Case Title: Burlington Northern R. Co. v. Dunkelberger

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 1996-06-24T00:00:00Z

Document:
Burlington Northern R. Co. v. Dunkelberger1996 WY 83918 P.2d 987Case Number: 95-213Decided: 06/24/1996Supreme Court of Wyoming
BURLINGTON NORTHERN RAILROAD COMPANY, a Delaware 
Corporation,

 Appellant 
(Plaintiff),

v.

David 
DUNKELBERGER, 

Appellee 
(Defendant).

Appeal 
from the District Court of Sheridan County, John C.

Jeff 
Hedger of Kroschel & Yerger, Billings, John Fenn of Yonkee & Toner, 
Sheridan, for appellant.

Alexander 
(Zander) Blewett, III of Hoyt & Blewett, Great Falls, Sharon Fitzgerald of 
Fitzgerald Law Offices, Cheyenne, for appellee.

Before 
GOLDEN, C.J., and THOMAS, MACY, TAYLOR and LEHMAN, JJ. 

THOMAS, 
Justice.

[¶1]      The only question 
in this case is whether Burlington Northern Railroad Company (Burlington) is 
foreclosed from relief in its action against David Dunkelberger (Dunkelberger) 
by decisions of the courts of the State of Montana. After executing a release 
relating to two separate personal injury claims against Burlington, Dunkelberger 
brought an action for damages against Burlington for the claim that was not 
timebarred. He asserted the release was fraudulently obtained, and a jury in the 
Montana court agreed with him. Burlington then sought a set-off against the 
judgment entered in favor of Dunkelberger for the amount paid in the settlement. 
The Montana trial court ruled there could be no set-off because Burlington was 
unable to apportion the amount paid between the injury for which the judgment 
was obtained and the injury that was time-barred. Judgment was entered against 
Burlington for the full amount of the jury verdict, and this became a final 
judgment in Montana when Burlington's appeal was dismissed. We hold Burlington's 
action in Wyoming to recover the amount paid in settlement is foreclosed by the 
doctrine of res judicata when full faith and credit is extended to the Montana 
judgment. The "Order Granting Defendant's Motion to Dismiss (Filed February 16, 
1995)" entered in the district court on July 3, 1995 is affirmed.

[¶2]      In its 
Appellant's Brief, Burlington presents the issue for review as:

A. 
Did the District Court err by granting Defendant's Motion to Dismiss on the 
grounds of judicial estoppel?

In 
his Brief of Appellee, Dunkelberger sets forth this statement of the 
issues:

A. 
Whether affording the Plaintiff Burlington Northern additional discovery would 
be an exercise in futility.

B. 
Whether this Court should affirm the trial court's order barring Plaintiff 
Burlington Northern from re-litigating its alleged $214,000.00 claim against 
Defendant David Dunkelberger. Specifically:

1. 
Does the Full Faith and Credit Clause of the United States Constitution bar 
re-litigating the claim?

2. 
Do the doctrines of collateral estoppel and res judicata bar Plaintiff from 
re-litigating claims that have already been rejected by a Montana 
court?

3. 
Is Plaintiff Burlington Northern's Wyoming action preempted by the Federal 
Employers [sic] Liability Act.

4. 
Should the District Court's judgment be affirmed on the basis of judicial 
estoppel?

C. 
Should the District Court's judgment barring relitigation of the Plaintiff's 
$214,000 claim against Mr. Dunkelberger be affirmed because Burlington Northern 
not only could have but was required to raise every theory of law which 
supported its claim in the Montana action?

[¶3]      Dunkelberger was 
employed by Burlington as a conductor. He suffered back injuries during his 
employment on two occasions: once, on July 21, 1987; and again, on August 20, 
1989. Dunkelberger arrived at a compromise of his injury claims with Burlington, 
and he signed a "Release of All Claims" arising from those injuries in exchange 
for $214,000. The release covered any claims for injuries Dunkelberger incurred 
inclusively to the date of the release, February 6, 1990.

[¶4]      After execution 
of the release, Dunkelberger filed an action pursuant to the Federal Employer's 
Liability Act, 45 U.S.C. § 51-60 (1988) (FELA), in which he alleged Burlington 
had obtained the release by fraud, and the injury incurred on August 20, 1989 
was proximately caused by Burlington's negligence. Dunkelberger's action against 
Burlington did not include any claim for the injury sustained in 1987 because it 
was barred by the three-year statute of limitations found in FELA. Dunkelberger 
demanded a jury trial.

