Salt Lake Tribune Pub. v. Management Planning

454 F.3d 1128

SALT LAKE TRIBUNE PUBLISHING COMPANY, LLC, Plaintiff-Appellant, v. MANAGEMENT PLANNING, INC.; Medianews Group, Inc.; Kearns-Tribune, LLC, Defendants-Appellees.

No. 05-4316.

United States Court of Appeals, Tenth Circuit.

July 19, 2006.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Seth P. Waxman of Wilmer, Cutler, Pickering, Hale, and Dorr, LLP, Washington, D.C. (A. Stephen Hut, Jr., Patrick J. Carome, David S. Cohen of Wilmer, Cutler, Pickering, Hale, and Dorr, LLP, Washington, D.C., and Milo Steven Marsden of Dorsey & Whitney, LLP, Salt Lake City, UT, with him on the briefs), for Plaintiff-Appellant.

Kevin T. Baine of Williams & Connolly, LLP, Washington, D.C. (Paul B. Gaffney of Williams & Connolly, LLP, James S. Jardine and Allan T. Brinkerhoff of Ray, Quinney & Nebeker, Salt Lake City, UT, with him on the briefs), for Defendants-Appellees, MediaNews Group, Inc. and Kearns-Tribune, LLC.

Robert S. Clark and D. Craig Parry of Parr, Waddoups, Brown, Gee & Loveless, Salt Lake City, UT, filed a brief on behalf of Defendant-Appellee, Management Planning, Inc.

Before BRISCOE, BALDOCK, and EBEL, Circuit Judges.

BRISCOE, Circuit Judge.

This appeal arises out of the efforts of Salt Lake Tribune Publishing Company ("Tribune Publishing") to reacquire The Salt Lake Tribune newspaper. An appraisal from Management Planning, Inc., ("MPI"), which valued the assets of The Salt Lake Tribune, is at the center of the present controversy. Tribune Publishing appeals the district court's dismissal of its complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. We exercise jurisdiction pursuant to 28 U.S.C. § 1291, and REVERSE and REMAND.

I.

Tribune Publishing has an Option Agreement to purchase The Salt Lake Tribune from MediaNews Group, Inc., and Kearns-Tribune, LLC, (collectively "MediaNews"). Under the Option Agreement, Tribune Publishing may reacquire the newspaper by paying the exercise price, which is the fair market value of the newspaper. The Option Agreement specifically defines "fair market value." Option Agreement ¶ 2(a), Aplt.App. at 86-87.

If the parties cannot agree on the fair market value, the Option Agreement prescribes an appraisal procedure. Each party appoints an appraiser to calculate the fair market value of the newspaper's assets. If one appraised value is 110% greater than the other appraised value, then the two parties select a third appraiser. The fair market value depends upon the three appraised values:

[T]he Fair Market Value of the Tribune Assets shall be equal to the average of the two closest Appraised Values reported by the three Appraisers, provided, however, that if the highest and the lowest of such three Appraised Values differ from middle by an equal amount, then the Fair Market Value of the Tribune Assets shall be equal to such middle determination.

Option Agreement ¶ 2(b), Aplt.App. at 87 (emphasis omitted). The Option Agreement further provides that "[e]ach determination of the Fair Market Value of the Tribune Assets ... in accordance with the appraisal provisions of this paragraph 2 shall be final, binding and conclusive." Option Agreement ¶ 2(d), Aplt.App. at 87. Although the parties agreed that each determination of the fair market value in accordance with paragraph 2 would be final and binding, the Option Agreement expressly allowed the parties to enforce the agreement in court. The Option Agreement states that "the parties shall be entitled to seek an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in any court of the United States" and seek other remedies at law or in equity. Option Agreement ¶ 13, Aplt.App. at 91. Tribune Publishing's appraiser valued the newspaper at $218 million, while MediaNews' appraiser valued it at $380 million. Because MediaNews' appraised value was 110% greater than that from Tribune Publishing, the parties agreed to a third appraisal by MPI.

The parties entered into an Appraisal Agreement with MPI, which requires MPI to comply with professional appraisal standards. The parties agreed to seek judicial review of any conflicts that arise between the terms of the Option Agreement and professional appraisal standards. MPI appraised the assets at $331 million.

Tribune Publishing filed the present action on June 24, 2003, against MediaNews Group, Kearns-Tribune, and MPI. Tribune Publishing asserts that MPI's appraisal used a different definition of "fair market value" than the Option Agreement. First Am. Compl. ¶¶41, 44, Aplt.App. at 126-127. Tribune Publishing further alleges that MPI ignored evidence relevant to valuing the newspaper assets. First Am. Compl. ¶¶41, 43, Aplt.App. at 126-127. Tribune Publishing maintains that MPI violated professional appraisal standards, even though MPI agreed to comply with those standards in the Appraisal Agreement. First Am. Compl. ¶¶41, 44, Aplt. App. at 126-127. Tribune Publishing seeks judicial invalidation of MPI's appraisal and damages from MPI caused by the issuance of its appraisal.

