## United States Court of Appeals FOR THE EIGHTH CIRCUIT

_____________ No. 97-3548MN

_____________
U.S. West Financial Services, Inc., * a Colorado corporation, * * Appellant, * * v. * * Buhler, Inc., a Minnesota corporation; * Buhler International, Ltd., a Swiss * corporation, * * On Appeal from the United Appellees, * States District Court * for the District of

----------------------------- * Minnesota. * U.S. West Financial Services, Inc., * as assignee of Reuter Recycling of * Florida, Inc., a Florida corporation, * * Appellant, * * v. * * Buhler, Inc., a Minnesota corporation; * Buhler Brothers, also known as * Buhler International, Ltd., * * Appellees, *-2-

----------------------------- * * U.S. West Financial Services, Inc., * as assignee of Reuter Recycling of * Florida, Inc., a Florida corporation, * * Appellant, * * v. * * Buhler, Inc., a Minnesota corporation; * Buhler Brothers, also known as * Buhler International, Ltd., * * Appellees. *

___________ Submitted: May 13, 1998 Filed: July 31, 1998

___________ Before RICHARD S. ARNOLD, JOHN R. GIBSON, and FAGG, Circuit Judges.

___________ RICHARD S. ARNOLD, Circuit Judge.

This appeal arises out of the construction of a municipal waste compostin g facil ity in Pembroke Pines, Florida, by Reuter Recycling of Florida. Buhler, Inc. , which is owned by Buhler International, Ltd. (then known as Buhler Brothers, Inc.) , prov idedequipment, design, and engineering services for the facility. U.S. Wes t Financial Services lent Reuter mo ney to finance the facility. Less than a year after the facil ity began operation, it was shut down by the state because of odor problems

. Reuter defaulted on its loan payments to U.S. West and assigne d its legal rights to U.S. West.The Ho n. David S. Doty, United States District Judge for the District o f 1 Minnesota. -3- U.S

. West initiated arbitration against Buhler Inc. and Buhler International o n fraud and negligence claims. It then alleged substantially the same claims in federa l sui ts, against both Buhler parties in its capacity as lender, and against Buhle r Int ernational in its capacity as Reuter’s assignee. The District Court stayed both 1 actions p ending the arbitration award. Ultimately, the arbitration panel awarded n o damages to U.S. West. Buhler Inc. and Buhler International t hen moved to confirm the arbit rators’ decision, and U.S. West moved to vacate or modify it as to Buhle r International. The District Court confirmed the award as to both defendants. I t dismisse dU.S. West’s assignee action on grounds of res judicata. In U.S. West’ s lender action, it granted summary judgment for Buhler Inc. and Buhler International.

On appeal, U.S. West challenges the dismissal of its assignee action agains t Buhler Inte

rnational and the dismissal of its lender action against both Buhler parties. We affirm.

I.
In 1990, Reuter and Buhler Inc. agreed that Buhler would design, engineer, and provide equipment

for the Pembroke Pines facility’s material separation and recovery syst em and composting process. The contract included a requirement tha t controversies arising from it be arbitrated. Later, U.S. West agreed to lend Reute r $48,545,000 to finance the facility. Soon after the facility was completed and began operation in October 1991, it developed odor problems and was cited and fined fo r violations of state odor regulations. U.S. West lent Reuter an additional $4,700,000 to address these problems. The facility had to close in November 1992.Against both parties, U.S. West also alleged breach of a 1986 partnershi p 2 agreement between Reuter and Buhler Inc. This claim is not now before us. -4- Whenthe plant’s odor problems began, Reuter initiated arbitration agains t Encorp, the designer of the underground aeration system, for design and construction defects, and was awarded $2.5 million. In December 1994, Reuter initiated arbitration ag ainst Buhler Inc. and Buhler International. Buhler Inc. asked the District Court t o stop the arbitration, on grounds that the claims should have been addressed in th e Encorp litigation. The Court allowed the arbitration to proceed.
In 1995, Reuter defaul ted on its loan and assigned its legal rights to U.S. West. In January 1996, U.S. West filed its own arbitration complaint against Buhler Inc. and Buhl er International. It sought damages on theories of fraudulent and negligen t misrepresentation, promissory estoppel, neglig ent design and professional malpractice, breach o f contract, and unjust enrichment. As described below, the Buhler partie s repeatedly contested Buhler International’s party status.

