## United States Court of Appeals

FOR THE EIGHTH CIRCUIT

No. 95-3852/3884SDFS Clifton Berglee, * * Appellant/Cross-Appelle, * * Appeal from the United State s vs. * District Court for the First National Bank, Bookings, * District of South Dakota South Dakota, * * Appellee/Cross-Appellant. *

Appellant/cross-appellee Berglee’s petition for panel rehearing is granted, and the clerk is directed to vacate th e court’s June 11, 1998 opinion and judgment. The clerk is directed to file the attached revised opinion and to issue a new judg ment in accordance with the revised opinion. October 7, 1998

Order Entered at the Direction of the Court: Clerk, U.S. Court of Appeals, Eighth Circuit

## United States Court of Appeals FOR THE EIGHTH CIRCUIT

_______________ Nos. 95-3852/3884

_______________ Clifton Berglee, * * Appellant/Cross-Appellee, * * Appeals from the United States
v. * District Court for the * District of South Dakota. First National Bank, Brookings, * South Dakota, * * Appellee/Cross-Appellant. *

___________ Submitted: April 16, 1998 Filed: October 7, 1998

___________ Before HANSEN, MORRIS SHEPPARD ARNOLD, and MURPHY, Circuit Judges.

___________ PER CURIAM.
Cl iftonBerglee appeals from the district court & s order granting First Nationa l Bank (Bank ) summary judgment on four of his claims for relief against the Ban k because of res judicata. The B ank cross-appeals from the grant of summary judgment for Berglee on his claim for coercive relief. Berglee further appeals from the court & s calculat ionof prejudgment interest awarded on his coercive-relief claim, and both parties appeal the denial of their postjudgment motions. We reverse and remand.
This case has a long history and is a somewhat tangled skein. On October 4,-3-

1989, the Ba

nk paid $252,876.71 out of Berglee & s account--a line of credit supported by a promisso ry note--to a cattle feeder named Woehlhaff without Berglee & s personal authoriz ation. In 1990, Berglee filed an action in Montana state court seeking a de claratory judgment that he did not owe the Bank for these unauthorize d disbursements. The Bank removed the suit to the Montana federal district court and filed a setoff and an unjust enrichment counterclai m; the Bank later dismissed its setoff
cou nterclaim, and following a bench trial the district court--applying Montana law-

- dismissedthe unjust enrichment counterclaim, ruled the disbursements wer e
una uthorized, and awarded Berglee monetary damages in the amount of th e disbursements. The Ninth Circuit, h owever, vacated the judgment; remanded the case for applic ation of South Dakota law; and ordered the district court to enter only a declaratory judgment, because Berglee did not sue for a money judgment, and “did not offer evidence upon which s uch a judgment could properly be based.” See Berglee v. Fi rst Nat & l Bank , No. 92-35242, 1993 WL 61388, at *3 (9th Cir. Mar. 8, 1993 ) (unpublished opinion) ( Berglee I ).

On r emand, Berglee filed an amended complaint alleging new claims fo r monetary relief, which were discovered at trial. In February 1994, the court granted the Bank & s motion for summa ry judgment on these new claims, stating the court could not deviate from the Ninth Circuit & s instructions to enter a declaratory judgment, bu t noting “this opinion does not address Berglee & s right to assert theseclaims in a separate action filed in the appropriate jurisdiction. Rather, this order solely addresses Berglee & s rightto ass ert new claims for monetary relief in what was charged, tried, adjudged , appealed an d finally remanded as a declaratory judgment.” J.A. at 85. In September 1994, t he Montana district court reformulated its prior judgment as a declarator y judgment for Berglee, dismissing the Bank & s unjus t enrichment counterclaim due to the Bank & s wrongful conduct, unclean hands, and lack of good faith; and declaring th e Bank was not entitled to a setoff against the un authorized disbursements to Woehlhaff. In Fe bruary 1995, the court denied Berglee & s 22 U.S.C. § 2202 motion for coerciv e relief in the amount of the declaratory judgment, relying on the Ninth Circuit & s prior-4-

mandate not to award monetary damages. Neither Berglee nor the Bank appealed.

Also in December 1994, Berglee filed this present action for coercive relief in Montana state court. The case was removed to the Montana federal district court on diversity grounds and transf erred to the United States District Court for the District of South Dakota. Berglee asserted four “tort claims,” and sought a coercive judgment to enforce the Mon tana district court & s declaratory judgment. The South Dakota district court gr anted the Bank summary judgment on Berglee & s tort claims, summaril y concluding Berglee was precluded by res judicata from raising claims he had failed to raise in the prior declaratory judgment litigation. After determining the Montan a district court had not ruled on the merits of Berglee & s coercive-relief claim, the court gr anted Berglee summary judgment on that claim and awarded Berglee prejudgmen t interest. The court subsequently denied both the Bank's and Berglee & s postjudgment motions pertaining to the calculation of the award of coercive relief and prejudgment interest. Both Berglee and the Bank appeal.
We review a gran t of summary judgment de novo, see Madewell v. Downs , 68 F.3d 1030, 1036 (8th Cir. 1995), and apply South Dakota & s preclusion rules t o det ermine the preclusive effect of the Montana district court & s prior judgment, se e F o llette v. Wal-Mart Stores, Inc. , 41 F.3d 1234, 1237 (8th Cir. 1994), reh & g , 47 F.3d 311 (8th Cir.), cert. denied , 516 U.S. 814 (1995).

