Court Opinion

ID: 9926417
Source: CourtListenerOpinion
Date Created: 2024-01-24 18:01:23.94737+00
Date Added: 2024-06-11T09:22:50.416500
License: Public Domain

Appellate Case: 22-4083     Document: 010110989227   Date Filed: 01/24/2024   Page: 1
                                                                             FILED
                                                                 United States Court of Appeals
                       UNITED STATES COURT OF APPEALS                    Tenth Circuit

                              FOR THE TENTH CIRCUIT                    January 24, 2024
                          _________________________________
                                                                     Christopher M. Wolpert
                                                                         Clerk of Court
  LEW WHEELWRIGHT, individually and
  on behalf of all those similarly situated;
  KENT WRIGHT, individually and on
  behalf of all those similarly situated;
  DAVID STORY, individually and on
  behalf of all those similarly situated;
  UTAH AIRWAYS LLC, individually and
  on behalf of all those similarly situated;
  DAVID WESTWOOD, individually and
  on behalf of all those similarly situated;
  DURBANO PROPERTIES LC, a Utah                           No. 22-4083
  limited liability company, individually and   (D.C. No. 1:21-CV-00075-DBB)
  on behalf of all those similarly situated;               (D. Utah)
  THE WESTERN GROUP LC, individually
  and on behalf of all those similarly
  situated; DAVID L. DURBANO,
  individually and on behalf of all those
  similarly situated; JEFF STRAHAN,
  individually and on behalf of all those
  similarly situated; TROY LARKIN,
  individually and on behalf of all those
  similarly situated; STEPHEN SWENSON,
  individually and oh behalf of all those
  similarly situated,

        Plaintiffs - Appellants,

  and

  OGDEN REGIONAL AIRPORT
  ASSOCIATION, INC., a Utah non-profit
  corporation; WENDY MARSELL,
  individually and on behalf of all those
  similarly situated; WAYNE LAW,
  individually and on behalf of all those
  similarly situated; KELLY CROZIER,
  individually and on behalf of all those
  similarly situated; ANDREW HECHT,
Appellate Case: 22-4083     Document: 010110989227   Date Filed: 01/24/2024   Page: 2

  individually and on behalf of all those
  similarly situated; BARRY NEUMAYER,
  individually and on behalf of all those
  similarly situated; BRENT CARLSON,
  individually and on behalf of all those
  similarly situated; DAN BLUMEL,
  individually and on behalf of all those
  similarly situated; DAVE CARLSON,
  individually and on behalf of all those
  similarly situated; DKS PROPERTIES,
  LLC, a Utah limited liability company,
  individually and on behalf of all those
  similarly situated; ED RICH, individually
  and on behalf of all those similarly
  situated; FLYING R LLC, individually and
  on behalf of all those similarly situated;
  JUSTIN R. ECCLES, individually and on
  behalf of all those similarly situated;
  ROYAL S. ECCLES, individually and on
  behalf of all those similarly situated;
  LARRY E. JONES, individually and on
  behalf of all those similarly situated;
  RALPH CHADBURN, individually and on
  behalf of all those similarly situated; R. B.
  WILLEY, individually and on behalf of all
  those similarly situated; ROUND TRIP
  THAIRAPY, a Utah Limited Liability
  Company, individually and on behalf of all
  those similarly situated, LLC; MARK
  COWLEY, individually and on behalf of
  all those similarly situated; DAVID L.
  SHUMWAY, individually and on behalf of
  all those similarly situated; JAMES G.
  CUTRUBUS, individually and on behalf of
  all those similarly situated; RELIABLE
  EQUIPMENT & ENGINEERING LLC,
  individually and on behalf of all those
  similarly situated; BRUCE MASON,
  individually and on behalf of all those
  similarly situated; MANAGEMENT
  SCIENCES CORP., individually and on
  behalf of all those similarly situated;
  SHAMROCK 2 LLC, individually and on

