Burlington Northern R. Co. v. Dunkelberger

• Decision Date: 24 June 1996
• Docket Number: No. 95-213,95-213
• Citation: 918 P.2d 987
• Parties: BURLINGTON NORTHERN RAILROAD COMPANY, a Delaware Corporation, Appellant (Plaintiff), v. David DUNKELBERGER, Appellee (Defendant).
• Court: Wyoming Supreme Court

Page 987

918 P.2d 987

BURLINGTON NORTHERN RAILROAD COMPANY, a Delaware Corporation, Appellant (Plaintiff), v. David DUNKELBERGER, Appellee (Defendant).

No. 95-213.

Supreme Court of Wyoming.

June 24, 1996.

Jeff Hedger of Kroschel & Yerger, Billings, John Fenn of Yonkee & Toner, Sheridan, for appellant.

Alexander (Zander) Blewett, III of Hoyt & Blewett, Great Falls, Sharon Fitzgerald of Fitzgerald Law Offices, Cheyenne, for appellee.

Before GOLDEN, C.J., and THOMAS, MACY, TAYLOR and LEHMAN, JJ.

THOMAS, Justice.

The only question in this case is whether Burlington Northern Railroad Company (Burlington) is foreclosed from relief in its action against David Dunkelberger (Dunkelberger) by decisions of the courts of the State of Montana. After executing a release relating to two separate personal injury claims against Burlington, Dunkelberger brought an action for damages against Burlington for the claim that was not time-barred. He asserted the release was fraudulently obtained, and a jury in the Montana court agreed with him. Burlington then sought a set-off against the judgment entered in favor of Dunkelberger for the amount paid in the settlement. The Montana trial court ruled there could be no set-off because Burlington was unable to apportion the amount paid between the injury for which the judgment was obtained and the injury that was time-barred. Judgment was entered against Burlington for the full amount of the jury verdict, and this became a final judgment in Montana when Burlington's appeal was dismissed. We hold Burlington's action in Wyoming to recover the amount paid in settlement is foreclosed by the doctrine of res judicata when full faith and credit is extended to the Montana judgment. The "Order Granting Defendant's Motion to Dismiss (Filed February 16, 1995)" entered in the district court on July 3, 1995 is affirmed.

In its Appellant's Brief, Burlington presents the issue for review as:

A. Did the District Court err by granting Defendant's Motion to Dismiss on the grounds of judicial estoppel?

In his Brief of Appellee, Dunkelberger sets forth this statement of the issues:

A. Whether affording the Plaintiff Burlington Northern additional discovery would be an exercise in futility.

B. Whether this Court should affirm the trial court's order barring Plaintiff Burlington Northern from re-litigating its alleged $214,000.00 claim against Defendant David Dunkelberger. Specifically:

1. Does the Full Faith and Credit Clause of the United States Constitution bar re-litigating the claim?

2. Do the doctrines of collateral estoppel and res judicata bar Plaintiff from re-litigating claims that have already been rejected by a Montana court?

3. Is Plaintiff Burlington Northern's Wyoming action preempted by the Federal Employers [sic] Liability Act.

4. Should the District Court's judgment be affirmed on the basis of judicial estoppel?

C. Should the District Court's judgment barring relitigation of the Plaintiff's $214,000 claim against Mr. Dunkelberger be affirmed because Burlington Northern not only could have but was required to raise every theory of law which supported its claim in the Montana action?

Dunkelberger was employed by Burlington as a conductor. He suffered back injuries during his employment on two occasions: once, on July 21, 1987; and again, on August 20, 1989. Dunkelberger arrived at a compromise of his injury claims with Burlington, and he signed a "Release of All Claims" arising from those injuries in exchange for $214,000. The release covered any claims for injuries Dunkelberger incurred inclusively to the date of the release, February 6, 1990.

After execution of the release, Dunkelberger filed an action pursuant to the Federal Employer's Liability Act, 45 U.S.C. §§ 51-60 (1988) (FELA), in which he alleged Burlington had obtained the release by fraud, and the injury incurred on August 20, 1989 was proximately caused by Burlington's negligence. Dunkelberger's action against Burlington did not include any claim for the injury sustained in 1987 because it was barred by the three-year statute of limitations found in FELA. Dunkelberger demanded a jury trial.

At the trial, the jury found Burlington had fraudulently obtained the release. The jury then awarded Dunkelberger a verdict in the amount of $450,000 for his FELA claim against Burlington. Before a judgment could be entered on the verdict, Burlington petitioned the court for a set-off of $214,000, the amount it had paid for the release. Dunkelberger filed a motion requesting the court to enter judgment for the entire $450,000, asserting Burlington had failed to establish any right to set-off.

