Baker Group, L.C. v. Burlington Northern, 04-4104.

• Decision Date: 16 June 2006
• Docket Number: No. 04-4124.,No. 04-4150.,No. 04-4104.,04-4104.,04-4150.,04-4124.
• Parties: THE BAKER GROUP, L.C.; Carle Baker, Jr., Trustee of the MTY Profit Sharing Plan and Trust, Plaintiffs-Appellants, v. BURLINGTON NORTHERN AND SANTA FE RAILWAY COMPANY, Defendant-Appellee. Linus L. Baker; Laurence M. Jarvis, Appellants, v. Burlington Northern and Santa Fe Railway Company, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

451 F.3d 484

THE BAKER GROUP, L.C.; Carle Baker, Jr., Trustee of the MTY Profit Sharing Plan and Trust, Plaintiffs-Appellants, v. BURLINGTON NORTHERN AND SANTA FE RAILWAY COMPANY, Defendant-Appellee.

Linus L. Baker; Laurence M. Jarvis, Appellants, v. Burlington Northern and Santa Fe Railway Company, Appellee.

No. 04-4104.

No. 04-4150.

No. 04-4124.

United States Court of Appeals, Eighth Circuit.

Submitted: January 9, 2006.

Filed: June 16, 2006.

Dennis James Campbell Owens, argued, Kansas City, MO (Linus L. Baker of Gardner, KS, on the brief), for appellant.

Curtis L. Tideman, Overland Park, KS (David R. Frye and Jeffrey R. King, Overland Park, KS, on the brief), for appellee.

Before LOKEN, Chief Judge, HANSEN and MELLOY, Circuit Judges.

LOKEN, Chief Judge.

The Baker Group, L.C., and MTY Profit Sharing Plan and Trust (collectively "the Baker Group") commenced this action against Burlington Northern and Santa Fe Railway Company ("BNSF") in Missouri state court, asserting contract and tort claims arising out of a Railroad Car Net Lease Agreement ("the Lease") under which BNSF leased 649 railcars for a ten-year period. BNSF removed the action, invoking the district court's diversity jurisdiction. In a prior appeal, we reversed the district court's dismissal of certain claims on res judicata grounds and remanded for further proceedings. Baker Group v. Burlington N. & S.F. Ry., 228 F.3d 883 (8th Cir.2000) ("Baker I"). On remand, District Judge Scott O. Wright recused, and the case was reassigned to District Judge Fernando J. Gaitan. In a series of pretrial rulings, Judge Gaitan sharply limited the issues to be tried. After a one day jury trial, the court granted BNSF judgment as a matter of law on the remaining claims. The Baker Group appeals these rulings. In a separate appeal, Baker Group attorneys Linus Baker and Laurence Jarvis ask us to expunge comments critical of them in Judge Wright's order that we reviewed in Baker I. We affirm the judgment of the district court and dismiss the attorneys' appeal.

Background

The Lease was signed in July 1987 by BNSF as Lessee and by Caldwell-Baker Company ("CBC") as Lessor acting as broker for a disclosed principal, First Security Bank of Utah. First Security assigned its interests under the Lease, including the exclusive right to receive rental payments, to the Baker Group in 1993. The Lease expired in 1997. Two Lease provisions are primarily at issue in this lawsuit and in related litigation in a Kansas state court. Article 8 set forth BNSF's duty to "maintain the cars in good condition and repair," required Lessor approval of physical alterations to the cars, provided that BNSF was responsible for lost or destroyed cars, and prescribed a procedure for resolving issues arising when a car was lost or destroyed. Article 14 set forth BNSF's duties to return the cars in good condition at the end of the Lease and to pay the daily rent fee until a car was returned.

The Baker Group and CBC sued BNSF in Kansas state court before the Lease expired, alleging violations of Article 8. With that litigation on-going, the Lease expired and the Baker Group filed this action asserting violations of Article 8 during the Lease plus additional violations of Article 14 at the end of the Lease, namely, the return of railcars in poor condition and the failure to return other cars. After the Kansas trial court dismissed all claims, the district court dismissed all claims in this action as barred by the doctrine of claim preclusion (res judicata). In Baker I, we reversed the dismissal of the Article 14 claims because they arose at the end of the Lease, after the Kansas lawsuit commenced, and because the Kansas court refused to permit Article 14 claims to be litigated. 228 F.3d at 886-87.

