United States District Court, D. Arizona
M. BRNOVICH, UNITED STATES DISTRICT JUDGE
Erik and Daryl de Jong (collectively,
“Appellants”) appeal the bankruptcy court's
decision granting Appellee Estate of Hugo N. Van Vliet
(“Appellee”) a claim in the amount of $240,
273.46. (Doc. 6, “Op. Br.”). Appellee has filed a
response brief (Doc. 8, “Resp.”) to which
Appellant replied. (Doc. 10, “Reply”). The
underlying dispute concerns a property that Appellants leased
from Appellee in order to run a dairy. For the reasons that
follow, the bankruptcy court is affirmed.
were in bankruptcy court after filing a petition pursuant to
Chapter 11 of the Bankruptcy Code. Appellee filed a proof of
claim in the amount of $347, 773.46 to which Appellants
objected. (ER0209; ER0234). After a three-day hearing, the
bankruptcy court issued a decision granting Appellee's
claim in the amount of $240, 273.46. (ER0283; ER0884).
Appellants filed a motion for relief from that order, which
was denied. (ER0284; ER0303).
facts giving rise to the claim concern a property lease.
Appellants and Appellee signed a lease (the
“Agreement”) for a dairy (the
“Property”) in Buckeye, Arizona, that went into
effect August 1, 2011. (Excerpt of Record at 0217,
“ER”). Appellee acted through the administrator
of the estate, Gary Genske. (Id.). The Agreement was
for a four-year lease on the property that would expire July
31, 2015. (Id.). It required Appellee to, among
other things, reinstall all milking equipment, bring property
infrastructure to good operating condition, warranty the
property infrastructure for 90 days after the commencement of
the lease, ensure “all utilities, fans, misters and
shade” were in “proper working condition, ”
ensure water handling systems were in operating condition,
and re-certify truck scales. (ER0219). It also promised
Appellants four move-in ready residences and a dairy office.
(ER0217). It gave Appellants the chance to approve or
disapprove the conditions and cancel the lease prior to
taking control of the Property. (Id.).
to taking control of the property, Appellants asked for 24
different repairs. (ER0088-89). The parties do not explain in
their briefings which of these repairs were made, though the
bankruptcy court concluded Appellee contracted with third
parties to address some of them. (ER0874). In any event, the
Appellants took control of the Property. Appellants provided
further notice that they were unsatisfied with the Property
at least twice in writing. (ER0098-99; ER0120-21). On appeal,
they specifically point to two reasons that the Property
could not be used as a dairy: (1) the scale was inoperable
and (2) the system for cooling cattle was not functioning
(Op. Br. at 5). Ultimately, Appellants vacated the premises
in late February or early March 2012. (ER0245).
filed a claim in bankruptcy court against Appellants in the
amount of $347, 773.46. (ER0209). The total was derived from
rent withheld during the time Appellants occupied the
Property, rent for the 18 months it took for Appellee to find
new tenants for the Property, and other costs to pay for
damage to the Property that Appellee believes Appellants
caused (“non-rental damages”). (ER0214-16). The
Appellants argued that they were not obligated to perform
under the Agreement because the Appellee materially breached
the Agreement and/or constructively evicted them. After three
days of trial in the bankruptcy court, the court awarded a
claim to Appellee in the amount of $240, 273.46. (ER0870-84).
bankruptcy court issued a memorandum decision explaining its
order. (Id.). It held that Appellees did not
materially breach the Agreement nor constructively evict
Appellants. (ER0876-79). The purpose of the Agreement was to
allow Appellants to operate a dairy, and the Property's
shortcomings did not prevent them from doing so. (ER0877-78).
The inoperable cooling system and scale may have made
operating the dairy more difficult, but the remedy was not
termination of the Agreement. (ER0878). Rather, any breach
relating to the scale gave rise to a claim for damages.
