November 8, 1994 [NOT FOR PUBLICATION]
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
No. 94-1451
ROBERT AUBE,
Plaintiff, Appellant,
v.
CYNTHIA AUBE,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
[Hon. Francis J. Boyle, U.S. Senior District Judge]
Before
Torruella, Chief Judge,
Boudin, Circuit Judge,
and Keeton,* District Judge.
Kris Macaruso Marotti with whom Thomas A. Tarro III and Fortunato
& Tarro were on brief for appellant.
J. Ronald Fishbein for appellee.
*Of the District of Massachusetts, sitting by designation.
Per Curiam. On November 19, 1982, Robert Aube entered
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
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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