                                              2
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  behalf of all those similarly situated;
  COWRIDE LLC, individually and on
  behalf of all those similarly situated; SETH
  C. SCHALL, individually and on behalf of
  all those similarly situated; KATHERINE
  J. SCHALL, individually and on behalf of
  all those similarly situated; CHARLES
  JOHNSON, individually and on behalf of
  all those similarly situated; JOHN
  CARPER, individually and on behalf of all
  those similarly situated; TIMOTHY RENE
  FELKER, individually and on behalf of all
  those similarly situated; A&R INC,
  individually and on behalf of all those
  similarly situated; ROBERT L.
  JOHNSON, individually and on behalf of
  all those similarly situated; JOEL W.
  PIERCY, individually and on behalf of all
  those similarly situated; JIM PETERSON,
  individually and on behalf of all those
  similarly situated; SHERRIE PETERSON,
  individually and on behalf of all those
  similarly situated; TAMERA NEWMAN,
  individually and on behalf of all those
  similarly situated; SHEILA GARVEY,
  individually and on behalf of all those
  similarly situated; SCOTT MAJOR;
  MEIJE INVESTMENTS LLC, a Utah
  limited liability company individually and
  on behalf of all those similarly situated;
  OSCAR VAN THORNOCK, individually
  and on behalf of all those similarly
  situated; RICK ROHLER, individually and
  on behalf of all those similarly situated;
  VERN FARR, individually and on behalf
  of all those similarly situated; FARRV
  LLC, individually and on behalf of all
  those similarly situated; SCOTT
  JACKSON, individually and on behalf of
  all those similarly situated; STEPHEN
  FABISZAK, individually and on behalf of
  all those similarly situated; RSL HANGAR
  LLC, individually and on behalf of all

                                             3
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  those similarly situated; JOHN
  SINGLETON, individually and on behalf
  of all those similarly situated; RALPH
  DOUGLAS, individually and on behalf of
  all those similarly situated; STRICTLY
  EXPERIMENTAL CREATIONS INC. ,
  individually and on behalf of all those
  similarly situated; DAVID ERICKSON,
  individually and on behalf of all those
  similarly situated; HOMER CUTRUBUS,
  individually and on behalf of all those
  similarly situated; TROY CUTRUBUS,
  individually and on behalf of all those
  similarly situated; H & P INVESTMENTS,
  a Utah limited liability company
  individually and on behalf of all those
  similarly situated; ROB MARTIN,
  individually and on behalf of all those
  similarly situated; DAVID R. WALKER,
  individually and on behalf of all those
  similarly situated; DON PANTONE,
  individually and on behalf of all those
  similarly situated; MIKE MCKEE,
  individually and on behalf of all those
  similarly situated; LUCKY LAKE LLC,
  individually and on behalf of all those
  similarly situated; TIMOTHY J. POPP,
  individually and on behalf of all those
  similarly situated; BEN SHELDON,
  individually and on behalf of all those
  similarly situated,

        Plaintiffs,

  v.

  OGDEN CITY AIRPORT, a subdivision of
  Ogden City; OGDEN CITY, a municipality
  in the State of Utah; BRYANT GARRETT,
  in his capacity as manager of the Ogden
  City Airport,

        Defendants - Appellees.

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                          _________________________________

                              ORDER AND JUDGMENT*
                          _________________________________

 Before PHILLIPS, KELLY, and McHUGH, Circuit Judges.
                    _________________________________

       This is an appeal by plaintiffs from the district court’s dismissal of (1) their

 federal claims in the second amended class action complaint (SAC) with prejudice

 under Fed. R. Civ. P. 12(b)(6) and (2) their state claims without prejudice under

 28 U.S.C. § 1367(c)(3). Exercising jurisdiction under 28 U.S.C. § 1291, we affirm.

                                  I. BACKGROUND

       Plaintiffs allege the following in the SAC. Plaintiffs are individuals or entities

 that own or have owned aircraft hangars on ground leased from defendant Ogden

 City Airport (Airport)—a public aviation facility owned and managed by defendant

 Ogden City (City). Defendant Bryant Garrett is the manager of the Airport.