[¶5]      At the trial, the 
jury found Burlington had fraudulently obtained the release. The jury then 
awarded Dunkelberger a verdict in the amount of $450,000 for his FELA claim 
against Burlington. Before a judgment could be entered on the verdict, 
Burlington petitioned the court for a set-off of $214,000, the amount it had 
paid for the release. Dunkelberger filed a motion requesting the court to enter 
judgment for the entire $450,000, asserting Burlington had failed to establish 
any right to set-off.

[¶6]      The issue of 
amending the judgment to set off the $214,000 against the judgment in favor of 
Dunkelberger was argued in briefs presented by Burlington and Dunkelberger. In 
addition to urging set-off, Burlington argued in a supplemental 
brief:

It 
is a fundamental principle of law expressed in Montana * * * that when a party 
seeks to rescind a contract the party "must restore to the other party 
everything of value which he has received from him under the contract or must 
offer to restore the same, upon condition that such party shall do likewise, 
unless the latter is unable or positively refuses to do so." It is simply 
elementary that when a contract has been declared void for reasons of fraud or 
mistake, the contract is void ab initio. Once the contract has been rescinded, 
it is as if it never existed and the parties are returned to their former 
status. Plaintiff's [Dunkelberger] arguments simply ignore this fundamental 
principle of contract law * * *.

[¶7]      The trial court 
in Montana refused to set off the $214,000 and entered a judgment in favor of 
Dunkelberger for the full amount of $450,000, plus interest and costs. The court 
ruled Burlington had established that some part of the $214,000 was attributable 
to the July 21, 1987 injury, but it refused set-off because Burlington "did not 
carry its burden of proof as to what amount of the $214,000 payment was 
attributable to the July 21, 1987 claim and what amount was attributable to the 
August 20, 1989 claim." The claims representative, who had obtained the original 
release, testified that apportionment between these two claims was not 
possible.

[¶8]      Burlington was 
neither discouraged nor deterred by the court's ruling, and it filed a motion 
for a new trial, while at the same time renewing its motion to amend the 
judgment. Burlington again urged its entitlement to the money based upon 
rescission of the contract (the abrogation of the release) and unjust 
enrichment. The district court refused relief for Burlington. The same arguments 
were asserted, for yet a third time, in Burlington's Appellant's Brief submitted 
on Appeal from the Eighth Judicial District Court of Cascade County, Montana to 
the Montana Supreme Court:

The 
effect of a jury's declaration that a contract is invalid is simply a legal 
determination that the contract never existed. * * * To now allow him 
[Dunkelberger] to keep the money and to not have it deducted from the judgment 
awarded by the jury in this case would simply result in unjust enrichment 
and would be contrary to the most fundamental principles of recision. 
(Emphasis added.)

These 
arguments were inefficacious because the Supreme Court of Montana dismissed 
Burlington's appeal, holding it was not timely. The Supreme Court of Montana 
denied Burlington's petition for rehearing.

[¶9]      The following 
year, Burlington brought its action in Wyoming. In its complaint, Burlington 
articulated the facts regarding the jury's finding that the release was invalid 
and the later verdict returned in favor of Dunkelberger for $450,000. Burlington 
sought:

Judgment 
against the Defendant in the amount of $214,000, with interest, costs of suit, 
and such other further relief as the Court deems just and equitable in the 
premises, to restore Burlington Northern Railroad Company to the position it was 
in prior to execution of the February 6, 1990 Release, and to prevent unjust 
enrichment of Dunkelberger; * * *.

The 
underlying justification for this prayer was the rescission of the release by 
the jury's verdict.

[¶10]   Dunkelberger responded by a 
Defendant's Motion to Dismiss Pursuant to Rule 12 and/or Motion for Summary 
Judgment Pursuant to Rule 56, together with a brief in support of the motion and 
exhibits from the Montana case. Burlington then filed Plaintiff Burlington 
Northern Railroad Company's Brief in Opposition to Defendant's Motion to Dismiss 
or for Summary Judgment, together with its supporting documentation. This 
included an affidavit of the attorney who represented Burlington in Montana, 
which stated, among other things, "To date, Dunkelberger retains possession of 
or the benefit of the $214,000.00 he was previously paid representing a 
settlement of incidents occurring in 1987 and 1989." Dunkelberger filed a reply 
brief and, pursuant to a court order, later filed a supplemental brief. 
Burlington also filed a supplemental brief in reply.

