* This order and judgment is not binding precedent, e xcept under the

doctrines of law of the case, res judicata, and col lateral estoppel. The court generally disfavors the citation of orders and judg ment; nevertheless, an order and judgment may be cited under the terms and condition s of the 10 thCir. R. 36.3. 

## F I L E D United States Court of Appeals Tenth Circuit 

### FEB 9 2005 

### PATRICK FISHER Clerk UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

JOE N. STEWART; OZZIE REE STEWART, Plaintiffs,

v. EARLE M. JORGENSEN CORPORATION; LARRY R. PITTMAN,

Defendants-Cross-Claimants - Appellees,

v. THE KANSAS CITY SOUTHERN RAILWAY COMPANY, Defendant Cross-Defendant - Appellant. No. 03-7133 (E.D. Oklahoma) (D.C. No. CIV-00-448-P)

ORDER AND JUDGMENT *** The Honorable Ted Stewart, District Judge, Districtof Utah, sitting

by designation. - 2 - Before EBEL , O’BRIEN , Circuit Judges, and STEWART , District Judge. **

SUMMARY The Kansas City Southern Railway Company (“the Rail road”) appeals a ruling from the Eastern District of Oklahoma. One of the Railroad’s trains collided with a tractor-trailer rig driven by Larry P. Pittman (“Pittman”) and owned by the Earle M. Jorgenson Corporation (“EMJ”) (collectively “the EMJ Parties”). Jon Stewart (“Stewart”) was a conductoron the train and was injured in the collision. He brought claims against the EM J Parties and against the Railroad, his employer. He settled his claims firs t with the Railroad and then with the EMJ Parties. After settling with Stewart, the Railroad amended its complaint and sought reimbursement of the funds it expended in settlement from the EMJ Parties under the theory of indemnity or, i n the alternative, contribution. The district court granted declaratory judgment in favor of the EMJ Parties pursuant to Title 28 U.S.C. § 2201(a). Applying Arkansas law, the district court found that the Railroad and the EMJ Parties were jo int tortfeasors. On this basis, the district court found that indemnity did not app ly. Because the Railroad had1 The EMJ Parties argue that the Railroad’s appeal to this court was

not timely because the clock for the appeal began t o run once the district court made its declaratory judgment. However, it was notuntil the district court disposed of the remaining cross-claims that its jud gment became final and the appeal period began to run. Albright v. UNUM Life Ins. Co. of Am. , 59 F.3d 1089, 1092 (10th Cir. 1995). Therefore, the appeal was timely.

Additionally, while the EMJ Parties ask us to affir m the district court’s decision based on Arkansas law, they make an argument in the alternative, that California indemnity law should apply rather t han that of Arkansas. However, because we find that the EMJ Parties have no obligation to indemnify the Railroad under Arkansas law, we do not reach th is issue. - 3 - settled with Stewart prior to the EMJ Parties doing the same, the district court also found that Arkansas law barred the Railroad’s claim for contribution. On appeal, the Railroad brings two challenges to th e decisions of the district court. The Railroad avers that the distri ct court abused its discretion when it considered the EMJ Parties’ motion for decl aratory judgment. It also argues that the court erred in its determination th at the Railroad and the EMJ Parties were joint tortfeasors, thus barring its cl aims for contribution and indemnity. 1
We AFFIRM.
BACKGROUND On December 5, 1997, a tractor-trailer rig, owned b y EMJ and driven by Pittman, collided with one of the Railroad’s trains at a railroad crossing in Mena, Arkansas. The train was en route to Oklahoma from Louisiana. Pittman had driven through a railroad crossing and into the pat h of the train. Stewart, the2 The parties use the terms “contribution” and “subro gation”

interchangeably. However, these doctrines are dist inct. Under Arkansas law, the law that governs this case, “subrogation is an equi table remedy that rests upon principles of unjust enrichment and attempts to acc omplish complete and perfect justice among the parties.” St. Paul Fire & Marine Ins. Co. v. Murray Guard, Inc., 37 S.W.3d 180, 183 (Ark. 2001) (citations omitted). [T]he elements of subrogation are as follows: 1) a party pays in full a debt or an obligation of another or removes an encu mbrance of another, 2) for which the other is primarily liable , 3) although the party is not technically bound to do so, 4) in orde r to protect his own secondary rights, to fulfill a contractual obligati on, or to comply with the request of the original debtor, 5) without acti ng as a volunteer or an intermeddler. Id . (citations omitted). Based on undisputed facts, the Railroad cannot meet the fourth and fifth prongs of this test: the Railroad entered into settlement as a volunteer and not to protect its secondary rights, to fulfill a contract, or to comply (continued...) - 4 - train’s conductor, was injured in the collision. S tewart sued the Railroad under the Federal Employer Liability Act (“FELA”), 45 U.S .C. § 51 et seq. He based his FELA claim on the allegation that the Railroad was negligent in failing to maintain a safe working environment. Stewart also sued the EMJ Parties for negligence under Arkansas state law. The Railroad and EMJ Parties denied liability and, additionally, brought cross claims a gainst each other for their respective property damage resulting from the colli sion. The Railroad settled with Stewart. The Railroad th en amended its crosscomplaint to demand that the EMJ Parties compensate it for the expenditures it made in settling with Stewart based on theories of indemnity or, in the alternative, contribution. 22 (...continued)

