United States Court of Appeals
For the Eighth Circuit
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No. 19-1310
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Tom Yeransian, in his representative capacity
lllllllllllllllllllllPlaintiff - Appellant
v.
B. Riley FBR, Inc., et al.
lllllllllllllllllllllDefendants - Appellees
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Appeal from United States District Court
for the District of Nebraska - Omaha
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Submitted: September 22, 2020
Filed: January 4, 2021
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Before LOKEN, SHEPHERD, and ERICKSON, Circuit Judges.
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LOKEN, Circuit Judge.
In 2009, Aspen Holdings, Inc. (“Aspen”), retained the predecessor of B. Riley
FBR, Inc. (“FBR”), an investment banking firm. Aspen agreed in a lengthy
Engagement Letter to pay FBR 1.25 percent of the aggregate consideration paid to
Aspen’s shareholders in the event of an acquisition or merger. In July 2010, Aspen
was acquired by Markel Corporation (“Markel”). In the Merger Agreement, Markel
became the parent of Aspen and agreed to pay Aspen shareholders $135,700,000 in
cash plus additional compensation based on the future value of Aspen’s business.
FBR provided a fairness opinion and, at closing, received 1.25 percent of the cash
consideration in accordance with the Engagement Letter. A Contingent Rights
Agreement between Markel, Aspen, and American Stock Transfer & Trust Company
as Rights Agent established a representative for Aspen shareholders who were issued
“contingent value rights” to the additional compensation (the “CVR Holders”). Tom
Yeransian, former Aspen CEO and board member, now holds that position.
In 2016, the CVR Holders sued Markel in the United States District Court for
the District of Delaware, challenging Markel’s valuation of the CVRs. Yeransian v.
Markel Corp., No. 1:16-CV-00808-MN (D. De. 2016); Yeransian v. Markel Corp.,
No. 1:18-CV-01777-MN (D. De. 2018). That court has not yet issued a valuation
opinion, and Markel has not paid any additional compensation. In 2018, after FBR
sent Yeransian a letter stating its intent to claim 1.25 percent of the additional
compensation, the CVR Holders filed this suit in Nebraska state court seeking, inter
alia, a declaratory judgment that FBR is not entitled to further payment. FBR
removed to the District of Nebraska and moved to dismiss for lack of standing.
Treating this as a factual challenge under Rule 12(b)(1), rather than a facial
challenge under Rule 12(b)(6) of the Federal Rules of Civil Procedure, the district
court1 granted the motion and dismissed the action without prejudice because the
CVR Holders failed to show the injury in fact required for Article III standing. One
month later, the court denied CVR Holders motions to alter or amend the judgment
under Fed. R. Civ. P. 59(e), and for leave to amend the complaint to cure standing
deficiencies. Yeransian v. B. Riley & Co., Inc., No. 8:13-CV-304, 2019 WL 252029
(D. Neb. Jan. 17, 2019).
1
The Honorable Robert F. Rossiter, Jr., United States District Judge for the
District of Nebraska.
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The CVR Holders appeal this second order, arguing the district court erred in
denying their Rule 59(e) motion because the court’s dismissal order was based on a
manifest error of law as to their standing.2 “Motions under Rule 59(e) serve the
limited function of correcting manifest errors of law or fact or to present newly
discovered evidence and cannot be used to introduce new evidence, tender new legal
theories, or raise arguments which could have been offered or raised prior to entry of
judgment.” Ryan v. Ryan, 889 F.3d 499, 507 (8th Cir. 2018) (quotation omitted). An
appeal from a Rule 59(e) motion permits the appellant to challenge the underlying
dismissal order for a manifest error of law. See Henley v. Brown, 686 F.3d 634, 639
(8th Cir. 2012), cert. denied, 568 U.S. 1089 (2013). Because standing is a threshold
inquiry into federal court jurisdiction, we begin -- and end -- our analysis there. See
Hodak v. City of St. Peters, 535 F.3d 899, 903 (8th Cir. 2008), cert. denied, 555 U.S.
1173 (2009). We agree the CVR Holders lack standing and therefore affirm.3
“Standing to sue is a doctrine rooted in the traditional understanding of a case
or controversy.” Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016). To establish
the “irreducible constitutional minimum of standing,” the CVR Holders must show
they have “(1) suffered an injury-in-fact, (2) that is fairly traceable to the challenged
action of [FBR], and (3) is likely to be redressed by a favorable judicial decision.”