       Plaintiffs’ ownership and use of the hangars are governed by ground lease

 agreements, which contain the following provision—or something nearly identical—

 requiring compliance with a particular City ordinance, namely Title 8-3-3:

       Lessee hereby acknowledges the applicability of Title 8, Ogden City
       Ordinances to this Lease Agreement. Lessee hereby acknowledges notice
       of the terms, conditions and requirements presently contained therein and

       *
         After examining the briefs and appellate record, this panel has determined
 unanimously that oral argument would not materially assist in the determination of
 this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore
 ordered submitted without oral argument. This order and judgment is not binding
 precedent, except under the doctrines of law of the case, res judicata, and collateral
 estoppel. It may be cited, however, for its persuasive value consistent with
 Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
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        agrees, so far as said ordinance applies to persons such as Lessee herein, to
        comply with such ordinance as now in effect or as it may be amended
        during the term of this Lease or any renewal. Specifically, the terms and
        conditions of Title 8-3-3 (A through G) Leases and Agreements as
        currently existing or as may be amended are incorporated herein by
        reference and made part hereof as though written herein.

 Aplt. App., vol. I at 82.

        Until April 2021, Title 8-3-3 allowed the Airport to grant ground leases for

 private hangars for a term of 15 years. As to lease renewal, Title 8-3-3 provided that

 when the lease expired, the “lessee shall have the ‘first right of refusal’ to renew

 the lease; provided however, that the lease is not in default. Each renewal term

 will be for five (5) years.” Id. at 81.1

        According to plaintiffs, “[t]he lease renewals have historically been automatic

 upon the [lessee’s] request.” Id. As a result, plaintiffs alleged that they “placed great

 stock in being able to reliably renew their leases . . . which has given [plaintiffs]

 confidence in pouring hundreds of thousands of dollars’ worth of construction

 upgrade and upkeep into their respective hangars.” Id. at 82.

        In late 2018, the Airport proposed a new Business Plan (Plan) to stem the tide

 of its operating losses. The Plan recommended changes to existing ground leasing

 policies and further identified other areas where changes should be made to allow the

 Airport to come close to breaking even from an operations standpoint. See Aplt.

 App., vol. II at 291-303. Plaintiffs alleged that the Plan proposed that all future

        1
          Most of the lease agreements also contain a “first right of refusal” provision
 in addition to the one contained in Title 8. See Aplt. App., vol. I at 82.

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 ground leases for construction of new hangars would last no longer than the time

 needed for the lessees to recoup their construction investment, after which the

 hangars would belong to the Airport and be leased out through facility leases at a

 higher rate. See Aplt. App., vol. I at 84-85. They further alleged that under the Plan,

 the ground leases for existing hangars would not be renewed once the hangars

 reached a certain age. See id. Although the Plan was not formally adopted at that

 time, plaintiffs alleged that the Airport’s interactions with hangar owners

 “demonstrated that the [Plan] was in fact being utilized as a model for assisting the

 Airport turn a profit.” Id.

       In April 2021, Mr. Garrett formally submitted the proposed amendments to

 Title 8 to the Ogden City Council (City Council). Several groups opposed the

 amendments, including the Ogden Airport Advisory Board, the Ogden Regional

 Airport Association, and most of the hangar owners. Ultimately, however, the City

 Council adopted the amendments. Shortly thereafter, plaintiffs filed suit.

                       II. DISTRICT COURT PROCEEDINGS

       Defendants moved to dismiss plaintiffs’ first amended complaint under

 Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure. The district

 court denied the motion to dismiss for lack of jurisdiction but agreed that plaintiffs

 had failed to state plausible claims for relief. Plaintiffs sought and were granted

 permission to file their SAC in which they reasserted their previous claims of

 promissory estoppel, physical taking, regulatory taking, and entitlement to

 declaratory relief under 28 U.S.C. § 2201, and added new claims for First

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 Amendment retaliation, breach of contract, and breach of the covenant of good faith

 and fair dealing. Plaintiffs also added Mr. Garrett as a defendant in their claim under

 42 U.S.C. § 1983. Defendants again moved to dismiss.

       The district court granted the motion and dismissed plaintiffs’ federal claims

 (physical taking, regulatory taking, First Amendment retaliation, and declaratory

 judgment) with prejudice under Rule 12(b)(6). Then, having dismissed the federal

 claims, the court declined to exercise supplemental jurisdiction over plaintiffs’ state

 law claims (promissory estoppel, breach of contract, and breach of the covenant of

 good faith and fair dealing) and dismissed those claims without prejudice under

 28 U.S.C. § 1367(c)(3). Plaintiffs appeal.

                            III. STANDARD OF REVIEW

       “We review de novo a district court’s grant of a 12(b)(6) motion to dismiss.”