the EMJ Parties’ request. Subrogation is inapplicable to this case. In formulating our decision, we rely on the doctrine of contributi on, as did the district court. - 5 - Subsequently, the EMJ Parties also settled with Ste wart. The EMJ Parties’ insurance policy, held by Reliance National Indemni ty Company (“Reliance”), covered a portion of their settlement with Stewart. The EMJ Parties paid Stewart the uncovered share of the settlement. Apparently, however, Reliance became insolvent before paying Stewart. The California In surance Guaranty Association (“CIGA”), an entity created by the State of Califor nia to pay the claims against insolvent insurers, paid Reliance’s portion of the settlement to Stewart. After making this payment, the CIGA had $325,000 of cover age that the EMJ Parties had not used; however, the CIGA apparently refused to cover the Railroad’s indemnity and contribution claims. The EMJ Parties later sought declaratory relief und er the Declaratory Judgment Act, 28 U.S.C. § 2201(a). The EMJ Parties argued that the district court should resolve that the Railroad could not se ek indemnity from them. The EMJ Parties’ rationale was that since the EMJ Parti es paid the amount it owed under the Reliance insurance contract, that the Rai lroad must then look to CIGA, the entity standing in place of the now defunct Rel iance, to pay any indemnity claim. The EMJ Parties noted that California law p rohibited CIGA from paying any indemnity claim against Reliance. The EMJ Part ies reasoned that this- 6 -

prohibition, therefore, shielded the EMJ Parties fr om the Railroad’s indemnity claim. The Railroad contended that declaratory judgment wa s improper and that Arkansas law of indemnity allowed the Railroad to p ursue its claims against the EMJ Parties. The Railroad argued that despite the CIGA’s coverage of a portion of the EMJ Parties’ settlement, the California law relied upon by the EMJ Parties was inapplicable to its claims for indemnification in the present action. On October 23, 2002, the district court entered a d eclaratory judgment in favor of the EMJ Parties. It did so, however, on g rounds other than those the EMJ Parties requested. The court determined that b ecause the accident arose in Arkansas and because the parties agreed that Arkans as law controlled other issues in the case, Arkansas law controlled the issue of i ndemnity as well. It found that the Railroad and the EMJ Parties were joint tortfea sors, as defined by the Arkansas Uniform Contribution Among Tortfeasors Act , currently codified at Ark. Code Ann. § 16-61-201 et seq . Because the parties were joint tortfeasors, the district court determined that the law of indem nity was inapplicable. Additionally, it found that Arkansas law prohibitedone joint tortfeasor from recovering contribution from another joint tortfeas or if a settlement terminated the former tortfeasor’s liability but not that of t he latter, which is what it found happened when the Railroad settled with Stewart pri or to the EMJ Parties doing- 7 -

the same. As a result, the court granted declarato ry relief and found that the Railroad was not entitled to recover on its indemni fication or contribution claims. The parties continued to pursue their remaining cro ss-claims for property damage. On November 14, 2002, however, the distric t court determined that it did not have jurisdiction over the parties’ remaini ng property damage claims because the damage asserted for the remaining claim s fell below the amount required for the court to invoke diversity jurisdic tion. The court, therefore, involuntarily dismissed the remaining claims, witho ut prejudice. The Railroad brings two challenges to the decisions of the district court. First, the Railroad avers that the district court a bused its discretion when it considered the EMJ Parties’ motion for declaratory judgment. Second, the Railroad argues that the court erred in its determi nation that the Railroad and the EMJ Parties acted as joint tortfeasors and, thus, t hat its contribution and indemnity claims could not survive. We AFFIRM the district court.
DISCUSSION A. Discretion to Consider the EMJ Parties’ Motion for Declaratory Relief The Railroad argues that the district court erred i n considering the EMJ Parties’ motion for declaratory relief. The Declar atory Judgment Act provides federal courts the discretion to grant declaratory relief. Kunkel v. Continental- 8 -

