Aube v. Aube

Opinion

USCA1 Opinion

November 8, 1994      [NOT FOR PUBLICATION]

                            UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT

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        No. 94-1451

                                     ROBERT AUBE,

                                Plaintiff, Appellant,

                                          v.

                                    CYNTHIA AUBE,

                                 Defendant, Appellee.

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                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                           FOR THE DISTRICT OF RHODE ISLAND

                 [Hon. Francis J. Boyle, U.S. Senior District Judge]
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                                        Before

                                Torruella, Chief Judge,
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                                Boudin, Circuit Judge,
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                             and Keeton,* District Judge.
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            Kris Macaruso Marotti with whom Thomas  A. Tarro III and Fortunato
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        & Tarro were on brief for appellant.
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            J. Ronald Fishbein for appellee.
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        *Of the District of Massachusetts, sitting by designation.



Per Curiam.  On  November 19, 1982, Robert  Aube entered
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            into a 50-year lease for a 7.7-acre tract of undeveloped land

            in Foster, Rhode Island, with  his now deceased father, Frank

            Aube.   Frank  Aube leased the  7.7 acres  to his  son for an

            annual rent of $10, payable on the first business day of each

            December starting on December  1, 1982.  The leased  land was

            part of a  larger piece of property owned  by the senior Aube

            consisting of 77 acres and including a house and a pond.

                 Robert  Aube used  the land  to operate a  plant nursery

            from 1983 to 1987.  In preparing for the nursery, Robert Aube

            made several improvements to the property, including clearing

            four acres of the undeveloped  land, installing two wells and

            an  irrigation system,  and constructing  a greenhouse  and a

            barn.   In  1987 Robert  Aube stopped  operating the  nursery

            because it was unprofitable,  at which point he sold  some of

            the  nursery  equipment  and  disconnected  the plumbing  and

            electricity  to  the  greenhouse.    Thereafter,  Robert Aube

            returned to the nursery every six or eight months to check on

            its  condition  or to  pick up  various  items he  had stored

            there.

                 In 1987 Frank Aube filed for Chapter 11 bankruptcy along

            with  his  wife, Cynthia  Aube,  who is  Robert  Aube's step-

            mother.  Frank Aube died in December 1990.  During the course

            of  bankruptcy  proceedings in  1992,  the  trustee of  Frank

            Aube's  estate filed an intended  notice of sale  to sell the

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entire 77-acre parcel, including the 7.7  acres.  Robert Aube

            objected to the sale, arguing that he had a valid interest in

            the 7.7 acres for the remaining 40 years of the lease.

                 On October  2, 1992,  at  the hearing  on Robert  Aube's

            objection, the bankruptcy court approved a payment of $33,000

            to Robert Aube.  In exchange, Robert consented to sale of the

            property,  which  was  then  sold  with  a  clear  title  for

            $270,000.   During  the hearing,  it was  also agreed  that a

            further hearing  would be  held to determine  what additional

            amount, if any, Robert  should receive to compensate  him for

            his interest.  If that interest was less than $33,000, Robert

            Aube was still entitled to keep the $33,000 already paid.

                 In April 1993,  the bankruptcy court  heard two days  of

            testimony concerning Robert Aube's claim for damages.  Robert

            Aube treated the lease as having been rejected by the trustee

            in bankruptcy.  See 11 U.S.C.   365.  He  then offered expert
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            testimony that the fee value of the 7.7 acres as improved was

            approximately  $70,000.   The  expert  was  also prepared  to

            testify  that,  on a  somewhat different  basis, the  fee and

            improvements represented  $126,000.   This latter  figure was

            adduced only  as an  offer of  proof.  In  the course  of the

            hearings,  Robert  Aube  testified  that he  had  no  precise

            recollection  as to when and  where he had  made the required

            $10 per year payments to his father, although he said that he

            was confident that he  had made them at different  times when

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he and  his father chanced  to be together.   He  did testify

            that a  final payment had been tendered by a check to Cynthia

            Aube, but  this occurred  after Frank  Aube's death,  and the

            check  was not accepted.   No receipts had  been obtained for

            any of the payments.

