A.H. ex rel. Hubbard v. Midwest Bus Sales, Inc.

• Decision Date: 19 May 2016
• Docket Number: 15–2318.,Nos. 15–2317,s. 15–2317
• Citation: 823 F.3d 448
• Parties: A.H., a minor, by and through his Next Friend, Tracy HUBBARD, Plaintiff–Appellant, v. MIDWEST BUS SALES, INC., Defendant–Appellee. Renna Yi, Plaintiff–Appellant, v. Midwest Bus Sales, Inc., Defendant–Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

823 F.3d 448

A.H., a minor, by and through his Next Friend, Tracy HUBBARD, Plaintiff–Appellant
v.
MIDWEST BUS SALES, INC., Defendant–Appellee.

Renna Yi, Plaintiff–Appellant
v.
Midwest Bus Sales, Inc., Defendant–Appellee.

Nos. 15–2317
15–2318.

United States Court of Appeals, Eighth Circuit.

Submitted: Feb. 9, 2016.
Filed: May 19, 2016.

823 F.3d 450

Gary C. Robb, Robb & Robb LLC, Kansas City, MO, argued (Anita Porte Robb, on the brief), for appellants.

Matthew W. Geary, Dysart Taylor Cotter McMonigle & Montemore, P.C., Kansas City, MO, argued (Patrick K. McMonigle, on the brief), for appellee.

Before RILEY, Chief Judge, LOKEN and BENTON, Circuit Judges.

RILEY, Chief Judge.

Missouri citizens A.H. and Renna Yi, both minors, were passengers on a school bus that collided with a pickup truck, causing them serious injuries. A.H.'s parents, and his mother Tracy Hubbard on A.H.'s behalf, and Yi's parents, and her mother Huairen Yi on Yi's behalf, separately sued numerous entities in Missouri state court, including the manufacturer and retailer of the bus and the manufacturer of its brakes, alleging, among other things, the brakes were defective. Kansas citizen Midwest Bus Sales, Inc. (Midwest Bus), the retail seller of the bus, originally was a party to each action, but was omitted from subsequent amended complaints. The consolidated cases went to trial against the remaining defendants, the jury found in favor of all the remaining defendants, the state trial court entered judgment, and the Missouri Court of Appeals affirmed.

A.H. (through his Next Friend, Tracy Hubbard) and Yi (appellants) also each sued Midwest Bus in federal court in the Western District of Missouri in diversity actions under Missouri law. See 28 U.S.C. § 1332(a)(1), (c)(1)-(2). The district court¹ granted Midwest Bus's motions to dismiss, deciding appellants' claims were barred by res judicata, also known as claim preclusion.² Appellants appeal. We affirm on

823 F.3d 451

the alternative basis that appellants' claims are barred by collateral estoppel, also known as issue preclusion.³

I. BACKGROUND

On May 9, 2005, A.H. and Renna Yi were riding in a Liberty Public School District (LPSD) school bus that crashed into a pickup truck as the bus sped through an intersection located at the bottom of a hill in Liberty, Missouri. According to the bus driver, the bus's brakes failed as she drove down the hill, so she began swerving to avoid the vehicles in the intersection but ultimately crashed into the truck.

The following month, A.H. and Yi each filed suit in the Circuit Court of Clay County, Missouri, against, among others, Bendix Commercial Vehicle Systems, LLC (Bendix), the manufacturer of the brakes; Thomas Built Buses, Inc. (Thomas Built), the manufacturer of the bus; Freightliner, LLC (Freightliner), Thomas Built's parent company; and Midwest Bus, the retail seller of the bus.⁴ Midwest Bus was not named in either A.H.'s or Yi's final amended petitions.⁵

A jury trial took place early in 2013 with Bendix, Thomas Built, and Freightliner (state court defendants) as named defendants. The claims were against

(1) Bendix for strict liability for selling defective automatic slack adjusters (ASAs), which are a component of the brake system;

(2) Bendix for strict liability for failing to warn that the ASAs were unreasonably dangerous;

(3) Thomas Built for strict liability for selling a defective bus; and

(4) Freightliner for negligently failing to warn Thomas Built that manual adjustment of the ASAs was dangerous.