The issue of amending the judgment to set off the $214,000 against the judgment in favor of Dunkelberger was argued in briefs presented by Burlington and Dunkelberger. In addition to urging set-off, Burlington argued in a supplemental brief:

It is a fundamental principle of law expressed in Montana * * * that when a party seeks to rescind a contract the party "must restore to the other party everything of value which he has received from him under the contract or must offer to restore the same, upon condition that such party shall do likewise, unless the latter is unable or positively refuses to do so." It is simply elementary that when a contract has been declared void for reasons of fraud or mistake, the contract is void ab initio. Once the contract has been rescinded, it is as if it never existed and the parties are returned to their former status. Plaintiff's [Dunkelberger] arguments simply ignore this fundamental principle of contract law * * *.

The trial court in Montana refused to set off the $214,000 and entered a judgment in favor of Dunkelberger for the full amount of $450,000, plus interest and costs. The court ruled Burlington had established that some part of the $214,000 was attributable to the July 21, 1987 injury, but it refused set-off because Burlington "did not carry its burden of proof as to what amount of the $214,000 payment was attributable to the July 21, 1987 claim and what amount was attributable to the August 20, 1989 claim." The claims representative, who had obtained the original release, testified that apportionment between these two claims was not possible.

Burlington was neither discouraged nor deterred by the court's ruling, and it filed a motion for a new trial, while at the same time renewing its motion to amend the judgment. Burlington again urged its entitlement to the money based upon rescission of the contract (the abrogation of the release) and unjust enrichment. The district court refused relief for Burlington. The same arguments were asserted, for yet a third time, in Burlington's Appellant's Brief submitted on Appeal from the Eighth Judicial District Court of Cascade County, Montana to the Montana Supreme Court:

The effect of a jury's declaration that a contract is invalid is simply a legal determination that the contract never existed. * * * To now allow him [Dunkelberger] to keep the money and to not have it deducted from the judgment awarded by the jury in this case would simply result in unjust enrichment and would be contrary to the most fundamental principles of recision. (Emphasis added.)

These arguments were inefficacious because the Supreme Court of Montana dismissed Burlington's appeal, holding it was not timely. The Supreme Court of Montana denied Burlington's petition for rehearing.

The following year, Burlington brought its action in Wyoming. In its complaint, Burlington articulated the facts regarding the jury's finding that the release was invalid and the later verdict returned in favor of Dunkelberger for $450,000. Burlington sought:

Judgment against the Defendant in the amount of $214,000, with interest, costs of suit, and such other further relief as the Court deems just and equitable in the premises, to restore Burlington Northern Railroad Company to the position it was in prior to execution of the February 6, 1990 Release, and to prevent unjust enrichment of Dunkelberger; * * *.

The underlying justification for this prayer was the rescission of the release by the jury's verdict.

Dunkelberger responded by a Defendant's Motion to Dismiss Pursuant to Rule 12 and/or Motion for Summary Judgment Pursuant to Rule 56, together with a brief in support of the motion and exhibits from the Montana case. Burlington then filed Plaintiff Burlington Northern Railroad Company's Brief in Opposition to Defendant's Motion to Dismiss or for Summary Judgment, together with its supporting documentation. This included an affidavit of the attorney who represented Burlington in Montana, which stated, among other things, "To date, Dunkelberger retains possession of or the benefit of the $214,000.00 he was previously paid representing a settlement of incidents occurring in 1987 and 1989." Dunkelberger filed a reply brief and, pursuant to a court order, later filed a supplemental brief. Burlington also filed a supplemental brief in reply.

On July 3, 1995, the district court entered its Order Granting Defendant's Motion to Dismiss (Filed February 16, 1995). In that order, the court stated in its last two findings:

(6) At the 1993 trial in Montana, "BN" proved a portion of the $214,000.00 already paid applied to the 1987 injury. However, "BN" did not prove any specific amounts;

(7) "BN" now wants a chance to prove appropriate allocation between the 1987 and 1989 claims, in a Wyoming Court, in hopes they can recover part of the $214,000.00 payment. (Emphasis in the original).

In a portion of the order denominated "Discussion," the court also stated:

However, given the history of this litigation, "BN" certainly knew apportionment was an issue at the time of the 1993 Montana trial.

Based on all of the facts and circumstances of this case, judicial estoppel now precludes "BN" from seeking recovery of all or any portion of the $214,000.00 payment.

Burlington appeals from that order.

As one...