[¶11]   On July 3, 1995, the district court 
entered its Order Granting Defendant's Motion to Dismiss (Filed February 16, 
1995). In that order, the court stated in its last two findings:

(6) 
At the 1993 trial in Montana, "BN" proved a portion of the $214,000.00 already 
paid applied to the 1987 injury. However, "BN" did not prove any specific 
amounts;

(7) 
"BN" now wants a chance to prove appropriate allocation between the 1987 and 
1989 claims, in a Wyoming Court, in hopes they can recover part of the 
$214,000.00 payment. (Emphasis in the original).

In 
a portion of the order denominated "Discussion," the court also 
stated:

However, 
given the history of this litigation, "BN" certainly knew apportionment was an 
issue at the time of the 1993 Montana trial.

Based 
on all of the facts and circumstances of this case, judicial estoppel now 
precludes "BN" from seeking recovery of all or any portion of the $214,000.00 
payment.

Burlington 
appeals from that order.

[¶12]   As one aspect of its claim of 
error, Burlington contends the district court did not give appropriate notice of 
its intent to convert Dunkelberger's motion to dismiss under WYO. R. CIV. P. 
12(b)(6) into a motion for summary judgment. For that reason, Burlington argues 
dismissal is appropriate only if its complaint shows on its face that it was not 
entitled to relief under any set of facts. We ruled in Kimbley v. City of Green 
River, 642 P.2d 443, 445 (Wyo. 1982) (quoting from Davis v. Howard, 561 F.2d 565, 571-72 (5th Cir. 1977)), that conversion from a Rule 12(b)(6) motion into a 
motion for summary judgment need not be accomplished by order of the court, 
saying:

The 
record must adequately demonstrate that all counsel were aware of the intentions 
of the district judge to treat the motion as converted, together with a 
reasonable opportunity afforded to the nonmoving party to present, by way of 
affidavit or otherwise, anything necessary to rebut the contention of the moving 
party.

See 
also Mostert v. CBL & Associates, 741 P.2d 1090 (Wyo. 1987); Torrey v. 
Twiford, 713 P.2d 1160 (Wyo. 1986).

[¶13]   Dunkelberger's motion was styled 
"Defendant's Motion to Dismiss Pursuant to Rule 12 and/or Motion for Summary 
Judgment Pursuant to Rule 56." When it responded, Burlington filed a pleading 
entitled "Plaintiff Burlington Northern Railroad Company's Brief in Opposition 
to Defendant's Motion to Dismiss or for Summary Judgment." That was followed by 
Dunkelberger's pleading entitled "Defendant's Reply Brief in Support of Motion 
to Dismiss and/or Motion for Summary Judgment." The documentation in this record 
establishes knowledge on the part of both Burlington and Dunkelberger that the 
motion was in the alternative for dismissal or summary judgment. As we noted in 
Torrey, 713 P.2d  at 1164, the requisite notice of conversion can be found in the 
record "by a writing such as a pleading, a letter, a written stipulation, or an 
oral stipulation on a transcribed record."

[¶14]   In this case, the record reveals at 
least three pleadings attesting to the anticipation of the parties of a possible 
order for summary judgment. Furthermore, documentation relating to a motion for 
summary judgment was filed in the record by both sides, "indicating that the 
parties were prepared to have the motion decided pursuant to Rule 56." Torrey, 
713 P.2d  at 1164. The affidavit filed by Burlington's attorney also stated, "The 
pleadings attached to this Brief in opposition to Defendant Dunkelberger's 
Motion to Dismiss are true and correct copies of pleadings filed in 
Dunkelberger v. Burlington Northern in Montana (emphasis added)." In this 
regard, we said in Torrey, 713 P.2d at 1164:

When 
a party files an affidavit which a judge considers under a Rule (12)(b)(6) 
motion, this court will treat the motion as a motion for summary judgment * * * 
whether or not the record demonstrates that the parties had other notice of the 
conversion, unless the record otherwise demonstrates unfair or inappropriate 
surprise to either party but normally for the nonmoving party.