Cas. Co. , 866 F.2d 1269, 1273 (10th Cir. 1989). Provided that the challenge to declaratory relief is not on a jurisdictional basis , “[w]hether to entertain a justiciable declaratory judgment action is a mattercommitted to the sound discretion of the trial court.” Id . citing Alabama State Fed’n of Labor v. McAdory , 325 U.S. 450, 462 (1945). In previous cases, this circuit has provided specif ic guidance regarding how district courts should use the discretion provided by the Declaratory Judgment Act. In considering whether to enter a declaratory judgment, a district court should weigh the following factors: (1) whether a declaratory action would settle the c ontroversy; (2) whether it would serve a useful purpose in clarifyi ng the legal relations at issue; (3) whether the declaratory rem edy is being used merely for the purpose of “procedural fencing” or “ to provide an arena for a race to res judicata”; (4) whether use of a declaratory action would increase friction between our federal and state courts and improperly encroach upon state jurisdiction; an d (5) whether there is an alternative remedy which is better or m ore effective.

State Farm Fire & Cas. Co. v. Mhoon , 31 F.3d 979, 983 (10th Cir. 1994) citing Allstate Ins. Co. v. Green , 825 F.2d 1061, 1063 (6th Cir. 1987). While the d istrict- 9 -

court must consider these factors, we review the di strict court’s review of these factors only for abuse of discretion. See id

. The district court considered these factors. In we ighing them, it found that the most important of these were whether declaratory relief would settle the controversy and clarify the legal relations at issu e. It found that declaratory judgment would resolve and clarify important issues before the district court. On this basis, it determined that it should use its di scretion and consider the EMJ Parties’ motion for declaratory relief. However, it appears that the Railroad’s argument is not that the district court failed to weigh these factors or somehow erre d in doing so, but rather that it based its declaratory judgment on what the Railroad alleges is a matter of disputed fact. Despite the Railroad’s argument to the contrary, its objection is based on the district court’s ruling rather than it s mere consideration of the EMJ Parties’ motion for declaratory relief. We find th e district court properly considered the relevant factors and did not err in deciding to consider the EMJ Parties’ motion for declaratory relief. B. Dispute Regarding Whether the Railroad Was a Jo int Tortfeasor When considering a motion seeking declaratory relie f at the summary judgment stage, which was the case here, a districtcourt’s role is not to make3 The district court was not explicit as to whether i ts judgment was

based on the facts alleged in the Railroad’s compla int or on undisputed facts. However, because it is clear that the district court relied on facts outside of the Railroad’s amended complaint, the district court ne cessarily relied on undisputed facts or, as the Railroad alleges, erred in relying on disputed allegations. - 10 - factual findings but to determine whether any mater ial factual dispute exists. 3 “We review the district court’s grant of summary ju dgment de novo , applying the same legal standard used by the district court.” Simms v. Oklahoma ex rel. Dep’t of Mental Health & Substance Abuse Servs. , 165 F.3d 1321, 1326 (10th Cir. 1999). We must determine whether in viewing the re cord in the light most favorable to the non-moving party, there exists anygenuine issue of material fact. Id. ; Wolf v. Prudential Ins. Co. of America , 50 F.3d 793, 796 (10th Cir. 1995). The Railroad argues that it was inappropriate for t he district court to rely on the finding that the Railroad and the EMJ Partie s were joint tortfeasors. The Uniform Contribution Among Tortfeasors Act defines “joint tortfeasors” to mean “two (2) or more persons jointly or severally liabl e in tort for the same injury to person or property, whether or not judgment has bee n recovered against all or some of them.” Ark. Stat. Ann. § 16-61-201. The nu b of the Railroad’s argument is that the district court’s factual finding that t he Railroad was jointly negligent with the EMJ Parties is disputed because the Railro ad contends it was free of any negligence. On this basis, it asserts that the res olution of this disputed claim should have properly been reserved for a finder of fact.- 11 -

In weighing the Railroad’s argument, we begin with the proposition that only facts necessarily relied upon in making a judg ment as a matter of law need to be undisputed. Reed v. Bennett , 312 F.3d 1190, 1195 (10th Cir. 2002). Therefore, we turn to the question of whether the f inding that the Railroad was a joint tortfeasor is material to the determination t hat the Railroad was barred from seeking indemnity and contribution from the EMJ Parties. Under Arkansas law, indemnity and contribution are mutually exclusive remedies. Contribution acts to equitably distribut e the loss among joint tortfeasors according to their relative degree of f ault. Boatmen’s Nat. Bank of Arkansas v. Cole, 947 S.W.2d 362, 366 (Ark. 1997). In the absence of contractual provisions, indemnity is an equitable r emedy that shifts the entire loss from one party to a tortfeasor who should rightfull y bear it in its entirety. Mosley Machinery Co., Inc. v. Gray Supply Co. , 833 S.W.2d 772, 775 (Ark. 1992).