Earlier in this case, the district court granted a prior Rule 12(b)(6) motion to dismiss filed by MediaNews, concluding that MPI's appraisal was an arbitration under the Federal Arbitration Act ("FAA"). We reversed, holding that the appraisal was not an arbitration under the FAA. Salt Lake Tribune Publ'g Co. v. Mgmt. Planning, Inc., 390 F.3d 684, 692 (10th Cir.2004) ("Tribune Publ'g II")¹.

On remand, the district court dismissed Tribune Publishing's first amended complaint under Rule 12(b)(6), again treating MPI's appraisal as an arbitration. Applying New Jersey law, the district court concluded that the New Jersey Supreme Court would treat an appraisal like an arbitration. The district court reasoned that, under New Jersey law, an appraisal, like an arbitration, is not subject to judicial review absent allegations of fraud, corruption, or similar wrongdoing. Then, by applying this standard to MPI's appraisal, the district court concluded that it could not review Tribune Publishing's challenge to MPI's appraisal. The district court also dismissed Tribune Publishing's claims against MPI, holding that the alleged injury was not ripe because Tribune Publishing has not paid the allegedly inflated purchase price.

II.

On appeal, Tribune Publishing argues that the district court misinterpreted New Jersey law in dismissing its claims seeking judicial invalidation of MPI's appraisal. Tribune Publishing further argues that the district court erred in its ripeness analysis in dismissing Tribune Publishing's claims for damages.

We review a district court's decision dismissing a complaint under Rule 12(b)(6) de novo. E.g., Clark v. State Farm Mut. Auto. Ins. Co., 319 F.3d 1234, 1240 (10th Cir.2003). We accept as true

all well-pleaded factual allegations in the... complaint ... and view[ ] [them] in the light most favorable to the nonmoving party. A 12(b)(6) motion should not be granted unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.

Sutton v. Utah State Sch. for Deaf & Blind, 173 F.3d 1226, 1236 (10th Cir.1999) (internal quotation marks and citations omitted). "[A] dismissal under Rule 12(b)(6) is a harsh remedy which must be cautiously studied. . . ." Moore v. Guthrie, 438 F.3d 1036, 1039 (10th Cir.2006) (internal quotation marks omitted).

A. Dismissal of claims seeking judicial invalidation of MPI's appraisal

The parties dispute whether a court may review MPI's appraisal for reasons other than fraud, corruption, or similar wrongdoing under New Jersey law.² Specifically the parties disagree whether a court may vacate an appraisal if the appraiser committed a mistake of law or failed to consider all of the relevant evidence. Applying New Jersey law, we hold that the district court may review MPI's appraisal for a mistake of law or failure to consider the relevant evidence.

1. New Jersey law

We conclude that the district court misinterpreted New Jersey law in determining the standard of judicial review for appraisals.

When proceeding under diversity jurisdiction, federal courts "have the duty to apply state law as announced by the state's highest court." Miller v. Auto. Club of N.M., Inc., 420 F.3d 1098, 1128 (10th Cir.2005) (internal quotation marks omitted); Phillips v. State Farm Mut. Auto. Ins. Co., 73 F.3d 1535, 1537 (10th Cir.1996). Where the state's highest court has spoken, we accept "its pronouncement... as defining state law unless it has later given clear and persuasive indication that its pronouncement will be modified, limited or restricted." West v. Am. Tel. & Tel. Co., 311 U.S. 223, 236, 61 S.Ct. 179, 85 L.Ed. 139 (1940). When a state's intermediate appellate court criticizes a decision from that state's supreme court, it is not "our position to predict that the [state] Supreme Court would overrule its precedent in the complete absence of any indication from that court of its inclination to do so." Ag Servs. of Am., Inc. v. Nielsen, 231 F.3d 726, 735-36 (10th Cir.2000) (emphasis in original). "No deference is given to the federal district court's views of state law, which we review de novo." Colo. Visionary Acad. v. Medtronic, Inc., 397 F.3d 867, 871 (10th Cir.2005).

Tribune Publishing contends that the district court erred by disregarding the New Jersey Supreme Court's decision in Elberon Bathing Co. v. Ambassador Ins. Co., 77 N.J. 1, 389 A.2d 439 (1978), and by treating MPI's appraisal like an arbitration. In Elberon, the New Jersey Supreme Court reviewed an appraisal when an appraiser and the umpire allegedly committed a mistake of law and failed to consider all of the relevant evidence. Id. at 442-43, 446. Contrary to MediaNews' assertions, the New Jersey Supreme Court's decision in Elberon is binding on us.

MediaNews argues that we should interpret Elberon narrowly by limiting it to a statut...