Before t he arbitration hearing, U.S. West filed two suits. First, with respect to the inducement of its loan to Reuter, it asserted against both Buhler parties claims of negligent misrepresentation, fraud, and promissory estoppel. Second, as assignee of Reuter’s legal rights, and in response to Buhler International’s resistance to inclusion in the a rbitration, it alleged against Buhler International substantially the same claims that it had raised against both Buhler parties in its arbitration complaint. 2

The a rbitration hearing was held in November 1996 and lasted 17 days. At its conclusion, the panel decided: “Claimant is awarded no damages from Respondents
on any of its c laims.” Appellant’s Add. at 26. The caption of the award notic e included both Buhler parties.-5-

The Buhlerparties moved for summary judgment in both federal actions, o n g rounds of res judicata and collateral estoppel. They also sought confirmation of the panel’s decision in a state court, p ursuant to 9 U.S.C. § 9 (1994) and Minn. Stat. Ann. § 572.18 (West 1988). U.S. West removed the confirmation action to federal court
an dsought to vacate or modify the award, as applied to Buhler International only , pursuant to 9 U.S.C. §§ 10 and 11 (1994). The District Court confirmed the award as to both Buhler parties. In the assignee action, it granted summary judgment in favor of Buh ler International, on grounds of res judicata. In the lender action, it grante d summary judgment in favor of both Buhler parties, on the ground that there were n o material facts in dispute.

II.

U.S. West challenges the District Court’s application of res judicata to it s assignee action against Buhler International. It argues that Buhler International was not a party and, therefore, tha

t the arbitration award was not a final decision on the merits of its claims against Buhler International. We affirm. We assess the preclusive effect of the arbitration award on U.S. West’s assignee action under Minnesota law. See Mandich v. Watters , 970 F.2d 462, 465 (8th Cir

. 1992). Under Minnesota law, “ ‘[a] judgment on the mer its constitutes an absolute bar to a second suit for the same cause of action, and is conclusive between parties an d privies . . ..’ ” Dorso Trailer Sales, Inc. v. American Body & Trai ler , 482 N.W.2d 771, 774 (Minn. 1992) (quoting Mattsen v. Packman , 358 N.W.2d 48, 49 (Minn. 1984 ) (citations om

itted)). The doctrine “should not be rigidly applied; rather, it focuses on whether its application results in an injustice against the party to b e precluded.” Sondel v. Northwest Airlines , 56 F.3d 934, 938 (8th Cir. 1995) (citing Houlihan v. Fimon , 454 N.W.2d 633, 635 (Minn. App. 1990)). A final arbitration award, unless it is set aside for a legally sufficient reason, has the same preclusive effect as a judgment.-6-

The procedural history of the arbitration supports the Di strict Court’s finding that Buhler International was a party. U.S. West named Buhler International as a respondent in its arbitration complaint and attempted to serv e the complaint on it. U.S. West never ask ed to dismiss Buhler International formally, and in fact opposed Buhle r International’s counsel’s proposal to do so. As a formal ma tter, then, from the time that Buhler International was named as an arbitration party to the time when it was included in the arbitration award’s caption, its party status never changed. We recognize that the Buhler parties resisted the inclusion of B uhler International as a party to the arbitrati on. Buhler Inc.’s response to the arbitration complaint denied that Buhler International wa s a proper party to the arbitration, and Buhler International did not serve an answer itself. In February 1996, counsel for the Buhler parties moved the arbitration panel to dismiss Buhl er International, though the panel did not do so. In a May 1 996 letter, their counsel reiterated that Buhler International was not a party to the arbitration. When U.S. West brought its lender action against t he Buhler parties, the Buhl er parties did not argue that the claims against Buhler International had to b e arbitrated, as they did regarding the claims against Buhler Inc.
However, we do not believe that these actions amounted to, or resulted in, the de facto dismissal of Buhler International from the arb itration proceedings. U.S. West still obtained extensive information from Buhler International, which the arbitration pane l ordered to participate in discovery despite its objections. Buhler International produced approximately fifteen boxes of documents. In fact, the Buhler p arties’ counsel informed the arbitration panel that he had provided to U.S. West “all nonprivileged documents fro m both Buhler Inc. and Buhler International related to the Pembroke Pine s Composting Facility . . ..” Appellant’s App. at 833. Additionally, U.S. West deposed Herman Hof

