Case: 20-1185 Document: 76 Page: 1 Filed: 12/29/2020
NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
TAYLOR & SONS, INC., CEDRIC THEEL, INC.,
WHITEY'S, INC., RFJS COMPANY, LLC, JIM
MARSH AMERICAN CORPORATION, LIVONIA
CHRYSLER JEEP, INC., BARRY DODGE INC.,
Plaintiffs-Appellants
ALLEY'S OF KINGSPORT, INC., ET AL.,
Plaintiffs
v.
UNITED STATES,
Defendant-Appellee
--------------------------------------------
MIKE FINNIN MOTORS, INC., GUETTERMAN
MOTORS, INC.,
Plaintiffs-Appellants
ALLEY'S OF KINGSPORT, INC., ET AL.,
Plaintiffs
v.
UNITED STATES,
Defendant-Appellee
______________________
2020-1185, 2020-1205
Case: 20-1185 Document: 76 Page: 2 Filed: 12/29/2020
2 TAYLOR & SONS, INC. v. UNITED STATES
______________________
Appeals from the United States Court of Federal
Claims in Nos. 1:10-cv-00647-NBF, 1:11-cv-00100-NBF,
1:12-cv-00900-NBF, Senior Judge Nancy B. Firestone.
______________________
Decided: December 29, 2020
______________________
ROGER J. MARZULLA, Marzulla Law, LLC, Washington,
DC, argued for plaintiffs-appellants Taylor & Sons, Inc.,
Cedric Theel, Inc., Whitey's, Inc., RFJS Company, LLC,
Jim Marsh American Corporation, Livonia Chrysler Jeep,
Inc., Barry Dodge Inc.
RICHARD D. FAULKNER, Faulkner ADR Law, Richard-
son, TX, for plaintiffs-appellants Guetterman Motors, Inc.,
Mike Finnin Motors, Inc. Also represented by HARRY
ZANVILLE, La Mesa, CA.
ELIZABETH MARIE HOSFORD, Commercial Litigation
Branch, Civil Division, United States Department of Jus-
tice, Washington, DC, argued for defendant-appellee. Also
represented by CHRISTOPHER JAMES CARNEY, JEFFREY B.
CLARK, KENNETH DINTZER, ROBERT EDWARD KIRSCHMAN,
JR., ALISON VICKS.
______________________
Before DYK, TARANTO, and STOLL, Circuit Judges.
TARANTO, Circuit Judge.
Before mid-2009, the plaintiffs in these cases were au-
tomobile dealers operating as franchisees of Chrysler LLC.
In that year, Chrysler filed a petition for reorganization in
bankruptcy, and it rejected the franchise agreements in the
bankruptcy proceeding under 11 U.S.C. § 365. Plaintiffs
sued the United States in the Court of Federal Claims,
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TAYLOR & SONS, INC. v. UNITED STATES 3
alleging that the government played a role in Chrysler’s re-
jection of the franchise agreements that constituted a tak-
ing of their property, requiring just compensation under
the Takings Clause of the Fifth Amendment to the United
States Constitution. In 2014, agreeing with the Claims
Court, we allowed the case to proceed beyond the pleading
stage. A & D Auto Sales, Inc. v. United States, 748 F.3d
1142 (Fed. Cir. 2014). On remand, the Claims Court, after
a full trial, rejected the claims on two grounds—first, that
the government’s actions did not amount to coercion of
Chrysler’s decision to reject the franchise agreements and,
second, that plaintiffs did not prove that the franchise
agreements would have had value but for those actions.
Colonial Chevrolet Co, Inc. v. United States, 145 Fed. Cl.
243 (2019) (Trial Opinion). On plaintiffs’ appeal, we now
affirm on the latter ground and do not address the former.
I
A
Taylor & Sons, Inc. (Taylor) and Mike Finnin Motors,
Inc. (Finnin) are two of the nine plaintiffs-appellants, all of
whom, like many other dealers, had their franchise agree-
ments with Chrysler rejected in the 2009 Chrysler bank-
ruptcy proceeding. Taylor and six other plaintiffs-
appellants have been called the “Alley’s dealers,” and Fin-
nin and one other plaintiff-appellant have been called the
“Colonial dealers,” reflecting the names of the first-named
plaintiffs in the actions filed and consolidated in the Claims
Court.
