Caldwell-Baker Co. v. Southern Illinois Railcar, Civil Action No. 00-2380-CM.

• Decision Date: 18 June 2002
• Docket Number: Civil Action No. 00-2380-CM.
• Parties: CALDWELL-BAKER COMPANY, et al., Plaintiffs, v. SOUTHERN ILLINOIS RAILCAR COMPANY., et al., Defendants.
• Court: U.S. District Court — District of Kansas

225 F.Supp.2d 1243

CALDWELL-BAKER COMPANY, et al., Plaintiffs, v. SOUTHERN ILLINOIS RAILCAR COMPANY., et al., Defendants.

Civil Action No. 00-2380-CM.

United States District Court, D. Kansas.

June 18, 2002.

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Linus L. Baker, Gardner, KS, for Plaintiffs.

Philip R. Dupont, Gregory J. Minana, Blackwell, Sanders, Peper, Martin, LLP, Kansas City, MO, Rick E. Frawley, Kutak Rock LLP, Kansas City, MO, for Defendants.

MEMORANDUM AND ORDER

MURGUIA, District Court Judge.

This matter is before the court on defendant DeBruce Grain, Inc.'s Motion to Dismiss or for Summary Judgment (Doc. 270), defendant General Mills's Motion to Dismiss (Doc. 303) and Motion for Summary Judgment (Doc. 365), defendant Michele Seiberlich's Motion to Dismiss (Doc. 335), defendant Southern Illinois Railcar Company, L.L.C.'s Motion to Dismiss (Doc. 337), and defendants Fred L. Parsons, Kurt E. Johnson, and Gary J. Goodman's Motion to Dismiss (Doc. 339). Also pending are plaintiffs' Motion to Strike Defendant DeBruce's Reply to Plaintiffs' Response to DeBruce's Motion to Dismiss (Doc. 298) and plaintiffs' Motion to Strike Defendant DeBruce's Reply to Plaintiffs' Response to DeBruce's Motion for Summary Judgment (Doc. 299). Finally, plaintiffs' Motion for Partial Summary Judgment (Doc. 14) against defendant Southern Illinois Railcar Company, and two of plaintiffs' Motions to Strike (Docs. 378 and 381) are pending.

As set forth below, defendants DeBruce Grain, Inc., General Mills, Michele Seiberlich, Fred L. Parsons, Kurt E. Johnson, and Gary J. Goodman's motions to dismiss are granted. Plaintiffs' motions to strike as against defendant DeBruce are denied. Plaintiffs' motion for partial summary judgment and motions to strike as against defendant Southern Illinois Railcar Co. are denied as moot without prejudice to be reasserted, if at all, only if and when the bankruptcy court allows plaintiffs to continue to pursue their claims against defendant Southern Illinois Railcar Co.

I. Facts¹

Plaintiffs Caldwell-Baker Co. ("Caldwell-Baker"), The Baker Group, L.C., and Carle E. Baker, Jr., as Trustee of the MTY Profit Sharing Plan and Trust ("MTY") allege several causes of action arising out of plaintiff Caldwell-Baker's agreement with defendant Southern Illinois Railcar Co. ("SIRC"), an Illinois corporation, to lease several hundred railcars partially owned by plaintiff Caldwell-Baker to SIRC.² Plaintiffs The Baker Group, L.C., and MTY are co-owners of the railcars. Defendants DeBruce Grain, Inc. ("DeBruce") and General Mills are sublessees of the railcars pursuant to separate lease agreements they entered into with SIRC. Defendant Southern Illinois Railcar Co., L.L.C., ("SIRC LLC") is an Illinois limited liability company. Defendant Seiberlich is defendant SIRC's Vice President of Sales and Operations. Defendant Parsons is defendant SIRC's President. Defendant Johnson is defendant SIRC's Executive Vice President and General Counsel. Defendant Goodman is defendant SIRC's Chief Financial Officer.

Defendant DeBruce entered into a Railcar Lease Agreement with defendant SIRC, effective June 17, 1996, in which defendant DeBruce agreed to lease cars which SIRC was "the owner of, agent for the owner of, or lessee." Plaintiff Caldwell-Baker is not named in and was not a signatory to the SIRC/DeBruce lease.

Plaintiff Caldwell-Baker entered into a Railcar Lease with defendant SIRC, effective August 29, 1997. Defendant DeBruce is not named in and was not a signatory to the Caldwell-Baker/SIRC lease. Under the lease, defendant SIRC was to pay plaintiff Caldwell-Baker $400 per month per railcar. The lease further stated that the cars were to be used only to transport grain products and could not be used to transport corrosive chemicals, including fertilizers. Among other terms of the lease, defendant SIRC was permitted to sublease the cars if it provided prior notice to plaintiff Caldwell-Baker. Plaintiffs contend the lease required defendant SIRC to provide information concerning defendant SIRC's financial condition.

After it encountered cash flow problems, defendant SIRC ceased making lease payments to plaintiffs. Plaintiffs also claim to have discovered that cars subleased by defendant SIRC were being used to carry corrosive substances. Plaintiffs state that they notified defendant SIRC of these alleged breaches of the lease agreement and that defendant SIRC took no steps to cure them. Plaintiffs' Second Amended Complaint sets forth numerous causes of action against SIRC.