 Johnson v. Reyna, 57 F.4th 769, 774 (10th Cir. 2023). “We accept as true all

 well-pleaded factual allegations in the complaint and view them in the light most

 favorable to . . . the non-moving party. To survive a motion to dismiss, a complaint

 must include enough facts to state a claim to relief that is plausible on its face.”

 Id. (citations and internal quotation marks omitted). A claim is plausible on its face

 “when the plaintiff pleads factual content that allows the court to draw the reasonable

 inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal,

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 556 U.S. 662, 678 (2009). But “the tenant that a court must accept” well-pled factual

 allegations as true “is inapplicable to legal conclusions.” Id.2

                             IV. LEGAL FRAMEWORK

 A. Takings Claims

       1. Physical Taking

       “The Fifth Amendment’s Takings Clause provides that ‘private property [shall

 not] be taken for public use, without just compensation.’” N. Mill St., LLC v. City of

 Aspen, 6 F.4th 1216, 1224 (10th Cir. 2021) (quoting U.S. Const. amend. V).

              The text of the Fifth Amendment . . . provides a basis for drawing a
       distinction between physical takings and regulatory takings. Its plain
       language requires the payment of compensation whenever the government
       acquires private property for a public purpose, whether the acquisition is
       the result of a condemnation proceeding or a physical appropriation. But

       2
          The district court dismissed plaintiffs’ claims for declaratory relief under
 28 U.S.C. § 2201 on the grounds that it did not have the authority to issue declaratory
 judgments absent “some independent basis of jurisdiction for doing so.” Aplt. App.,
 vol. II at 347, 358 (internal quotation marks omitted). See also Devon Energy Prod.
 Co., L.P. v. Mosaic Potash Carlsbad, Inc., 693 F.3d 1195, 1202 (10th Cir. 2012)
 (recognizing that “the Declaratory Judgment Act does not confer jurisdiction upon
 federal courts, so the power to issue declaratory judgments must lie in some
 independent basis of jurisdiction,” namely “diversity jurisdiction” or “federal
 question jurisdiction”) (internal quotation marks omitted)). Having found no federal
 question jurisdiction, the court dismissed the claims for declaratory relief. Because
 we affirm the dismissal of the federal claims, the claims for declaratory relief were
 also properly dismissed.

        Relatedly, “[u]nder 28 U.S.C. § 1367(c)(3), a district court may decline to
 exercise supplemental jurisdiction if the . . . court has dismissed all claims over
 which it has original jurisdiction. When all federal claims have been dismissed, the
 court may, and usually should, decline to exercise jurisdiction over any remaining
 state claims.” Koch v. City of Del City, 660 F.3d 1228, 1248 (10th Cir. 2011)
 (internal quotation marks omitted). Again, because we affirm the court’s dismissal of
 the federal claims, the court properly declined to exercise supplemental jurisdiction
 over the state claims.
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        the Constitution contains no comparable reference to regulations that
        prohibit a property owner from making certain uses of her private property.

  Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg’l Planning Agency, 535 U.S. 302,

  321-22 (2002). Although the property interest at the core of physical takings claims

  is typically real or personal property, the Fifth Amendment also extends to intangible

  rights, such as leaseholds and contracts. See, e.g., United States v. Gen. Motors

  Corp., 323 U.S. 373, 378 (1945) (leaseholds); Lynch v. United States, 292 U.S. 571,

  579 (1934) (contracts). But even if a private party’s contract rights constitute a

  property right, “the exercise of contractual rights by a governmental contracting party

  generally does not give rise to a constitutional claim. See Hughes Commc’ns Galaxy,

  Inc. v. United States, 271 F.3d 1060, 1070 (Fed. Cir. 2001) (holding that “[t]aking

  claims rarely arise under government contracts because the Government acts in its

  commercial or proprietary capacity in entering contracts, rather than in its sovereign

  capacity. Accordingly, remedies arise from the contracts themselves, rather than

  from the constitutional protection of private property rights”) (citation omitted)).

