Filed: Aug. 25, 2005
Latest Update: Feb. 21, 2020
Summary: United States Court of Appeals Fifth Circuit F I L E D UNITED STATES COURT OF APPEALS FIFTH CIRCUIT August 23, 2005 Charles R. Fulbruge III Clerk No. 04-30782 KANSAS CITY SOUTHERN RAILWAY COMPANY, Plaintiff-Appellant, versus CANADIAN NATIONAL/ILLINOIS CENTRAL RAILROAD, Defendant-Appellee. Appeal from the United States District Court for the Eastern District of Louisiana (2:03-CV-3064-T) Before HIGGINBOTHAM, BARKSDALE, and CLEMENT, Circuit Judges. PER CURIAM:* Kansas City Southern Railway (KCS) a
Summary: United States Court of Appeals Fifth Circuit F I L E D UNITED STATES COURT OF APPEALS FIFTH CIRCUIT August 23, 2005 Charles R. Fulbruge III Clerk No. 04-30782 KANSAS CITY SOUTHERN RAILWAY COMPANY, Plaintiff-Appellant, versus CANADIAN NATIONAL/ILLINOIS CENTRAL RAILROAD, Defendant-Appellee. Appeal from the United States District Court for the Eastern District of Louisiana (2:03-CV-3064-T) Before HIGGINBOTHAM, BARKSDALE, and CLEMENT, Circuit Judges. PER CURIAM:* Kansas City Southern Railway (KCS) ap..
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United States Court of Appeals
Fifth Circuit
F I L E D
UNITED STATES COURT OF APPEALS
FIFTH CIRCUIT August 23, 2005
Charles R. Fulbruge III
Clerk
No. 04-30782
KANSAS CITY SOUTHERN RAILWAY COMPANY,
Plaintiff-Appellant,
versus
CANADIAN NATIONAL/ILLINOIS CENTRAL RAILROAD,
Defendant-Appellee.
Appeal from the United States District Court
for the Eastern District of Louisiana
(2:03-CV-3064-T)
Before HIGGINBOTHAM, BARKSDALE, and CLEMENT, Circuit Judges.
PER CURIAM:*
Kansas City Southern Railway (KCS) appeals the dismissal, for
lack of subject matter jurisdiction, of its claims for indemnity
against Canadian National/Illinois Central Railroad (CN/IC). In an
earlier action by two KCS employees against KCS and CN/IC, and
following arbitration involving KCS and CN/IC and concerning the
tort claims brought by those employees, the district court held it
lacked subject matter jurisdiction over KCS’ claims against CN/IC.
These claims are presented again in this action. KCS contends they
are not subject to the prior arbitration. CN/IC counters that the
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
district court’s holding in the earlier action – not appealed by
KCS – is controlling. The district court held correctly that, in
accordance with its prior holding, it must continue to hold
jurisdiction is lacking. AFFIRMED.
I.
This dispute arises out of a collision at the “Orleans
Junction” in Kenner, Louisiana, between a KCS locomotive and a
Burlington Northern Santa Fe (BNSF) detour train, operated by CN/IC
employees, on tracks owned by CN/IC. Two KCS employees, Crump and
Lentz, were seriously injured. They sued KCS under the Federal
Employee Liability Act, 45 U.S.C. § 51 et seq. (2000), and brought
negligence and other tort claims against CN/IC and BNSF (the Crump
and Lentz action). As demanded by CN/IC, BNSF agreed to indemnify
CN/IC in that action, according to a “Detour Agreement” between the
two railroads. (The district court later dismissed BNSF with
prejudice from the Crump and Lentz action.) CN/IC accepted
indemnity from BNSF; it is not involved in the instant action.
CN/IC also demanded indemnity from KCS in the Crump and Lentz
action, pursuant to the Joint Facilities Agreement (JFA)
controlling the CN/IC and KCS relationship. When KCS refused,
CN/IC invoked Section 17 of the JFA, which required binding
arbitration in case of disagreement over the parties’
responsibilities.
2
Pending arbitration, KCS and CN/IC agreed to mediate the Crump
and Lentz claims; by oral agreement, each consented to fund one
half of any settlement reached, reserving rights under the JFA in
arbitration. On 3 July 2002, based on a mediated settlement, the
district court dismissed without prejudice all claims in the Crump
and Lentz action, retaining jurisdiction and allowing either party
to reopen the action to enforce the settlement. Pursuant to their
agreement, CN/IC and KCS contributed equally to the settlement.
Arbitration was held on 19 July 2002, approximately two weeks
after the claims in the Crump and Lentz action were dismissed
(pursuant to the settlement). The sole issue presented at
arbitration by CN/IC was whether the JFA required KCS to indemnify
CN/IC in that action. KCS did not present any claims at
arbitration. The arbitration panel held CN/IC could not claim
indemnity from KCS under the JFA because BNSF had agreed to
indemnify CN/IC under a separate agreement. The panel concluded:
[T]he language used by the parties in the
[JFA] expresses an intent that neither party
shall be liable to indemnify the other party
for any loss or damage that a third party
railroad that is allowed to enter or permitted
to use a portion of the joint facilities is
obligated to assume pursuant to an agreement
with its host, regardless of whether the
third-party railroad is using the facilities
under another Joint Facilities Agreement,
under a detour agreement or on some other
basis. For that reason, KCS is not responsible
to indemnify CN/IC for an obligation that BNSF
has assumed pursuant to the Detour Agreements.