In late 2008, Chrysler, which had been experiencing
significant difficulties that were exacerbated by a general
market crisis, sought financial assistance from the federal
government. The Department of the Treasury entered into
a Loan and Security Agreement (Agreement) with Chrys-
ler. The Agreement provided for an immediate bridge loan
(totaling $4 billion) to Chrysler and also provided for fur-
ther, more wide-ranging negotiations—in which the
Case: 20-1185 Document: 76 Page: 4 Filed: 12/29/2020
4 TAYLOR & SONS, INC. v. UNITED STATES
Treasury Department’s new Auto Team Task Force (Auto
Team) was to play a central role—aimed at enabling the
Chrysler business to continue operating over the long term.
J.A. 10460 (§ 7.20(b)). The Auto Team and Chrysler ulti-
mately agreed on a plan under which Chrysler would file
for reorganization, the government would supply substan-
tial funding during the bankruptcy process, and a newly
formed entity (to be owned in part by Italian vehicle man-
ufacturer Fiat) would take over the business. One issue
discussed during the negotiations was reducing the num-
ber of Chrysler’s dealer-franchisees, which Chrysler had
been doing for many years through its “Project Genesis,”
though more gradually and with a greater role for fran-
chisees’ choice than was now discussed. J.A. 10365–66,
10378–82.
Chrysler filed for bankruptcy on April 30, 2009. In re
Chrysler LLC, 405 B.R. 84, 87–88 (Bankr. S.D.N.Y. 2009).
Two weeks later, on May 14, 2009, Chrysler, as debtor-in-
possession, invoked its right under 11 U.S.C. § 365 to “as-
sume or reject any executory contract” by filing a motion to
approve rejection 789 franchise agreements, including
those of the Alley’s and Colonial dealers. Id. at 88. The
bankruptcy court approved the rejection on June 9, 2009,
effective immediately, with the result that the now-former
franchisees could no longer exercise franchise-agreement
rights, such as holding themselves out as authorized
Chrysler dealers and providing warranty-covered service
for which Chrysler would pay. Order Rejecting Executory
Contracts, In re Chrysler LLC, No. 09-50002, ECF No. 3802
(Bankr. S.D.N.Y. 2009).
B
Following rejection of their franchise agreements,
plaintiffs filed the present actions, alleging that the federal
government had committed a taking by its actions that as-
sertedly coerced Chrysler’s rejection of the franchise agree-
ments in bankruptcy. When the government moved to
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TAYLOR & SONS, INC. v. UNITED STATES 5
dismiss the claims for failure to state a claim, the Claims
Court denied the motion, Colonial Chevrolet Co., Inc. v.
United States, 103 Fed. Cl. 570 (2012); Alley’s of Kingsport,
Inc. v. United States, 103 Fed. Cl. 449 (2012), but granted
the government’s motion for interlocutory appeal, Colonial
Chevrolet Co., Inc. v. United States, 106 Fed. Cl. 619 (2012);
Alley’s of Kingsport, Inc. v. United States, 106 Fed. Cl. 762
(2012).
On the interlocutory appeal, we affirmed the denial of
dismissal and remanded the case. A & D Auto Sales, 748
F.3d at 1147, 1159. We concluded that plaintiffs had al-
leged sufficient facts for the takings claim to pass muster
at the motion-to-dismiss stage, save for their failure to al-
lege a loss of economic value because the complaints “d[id]
not sufficiently allege that the economic value of the plain-
tiffs’ franchises was reduced or eliminated as a result of the
government’s actions.” Id. at 1147. And we remanded with
instructions to grant plaintiffs leave to amend their com-
plaints to allege economic loss of “but-for economic use or
value” in the absence of government financing. Id. at
1157–58.
On remand, the complaints were amended, then the
case proceeded through discovery and a trial, after which
the Claims Court entered findings of fact and conclusions
of law that rejected the dealers’ takings claims on two
grounds, each sufficient for judgment against the dealers.
The court ruled first that the challenged government ac-
tions that led to Chrysler’s franchise terminations—fo-
cused on conditions the government placed on its provision
of funding—did not constitute a taking because those ac-
tions did not rise to the level of “coercion” as the trial court
understood our holding in A & D Auto Sales. Trial Opin-
ion, 145 Fed. Cl. at 249, 316–22. The Claims Court also
ruled that, in any event, the taking claim failed on a sepa-
rate ground: the dealers failed to prove that their franchise
agreements would have had positive value in a “but for
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6 TAYLOR & SONS, INC. v. UNITED STATES
world” without the government’s challenged actions. Id. at
249, 322–24.
The Claims Court entered final judgment against the
dealers on October 2, 2019. The dealers timely appealed.
We have jurisdiction under 28 U.S.C. § 1295(a)(3).
II
Whether government action constitutes a compensable
taking is a question of law based on factual underpinnings.