Id., quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). In reviewing
a Rule 12(b)(1) dismissal based on a factual attack on the opposing party’s claims,
2
Rather than wait for an opinion in this case, Yeransian filed substantially the
same claims against FBR in Delaware. Yeransian v. Markel Corp., No. 1:20-CV-
00762-MN (D. De. June 5, 2020). Needless to say, we do not look favorably on these
duplicative litigation tactics.
3
The CVR Holders’ contention that the district court erred in not considering
their post-dismissal motion for leave to amend under the liberal pleading standard in
Rule 15(a) is without merit. See United States ex rel. Roop v. Hypoguard USA, Inc.,
559 F.3d 818, 823-24 (8th Cir. 2009). In any event, their lack of standing is an
incurable deficiency in this case.
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we review the district court’s factual findings for clear error and its ultimate
determination the CVR Holders lack standing de novo. See Branson Label, Inc. v.
City of Branson, Mo., 793 F.3d 910, 914-15 (8th Cir. 2015).4
We conclude the CVR Holders have not made these essential showings. First,
while their contract-based claims to a share of the additional compensation may well
be a legally protected interest, they have not suffered injury in fact, that is, “an
invasion of a legally protected interest that is concrete and particularized and actual
or imminent, not conjectural or hypothetical.” Spokeo, 136 S. Ct. at 1548 (quotation
omitted, emphasis added). The final amount of the additional compensation has not
been determined, and no payments have been made. Second, the only injury in fact
the CVR Holders can claim -- failure to receive what they contend is their full share
of the yet-unpaid additional compensation -- is not fairly attributable to the action of
FBR in asserting a competing claim, and cannot be redressed at this time by the
favorable judicial decision they seek. The additional compensation will be paid by
Markel, a non-party. Thus, the CVR Holders’ alleged injury in fact “is not fairly
traceable to [FBR] because [it] does not possess any . . . authority” to pay their
claims. Balogh v. Lombardi, 816 F.3d 536, 543 (8th Cir. 2016). The CVR Holders
are prematurely asserting contractual rights that have not ripened.
The CVR Holders respond by arguing they have standing to assert this claim
under the Declaratory Judgment Act, 28 U.S.C. § 2201. The argument is unavailing.
“The operation of the Declaratory Judgment Act is procedural only” and does not
expand the jurisdiction of federal courts. Aetna Life Ins. Co. v. Haworth, 300 U.S.
227, 240 (1937). As with any claim brought in federal court, a declaratory judgment
action must be “definite and concrete, touching the legal relations of parties having
4
The CVR Holders’ assertion that the district court erred in treating FBR’s
motion to dismiss as a factual challenge under Rule 12(b)(1) is frivolous. See
Johnson v. United States, 534 F.3d 958, 964 (8th Cir. 2008).
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adverse legal interests, real and substantial, and admit of specific relief through a
decree of a conclusive character, as distinguished from an opinion advising what the
law would be upon a hypothetical state of facts.” McLeod v. General Mills, Inc., 856
F.3d 1160, 1166 (8th Cir. 2017) (quotation omitted). The Supreme Court has
emphasized “the need . . . to prevent federal court litigants from seeking by
declaratory judgment to litigate a single issue in a dispute that must await another
lawsuit for complete resolution.” Calderon v. Ashmus, 523 U.S. 740, 748 (1998)
(citations omitted).
The CVR Holders and FBR assert competing claims to the additional
compensation, which is a finite, undetermined sum of money that will be paid in the
future by Markel, a non-party. The CVR Holders cite no case holding that competing
claimants can sue one another because a third party may eventually decide to pay one
rather than the other. In these circumstances, the competing claims are speculative,
not ripe. They turn on future events, most importantly the aggregate value of the
additional compensation and Markel’s decision which claims it will pay. Any future
injury will be traceable to Markel’s decisions regarding payment, “the independent
action of some third party not before this court.” Lujan, 504 U.S. at 561-62. The
CVR Holders have an action against Markel pending in the District of Delaware.
They do not suffer present injury nor face the risk of liability in waiting for their
claims to ripen in the Delaware litigation. Indeed, any declaratory judgment in this
action would “merely determine a collateral legal issue.” Calderon, 523 U.S. at 747.
Thus, as in MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 128 n.8 (2007),
“standing and ripeness boil down to the same question in this case.”
The district court committed no manifest error of law in concluding the CVR
Holders lack standing. The judgment of the district court is affirmed.
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