The state court defendants' theory of the crash was “pedal misapplication,” that is, the bus driver was pressing the accelerator when she thought she was pressing the brake. The jury found in favor of all these defendants on all claims. In October 2014, the Missouri Court of Appeals affirmed. See Gleason v. Bendix Commercial Vehicle Sys., LLC, 452 S.W.3d 158, 185 (Mo.Ct.App.2014).

In March 2015, A.H. and Yi each filed parallel diversity suits against Midwest Bus in the Western District of Missouri. See 28 U.S.C. § 1332(a)(1), (c)(1)-(2). Both complaints alleged Midwest Bus (1) inspected the bus before delivering it to LPSD but “negligently failed to discover” improper installation of three of four

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ASAs, and (2) knew “of the hazards ... of manual adjustment of automatic slack adjusters and negligently failed to warn [LPSD].” The parties agree Missouri law applies to appellants' claims.

Midwest Bus moved to dismiss, asserting appellants' claims were barred by res judicata, collateral estoppel, and the prohibition against claim splitting. Appellants responded that res judicata precludes only successive claims against the same party, and Midwest Bus was dismissed from the state court case and “is not and was not in privity with any” remaining state court defendant. Appellants maintained that while collateral estoppel prevents a party from relitigating an issue already decided in an earlier case, they raised issues not previously litigated in the state court case. According to appellants, “[t]he trial of claims against [the state court defendants] could not, and demonstrably did not, adjudicate facts unique to Plaintiff[s'] claim[s] that Midwest Bus's own negligent inspection of the bus failed to uncover improper installation of the brakes, and its own negligent failure to warn [LPSD] mechanics of a known dangerous maintenance practice.”

The district court granted Midwest Bus's motions, issuing a detailed order in A.H.'s case explaining the principles of res judicata precluded the action because “both [the state court case and the federal case] involved (a) the same parties or their privies, and (b) the same cause of action.”⁶ First, the district court concluded that even if it assumed Midwest Bus voluntarily was dismissed without prejudice from the state court case before trial, Midwest Bus was in privity with the state court defendants and therefore the identity of parties requirement was satisfied. Quoting Clements v. Pittman, 765 S.W.2d 589, 591 (Mo.1989) (en banc), the district court determined the state court defendants “ ‘represented the same legal right’ ” as Midwest Bus. Observing “the subject matter of both cases [wa]s alleged brake failure,” the district court further explained “[t]he state court defendants successfully defended those allegations, and Midwest Bus ha[d] an identical and intertwined interest in rebutting the same claims.”

Second, quoting Ronwin v. Union Electric Company, 2011 WL 442370, at *2 (W.D.Mo. Feb. 2, 2011), the district court decided the present case involved the same claims as the state court case because the claims “ ‘ar[o]se out of the same nucleus of operative facts.’ ” The district court reasoned “both cases necessarily depend on the same set of facts; if Thomas Built did not improperly install the automatic slack adjusters, then Midwest Bus cannot be liable for failing to discover an improper installation.” Furthermore, “both cases depend on ... whether manual adjustments were dangerous and whether a warning was required.” Because the jury found failure to warn “was not the cause of the accident,” the district court continued, “[i]t [wa]s irrelevant who was supposed to give the warning.” The district court added that even if the claims in the present cases were different than those in the state court case, the present claims “ ‘could have been brought in the first suit, ’ ” quoting Chadd v. City of Lake Ozark, 326 S.W.3d 98, 101–02 (Mo.Ct.App.2010), and would also be precluded on that basis. The district court did not address Midwest Bus's collateral estoppel or claim splitting arguments. Appellants appeal.

II. DISCUSSION

A. Standard of Review

“We review de novo the district court's grant of a motion to dismiss for

823 F.3d 453

failure to state a claim based on res judicata, ” Laase v. County of Isanti, 638 F.3d 853, 856 (8th Cir.2011), ...