See Wyatt v. United States, 271 F.3d 1090, 1096 (Fed. Cir.
2001). We review the Claims Court’s legal conclusions de
novo and its factual findings for clear error. Reoforce, Inc.
v. United States, 853 F.3d 1249, 1265 (Fed. Cir. 2017).
Findings of fact are “clearly erroneous” when “the review-
ing court on the entire evidence is left with the definite and
firm conviction that a mistake has been committed.” Gads-
den Indus. Park, LLC v. United States, 956 F.3d 1362, 1368
(Fed. Cir. 2020) (internal quotation marks and citations
omitted). “‘The fact-finder has broad discretion in deter-
mining credibility’” of witnesses. J.C. Equip. Corp. v. Eng-
land, 360 F.3d 1311, 1315 (Fed. Cir. 2004) (quoting Bradley
v. Sec’y of Health & Human Servs., 991 F.2d 1570, 1575
(Fed. Cir. 1993)).
On appeal, plaintiffs challenge both of the Claims
Court’s rulings. We conclude that the Claims Court com-
mitted no reversible error in determining that the dealers
failed to prove a positive value that their franchise agree-
ments would have had but for the challenged government
actions. That conclusion suffices for affirmance. We do not
reach the Claims Court’s no-coercion ruling.
The Fifth Amendment states: “nor shall private prop-
erty be taken for public use, without just compensation.”
U.S. Const. amend. V. There is no compensable taking
when the alleged economic impact of the government action
has not resulted in a diminution in value. See A & D Auto
Sales, 748 F.3d at 1157 (collecting cases); see also Love
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TAYLOR & SONS, INC. v. UNITED STATES 7
Terminal Partners, L.P. v. United States, 889 F.3d 1331,
1342 (Fed. Cir. 2018); Cienega Gardens v. United States,
331 F.3d 1319, 1340 (Fed. Cir. 2003). 1 “It is the property
owner who bears the burden of proving an actual loss has
occurred”; the property owner must “show actual damages
‘with reasonable certain[t]y,’ which ‘requires more than a
guess, but less than absolute exactness.’” Gadsden, 956
F.3d at 1371 (quoting Otay Mesa Prop., L.P. v. United
States, 779 F.3d 1315, 1323 (Fed. Cir. 2015)) (cleaned up).
The trial court did not clearly err in finding that the
dealers failed to meet their burden. The dealers have con-
ceded that Chrysler would have petitioned for bankruptcy,
and proceeded to liquidate, in a hypothetical, but-for world
without government financial assistance. Trial Opinion,
145 Fed. Cl. at 247; Alley’s Op. Br. 44; Colonial Op. Br. 36.
The dealers’ but-for-world valuations of the franchise
agreements—presented by experts Diane Anderson Mur-
phy and Edward Stockton—rested on premises about how
Chrysler or a bankruptcy trustee would have treated the
franchise agreements in such a liquidation. The Claims
Court rejected those crucial premises about the but-for-
world franchise treatment as unsupported and unpersua-
sive. Trial Opinion, 145 Fed. Cl. at 319, 322–24. We see
no basis for reversing that determination, which leaves
plaintiffs with no reliable proof of the but-for-world value
they must establish.
1 In their opening brief, the Colonial dealers argue
that the government actions at issue were “a per se direct
taking, akin to a physical taking,” Colonial Op. Br. 38–39,
but they present no argument that this characterization,
even if correct, modifies their burden to prove the loss in
value of the franchise agreements but for the challenged
government actions. We therefore apply the loss-in-value
requirement here without regard to other issues about the
proper characterization of the claim for takings analysis.
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8 TAYLOR & SONS, INC. v. UNITED STATES
The Claims Court found that “a trustee in bankruptcy
would have rejected all franchise agreements to protect the
assets of the bankruptcy estate.” Trial Opinion, 145 Fed.
Cl. at 323. The evidence supports that finding. Donald
MacKenzie, one of the government’s expert witnesses, tes-
tified that “Chrysler could not have paid its dealers for any
warranty service performed after the [bankruptcy] petition
date, nor could the company have provided assurance of fu-
ture performance under the dealer franchise agreements,”
due to the company’s high debt. Testimony of Donald Mac-
Kenzie, Tr. 4076:10–14 (May 3, 2019), No. 1:10-cv-00647,
ECF No. 480; id. at 4045:15–19; see Trial Opinion, 145 Fed.