        2. Regulatory Taking

        In addition to physical takings, “[t]he Supreme Court has recognized that

  government regulation of private property may, in some instances, be so onerous that

  its effect is tantamount to a direct appropriation or ouster—and that such regulatory

  takings may be compensable under the Fifth Amendment.” N. Mill St., 6 F.4th

  at 1224 (internal quotation marks omitted). But a per se regulatory taking occurs

  only under “the extraordinary circumstance when no productive or economically

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  beneficial use of land is permitted” resulting from the government regulation.

  Tahoe-Sierra, 535 U.S. at 330 (internal quotation marks omitted). “Anything less

  than a complete elimination of value, or a total loss,” must be analyzed under the

  framework set forth in Penn Central Transportation Co. v. City of New York,

  438 U.S. 104 (1978). Id. (internal quotation marks omitted). A plaintiff seeking to

  establish a regulatory taking has a “heavy burden.” Buffalo Teachers Fed’n v. Tobe,

  464 F.3d 362, 375 (2d Cir. 2006).

  B. First Amendment Retaliation

        To state a First Amendment retaliation claim, a plaintiff must plausibly allege

        (1) that the plaintiff was engaged in constitutionally protected activity;
        (2) that the defendant’s actions caused the plaintiff to suffer an injury that
        would chill a person of ordinary firmness from continuing to engage in that
        activity; and (3) that the defendant’s adverse action was substantially
        motivated as a response to the plaintiff’s exercise of constitutionally
        protected conduct.
  Requena v. Roberts, 893 F.3d 1195, 1211 (10th Cir. 2018) (internal quotation marks

  omitted).

                                     V. DISCUSSION

  A. Takings Claims

        Plaintiffs maintain that they have stated a plausible claim for a physical taking

  because the City acted as “a sovereign” when it amended Title 8, and then, pursuant

  to its “sovereign” authority, the “City acquired property for the public good from the

  rightful owners.” Aplt. Opening Br. at 11. See also Pi Elecs. Corp. v. United States,

  55 Fed. Cl. 279, 286 (2003) (holding that “in order to show that it is entitled to a

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  takings remedy, plaintiff must have alleged that the Government was exercising its

  right as sovereign to acquire property from the rightful owner for the public good”)

  (internal quotation marks omitted)).

         According to plaintiffs, they are rightful owners of the Airport property

  because their leasehold interests “were valued as a fee simple assessment and . . .

  historically [some lessees had] pass[ed] the hangars from generation to generation or

  placed [them] in trusts for inheritance purposes.” Aplt. Opening Br. at 11. They

  further maintain that the first right of refusal created a property interest that was

  taken when the City modified Title 8. See id. at 14.

         Assuming, without deciding, that the City acted as “sovereign,” the problem

  for plaintiffs is that they have failed to provide any authority that the “first right of

  refusal,” fee-simple assessments, or terms of their estate-planning documents made

  them the rightful owners of the Airport property. As such, we decline to consider

  these arguments. See Phillips v. Calhoun, 956 F.2d 949, 953-54 (10th Cir. 1992)

  (declining to consider issue in part because appellant’s position not even minimally

  supported by legal argument or authority); Fed. R. App. P. 28(a)(8)(A) (Among other

  things, “[t]he appellant’s brief must contain . . . the argument, which [in turn] must

  contain[] appellant’s contentions and the reasons for them, with citations to the

  authorities . . . on which the appellant relies”).3

         3
          Plaintiffs argue for the first time on appeal that the lease agreements are
  invalid or unenforceable as illusory. See Aplt. Opening Br. at 11-13. We decline to
  consider the issue because “[g]enerally, an appellate court will not consider an issue
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        Similarly, we affirm the district court’s dismissal of plaintiffs’ regulatory-

  taking claim because they fail to challenge the basis for the district court’s ruling.