1. Contribution Under Arkansas law, contribution in tort is depende nt on a finding that the party seeking contribution and the party from which contribution is sought are joint tortfeasors. Scalf v. Payne , 583 S.W.2d 51, 53 (Ark. 1979). If parties do not have a potential liability as joint tortfeasors , no right of contribution exists. Id . Additionally, “[a] joint tortfeasor who enters i nto a settlement with [an]- 12 -

injured person is not entitled to recover contribut ion from another joint tortfeasor whose liability to the injured person is not exting uished by the settlement.” Ark. Code Ann. § 16-61-202(3). The district court found that the Railroad’s right to contribution was extinguished because it settled with Stewart prior to Stewart settling with the EMJ Parties. The Railroad does not dispute this. Neve rtheless, it asserts that it was not a joint tortfeasor. However, if the Railroad w as not a joint tortfeasor, as it contends, it would have no right to contribution un der Arkansas law. The only hope that the Railroad had to recover under a theory of contribution hinges on the determination that it was a joint tortfeasor. Thus , the district court did not need to rely on the determination that the Railroad was a joint tortfeasor in finding that it had no right to contribution: if the Railroad wa s not a joint tortfeasor, it had no right to seek contribution. Regardless of whether the Railroad was a joint tortfeasor, judgment against the Railroad’s contrib ution claim was proper.

2. Indemnity The Railroad argues that the district court erred i n looking to contribution law rather than to that of indemnity. The signific ance of the Railroad’s argument is that unlike contribution law, under indemnity law, there is no procedural requirement that would bar the Railroad from pursui ng its claim simply because it settled with Stewart prior to the EMJ Parties doing the same.- 13 -

Under Arkansas law, “the right to indemnity, where one of the parties is not liable to the injured party for a joint wrong, mustbe based upon a relationship other than that of joint tortfeasors.” Larson Mach., Inc. v. Wallace , 600 S.W.2d 1, 13 (Ark. 1980); Welter v. Curry, 539 S.W.2d 264, 272 (Ark. 1976); Jack Morgan Construction Co. v. Larkan , 496 S.W.2d 431 (Ark. 1973). However, only a person who was compelled to pay another party due to a legal obligation is eligible to seek indemnification. Jean-Pierre v. Plantation Homes of Crittenden County, Inc., 89 S.W.3d 337, 341 (Ark. 2002). Assuming that the Railroad sought indemnification f rom the EMJ Parties under the theory that the Railroad and the EMJ Part ies were joint tortfeasors, Arkansas law would not permit it. As discussed abo ve, the relationship between the Railroad and the EMJ Parties must be based on arelationship other than that of joint tortfeasors to allow the Railroad to seek indemnification. Larson Mach.,
Inc. , supra ; Welter , supra ; Jack Morgan Construction Co. , supra. The Railroad argues that it was not negligent and t hat the EMJ Parties are the sole tortfeasors. This argues for the finding of an alternative relationship, namely that of victim (i.e., the Railroad) and tort feasors (i.e., the EMJ Parties). Even if this alternative relationship were assumed to be the case, the question remains, however, whether its settlement with Stewart was compelled by a legal obligation or whether the Railroad settled as a mer e volunteer. Stewart’s claim- 14 -

against the Railroad was that the Railroad violated FELA by negligently failing to provide him a safe workplace. The Railroad could h ave legally resisted this claim; it had no unescapable liability to pay Stewa rt’s FELA claim. The Railroad did not pay Stewart as a result of a judgment or du e any legal compulsion, but rather it voluntarily entered into settlement. Whe ther or not the Railroad was a joint tortfeasor, it was not eligible to seek indem nification because it voluntarily settled rather than being compelled to pay Stewart due to a legal obligation.
Jean-Pierre , supra .

CONCLUSION We AFFIRM the judgment of the district court granti ng declaratory relief to the EMJ Parties as to the Railroad’s contributio n and indemnity claims. The district court correctly applied Arkansas law and f ound that when the Railroad voluntarily settled with Stewart prior to the EMJ P arties doing the same, the Railroad extinguished any possibility it had to rec over contribution or indemnity from the EMJ Parties. The Railroad’s assertion that it was not a joint tortfeasor is irrelevant because it does not raise a material fac t as to the determination to grant judgment against the Railroad’s indemnity and contr ibution claims. Entered for the Court

Ted Stewart District Judge