Cl. at 319, 323. There was evidence that Chrysler, in an
unassisted liquidation, would have ceased production and
other activities. Trial Opinion, 145 Fed. Cl. at 294. With
context-describing support from former Bankruptcy Judge
Gerber, Mr. MacKenzie also testified that Chrysler’s obli-
gation under the franchise agreements to purchase back
unsold vehicles and parts in the event of termination (trig-
gered by a discontinuance of production, J.A. 10113) was a
liability that, consistent with fiduciary and trustee duties,
would have been avoided in a liquidation by a rejection of
the franchise agreements. See Trial Opinion, 145 Fed. Cl.
at 307–09, 319, 323–324. The Claims Court reasonably
found that, in a liquidation (in a but-for world), the fran-
chise agreements of plaintiffs would have been rejected.
That finding amply supports the Claims Court’s refusal
to credit the valuation opinions of the plaintiffs’ experts.
The valuation opinion of Ms. Murphy, for the Alley’s deal-
ers, rested on the contrary assumption—that the franchise
agreements would not have been rejected in a liquidation,
so that the dealerships would have continued to operate as
Chrysler dealerships and sell Chrysler vehicles. See, e.g.,
id. at 254–255, 284; Testimony of Diane Anderson Murphy,
Tr. 1749:4–7 (Apr. 15, 2019), No. 1:10-cv-00647, ECF No.
462 (“Q. Your valuation certainly assumes that the dealers
will last more than five years, correct? A. The dealership
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TAYLOR & SONS, INC. v. UNITED STATES 9
would last more than five years, yes.”); id. at 1750:1–6
(“You write . . . ‘even in the absence of Government funding
and Chrysler having entered bankruptcy, the franchise
agreements of the Chrysler franchisees would remain in
full force and effect.’ Correct? A. Yes.”). The same is true
of the valuation testimony of the Colonial dealers’ valua-
tion expert Mr. Stockton. See Trial Opinion, 145 Fed. Cl.
at 323.
There also were other unpersuasive assumptions built
into the opinions of the dealers’ valuation experts. For ex-
ample, the Claims Court found a number of additional as-
sumptions by Ms. Murphy unsupported by the evidentiary
record, Trial Opinion, 145 Fed. Cl. at 323 n.46—a finding
not challenged on appeal. The Claims Court, relying on
testimony of Mr. MacKenzie and others, rejected, as well,
the assumption embedded in Mr. Stockton’s valuation that
the federal government would have chosen to continue to
cover Chrysler warranties after Chrysler began to liqui-
date. Id. at 303 n.41, 319, 323. Further, based on the fact
that the property at issue here consists of contract rights,
see Taylor v. United States, 959 F.3d 1081, 1087 (Fed. Cir.
2020) (noting Takings Clause precedents involving con-
tract rights)—specifically, the plaintiffs’ rights under their
franchise agreements—the Claims Court noted that Ms.
Murphy testified that her calculations included tangible
property beyond the rights in the franchise agreements, see
J.A. 21797 (Tr. 1542:2–22), yet her opinion “did not sepa-
rately analyze how these tangible assets contributed to the
plaintiff’s income stream profits, separate from the fran-
chise agreement allegedly taken,” Trial Opinion, 145 Fed.
Cl. at 322. The same was true of Mr. Stockton’s valuation,
which he testified included, beyond the terms of the fran-
chise agreements, “other elements of value associated with
franchise operations.” Trial Opinion, 145 Fed. Cl. at 286;
see also J.A. 22611 (Tr. 2356:15–16). “[W]hat was im-
portant was for the focus to be on awarding just compensa-
tion for exactly what had been taken in the case.” Otay
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10 TAYLOR & SONS, INC. v. UNITED STATES
Mesa Prop., L.P., 779 F.3d at 1320. The Claims Court rea-
sonably found the testimony of the dealers’ experts not ad-
equately so focused.
We conclude that the record supports the Claims
Court’s rejection of crucial assumptions of the plaintiffs’ ex-
perts and finding that the plaintiffs did not provide a reli-
able proof that, in the but-for world, the franchise
agreements would have had a positive value. The Claims
Court’s finding is not clearly erroneous. And contrary to
the Colonial dealers’ contention, Colonial Op. Br. 51–52,
the finding of no proof of but-for-world value of the specific
property at issue does not rest on any exclusion by the
Claims Court of a legally legitimate method of proving
value. The variations in methodology discussed by the Co-
lonial dealers are immaterial given the Claims Court’s
well-supported rejection of the plaintiffs’ experts’ assump-
tion about the treatment of the franchise agreements in the
liquidation that would concededly have occurred in the but-
for world.
We have considered the dealers’ remaining arguments
and find them unpersuasive.
III
For the foregoing reasons, we affirm the trial court’s
judgment.
AFFIRMED