  See Nixon v. City & Cnty. of Denver, 784 F.3d 1364, 1366 (10th Cir. 2015); see also

  United States v. Kunzman, 54 F.3d 1522, 1534 (10th Cir. 1995) (explaining that

  “[i]t is insufficient merely to state in one’s brief that one is appealing an adverse

  ruling below without advancing reasoned argument as to the grounds for the appeal”)

  (internal quotation marks omitted)).

  B. First Amendment Retaliation

        We agree with the district court that “[p]laintiffs’ commencement of this

  lawsuit against the City and the Airport is a constitutionally protected activity under

  the petitioning clause of the First Amendment.” Aplt. App., vol. II at 355. As such,

  we address the second and third elements required to state a plausible First

  Amendment retaliation claim.

        The second element requires a plaintiff to plausibly plead that “the defendant’s

  actions caused the plaintiff to suffer an injury that would chill a person of ordinary

  firmness from continuing to engage in that activity.” Requena, 893 F.3d at 1211

  (internal quotation marks omitted). The district court explained that the action that

  plaintiffs “now allege was retaliatory and chilling—Defendants’ refusal to renew

  their ground leases—is the same action that led Plaintiffs to bring this lawsuit in the

  first place.” Aplt. App., vol. II at 356. This claim, according to the court, was

  raised for the first time on appeal.” Tele-Commc’ns, Inc. v. Comm’r, 104 F.3d 1229,
  1232 (10th Cir. 1997).
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  beyond the parameters of a “[t]ypical” retaliation claim in which the alleged

  retaliatory conduct “occur[s] outside the scope of the plaintiff’s petition for redress.”

  Id. at n.96 (emphasis added), citing Van Deelen v. Johnson, 497 F.3d 1151, 1157

  (10th Cir. 2007). Noting plaintiffs’ failure to “identify[] . . . a single case in which a

  plaintiff brought a First Amendment retaliation claim in such circumstances, let alone

  one in which such a claim was found plausible,” the court determined that plaintiffs

  failed to plausibly plead the second element. Aplt. App., vol. II at 356. Again,

  plaintiffs’ failure on appeal to provide any authority to support their argument means

  that we will not consider the issue. See Phillips, 956 F.2d at 953-54; Fed. R. App. P.

  28(a)(8)(A).

         But even if plaintiffs met the second element, they did not meet the third

  element, which requires them to plausibly plead “that the defendant’s adverse action

  was substantially motivated as a response to the plaintiff’s exercise of

  constitutionally protected conduct.” Requena, 893 F.3d at 1211 (internal quotation

  marks omitted). We agree with the district court that defendants’ failure to renew the

  ground leases was not “a response to Plaintiffs’ exercising their First Amendment

  rights by bringing this lawsuit.” Aplt. App., Vol. II at 355. To the contrary, it was

  defendants’ refusal to renew the leases that “led Plaintiffs to file this lawsuit in the

  first place.” Id. In addition, the court explained that

         [t]he fact that the Airport allegedly told certain plaintiffs after the
         commencement of this lawsuit that no one who is participating in it will
         receive a lease renewal does not change the fact that the decision to stop
         renewing ground leases in favor of other types of leases was made before
         this lawsuit began. Thus, there are no grounds for the court to reasonably

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         infer that Defendants’ refusal to renew any of Plaintiffs’ ground leases, and
         any injury that may have cause, was substantially motivated by Plaintiffs’
         lawsuit.

  Id. at 356.

         Plaintiffs’ contention that defendants’ attempts to resolve individual claims as

  “an effort to retaliate against and/or bully Lessees who opted to engage in the

  lawsuit,” is unavailing. Aplt. Opening Br. at 17. Instead, we agree with the district

  court that this was “essentially a settlement offer, not an act of deterrence or

  intimidation.” Aplt. App., vol. II at 357.

                                    VI. CONCLUSION

         The judgment of the district court is affirmed. We deny appellees’ request for

  an award of attorney fees, which is based on a provision in the lease agreements that

  entitles the prevailing party in litigation concerning a breach or default to an award of

  reasonable fees. Because the state-law contract claims were dismissed without

  prejudice, defendants are not the prevailing party on the breach-of-contract claims in

  this federal action.

                                                Entered for the Court

                                                Gregory A. Phillips
                                                Circuit Judge

                                               15