We con clude res judicata does not bar Berglee from litigating his tort claims , because in th e prior dismissal of these claims, the United States District Court for the District o f Montana explicitly stated that the court was not addressing Berglee & s right to bring these claims in a separate action. Such a dismissal is not a decision on th e merits. See Allan v. Sheesley , 447 N.W.2d 361, 363 (S.D. 1989) (prior actio n
accor ded res judicata effect only if judgment on merits rendered). Furthermore, th e Montana district court, relying on the Ninth Circuit's mandate, specifically precluded Berglee from bringing these claims--which were discovered at the trial of the-5-

declar atory judgment action--as part of that declaratory judgment action. Althoug h Berglee was permitted to state his new additional tort claims i n the form of an amended complaint in the declaratory judgment case after the Ninth Circuit's remand, th e Montana district court made it clear that he was not given leave to expand the issues and strictly enforced the Ninth Circuit's remand. See Mem. and Order (Feb. 3, 1994), J.A. at 84. Consequently, t he tort claims dismissed by the South Dakota district court could not have been brought in the prior declaratory judgment action.

We f urther conclude that Berglee is not entitled to summary judgment on hi s claim for coercive relief. As the district court recognize d, South Dakota law seemingly permits Berglee to pursue further, coercive relief to enforce the original declarator y judgment. See Carver v. Heikkila , 465 N.W.2d 183, 186 (S.D. 1991) (plaintiff wh o wi ns declaratory relief may pursue further coercive relief in action for same clai m underl ying declaratory judgment, even if plaintiff could have requested such relie f initially). However, no money judgment is supported by the evidence presented. The Bank made unauthorized dis bursements "to Woehlhaff in the amount of $252,876.71" ( Berglee I , 1993 WL 61388 at *1) and was instructed by the court t hat Berglee "did not
o w e this money to the Bank on the note." Id. at *3. To force the bank both to credit Berglee 's debt for this amount and to pay him that same amount would constitute a double recovery for Berglee.

On the othe r hand, there is no evidence in the record before us that the Ban k actually did credit Berglee with $252,876.71, as of October 4, 1989, the date of th e unauth orized disbursements, as mandated by the Ninth Circuit and the district cour t of Montana. In response to Berglee's petition for rehearing of our original pane l opinion, the Bank

asserts that we should infer it has complied with the Ninth Circuit's mandate from the fact that it has not attempted to collect that debt from Berglee without showing us in a simple, straightforward way that it has done so. There are many other in ferences which could be drawn from the asserted decision not to pursue the debt , many of which do not tend to prove the Bank's compliance. One such inference is that-6-

the Bank sold Bergle e's cattle, applied the proceeds of the sale against his promissory note, but n ever issued him credit for the $252,876.71. If one infers this, the Ban k would n ot initiate collection action because it has retained a greater portion of th e proceeds from the cattle sale than that to which it was entitled. In such a case, it would not be eager to initiate a collection proceeding which might clarify the accounting.

We decline t o draw this or any other inference. We have remanded for tria l Berglee's c laim that the Bank converted his cattle, along with the rest of his claim s against the Bank. Berglee alleges that the Bank sold nearly $1 .2 million worth of cattle and applied the proceeds against a debt of a considerab ly smaller amount. If he proves this, he may b e entitled to a recovery. If his proof fails, he may not recover. Bu t whatever else he may show regarding the value of cattle sold or the amount he owed the Bank, it is long since settled that his debt to the Bank does not include th e $252,876.71 disbursed on October 4, 1989, or any interest assessed on that amount

. ( See, e.g., Mont. Dist. Ct. J. (Sept. 20, 1994); J.A. at 88.)
The district court, in awarding Berglee his requested coercive relief, also granted him pr ejudgment interest from the date of the Montana district court judgment. Ou r resolution of this case precludes an award of prejudgment interest at this stage of the litigation. None theless, we make clear that, as a result of the previous proceedings in the Ninth Circuit, the Bank must credit Berglee's account with $252,876.71, and that credit must be given as of October 4, 198 9, the date of the unauthorized disbursement. Berglee did not receive a money judgment from the Montana district court, an d therefore h is relief cannot be increased by an amount of interest, as though he ha d actually p revailed on his claim at an earlier date. But, by entering the credit to which he is entitl ed as of the very date on which the Bank made its unauthorize d disbursements, Berglee is absolved of responsibility for paying any interest on th e unauthorized $252,87 6.71 from October 4, 1989, forward. However, as the litigation over hi s remaining claims advances, the correct assessment of the parties' obligations will undoubtedly hinge on the effective date of that credit.-7-

Since Be rglee is not entitled to coercive relief enforcing the judgment of th e Montana district court, the parties' appeals from the denials of their postjudgmen t motions are dismissed as moot.
Accordingly, we reverse the judgment of the district court awarding coerciv e relief to Berglee and dismissing Berglee's tort claims. We remand for furthe r proceedings consistent with this opinion.
A true copy.

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