(Id. citing Thompson v. Harris, 9452 P.2d
122, 126 (Ariz.Ct.App. 1969)). Likewise, the alleged breaches
did not give rise to constructive eviction, as Appellants
were not deprived of the beneficial enjoyment of the Property
because they were able to operate their dairy and produce
grade A milk. (Id. citing Stewart Title &
Trust of Tucson v. Pribbeno, 628 P.2d 52, 53
(Ariz.Ct.App. 1981)). Furthermore, Appellants had advised
Appellee that the cooling system repairs were not necessary
until May 2012, so the bankruptcy court concluded that there
were no damages from it being inoperable. (ER0877-78;
ER0882). The bankruptcy court added that Appellants
“had no reasonable concern that the cow cooling system
would go unrepaired.” (ER0878).
bankruptcy court did, however, reduce the amount of the claim
to account for the Property's shortcomings or lack of
proof of certain damages. It held that Appellee did not meet
its burden of proof to show that Appellants were obligated to
pay for the non-rental damages. (ER0883). It also reduced the
amount of the claim to account for the inoperable scale ($40,
000 per a contractor's repair bid), the cost of
remodeling one of the four residences on the Property because
it was uninhabitable ($15, 000 per testimony from the
administrator of Appellee, Genske), and the cost of renting
one of the residences because it was also uninhabitable ($600
a month for 25 months, which equals $15, 000). (ER0881-84).
This brought the claim's total down to $240, 273.46.
appeal, Appellants raise five issues: (1) whether the
bankruptcy court applied the correct measure of damages; (2)
whether the bankruptcy court properly calculated
Appellee's alleged damages; (3) whether the bankruptcy
court incorrectly determined there was no constructive
eviction; (4) whether Appellee's actions/inactions caused
a breach of the lease; and (5) whether Appellants were
justified in vacating the premises. (Op. Br. at 1-2).
Appellee asserts, however, that Appellants only provided
sufficient argument for the Court to consider the second and
Court agrees and “will not consider any claims that
were not actually argued in appellant's opening
brief.” Indep. Towers of Wash. v. Washington,
350 F.3d 925, 929 (9th Cir. 2003). The Court “cannot
‘manufacture arguments for an appellant'” and
will “review only issues which are argued specifically
and distinctly in a party's opening brief.”
Id. (quoting Greenwood v. Fed. Aviation
Admin., 28 F.3d 971, 977 (9th Cir. 1994). The
“bare assertion of an issue does not preserve a
claim.” Id. (citing D.A.R.E. America v.
Rolling Stone Magazine, 270 F.3d 793, 793 (9th Cir.
2001)). In the Opening Brief, Appellants do not develop
arguments for their first, fourth, and fifth issues with any
specificity. Even in the Reply, Appellants do not argue they
preserved those issues, and the Court will not manufacture
such arguments for them. Accordingly, the Court will not
STANDARD OF REVIEW
parties agree that the second issue, whether the bankruptcy
court properly calculated Appellee's damages is a
question of fact reviewed for clear error. See Howard v.
Crystal Cruisers, Inc., 41 F.3d 527, 530 (9th Cir.
1994). “A court's factual determination is clearly
erroneous if it is illogical, implausible, or without support
in the record. In re Retz, 606 F.3d 1189, 1196 (9th
Cir. 2010) (citing United States v. Hinkson, 585
F.3d 1247, 1261-62, n. 21 (9th Cir. 2009) (en banc)).
parties disagree on the standard of review for Appellants
constructive eviction argument. Appellants believe it is de
novo but provide no legal authority for that conclusion. (Op.
Br. at 2). Appellee contends it is reviewed for clear error,
arguing that it involves questions of fact. (Resp. at 1)
(citing Worcester Felt Pad Corp. v. TucsonAirport Authority, 233 F.2d 44, 50 (9th Cir. 1956)
(recognizing that constructive eviction is a question for the
jury); Gottdiener v. Mailhot, 431 A.2d 851, 855
(1981) ( N.J.Super. App. Div. 1981) (“What amounts to a
constructive eviction is a question of fact.”));
Auto. Supply Co. v. Scene-in-Action Corp., 340 Ill.
196, 201 (1930) (citations omitted) (same). Undoubtedly,
resolving a constructive eviction claim involves questions of
fact, but the bankruptcy court also made legal conclusions
when considering Appellants ...