BURLINGTON NO. R. CO. v. Dunkelberger

Citations: 918 P.2d 987; 1996 Wyo. LEXIS 95; 1996 WL 343446Docket: 95-213

Court: Wyoming Supreme Court; June 24, 1996; Wyoming; State Supreme Court

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Burlington Northern Railroad Company appealed a decision regarding its ability to seek relief against David Dunkelberger, following a Montana court's judgment that favored Dunkelberger. The case centered on whether Burlington could recover a settlement amount after Dunkelberger claimed the release he signed was fraudulently obtained. The Montana jury concurred with Dunkelberger, leading to a judgment for him. Burlington sought a set-off, but the Montana trial court denied it, stating Burlington could not apportion the settlement amount between claims. This judgment became final upon the dismissal of Burlington's appeal.

The Wyoming Supreme Court held that Burlington's action was barred by res judicata due to the Montana judgment, affirming the lower court's dismissal. The issues on appeal included whether additional discovery for Burlington would be futile, if the Full Faith and Credit Clause barred re-litigation, and if res judicata or collateral estoppel applied. Dunkelberger had previously settled for $214,000, covering all claims up to the release date. After the release, he filed a FELA claim alleging Burlington's negligence for a subsequent injury, but did not include a claim for a prior injury as it was time-barred by the statute of limitations.

Dunkelberger requested a jury trial, which resulted in a verdict finding Burlington had fraudulently obtained a release, leading to an award of $450,000 for Dunkelberger's FELA claim. Burlington sought a set-off of $214,000, the amount it paid for the release, but Dunkelberger contested this, arguing Burlington did not prove its right to set-off. The court heard arguments from both sides regarding the set-off and Burlington cited Montana law requiring restoration of value received in case of rescission due to fraud. The trial court ruled against the set-off, awarding Dunkelberger the full $450,000, citing Burlington's failure to prove what portion of the $214,000 was related to Dunkelberger's claim. Burlington's claims representative testified that the apportionment was impossible. Following this decision, Burlington filed for a new trial and renewed its motion to amend the judgment, asserting rights based on rescission and unjust enrichment. The district court denied Burlington's requests, which were subsequently reiterated in an appeal to the Montana Supreme Court, but the court dismissed the appeal as untimely and denied a rehearing. In the following year, Burlington initiated a new action in Wyoming, seeking to reclaim the $214,000, along with interest and costs, to restore its prior position and prevent Dunkelberger's unjust enrichment.

The justification for the prayer was based on the rescission of the release due to the jury's verdict. Dunkelberger filed a motion to dismiss under Rule 12 and/or a motion for summary judgment under Rule 56, supported by a brief and exhibits from a related Montana case. Burlington opposed this motion, submitting a brief that included an attorney's affidavit stating Dunkelberger was still benefiting from a previous $214,000 settlement related to incidents from 1987 and 1989. Dunkelberger subsequently filed a reply brief and, following a court order, a supplemental brief, to which Burlington also responded with a supplemental brief. On July 3, 1995, the district court granted Dunkelberger's motion to dismiss, noting that Burlington had not proven specific amounts of the $214,000 attributed to the 1987 injury, and was now seeking to prove apportionment in Wyoming. The court also indicated that judicial estoppel barred Burlington from recovering any portion of the payment, given their prior knowledge of the apportionment issue during the Montana trial. Burlington appealed, arguing that the district court failed to properly notify them of the conversion of Dunkelberger's motion to a motion for summary judgment. However, it was established that both parties were aware of the dual nature of the motion, as demonstrated by the pleadings exchanged. The record indicated that Burlington and Dunkelberger had prepared for a decision under Rule 56, affirming that proper notice of the conversion was evident.

Burlington's attorney submitted an affidavit asserting that attached pleadings opposing Defendant Dunkelberger's Motion to Dismiss are accurate copies from a related case in Montana. Citing legal precedent, the court indicated that when an affidavit is filed in response to a Rule 12(b)(6) motion, it effectively converts the motion to one for summary judgment, unless there is evidence of unfair surprise to the nonmoving party. The court found that Burlington was adequately notified of this conversion and was not prejudiced by the trial court's treatment of Dunkelberger's motion as one for summary judgment. There were no genuine issues of material fact to impede summary judgment in favor of Dunkelberger, as the focus of the dispute revolved around the applicable law rather than factual disputes.

The court emphasized the Full Faith and Credit Clause, confirming that judgments from one state must be recognized in others, granting them the same legal effect as in the state of origin. It explained that a foreign judgment is enforceable, regardless of errors, and is protected against collateral attacks unless valid grounds are presented. The Montana court's judgment, which ordered compensation to Dunkelberger without offsetting for a previous settlement due to Burlington's failure to prove apportionment of injuries, was found valid. Burlington did not contest the validity of the Montana judgment, and since no grounds for a collateral attack were established, the judgment is entitled to full faith and credit in Wyoming. The discussion then transitions to the doctrine of res judicata and whether the claims in Wyoming overlap with those previously resolved by the Montana court.

The court in Delgue v. Curutchet, 677 P.2d 208 (Wyo. 1984), established that res judicata bars claims already resolved by prior judgments, while collateral estoppel prevents relitigation of specific issues from previous actions involving the same parties. Judicial estoppel, although referenced, was determined not to apply in this case. The court outlined four criteria for res judicata: identical parties, identical subject matter, related issues, and identical capacities of the parties concerning those issues. 

In this instance, Dunkelberger and Burlington were the same parties involved in earlier Montana litigation regarding a $214,000 claim, which Burlington sought to set off against Dunkelberger's judgment. Although Burlington did not present all relevant theories, such as unjust enrichment, breach of contract, and rescission in the Montana court, they were nonetheless known to the Wyoming court and were subject to res judicata. The court emphasized that Burlington could not introduce theories that could have been raised in Montana, as doing so would result in impermissible claim or defense splitting. The court affirmed the district court's dismissal of Burlington’s action in Wyoming, asserting it was an attempt to circumvent the binding Montana judgment, which is prohibited under the Full Faith and Credit Clause of the Constitution. The order granting Dunkelberger's motion to dismiss was thus upheld.