Bankcard Systems, Inc. v. Miller/Overfelt, Inc., 99-2195

• Decision Date: 10 January 2000
• Docket Number: No. 99-2195,99-2195
• Citation: 219 F.3d 770
• Parties: (8th Cir. 2000) BANKCARD SYSTEMS, INC.; RAYMOND C. HYATT; MYRA OVERRIGHT HYATT, APPELLANTS, v. MILLER/OVERFELT, INC., DOING BUSINESS AS JACK MILLER JEEP EAGLE; CHRYSLER FINANCIAL CORPORATION; DALE E. OVERFELT; MELISSA S. OVERFELT; AARON LOUGHLIN; GARY MESCHON, JR.; RICHARD OGDEN, JR.; JOHN B. HESHION, APPELLEES. Submitted:
• Court: U.S. Court of Appeals — Eighth Circuit

Page 770

219 F.3d 770 (8th Cir. 2000)

BANKCARD SYSTEMS, INC.; RAYMOND C. HYATT; MYRA OVERRIGHT HYATT, APPELLANTS, v. MILLER/OVERFELT, INC., DOING BUSINESS AS JACK MILLER JEEP EAGLE; CHRYSLER FINANCIAL CORPORATION; DALE E. OVERFELT; MELISSA S. OVERFELT; AARON LOUGHLIN; GARY MESCHON, JR.; RICHARD OGDEN, JR.; JOHN B. HESHION, APPELLEES.

No. 99-2195

UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT

Submitted: January 10, 2000

Filed: July 19, 2000

Appeal from the United States District Court for the Western District of Missouri. [Copyrighted Material Omitted] Before Wollman, Chief Judge, Morris Sheppard Arnold, and Murphy, Circuit Judges.

Wollman, Chief Judge.

Raymond C. Hyatt, Myra Overright Hyatt, and Bankcard Systems, Inc. (Bankcard), brought suit in federal district court against Miller/Overfelt, Inc., d/b/a Jack Miller Jeep Eagle (Miller Jeep), several named corporate officers and employees of Miller/Overfelt, Inc., and Chrysler Financial Company, L.L.C. (Chrysler) (collectively, respondents), asserting a variety of claims that developed from the attempted purchase of a business vehicle. The district court ¹ dismissed the action for failure to state a claim, holding that the claims should have been brought as compulsory counterclaims in state court. We affirm.

I.

In February of 1998, the Hyatts, who are corporate officers of Bankcard, went to the Miller Jeep dealership in North Kansas City, Missouri, and negotiated the purchase of a 1998 Jeep Grand Cherokee for Bankcard's use. The arrangement included the dealership's acceptance of the Hyatts' two personal vehicles as trade-ins. After Raymond Hyatt signed on behalf of Bankcard a retail installment contract and a rider concerning contract assignment, Bankcard took possession of the Cherokee. Approximately one week later, employees from Miller Jeep requested that the Hyatts sign a new contract. Because the Hyatts believed that the new contract changed the terms of the agreement, they, on behalf of Bankcard, refused to sign it and retained the Cherokee. A number of discussions occurred between the representatives of Bankcard and representatives of Miller Jeep during the following months, but the parties were unable to resolve their disagreements. In May of 1998, Miller Jeep repossessed the Cherokee. The Hyatts' trade-in vehicles were repossessed from the Miller Jeep lot by lien holders for want of payments.

On December 9, 1998, Miller Jeep filed suit solely against Bankcard in the Circuit Court of Clay County, Missouri, petitioning for damages for breach of contract.²On December 23, 1998, the Hyatts filed suit against the respondents in the United States District Court for the Western District of Missouri, alleging breach of contract, fraud, intentional infliction of emotional distress, conspiracy to commit fraud, malicious prosecution, and racketeering claims under the Racketeer Influenced and Corrupt Organizations Act (RICO).

The district court dismissed the claims against Miller Jeep and the individual defendants on March 22, 1999, and against Chrysler on April 6, 1999, finding that Missouri Supreme Court Rule 55.32(a) required the Hyatts to bring all their claims as counterclaims in the state court action. The Hyatts appeal, contending that because the state court action involves only the validity of the rider to the contract and because none of their claims implicate the rider, they and Bankcard should be allowed to proceed in federal court. They further argue that even if their contract claims are precluded, their RICO-based claim should survive in federal court.³

II.

We review de novo the district court's dismissal of the claims for failure to state a cause of action. See Helvey v. City of Maplewood, 154 F.3d 841, 844 (8th Cir. 1998). "A complaint should not be so dismissed unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim that would demonstrate an entitlement to relief." Springdale Educ. Ass'n v. Springdale Sch. Dist., 133 F.3d 649, 651 (8th Cir. 1998). To determine whether the complaint should be dismissed because of preclusion under state counterclaim requirements, we turn to Missouri law. See Brannan v. Eisenstein, 804 F.2d 1041, 1044 (8th Cir. 1986).