[¶15]   We are satisfied that, in filing an 
affidavit in opposition to Dunkelberger's motion to dismiss under WYO. R. CIV. 
P. 12(b)(6), Burlington acceded to the conversion of the motion to dismiss into 
one for summary judgment. See also Mostert; Torrey; Kirby Bldg. Sys., Inc. v. 
Independence Partnership No. One, 634 P.2d 342 (Wyo. 1981); Wyoming Ins. Dep't 
v. Sierra Life Ins. Co., 599 P.2d 1360 (1979). We hold Burlington was afforded 
reasonable notice that Dunkelberger's motion could be considered by the trial 
court as a motion for summary judgment. On the record in this court, Burlington 
was not prejudiced by the trial court's treatment of Dunkelberger's dual motion 
as a motion for summary judgment.

[¶16]   There is no debate in this case 
about any genuine issue of material fact that would preclude summary judgment in 
favor of Dunkelberger. See Hanna v. Cloud 9, Inc., 889 P.2d 529 (Wyo. 1995); 
Wilder v. Cody Chamber of Commerce, 868 P.2d 211 (Wyo. 1994). This case is one 
in which no genuine issue of fact could be material if Dunkelberger is entitled 
to judgment as a matter of law. Daily v. Bone, 906 P.2d 1039 (Wyo. 1995); 
Beaudoin v. Kibbie, 905 P.2d 939 (Wyo. 1995); Martin v. Alley Const., Inc., 904 P.2d 828 (Wyo. 1995). The appropriate rule of law, indeed, is the focus of the 
debate of the parties.

[¶17]   In addressing the entitlement of 
Dunkelberger to a judgment as a matter of law, we begin with the proposition 
that, under the Full Faith and Credit Clause of the Constitution of the United 
States, Article IV, § 1, the final judgments, orders, and decrees pronounced by 
a court of any state are to be fully recognized as legal acts in all other 
states. We have summarized that proposition in this way:

The 
United States Supreme Court has held that full faith and credit "generally 
requires every State to give a judgment at least the res judicata effect which 
the judgment would be accorded in the State which rendered it." A foreign 
judgment will be enforced to its full extent regardless of any errors or 
irregularities it may contain.

The 
full faith and credit clause generally protects the judgment of a court of a 
sister state against collateral attacks, unless proper grounds for the 
collateral attack can be established.

Sandstrom 
v. Sandstrom, 880 P.2d 103, 106 (Wyo. 1994) (quoting with approval from 
Marworth, Inc. v. McGuire, 810 P.2d 653, 655-56 (Colo. 1991)).

[¶18]   The premise of the Montana court's 
judgment was that, in light of Burlington's failure to establish apportionment 
between the 1987 and 1989 injuries to Dunkelberger, there was no evidence that 
would justify the court in offsetting any of the $214,000 paid in the settlement 
against the $450,000 judgment in favor of Dunkelberger, which related to the 
1989 injury only. Burlington has not attempted to demonstrate any invalidity in 
the Montana judgment or made any showing it should be considered void. Since no 
proper grounds exist for collateral attack upon the Montana judgment, we hold it 
is entitled to full faith and credit in Wyoming.

[¶19]   We turn then to the doctrine of res 
judicata and the determination as to whether the claims asserted in Wyoming are 
the same as those decided by the Montana court. In Delgue v. Curutchet, 677 P.2d 208 (Wyo. 1984), we recognized that the doctrine of res judicata 
forecloses litigation of a claim resolved by an earlier judgment. Collateral 
estoppel prevents relitigation of issues actually and necessarily involved in 
the prior action between the same parties. We have defined judicial estoppel, 
the ground relied upon by the district court in this case, in this 
way:

The 
principle, while denominated judicial estoppel, is sometimes referred to as a 
doctrine which estops a party to play fast and loose with the courts or to 
trifle with judicial proceedings. It is an expression of the maxim that one 
cannot blow hot and cold in the same breath. A party will just not be allowed to 
maintain inconsistent positions in judicial proceedings, as here. 31 C.J.S. 
Estoppel § 117, pp. 624-25.

Allen 
v. Allen, 550 P.2d 1137, 1142 (Wyo. 1976).

