Court Opinion

ID: 160358
Source: CourtListenerOpinion
Date Created: 2010-08-14 06:43:24+00
Date Added: 2024-06-11T17:24:35.032856
License: Public Domain

F I L E D
                                                          United States Court of Appeals
                                                                  Tenth Circuit
                                   PUBLISH
                                                                  NOV 6 2000
                    UNITED STATES COURT OF APPEALS
                                                               PATRICK FISHER
                              TENTH CIRCUIT                           Clerk

 AG SERVICES OF AMERICA, INC.,
 an Iowa corporation,

       Plaintiff,
 v.

 JOHN D. NIELSEN, also known as
 Jack Nielsen, and DIAMOND HILLS
 FARMS, CLOVIS, INC., a New
 Mexico Corporation,
                                                 No. 99-2094
       Defendants-Third-Party
       Plaintiffs-Third-Party Counter-
       Defendants-Appellees,

 v.

 TERRY LUNDELL,

       Third-Party Defendant- Third-
 Party Counter-Claimant-
 Appellant.

        APPEAL FROM THE UNITED STATES DISTRICT COURT
               FOR THE DISTRICT OF NEW MEXICO
                 (D.C. No. CIV-96-1637-JC/WWD)

Submitted on the briefs:

Terry Lundell, Pro Se.

Stephen S. Hamilton, Montgomery & Andrews, P.A., Santa Fe, New Mexico, and
Laurice Margheim, Curtiss, Moravek, Curtiss & Magheim, Alliance, Nebraska, for
Defendants-Appellees.

Before MURPHY and HOLLOWAY, Circuit Judges, and COOK, District Judge. 1

HOLLOWAY, Circuit Judge.

       This appeal is brought by Mr. Terry Lundell, who was a third-party defendant

and counter-claimant in the action below. The only district court ruling at issue in

this appeal is the grant of summary judgment against Lundell on his third-party

counterclaim. Our review is     de novo.   2

       Ag Services of America, Inc. (Ag Services) brought an action in the district

court against Mr. John Nielsen and Diamond Hills Farms, Clovis, Inc. (DHFC),

seeking to hold them liable for the unpaid agricultural loan which Ag Services had

made to Lundell for the 1992 growing season. That primary controversy is the

subject of a related opinion filed this day in No. 99-2081,   Ag Services of America,

Inc. v. Nielsen, et al. , where a more complete review of the underlying facts may be

      The Honorable H. Dale Cook, Senior United States District Judge for the
       1

Northern District of Oklahoma, sitting by designation.

      After examining the briefs and appellate record, this panel has determined
       2

unanimously to honor the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34 (f). the case is therefore submitted without oral
argument.

                                               -2-
found.

         Nielsen and DHFC filed a third-party complaint against Lundell, alleging that

Lundell should be liable to them for indemnity for any judgment in favor of plaintiff

Ag Services. Lundell then filed a counterclaim against Nielsen and DHFC. Lundell

sought recovery of damages against Nielsen and DHFC in eight counts.    3
                                                                            Nielsen and

DHFC moved for summary judgment against Lundell on the issues raised in his

counterclaim. The district court granted the motion for summary judgment, and

when final judgment disposing of all claims had been entered, Lundell brought this

appeal. 4

                                           II

         All of the claims except one alleging tortious interference with contractual

rights were based entirely on the events of 1992, when Nielsen and Lundell had

formed DHFC and engaged in a potato farming venture in the Clovis, New Mexico

area, events which are reviewed in much more depth in our opinion in the related,

primary appeal, No. 99-2081. For present purposes only a much truncated overview

        The theories of relief asserted in the eight counts were breach of the implied
         3

covenant of good faith and fair dealing, breach of fiduciary duty, negligent
misrepresentation, fraud, violation of the New Mexico Unfair Practices Act, prima
facie tort, tortious interference with contractual relations, and economic coercion.

       Lundell’s counterclaim was alleged against both Nielsen and DHFC, and his
         4

notice of appeal named both of those parties. In his briefs, however, Lundell has
included only Nielsen in the caption and has presented no argument directed to
DHFC’s involvement, if any, in the facts giving rise to his claims. We therefore
deem the appeal as to DHFC to have been abandoned by Lundell.

                                           -3-
of the underlying facts is necessary.

      Lundell had borrowed operating funds from Ag Services in previous years.

In the second half of 1991 he became interested in leasing a large farm in the Clovis

area from Jeff Jorde and in growing potatoes on part of that farm. Eventually Ag

Services agreed to loan up to $800,000.00 for this venture, at least partially in

reliance on Nielsen’s association with the project, which was perceived as valuable

because of Nielsen’s experience in the more than usually risky business of potato

farming and his contacts with potato chip companies which could contract in advance

to buy large quantities of the crop.

