Aerojet-General Corporation v. Askew

• Decision Date: 02 February 1972
• Docket Number: No. 31018.,31018.
• Parties: AEROJET-GENERAL CORPORATION, Plaintiff-Appellee, v. Reubin O'Donovan ASKEW, Governor of the State of Florida, et al., Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

453 F.2d 819 (1971)

AEROJET-GENERAL CORPORATION, Plaintiff-Appellee, v. Reubin O'Donovan ASKEW, Governor of the State of Florida, et al., Defendants-Appellants.

No. 31018.

United States Court of Appeals, Fifth Circuit.

December 9, 1971.

Rehearing and Rehearing February 2, 1972.

Robert L. Shevin, Atty. Gen., Fla., Ronald W. Sabo, Asst. Atty. Gen., Philip S. Bennett, Gen. Counsel, State Bd. of Trustees of the Internal Improvement Trust Fund, Stephen Marc Slepin, Counsel, State Bd. of Ed., Rivers Buford, Jr., Gen. Counsel, State Bd. of Ed., Tallahassee, Fla., Marion E. Sibley, Sp. Asst. Atty. Gen., Miami Beach, Fla., for defendants-appellants.

George W. Wright, Jr., Karl B. Block, Jr., Miami, Fla., for plaintiff-appellee.

Before GODBOLD, SIMPSON and CLARK, Circuit Judges.

Rehearing and Rehearing En Banc February 2, 1972.

SIMPSON, Circuit Judge:

The Aerojet-General Corporation (plaintiff), an Ohio corporation doing business in the State of Florida, brought suit in the district court against the State Board of Trustees of the Internal Improvement Trust Fund and the State Board of Education (defendants),¹ seeking specific performance of an option to purchase approximately 25,313 acres of land in Dade County, Florida. The defendants entered a general appearance and interposed several affirmative defenses. The district court granted a summary judgment in favor of the plaintiff and ordered the defendants to convey to the plaintiff the specified real estate. Aerojet-General Corporation v. Kirk, 1970, N.D.Fla., 318 F.Supp. 55. Timely appeal to this Court followed. We affirm the district court.

In September and October, 1961, the defendants' predecessors in office caused to be published in the Homestead News, a newspaper of general circulation in Dade County, Florida, a Notice of Bids and Public Sale² by means of which bids were solicited for the lease of lands owned by the defendants in Dade County, Florida. On December 21, 1961, the plaintiff and the defendants' predecessors in office entered into a written lease with option to purchase the leased lands at $50.00 per acre.³ An amendment to paragraph three of the lease

COPYRIGHT MATERIAL OMITTED

was executed by the parties on January 14, 1963.⁴.

In addition to leasing the subject land from defendants, the plaintiff purchased additional land surrounding the defendants' lands, at an expenditure of $7,100,000. In early 1962, plaintiff began construction of a plant for the development of solid rocket fuels, which resulted in a capital investment on the plaintiff's part for buildings and equipment of $21,200,000. About $2,000,000 of this construction was located on the land leased from the Board of Education and the Board of Trustees of the Internal Improvement Trust Fund. The plant was completed in the spring of 1964 and was in operation until June, 1967, at which time it ceased operations due to cutbacks in the federal government's spending on solid rocket fuel research and development. Since that time the plaintiff has maintained a caretaker force of fourteen people at the plant.

On September 8, 1969, the plaintiff notified each of the defendants in writing⁵ that it had elected to exercise its option to purchase the lands which are the subject of the lease. Prior to that date, the plaintiff had paid over $500,000 in yearly rentals under the lease to the defendants and $231,000 under Paragraph 7 of the lease to Dade County in lieu of ad valorem taxes. Payments under the lease were current in all respects. At no time prior to the "notify date", September 8, 1969, had the defendants or their predecessors in office ever notified plaintiff or even intimated to it that plaintiff had failed in any way whatever to comply with the terms of the lease. No objection was made prior to that time to the reduction in work force caused by the shutdown in operations of June, 1967. At a meeting of the State Board of Education and of the Board of Trustees of the Internal Improvement Trust Fund on October 21, 1969, it was decided not to convey the land to the plaintiff. This suit to compel conveyance of the property was instituted that same day.