er, the Buhler parties’ expert in odor and “the Buhler Internationa l employee most directly involved in the de sign of the Facility . . ..” Appellant’s App. at 162 (aff. of Buhler counsel). Though, as U.S. West asserts, these-7-

act s do not themselves render Buhler International a party, they do indicate that U.S

. West did not lack access to information pertinent to Buhler International’s liability.

Furt her, Buhler International’s conduct and knowledge appear to have figure d prominen tly in the arbitration hearing. It is true that, in its opening statement at th e hearing, U.S. West counsel said, “we are not asking this panel for a determination o f either liability or the amount of damages with respect to Buhler International LTD i n th is case.” Appellant’s App. at 193. However, this statement was immediatel y followed by a disclaimer: “Having said that, I will tell the panel that it’s going to b e diff icult in this case to present the evidence without presenting evidence of th e invol vement

of Buhler International LTD. I think the panel is going to hear a lot o f evidence about where the original design for this composting system came from, who was involved and the people from [Buhler International]. So I believe there are some common factual backgrounds . . .. ” Id.

The record indicates that U.S. West did indeed present, and the arbitration panel considered, substantial evidence relevant to Buhler International’s liab ility. U.S. West’s arbitration brief alleged

odor problems at “the 80 - 100 facilities [Buhler International] had designed and engineered.” Appellant’s A pp. at 215. Its opening statement alleged that Reuter had been lied to about odor prob lems at a Buhler plant in Germany and that “major odor problems” at other foreign plants had been concealed. Appellant’s App. at 194 -95. U.S. West’s assignee action would have depended on proof of these same odor problems. The overlap of “common factual backgrounds” is especially significant in light of the fact that the alleged odor problems were in plants operated by Buhle r International, and not its U.S. subsidiary Buhler Inc. As Buhler coun sel explained in the memorand um

supporting the Buhler parties’ application to confirm the award, “onl y BuhlerI nternational supplied composting equipment to facilities outside the Unite d States” and “only Buhler International had supplied equipment to approximately 80

- 100 compos ting facilities.” Appellant’s App. at 146, n.2. U.S. West does not den y these assertions.-8-

U.S. West argues that, in the arbitration hearing, “U S WEST tried to show that BuhlerUSA asked others -- including Buhler Int’l., its parent corporation -- how t o build and design such a plant and what problems had been previously faced and dealt with. This is entirely different than stating U S WEST offered the testimony of Buhler Int’l’s employee as evidence that Buhler Int’l made false or misleading statements. ” App ellant’s Reply Br. at 8. However, U.S. West’s opening statement alleged tha t Her man Hofer, the Buhler parties’ odor expert, had concealed evidence of odo r problems during a test run of the Pemb roke Pines facility. Appellant’s App. at 194-95. Mr. Hofer was a Buhler Internat ional employee. Additionally, in U.S. West’s answers to Buhler Inc.’s arbitration interrogatories, it alleged misrepresentations by other Buhler Interna tional employees. Appellant’s App. at 200. U.S. West does not specif y instances of alleged fraud, beyond those already explored in arbitration, that it would seek to prove in further litigation.

Becau se Buhler International technically remained a party throughout th e arbitra tion, and because U.S. West presented substantial evidence relevant to Buhle r Internat ional’s liability during the hearing, the District Court’s finding that Buhle r Int ernational had been a party was not error. We believe that the arbitration pane l considered U.S. West’s claims against Buhler International o n their merits fully, and we are not convinced that its use of the plural “respondents” in the award was inadvertent.

