court agrees that “issues
involving The Active Network are self-contained.” An appellate ruling will finally
resolve the sufficiency of the cross-claim. The Rule 54(b) certification was proper
as to Active Network.

       GreatLodge filed an “Answer to Plaintiffs’ Second Amended Complaint,
Affirmative Defenses, Counterclaims and Cross-Claim Against The Active Network.”
Count V claimed unjust enrichment. “[U]njust enrichment . . . occurs where a benefit
is conferred upon a person in circumstances in which retention . . . of that benefit
without paying its reasonable value would be unjust.” ACLU/E. Mo. Fund v. Miller,
803 S.W.2d 592
, 595 (Mo. banc 1991) (quotation marks and citation omitted). Where
a party has already paid for something, “equity will not require [it] to pay twice.”
Johnson Group, Inc. v. Grasso Bros., Inc., 
939 S.W.2d 28
, 31 (Mo. App. 1997)
(citation omitted). As GreatLodge acknowledges, Active Network paid about $46.5
million for assets that included the system that GreatLodge sold for $965,000. The
district court properly granted dismissal.

       GreatLodge’s Count VI sought a declaratory judgment that Active Network
owed earnouts to GreatLodge. One term of the Central Bank-Active Network
agreement excluded the “Contract for Purchase of Business Assets dated March 1,
2005 by and between Central Bank and GreatLodge.com.” However, another term
provided, “Buyer [Active Network] hereby agrees to assume . . . subject to the
indemnification obligations of Sellers . . . the liabilities and obligations of Central
Bank under Section 7 of the GreatLodge Agreement.” Arguably, this second term
delegated Central Bank’s duties, putting GreatLodge and Active Network in privity.
GreatLodge’s brief opposing the motion to dismiss discusses this second term.
However, GreatLodge did not amend its pleading to allege the delegation. On appeal,
GreatLodge points to Central Bank’s Answer, which stated: “To the extent
GreatLodge has any expectation of additional compensation in the future, its rights,
if any, were preserved in the sale agreement with Active [Network].”

                                         -6-
       In deciding Rule 12(b)(6) motions, courts are not strictly limited to the four
corners of complaints. See Brown v. Medtronic, Inc., 
628 F.3d 451
, 459-60 (8th Cir.
2010). This court assumes without deciding that GreatLodge may rely on Central
Bank’s pleading to resist Active Network’s motion to dismiss. “Courts must accept
. . . specific factual allegations as true but are not required to accept . . . legal
conclusions.” 
Id. at 459,
citing Bell Atl. Corp. v. Twombly, 
550 U.S. 544
, 556
(2007). The phrase “its rights, if any, were preserved” says nothing about delegation.
This bare conclusion fails to move GreatLodge’s Count VI “‘above the speculative
level,’” and the district court correctly dismissed it. 
Id., quoting Twombly,
550 U.S.
at 555. GreatLodge also argues that it sought relief from the dismissal by filing a
motion under Fed. R. Civ. P. 59. “[I]n order to preserve the right to amend the
complaint, a party must submit the proposed amendment along with its motion.” In
re 2007 Novastar Fin. Inc., Sec. Litig., 
579 F.3d 878
, 884 (8th Cir. 2009) (quotation
marks and citation omitted). GreatLodge does not point this court to any proposed
amendment.

      The dismissal of GreatLodge’s cross-claim against Active Network is affirmed.

                                  * * * * * * *

        The district court properly certified its order dismissing the cross-claim
against Active Network, which is affirmed. As there is no final judgment on all
claims or a proper Rule 54(b) certification as to the claims between Central Bank and
GreatLodge, the remainder of the appeals are dismissed without prejudice, and the
case remanded for further proceedings consistent with this opinion.
                       ______________________________




                                         -7-

Source:  CourtListener

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