See 
also Willowbrook Ranch, Inc. v. Nugget Exploration, Inc., 896 P.2d 769 (Wyo. 
1995); Matter of Paternity of SDM, 882 P.2d 1217 (Wyo. 1994); Bredthauer v. TSP, 
864 P.2d 442 (Wyo. 1993). It is clear judicial estoppel does not fit this 
particular case.

[¶20]   We are satisfied, however, that the 
doctrine of res judicata is appropriate to and does dispose of this case. Four 
criteria must be satisfied:

(1) 
The parties were identical; (2) the subject matter was identical; (3) the issues 
were the same and related to the subject matter; and (4) the capacities of the 
persons were identical in reference to both the subject matter and the issues 
between them.

Livingston 
v. Vanderiet, 861 P.2d 549, 552 (Wyo. 1993).

See 
also Osborn v. Painter, 909 P.2d 960 (Wyo. 1996); Claim of Moriarity, 899 P.2d 879 (Wyo. 1995); Matter of Paternity of SDM, 882 P.2d 1217 (Wyo. 1994); Matter 
of Paternity of JRW, 814 P.2d 1256 (Wyo. 1991).

[¶21]   Dunkelberger and Burlington are the 
same parties involved in the Montana litigation. The same claim was asserted in 
the Montana court. Burlington there was asserting a right to the $214,000 as a 
set-off against Dunkelberger's judgment. Here the same right is advanced based 
upon theories of unjust enrichment, breach of contract, and rescission. While 
these theories were not presented as defenses in the original answer of 
Burlington to Dunkelberger's complaint, they were presented at varying stages to 
the Montana court. This was known to the Wyoming court in the course of the 
proceedings prior to the entry of its order granting Dunkelberger's motion to 
dismiss. The record adequately demonstrates the court considered all of that 
background.

[¶22]   Furthermore, Burlington is 
foreclosed from presenting to the Wyoming court any and all theories it could 
have advanced in the Montana litigation. To permit Burlington to do otherwise 
would result in impermissible claim splitting or, as in this case, "defense 
splitting." See Foianini v. Brinton, 855 P.2d 1238 (Wyo. 1993); see also Hansen 
v. Sheridan County Sch. Dist. No. 2, 847 P.2d 1026 (Wyo. 1993). As the United 
States Court of Appeals for the Second Circuit recently stated in articulating 
the reach of the doctrine of res judicata:

However, 
"the bar of res judicata extends not only to questions actually decided, 
but also to all grounds of recovery and defenses which might have been presented 
in the prior litigation between the parties." As a result, "[a] defendant may 
not litigate a defense, which was available but not raised in a prior action, by 
making it the basis of a claim in a subsequent action against the original 
plaintiff."

Pirela 
v. Village of North Aurora, 935 F.2d 909, 911-12 (7th Cir. 1991), cert. denied, 
502 U.S. 983, 112 S. Ct. 587, 116 L. Ed. 2d 612 (1991) (emphasis added, citations 
omitted).

Burlington 
could have presented these theories in the Montana action and is now barred by 
the doctrine of res judicata from doing so in the courts of Wyoming.

[¶23]   There is no question that the right 
of Burlington to the benefit of the $214,000, on any conceivable theory, was the 
same question decided directly by the Montana court, adversely to Burlington. 
Finally, both parties had the same fundamental interest in determining who was 
entitled to the benefit of the $214,000 in the Montana proceeding. Burlington's 
action against Dunkelberger in Wyoming is an attempt to avoid the binding effect 
of the Montana judgment, and that attempt is barred by the doctrine of res 
judicata.

[¶24]   Our analysis does not address 
collateral estoppel or preemption under FELA because we are entitled to affirm 
the district court on any proper ground. Matter of Harrington's Estate, 648 P.2d 556 (Wyo. 1982); Agar v. Kysar, 628 P.2d 1350 (Wyo. 1981); Wightman v. American 
Nat'l Bank of Riverton, 610 P.2d 1001 (Wyo. 1980). We affirm the district court 
based upon the doctrine of res judicata, which flows from our constitutional 
obligation to give effect to the Montana judgment under the Full Faith and 
Credit Clause of the Constitution. The Order Granting Defendant's Motion to 
Dismiss (Filed February 16, 1995) is affirmed.