The claim preclusion landscape was altered when the Kansas Court of Appeals reversed the trial court decision on which Baker I relied. Caldwell-Baker Co. v. Burlington N. & S.F. Ry., 4 P.3d 1191 (Kan.App., 2000).¹ On remand in that case, the Kansas trial court refused to permit an expansion of the issues to be tried to include the primary issue in this Missouri action — Article 14 claims involving the condition of cars returned by BNSF at the end of the Lease. Instead, the court's pretrial Journal Entry recited that the causes of actions remaining for trial in Kansas were "plaintiffs' claim that defendant violated Article 8C and Article 14 of the Lease in question by destroying wrecked cars and not returning them to plaintiffs," plus a contract claim for attorneys' fees. The Kansas case was tried, and the jury awarded plaintiffs $168,000 because BNSF failed to give timely notice that certain rail cars had been damaged and would be destroyed.

The Article 14 Claims That Were Tried

In a laudable effort to narrow the issues for trial, the district court on remand ordered the parties to respond to a series of questions and then used those responses as a basis for determining that the only issue to be tried was the Baker Group's Article 14 claim that BNSF failed to return certain railcars at the end of the Lease. The parties agreed that either 648 or 649 cars were initially leased, that 23 cars were lost or destroyed during the term of the Lease and paid for by BNSF pursuant to Article 8, and that 615 cars were returned by BNSF or were being repaired by the Baker Group at the end of the Lease. That left eleven cars to be accounted for at trial. The task of tracing a particular railcar was complicated by the fact that BNSF had renumbered some cars during the term of the Lease. Just before trial, the court issued an order that identified eleven cars at issue, limited the trial to those eleven cars, and provided that the Baker Group "will be required to establish that the above referenced cars were not returned at the end of the lease in accordance with Article 14."

Carle Baker was the only witness for the Baker Group at trial. While insisting that eleven cars were never returned, Baker admitted that the Baker Group had been notified by BNSF during the term of the Lease that at least six of the eleven had been damaged and would be destroyed pursuant to Article 8. However, Baker explained, the Baker Group was never paid for those six cars and the other five "have not been accounted for." Roger Sperry, retired Director of Equipment, testified for BNSF that he was responsible for finding all leased railcars at the end of the Lease and that "every active car was returned." Sperry explained that, just before the Lease expired, BNSF was paying rent on 626 cars, eleven more than the 615 that were returned, because "[i]n some cases Mr. Baker refused to acknowledge that the cars had been destroyed so it was determined that it would be at that time appropriate to continue to pay rent until resolution could be made between Mr. Baker and BN[SF]."

Reviewing the issue de novo, we conclude that the district court correctly granted BNSF judgment as a matter of law at the close of the evidence. See Arabian Agric. Servs. Co. v. Chief Indus., Inc., 309 F.3d 479, 482 (8th Cir.2002) (standard of review). Recall that the Kansas court defined the issue to be tried in that case as "plaintiffs' claim that defendant violated Article 8C and Article 14 of the Lease in question by destroying wrecked cars and not returning them to plaintiffs." The doctrine of claim preclusion barred the Baker Group "from relitigating claims that were litigated or could have been litigated" in that prior suit. Baker I, 228 F.3d at 885. All claims for cars that were not returned because they were lost or destroyed during the term of the Lease could have been litigated in the Kansas action. This included claims for a larger settlement payment under Article 8 because BNSF did not provide timely notice. It also included claims for rental payments not made prior to the settlement payments, which could be viewed as either Article 8 or Article 14 claims. On the other hand, the Kansas court did not include in the issue to be tried Article 14 claims for cars that were not wrecked, were still in existence, and were not returned at the end of the Lease. Any cars in that category were never involved in the Article 8 process that was the core of the Kansas lawsuit. Thus, to prevail at this trial, the Baker Group had to prove that one or more railcars fell into this narrow category. It failed to do so. Indeed, on direct examination, Carle Baker testified:

Q (By Mr. [Linus] Baker) Mr. Baker, for every car that was destroyed, did you find a payment record?

A No.

Q How many payments records are you missing, for the cars under the lease?

A Eleven.

This testimony, plus the Baker Group's failure to discredit Sperry's testimony that all railcars in existence at the end of the Lease were returned, establish that all claims for non-returned cars are precluded because they could have been litigated in the Kansas case. "[A]n entire claim arising from a single wrong cannot be divided and made subject of several suits no matter how numerous the items of damage." Klassen v. Central Kan. Co-op. Creamery Ass'n, 160 Kan. 697, 165 P.2d 601, 606 (1946).

It may be that the Baker Group has lost an opportunity to litigate whether there are up to five leased railcars that were never returned to the Baker Group and are still functioning somewhere in the BNSF system or elsewhere. But this is the result of filing multiple lawsuits with overlapping claims in different courts. Those who abuse the judicial system in this fashion must suffer the consequences. The judgment dismissing all claims for non-returned cars is affirmed.

The Claims That Were Not Tried

The district court made a series of pretrial rulings that simplified the issues to be tried in this action. These rulings are ripe for review because the court has now entered final judgment.

A. Tort Claims. The Baker Group's amended complaint included tort claims for conversion of non-returned cars,² for negligent breach of a...