                 On  December 16,  1993,  the bankruptcy  court issued  a

            decision  and order that rejected  Robert Aube's claim to any

            amount beyond the $33,000 already  obtained.  The court  said

            that  it did not credit  Robert Aube's testimony  that he had

            made  the lease  payments  and concluded  that Robert  Aube's

            breach  precluded his own suit  for damages.   The court also

            ruled, in the alternative, that damages had not been properly

            proved because  damages had to be  based on the  value of the

            leasehold interest  and not  on the  replacement cost  of the

            premises  as  improved.     On  review,  the  district  court

            summarily sustained  the  bankruptcy court,  and this  appeal

            followed. 

                 In our view,  the bankruptcy court  permissibly rejected

            the expert's testimony, and we affirm  on that ground without

            reaching  the  question  whether  the  lease  was  terminated

            because of  Robert Aube's supposed failure  to make payments.

            The problem  with the expert's testimony arose  at the outset

            when he  said that he had not been able to value directly the

            leasehold interest Robert Aube possessed in the 7.7  acres in

            question.     Apparently  the  expert  was   unable  to  find

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comparably improved rental property and  was therefore unable

            to use comparable rental transactions to measure the value of

            the  lease.   This  in  turn led  the  expert  to attempt  to

            determine  what  it would  cost,  starting  from scratch,  to

            acquire  unimproved  land  then  to  duplicate  the  improved

            property that Robert Aube had ultimately possessed.

                 Over many  objections and  several adverse  rulings, the

            expert ultimately managed to testify that he thought that the

            value of  the 7.7  acres with improvements  was approximately

            $70,000.   He  was not  allowed to testify,  but an  offer of

            proof was  submitted, as to a  somewhat different computation

            that  added the  replacement cost  of the  improvements taken

            individually to annual  rent for the  land aggregated over  a

            40-year period.   The total  was $126,000.   Our view  of the

            evidence is  somewhat different than  the view  taken by  the

            bankruptcy judge but leads us to the same result.

                 As we read  the expert's  testimony it was  a morass  of

            unexplained  and  inconsistent statements,  due  in no  small

            measure to the way  in which the testimony  was adduced.   At

            first,  he appeared to  say that he could  not testify to the

            leasehold interest.  Then  he offered two different figures--

            $70,000  (in testimony)  and $126,000  (through the  offer of

            proof)--apparently using  the cost of the  improvements as an

            element  in both  figures  but never  clearly explaining  the

            reasons for the different treatment.

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In addition, the  $70,000 figure was apparently  offered

            as the fee value of  the improved property, not the  value of

            the use of the property for 40 years, although one could read

            the expert's testimony as  taking different positions on this

            issue  at  different  points.   The  $126,000  figure,  which

            seemingly valued  the land based  on 40  years of  aggregated

            rent,  also treated the improvements as if they were owned by

            Robert Aube  instead  of being  located on  rented land  that

            would eventually revert.  

                 We do not see how the cost of specific improvements made

            to  facilitate a  business that  later failed  could, without

            more explanation, provide a  reliable basis for the valuation

            of property; nor do  we understand how any valuation--whether

            for  part or all of  the property--could rest  on the premise

            that Aube  owned the land  or improvements  outright when  at

            most he possessed a 40 year lease.  If there is any answer to

            these  flaws,  both  of  which  seem  to have  concerned  the

            bankruptcy  judge,  the  answer   is  not  evident  from  the

            testimony.

                 If we thought that a miscarriage of justice had occurred

            because  of confusion  in  the presentation  of the  expert's

            testimony, we  might be inclined to seek  some solution other

            than outright affirmance.  In this instance, however, we take

            note  of the  bankruptcy judge's  final observation  that the

            "entire  77  acre  parcel   of  property  (which  included  a

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substantial house)  sold for $270,000  . . . ."   Absent some

            other explanation, one might think that Robert Aube's $33,000

            amply compensated him--indeed overcompensated him--for the 10

            per cent  of the property for  which (at best) he  held a 40-

            year lease.

                 Affirmed.
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