The complaint for specific performance recited the terms of the lease and the plaintiff's attempt to exercise its option to purchase. It asserted that the plaintiff was ready, willing, and able to pay the required amount of the purchase price simultaneously with the execution of a contract to purchase between the plaintiff and the defendants, but that the "defendants have advised the plaintiff that they will not accept said required amount of the purchase price and will not execute, and have failed and refused to execute, said contract to purchase".

On December 1, 1969, the defendants filed their answer in the court below in which they admitted the allegations of the complaint⁶ and interposed several affirmative defenses. The answer asserted that plaintiff had breached the contract by shutting down its operations in June, 1967, thereby rendering it ineligible to purchase the property under the terms of the option clause. Additionally, the defendants suggested that the remedy of specific performance was inappropriate because the value of the land involved had appreciated considerably between the time the lease was executed and the time that the plaintiff gave its notice of election to exercise the option to purchase. On September 21, 1970, the district court granted the plaintiff's motion for summary judgment and directed the defendants to execute and comply with a contract of sale of the real property once the plaintiff had made the prescribed payments.

On January 15, 1971, the defendants filed their appellate brief with this Court in which they urged the reversal of the grant of summary judgment in favor of the plaintiff on the following grounds: (1) the plaintiff was in default under the terms of the lease at the time it sought to exercise the option to purchase because of the plant shutdown, and was therefore disqualified from exercising the option; and (2) the district court should not have granted summary judgment as to the remedy of specific performance because the appreciation in the value of the land raised a material issue of fact which necessitated a trial on the merits. In response, the plaintiff argued that the lease clearly empowered the lessee to exercise its option at any time within the lease period and that the defendants, prior to their refusal to convey the land, had at no time given the required sixty day notice of default to the plaintiff. Aerojet of course took the position that the district court's grant of summary judgment was proper.

The State of Florida underwent a change of administration on January 5, 1971. The successor defendants, after a review of the record in this case, petitioned this Court for leave to file a supplemental brief. Leave was granted and oral argument postponed. On April 14, 1971, the defendants filed a supplemental brief in which they repudiated two concessions which their predecessors had made in the course of the proceedings in the district court: (1) that the defendants had authority under the laws of the State of Florida to grant to the plaintiff a ten-year option to purchase over twenty-five thousand acres of land at fifty dollars an acre; and (2) that the notice published in the Homestead News was sufficient to comply with the requirements of applicable Florida law.⁷ In reply to the supplemental brief of the defendants, Aerojet filed a brief in which it argued that: (1) the law of Florida empowered the defendants to dispose of the lands held by them by means of lease, sale, or option; (2) the notice published in the Homestead News complied with all the pertinent provisions of the Florida statutes; and (3) the defendants were estopped to deny the validity of the option clause in the lease.

At oral argument, this Court, on its own motion, raised the question of whether this suit was barred by the provisions of the Eleventh Amendment to the United States Constitution.⁸ In response to the Court's request, the parties submitted additional briefs on this point, Aerojet arguing that the suit is not barred by the Eleventh Amendment and the defendants taking the contrary position.

I. Waiver of Eleventh Amendment Immunity by General Appearance

Even if this suit was initially barred by Eleventh Amendment immunity, such immunity may have been waived by general appearance and defense on the merits in the trial court. We approach the waiver question first.

In Clark v. Barnard, 1883, 108 U.S. 436, 2 S.Ct. 878, 27 L.Ed. 780, the assignees of a bankrupt railroad and the treasurer of the State of Rhode Island contested ownership of a $100,000 certificate of indebtedness issued by the City of Boston. The assignees brought suit in federal court and named the State Treasurer, Samuel Clark, as a defendant. Clark demurred to the complaint on the basis that the Eleventh Amendment to the United States Constitution barred the suit. The demurrer was overruled. An interlocutory decree was subsequently entered ordering the City of Boston to pay into the registry of the court the face amount of the certificate and authorizing the State of Rhode Island to file a claim for damages for breach of a surety bond given by the officers of the railroad prior to its bankruptcy. The money was paid in and the state filed its claim. After judgment was entered for the assignees, Clark and the State appealed, raising the jurisdictional bar of the Eleventh Amendment. The Supreme Court rejected this argument saying:

"We are relieved, however, from its consideration by the voluntary appearance of the state in intervening as a claimant of the fund in court. The immunity from suit belonging to a state, which is respected and protected by the constitution within the limits of the judicial power of the United States, is a personal privilege which it may waive at pleasure; so that in a suit, otherwise well brought, in

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