We find U.S. West’s other arguments against res judicata unpersuasive. First , we r eject its challenge that the award is ambiguous and should be remanded fo r clarifica tion, because it did not raise this issue before the District Court. Further, i t contends that Buhler International cannot benefit from the arbitration award because it did not sign the arbitrati on agreement, and because it was estopped by its resistance to inclusion in the arbitration. Noting the Distric t Court’s characterization of the litigation process on both sides -- “nobody is being real clear about what they want toThe mot ion of U.S. West to supplement the record is granted, but th e 3 supplemental materials presented do not change our view as to the conclusiveness of the arbitration award. -9- do because I think they also want to maintai n the argument the other way,” Appellant’s App. at 512-13 -- we hold that these arguments are belied by U.S. West’s own course of conduct in these proceedings. See Twomey v. Durkee , 291 N. W.2d 696, 699 (Minn. 1980) (“Pl aintiffs by acquiescing in and participating in the proceeding in effec t represented . . . that thedispute was arbitrable, and that the parties would be bound by the decision and award . . ..”).

We therefor e hold that the District Court’s application of res judicata did no t result in “injustice.” Sondel , 56 F.3d at 938. Rather, it properly acted “to reliev e parties of the burden of relitigating issues already determined in a prior action . . .. ” Buetz v. A.O. Smith Harvestore Products, Inc. , 431 N.W.2d 528, 531 (Minn. 1988). 3

III.

We also affirm the District Court’s grant of summary judgment in U.S. West’s lender action. For evidence of a genu ine issue of material fact, U.S. West relied on the deposition of Joseph Blankenship, U.S. West’s project manager and loan officer:
Q. In any event, did Buhler ever misrepresent anyt hing to you or make any fraudulent statements to U S WEST that you ar e aware of?
A. No , but if there were problems going on in some of th e Europea n facilities that Buhler was aware of, they didn’ t bring the m up either. What represents misrepresentation, is it omission?-10- Q. I will ask you about the omission. Did th e Buhler folks ever, you think, fail to tell yo u so mething, did you ever ask them about an y prob lems with any of their facilities, did the y ever lie to you or misrepresent? Maybe you r response was if there was a problem out ther e and they didn’t tell you about it, that would be an omission that you might think of?

* * *
A. I do not believe and I have never felt that Buhler peopl e ei ther lied or in the same term [sic] purposefull y misrepresented. Q. One o f the things you just mentioned is you think if the y knew about so me problems in terms of odor, that if they are guilty of anything, they are guilty of the sin of omission, i f you will, for failing to raise the issue?
A. I think they probably knew more than they were telling. Appellant’s App. at 406-07. Blankenship’s vague statements do not create a genuine iss ue of material fact as to the Buhler parties’ knowledge and misstatement of odo r problems, key elements of U.S. West’s fraud claims. Summ ary judgment was therefore proper. We also affirm the District Court’s denial of U.S. West’s po st-judgment motions. U.S. We st first filed a motion to reconsider, along with additional affidavits fro m Blankenship and another employee, w hich attested to fraudulent conduct by the Buhler parti es. The District Court denied this motion: “[n]otwithstanding the procedurall y defective nature of plaintiff’s motion [failure to compl y with the procedural requirement of obta ining “express permission” from the court to file such a motion, Local Rul e 7.1(g)], t he court has reviewed plaintiff’s motion and determines that it has failed t o make the requisite showing of compelling circumstances.” Appellant’s App. at 685-11-

(Order at 2 (Sept. 16, 1997)). U.S. West then resubmitted its motion as a Rule 59(e) moti onto alter or amend the judgment. The Court summarily denied this secon d motion.

U.S. West admits that the affidavits it wished to submit were available to i t before the entry of judgment. Appellant’s Reply Br. at 21. It was not an abuse of discretion for the Court to deny U.S. West’s Rule 59(e) motion “to introduce new evidence that could have been introduced during pendency of the summary judgment motion . . .. ” Global Network Techs., Inc. v. Regional Airport Auth. , 122 F.3d 661, 665-66 (8th Cir. 1997) (citation omitted). We therefore affirm the judgment of the District Court. A true copy.

Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.