First Bankers Corporation v. Water Witch Fire Company, Incorporated

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 10-2046
FIRST BANKERS CORPORATION,
Plaintiff - Appellee,
v.
WATER WITCH FIRE COMPANY, INCORPORATED,
Defendant - Appellant.
Appeal from the United States District Court for the District of
Maryland, at Baltimore. Richard D. Bennett, District Judge.
(1:09-cv-00975-RDB)
Submitted: June 14, 2011 Decided: July 22, 2011
Before TRAXLER, Chief Judge, and NIEMEYER and KING, Circuit
Judges.
Affirmed by unpublished per curiam opinion.
Roger N. Powell, Pikesville, Maryland, for Appellant. Geoffrey
H. Genth, Mary Beth Ewen, KRAMON & GRAHAM, P.A., Baltimore,
Maryland, for Appellee.
Unpublished opinions are not binding precedent in this circuit.

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PER CURIAM:
Water Witch Fire Company, Incorporated appeals a
judgment against it in an action brought by First Bankers
Corporation (“FBC”), contending that the district court lacked
subject-matter jurisdiction. Finding no error, we affirm.
FBC is an Indiana-based business that finances fire
companies’ equipment leases, and Water Witch is a Maryland
volunteer fire company. In May 2007, FBC and Water Witch
entered into both a lease and option agreement and an escrow
agreement. Pursuant to these agreements, Water Witch leased a
fire truck from FBC and FBC deposited into escrow $200,000,
which was to be paid to the truck’s manufacturer. Water Witch
subsequently found an alternative financing source, however, and
failed to make lease payments to FBC when they began to become
due on September 1, 2008.
On October 15, 2008, Water Witch, through its
attorney, Roger Powell, sent FBC’s principal, John Hill, a
proposed release of the escrowed funds. On October 29, 2008,
Hill replied via e-mail that the release’s terms were “one-sided
and unacceptable” and suggested that the parties’ principals and
attorneys participate in a conference call in an attempt to
resolve their differences. J.A. 61. When Water Witch did not
respond, Hill sent Powell another e-mail on November 6, which
stated that, absent a resolution, FBC would sue Water Witch in

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federal court. When Water Witch again failed to respond, FBC’s
counsel, Geoffrey Genth, sent Powell a letter dated December 3
stating that FBC considered the escrow agreement to have
terminated and that FBC regarded Water Witch as having abandoned
any claim to the funds therein. The letter informed Water Witch
that FBC would disburse the funds “in short order” and asked
Water Witch to provide written notice on or before December 16
if it disputed FBC’s right to do so. J.A. 65.
On December 9, Powell sent Genth a letter outlining
some of Water Witch’s positions but not conceding FBC’s right to
dispute the funds. Genth then responded with a letter dated
December 12 stating that he did “not read [Water Witch’s]
December 9 letter as disputing that right of [FBC]” and stating
that FBC “will proceed accordingly, absent some contrary written
indication from [Powell] . . . on or before December 16.” J.A.
71. On December 17, Powell responded with a letter to Genth
stating
Respectfully, I have no idea what “you are
talking about” in your December 12, 2008 letter.
What your letter does not do is respond to your
fiduciary responsibilities nor does it respond to the
pertinent portions of my letter of December 9, 2008.
Whatever you do, you proceed at your own peril
subject to my client’s rights.
J.A. 73.

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Having not received the confirmation that it sought,
on February 9, 2009, FBC filed suit against Water Witch in
Maryland state court. When Water Witch filed a request for jury
trial, however, FBC filed a notice of voluntary dismissal
without prejudice.
On April 16, 2009, FBC filed this action in federal
district court on the basis of diversity jurisdiction. The
complaint requests a declaratory judgment declaring that the
parties’ escrow agreement terminated according to its terms on
October 15, 2008, and thus that FBC no longer has any
obligations or liabilities in connection with the funds that
were in the account. It also asserts a cause of action for
breach of contract and requests an award of money damages.
Water Witch moved to dismiss the suit for lack of
subject-matter jurisdiction, arguing that there was no actual
controversy regarding the escrow agreement and the amount in
controversy in the breach of contract claim was less than
$75,000. See Fed. R. Civ. P. 12(b)(1).
The district court denied the motion, reasoning:
In this case, a declaration concerning the rights
under the escrow fund would yield a pecuniary result
in excess of $200,000 for one of the parties.
Although Water Witch asserts that it has agreed to
release the escrow monies and accrued interest to
[FBC], the Complaint and [FBC’s] Memorandum make clear
that this offer was insufficient to convince [FBC]
that Water Witch had abandoned all potential claims or
counterclaims regarding the Escrow Agreement.

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J.A. 84-85.
After the district court denied Water Witch’s motion,
Water Witch filed an answer and asserted a counterclaim alleging
fraud by FBC. FBC subsequently moved for, and was granted,
summary judgment both on its claims and on Water Witch’s
counterclaim. The district court awarded FBC damages for Water
Witch’s breach as well as attorneys’ fees and costs. The court
also entered an order declaring that the escrow agreement
terminated on October 15, 2008.
Water Witch now appeals, again arguing that the
district court lacked jurisdiction because there was no actual
controversy over the escrowed funds. See Volvo Constr. Equip.
N. Am., Inc. v. CLM Equip. Co., 386 F.3d 581, 592 (4th Cir.
2004) (holding that for a district court to exercise
jurisdiction over a declaratory judgment action, the complaint
must allege “an ‘actual controversy’ between the parties ‘of
sufficient immediacy and reality to warrant issuance of a
declaratory judgment’” (quoting 28 U.S.C. § 2201)). Without so
much as acknowledging the factual basis that the district court
gave for its ruling, Water Witch conclusorily maintains that it
in fact offered to release the funds in October 2008.
Finding no error, we affirm on the reasoning of the
district court. We dispense with oral argument because the
facts and legal contentions are adequately presented in the

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materials before the court and argument would not aid the
decisional process.
AFFIRMED

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