Under Missouri Supreme Court Rule 55.32(a), a party is precluded from asserting counterclaims that are deemed to be compulsory and thus should have been brought in a previous action. See id. (explaining relevant Missouri law). Rule 55.32(a) states:

(a) Compulsory Counterclaim. A pleading shall state as a counterclaim any claim that at the time of serving the pleading the pleader has against any opposing party, if it arises out of the transaction or occurrence that is the subject of the opposing party's claim and does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction.

This rule is "identical to [Federal Rule of Civil Procedure] 13(a)," and it functions "as 'a means of bringing all logically related claims into a single litigation, through the penalty of precluding the later assertion of omitted claims.'" State ex rel. J.E. Dunn, Jr. & Assocs., Inc. v. Schoenlaub, 668 S.W.2d 72, 75 (Mo. 1984) (en banc) (quoting Cantrell v. City of Caruthersville, 221 S.W.2d 471, 474 (Mo. 1949)). Under Rule 55.32(a), the subject of an opposing party's claim consists of the physical facts, things real or personal, the money, lands, chattels, and the like, in relation to which the suit is prosecuted, and the term "transaction" is to be applied in its broadest sense, to include all facts and circumstances constituting the foundation of the claim. See Choate v. Hicks, 983 S.W.2d 611, 614, 613 (Mo. Ct. App. 1999). When the facts which would support a defense to the original claim would also support a counterclaim, the two arise from the same transaction. See id. at 614.

In sum, for a counterclaim to be compulsory under Missouri law, it must be a claim that, at the time of serving the pleading, arises from the same transaction or occurrence as the original claim, i.e., is logically related to the claim in a broad sense; and must be brought by one party against an opposing party, not involving any third parties over whom the court cannot acquire jurisdiction.

We conclude that the Hyatts' and Bankcard's claims are logically related to the state court claim, because they involve the facts and circumstances of the making and enforcing of the same contract. In state court, Miller Jeep sued Bankcard for breach of contract, citing the February 1998 contract and the accompanying rider. The Hyatts' claims of breach of contract, fraud, and conspiracy to commit fraud also pertain to the February 1998 contract; they allege that it was Miller Jeep and its agents that failed to abide by the contract and that this failure, which harmed both Bankcard and the Hyatts, was intentional.

The Hyatts' RICO, malicious prosecution, and intentional infliction of emotional distress claims have a slightly different cast, as they rely more heavily on the events that occurred following the initial interactions. The scope of compulsory counterclaims, however, is not limited "to only those claims which are of the same nature or seek the same relief." Schoenlaub, 668 S.W.2d at 75. These claims, despite the shift in emphasis, still focus on what respondents, Bankcard, and the Hyatts did in response to each other's perceived failure to live up to the February 1998 contract. To hear these claims separately would defeat the function of Rule 55.32(a) by requiring a reexamination of the same events of the state court action in a later litigation. See Schoenlaub, 668 S.W.2d at 75. As we stated about the claims in Tullos v. Parks, 915 F.2d 1192, 1196 (8th Cir. 1990), "[t]o put the matter simply, all the claims asserted by both sides in this case are part of the fight between the parties." ⁴

This conclusion does not end our inquiry. For a counterclaim to be compulsory, it must be asserted by a party against an "opposing party," see Schoenlaub, 668 S.W.2d at 76; Oates v. Safeco Ins. Co., 583 S.W.2d 713, 717 (Mo. 1979) (en banc), or someone in privity with that party. See Schneeberger v. Hoette Concrete Const. Co., 680 S.W.2d 301, 303 (Mo. Ct. App. 1984). The Hyatts note that the state court action involves only Bankcard and Miller Jeep, not themselves, any of the individual defendants, or Chrysler.

Respondents refer to several cases for the proposition that "a compulsory counterclaim may arise without complete mutuality and identity of parties at the time it must be asserted," id.; see Barclay Inv. Corp. v. Lamkin, 408 S.W.2d 168, 169-70 (Mo. Ct. App. 1966), and contend that the minor difference in parties is not determinative because all of the individuals are corporate officers or employees of the corporations that are already parties. They rely heavily on Schneeberger, in which the Missouri Court of Appeals held that a homeowner was barred from bringing suit against a subcontractor for the same damage that the homeowner had previously claimed against the contractor. See Schneeberger, 680 S.W.2d at 303. The court there noted that a compulsory counterclaim may arise without complete mutuality and identity of parties and that if the defendant subcontractor "was a necessary party to the full adjudication of the issues in the [] suit, . . . it was [claimant's] duty to request that defendant [] be made a party." See id.

The same year that Schneeberger was decided, the Missouri Supreme Court reiterated that for it to be a compulsory counterclaim under Rule 55.32(a), the party's claim must involve an "opposing party." See Schoenlaub, 668 S.W.2d at 74. In Schoenlaub, a contractor had brought suit against a hospital and several other parties, but the hospital had...