Fankhanel Farms Limited Partnership v. Holden-Conner Realty Co et al

Filing 18

ORDER granting 4 Holden-Conner's Motion to Dismiss for want of jurisdiction. The Court will dismiss the complaint without prejudice. The parties must proceed in state court. Signed by Judge D. P. Marshall Jr. on 10/31/13. (kpr)

IN THE UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF ARKANSAS
NORTHERN DIVISION
FANKHANEL FARMS LIMITED
PARTNERSHIP

v.

PLAINTIFF

No. 1:13-cv-57-DPM

HOLDEN-CONNER REALTY CO.;
LAWHON SEED LLC

DEFENDANTS

ORDER
The parties dispute the amount in controversy for purposes of this
Court's subject matter jurisdiction under the diversity statute. 28 U.S.C.
§ 1332(a)(1). Fankhanel and Holden-Conner own an approximately 471-acre

farm in Jackson County, Arkansas. They're tenants in common, each holding
an undivided one-half interest in the surface rights of the whole. The parties
agree that their farm is probably worth about $1.4 million today,
approximately $3,000.00 an acre. Fankhanel and a non-party own the mineral
rights; but title to the surface and the minerals having been severed, and there
being no dispute about the mineral estate, the other mineral owner's absence
from this case makes no difference. Schnitt v. McKellar, 244 Ark. 377, 386-87,
427 S.W.2d 202,208 (1968). Fankhanel and Holden-Conner have fallen out
over a tenant. Fankhanel has sued, seeking a partition in kind. Lawhon Seed

is in the case because it holds a mortgage on Holden-Conner's interest in the
farm.
The parties' diversity is not contested. Fankhanel is a Connecticut
limited partnership whose principal place of business is in that State and
whose partners are not Arkansawyers. Holden-Conner is an Arkansas
corporation with its principal place of business in Jackson County. Lawhon
is an Arkansas LLC based in Pulaski County.
This Court has jurisdiction if" the matter in controversy exceeds the sum
or value of $75,000[.00], exclusive of interest and costs[.]" 28 U.S.C. § 1332(a).
No sum is in dispute-Fankhanel does "not ask for a money judgment for a
sum certain or for consequential damages." Usery v. Anadarko Petroleum Corp.,
606 F.3d 1017, 1018 (8th Cir. 2010). "This kind of case therefore engages the
part of the relevant statute that provides for federal jurisdiction when the
matter in controversy exceeds the value of $75,000[.00]." Ibid. (emphasis in
original, quotation omitted). "The question is the actual value of the object of
the suit." 606 F.3d at 1019. This is a question of federal law, "although the
federal courts must, of course, look to state law to determine the nature and
extent of the right to be enforced in a diversity case." Horton v. Liberty Mutual

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Insurance Co., 367U.S. 348,352-53 (1961). To sustain this Court's jurisdiction,

Fankhanel must show, by a preponderance of the evidence, that a declaration
dividing the farm in kind- the sole object of this lawsuit- is worth more than
the $75,000.00 statutory threshold. Kopp v. Kopp, 280 F.3d 883, 884 (8th Cir.
2002); Usery, 606 F.3d at 1018-19; see generally WRIGHT & MILLER, FEDERAL
PRACTICE & PROCEDURE§ 3708 (4th ed. 2013).
Fankhanel has not shown a sufficient amount in controversy. Start with
Arkansas law. Each co-tenant has an absolute statutory right to partition.
ARK. CODE ANN. § 18-60-401. This right is part of owning this interest in real
property; it is a constituent of title. Whether partition occurs by decree or
deed, it is a zero-sum transaction for Fankhanel and Holden-Conner. "It is
generally held that a partition of land creates no new title to the shares set off
to the parties to be held in severalty, whether the partition be made by act of
the parties or by a judgment or decree of the court. While its effect is to
allocate the share of each in his allotted parcel of land, and extinguish his
interest in all of the others, the title by which he holds his divided share is the
same as that by which his undivided interest in the estate in common was
held." Wofford v. Jackson, 194 Ark. 1049, 1056-57, 111 S.W.2d 542, 545-46

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(1937).

Partition will sever Fankhanel's and Holden-Conner's unity of

possession, not create or convey title. Johnson v. Ford, 233 Ark. 504,505-06,345
S.W.2d 605,605 (1961); see generally SUPPLEMENT TO JONES' ARKANSAS TITLES
§ 1364 (D.R. Vam ed. 1960).

Back to federal law. What is the actual value to Fankhanel of severing
the unity of possession in the whole farm? This is a hard question, perhaps
one with no answer. No market exists for the right of partition. Compare
Usery,606F.3dat1019(marketvalueofdisputedmineralinterest). Fankhanel
argues hard that half the farm's value is the right number. This view is
mistaken. The parties' ownership is undisputed. Fankhanel' s entitlement to
half a farm worth more than a million dollars is not in controversy. This fact
distinguishes this case from Fankhanel's authorities (and others) where the
Court had to quiet disputed title, or resolve some dispute about the extent of
ownership, as well as partition the property. E.g., Green v. Fisk, 103 U.S. 518,
519-20 (1880); Whiteside v. Haselton, 110 U.S. 296,298 (1884); Pinel v. Pinel, 240
U.S. 594, 595-96 (1916); Melnick v. Press, 809 F. Supp. 2d 43, 57-71 (E.D.N.Y.
2011); EstateofChurch v. Tubbs,2006 WL568335, at*1 (E. D. Mich. 2006). There
are cases in the books where it is unclear whether title was disputed or not.

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E.g., McCarthy v. Provost, 103 U.S. 673 (1880). No rule emerges from the
silence in those decisions. Fankhanel does not argue, and has not proved, that
any difference in value exists between its one-half interest in the whole farm
and a whole interest in half of it. Rapoport v. Rapoport, 416 F.2d 41,44 (9th Cir.
1969). Insofar as the record discloses, no difference in value exists.
A forced sale is a possibility. "[I]f it shall appear that partition cannot
be made without great prejudice to the owners[,]" the farm will be sold.

ARK.

CODE ANN.§ 18-60-401. This possibility does not change the jurisdictional
analysis in this case. Fankhanel does not seek a sale. Fankhanel seeks only
a division in kind. NQ 1 at 4. It pleads that the farm can be divided in kind.
NQ 1 at 3. Holden-Conner does not dispute this allegation in moving to

dismiss for lack of jurisdiction. No evidence of impracticability of division
has been offered. Fankhanel thus has not demonstrated jurisdiction on this
theory of how the case might spin out. Compare Brewer v. Middleton, 1994 U.S.
Dist. LEXIS 1862 (W.D. Mich. 1994) (co-owners pursuing partition only by
sale), affd, 64 F.3d 662 (6th Cir. 1995) (unpublished disposition).

***

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Fankhanel' s complaint for partition does not put more than $75,000.00
in controversy. Holden-Conner's motion to dismiss for want of jurisdiction,
NQ 4, is granted. The Court will dismiss the complaint without prejudice. The

parties must proceed in state court.
So Ordered.

D.P. Marshall Jr.
United States District Judge

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