With respect to defendant DeBruce, plaintiffs' Second Amended Complaint alleges that defendant DeBruce agreed in its lease with defendant SIRC to become a joint obligor with SIRC under the terms of the Caldwell-Baker/SIRC lease. Plaintiffs further state that they are third party beneficiaries of the SIRC/DeBruce lease.

Plaintiffs state that defendant DeBruce agreed in the SIRC/DeBruce lease to become bound by the terms of the Caldwell-Baker/SIRC lease. In addition, plaintiffs claim defendant DeBruce failed to fulfill the following duties under the SIRC/DeBruce lease: (1) to indemnify, defend, and hold harmless plaintiff Caldwell-Baker and any owner of the cars from certain obligations; (2) to name plaintiff Caldwell-Baker and any owner of the cars as insureds; (3) to maintain and repair certain "Lessee Maintenance Items" on the subleased cars; (4) to return the cars free of certain damage; (5) that "[t]he Lessee's duties under the Lease were not performed by DeBruce as set forth in CBC's Complaint against SIRC." Plaintiffs seek monetary damages, including attorney's fees. Further, plaintiffs request the court to enter a declaratory judgment that defendant DeBruce is obligated to indemnify plaintiffs and defendant SIRC for claims arising out of the Caldwell-Baker/SIRC lease and the SIRC/DeBruce lease.

Plaintiffs' Second Amended Complaint does not allege that any insurance claims were made by plaintiffs and were not covered by defendant DeBruce. Further, the Second Amended Complaint does not indicate that any notice of default and opportunity to cure was provide to defendant DeBruce by defendant SIRC or by plaintiffs. Some of the cars leased to defendant DeBruce by SIRC were RFMX cars that are identified as cars owned by plaintiffs. Prior to becoming aware of the instant lawsuit in 2001, defendant DeBruce was not aware that the RFMX cars were owned by plaintiffs, nor that defendant SIRC had a lease with plaintiffs. Plaintiffs never informed defendant DeBruce during the time that the RFMX cars were leased to defendant DeBruce that defendant DeBruce owed any obligations to plaintiffs under either the Caldwell-Baker/SIRC lease or the SIRC/DeBruce lease. At defendant SIRC's request, in 2001, and prior to DeBruce's becoming a party to this lawsuit, all remaining RFMX cars leased to defendant DeBruce were replaced with substitute cars by defendant SIRC. After the substitution, the returned RFMX cars were accepted by plaintiffs, and neither defendant SIRC nor anyone else identified to defendant DeBruce any repairs or maintenance to the RFMX cars that defendant DeBruce had not performed. During the entire time that any RFMX cars were leased to DeBruce under the SIRC/DeBruce Lease, and to date, defendant SIRC provided no notice of default and opportunity to cure to defendant DeBruce. Defendant DeBruce timely made all payments under the SIRC/DeBruce Lease and plaintiffs never notified defendant DeBruce that it needed to make payments to plaintiffs rather than SIRC.

Plaintiffs' allegations with respect to defendant General Mills mirror those against defendant DeBruce. Plaintiffs claim that defendant General Mills agreed in its November 30, 1993 lease with SIRC to become a joint obligor with SIRC under the terms of the Caldwell-Baker/SIRC lease. Plaintiffs further state that they are third party beneficiaries of the SIRC/General Mills lease.

Plaintiffs state that defendant General Mills agreed in the SIRC/General Mills lease to become bound by the terms of the Caldwell-Baker/SIRC lease. In addition, plaintiffs claim defendant General Mills failed to fulfill the following duties under the SIRC/General Mills lease: (1) to indemnify, defend, and hold harmless Caldwell-Baker and any owner of the cars from certain obligations; (2) to name Caldwell-Baker and any owner of the cars as insureds; (3) to maintain and repair certain "Lessee Maintenance Items" on the subleased cars; (4) to return the cars free of certain damage; (5) that "[t]he Lessee's duties under the Lease were not performed by General Mills as set forth in CBC's Complaint against SIRC." Plaintiffs seek monetary damages, including attorney's fees. Further, plaintiffs request the court to enter a declaratory judgment that defendant General Mills is obligated to indemnify plaintiffs and defendant SIRC for claims arising out of the Caldwell-Baker/SIRC lease and the SIRC/General Mills lease.

Plaintiffs' Second Amended Complaint does not identify any insurance claims that were available to defendant General Mills and not presented, nor does the complaint specify any events or conditions for which insurance coverage would be appropriate. Furthermore, plaintiffs do not allege that any cars were tendered for which defendant SIRC required repair payments by defendant General Mills. Plaintiffs were not named in the SIRC/General Mills lease, and defendant General Mills was not named in the Caldwell-Baker/SIRC lease. Finally, defendant SIRC has not presented the court with complaints arising out of defendant General Mills's contractual performance of the SIRC/General Mills lease obligations.

In a prior order, this court denied defendant SIRC's Motion to Dismiss for Lack of Personal Jurisdiction (Mem. and Order, Sept. 28, 2001, at 7-8). In so doing, the court found SIRC had relevant contacts with the State of Kansas stemming from negotiations that took place by...