      Although the potato crop turned out fairly well, the Ag Services loan remained

unpaid. Nielsen had not been reimbursed for most of his large contributions to the

effort, and Nielsen believed that Lundell had taken a substantial amount of the

proceeds for his personal use. Eventually, in December 1992, Lundell acknowledged

these facts and executed a promissory note to Nielsen in the amount of $355,001.11.

Lundell failed to pay the note, and in June 1993, Nielsen sued Lundell on the note

in state court in Arizona. Nielsen took judgment by default against Lundell in that

action in December 1993.

      In the instant case, the district court determined that the Arizona default

judgment barred all of Lundell’s claims, except the tortious interference claim, under

the doctrine of res judicata . The district judge held that under the Full Faith and

                                         -4-
Credit Act, 28 U.S.C. § 1738, the Arizona judgment should be given the same effect

that it would be given by the courts of Arizona, citing      Matsushita Elec. Indus. Co.

v. Epstein , 516 U.S. 367 (1996). He then determined that default judgments are

given the same preclusive effect under Arizona law as judgments on the merits,

citing Technical Air Products, Inc. v. Sheridan-Gray, Inc.         , 445 P.2d 426 (Ariz.

1968). Furthermore, the district court noted, also on the authority of     Technical Air

Products , that judgment by default bars any claims of the defaulting defendant which

were compulsory counterclaims in the first proceeding. The judge went on to find

that all of Lundell’s counterclaims, except the tortious interference claim, clearly

arose out of the same transaction on which Nielsen’s Arizona lawsuit had been

based, and the court accordingly held those counterclaims barred.

       On appeal, Lundell’s pro se brief devotes only one sentence to this part of the

district court’s ruling, asserting that the district court should have applied New

Mexico law to determine the preclusive effect to by given to the Arizona judgment.

This contention is erroneous. The district court correctly held that the law of

Arizona must govern the preclusive effect to be given to the Arizona judgment.      See

Kremer v. Chemical Const. Corp.       , 456 U.S. 461, 466 (1985). Because appellant

makes no other argument, we need not consider this point further, but we do note

that not only did the judge apply the correct law, he appears to have applied it

correctly.

                                            -5-
                                         III

      When Lundell leased the Jorde farm for the 1992 growing season, he signed

a five-year lease. In January 1993, Lundell had still failed to pay the second half of

the lease payment for 1992 and was in default. Jorde terminated the lease. Lundell’s

tortious interference claim is based on the allegation that Nielsen improperly

influenced Jorde to declare default so that he, Nielsen, could lease the farm for 1993.

He produced evidence that Jorde and Nielsen had discussed Lundell’s possible

default before the end of the first lease year in a single conversation, and that

Nielsen had expressed an interest in leasing the farm for 1993 if the default did

occur. 5 The district court found, however, that the undisputed evidence was that

Jorde terminated Lundell’s lease only because of Lundell’s default, not because he

wanted to lease to Nielsen instead of Lundell.

      On appeal, Lundell argues that Jorde’s motivation presented a genuine issue

of material fact precluding summary judgment. In essence, this is an argument that

the finder of fact could have found Jorde’s testimony untrue, because Lundell does

not identify any evidence supporting his allegations. As the district court apparently

recognized, this is not the same thing as producing evidence to support the claimed

interference. In any event, we conclude that the summary judgment was properly

      5
       As it turned out, Nielsen leased only about 500 acres of the more than 4,000
acre farm for 1993.

                                          -6-
granted because, if for no other reason, Lundell failed even to allege, much less to

show evidence of, an essential element of this claim, a breach of his contract by

Jorde as a result of the alleged interference.

       Even if Lundell’s allegations are taken as true, which would be an overly

generous assumption in conflict with the summary judgment framework of Rule 56,

Lundell still could not prevail on this claim. Lundell defaulted on the lease. Jorde

therefore did not breach the lease when he declared Lundell to be in default. Lundell

has not shown any legally cognizable injury from the alleged interference because

there is no evidence that he otherwise would have been able to pay the rent and to

be entitled to remain in possession of the farm.        See Wolf v. Perry , 339 P.2d 679

(N.M. 1959) (“There must be some . . . overt act which influences the promisor to

breach his contract.”).

       Mr. Lundell has not even alleged that Mr. Jorde breached the contract, nor has

Lundell directed us to any evidence tending to show that, absent the alleged

interference, he would have been able to perform and thus retain the leasehold

interest. The district court did not err in granting summary judgment in favor of

Nielsen on this claim.

       For the foregoing reasons, the judgment of the district court is   AFFIRMED.

                                             -7-