3
The panel neither made a liability determination for the underlying
accident nor discussed CN/IC’s responsibility to KCS.
Following the arbitration ruling against CN/IC, KCS demanded
CN/IC reimburse it for KCS’ contribution to the Crump and Lentz
settlement. When negotiations between the parties failed, KCS
moved the district court to reopen the Crump and Lentz action to
“resolve the issue of any negligence on the part of KCS which would
entitle CN/IC to contribution”. In August 2003, the motion was
denied. The court held it did not have jurisdiction over KCS’
claims because the JFA arbitration clause required all issues to be
arbitrated; and KCS had not moved to amend the order of dismissal
evidencing the parties’ agreement to settle all claims without
reservation. Crump v. Can. Nat’l/Ill. Cent. R.R. Co., No. 01-0296,
2003 WL 21999334 (E.D. La. 19 Aug. 2003) (unpublished). KCS did
not appeal this decision. (Neither party disputes this was a final
appealable order.)
In October 2003, less than three months after the district
court refused to reopen the Crump and Lentz action, KCS brought the
instant action against CN/IC, again seeking reimbursement for its
settlement contribution, as well as attorney’s fees. (Other than
stating a damages amount, the complaint is essentially identical to
the earlier, denied motion to reopen.) KCS’ complaint claimed:
“the losses and damages incurred by Crump and Lentz were due solely
and exclusively to the fault of CN/IC”; the arbitration panel found
4
“CN/IC was not entitled to a defense and indemnification from KCS
under the [JFA] for the claims asserted against it”; and,
therefore, CN/IC was obliged to reimburse KCS for its settlement
contribution.
CN/IC moved to dismiss for lack of subject matter jurisdiction
and improper venue under Federal Rules of Civil Procedure 12(b)(1)
and (b)(3), maintaining: the indemnification dispute was subject
to arbitration under the JFA; the prior indemnity ruling
constituted res judicata, based on the binding arbitration
agreement; and res judicata also barred the complaint because, in
denying KCS’ motion to reopen in the earlier Crump and Lentz
action, the district court held it lacked jurisdiction over these
issues.
On granting the motion to dismiss, the district court ruled:
in the earlier arbitration, KCS should have presented a claim that
CN/IC owed it indemnification; and KCS forfeited any
indemnification claim after the dismissal of the Crump and Lentz
action and the close of the arbitration hearing. In its analysis,
the district court quoted its 13 August 2003 denial of the motion
to reopen the Crump and Lentz action and held: “The same analysis
holds true in the current dispute and, thus, this Court finds it is
without jurisdiction to hear these previously decided issues”.
Kansas City S. Ry. Co. v. Can. Nat’l/Ill. Cent. R.R. Co., No. 03-
3064, 2004 WL 1638115, at *5 (E.D. La. 20 July 2004) (unpublished).
5
(The district court did not reach the issue of indemnity or any res
judicata effect of the arbitration agreement on KCS’ claims, other
than, as stated, to note KCS “could have and should have” raised
these claims in the arbitration. Id.) The district court did not
reach CN/IC’s improper-venue claim.
II.
Because the dismissal for lack of jurisdiction is the only
issue presented, we do not consider the improper-venue motion. A
lack-of-subject-matter-jurisdiction dismissal is reviewed de novo,
e.g., Krim v. pcOrder.com, Inc., 402 F.3d 489, 493 (5th Cir. 2005),
as is the res judicata effect of a prior judgment, Davis v. Dallas
Area Rapid Transit,
383 F.3d 309, 313 (5th Cir. 2004).
KCS contends: the district court erred in concluding the
question of CN/IC’s duty to indemnify KCS was within the scope of
the arbitration; KCS’ indemnity rights were not ripe for
arbitration; and those rights were not the proper subject of
arbitration because those proceedings were not meant to assign
liability for the accident. KCS requests either reversal of the
district court’s order or a return to arbitration to address KCS’
indemnity rights.
CN/IC responds: the district court’s denial of the motion to
reopen the Crump and Lentz action was a final, controlling ruling
on the subject-matter-jurisdiction issue and stands as res judicata
to the instant action; KCS’ assertion of subject matter
6
jurisdiction is barred by collateral estoppel; res judicata also
bars KCS’ indemnity claim because it should have been addressed at
arbitration; and the appropriate remedy was for KCS to appeal the
denial of the motion to reopen the Crump and Lentz action, not file
the instant action.
KCS replies that CN/IC cannot assert the affirmative defenses
of res judicata or collateral estoppel because it did not do so in
its motion to dismiss; and that collateral estoppel and res
judicata do not apply because the issue of KCS’ indemnity was not
raised or litigated in the prior arbitration or district court
proceedings.
The district court ruled correctly. In so holding, we do not
decide, inter alia, whether the parties may return to arbitration.
A.
1.
Generally, res judicata is an affirmative defense which must
be raised in a party’s first responsive pleading. FED. R. CIV. P.
8(c); e.g., Nagle v. Lee, 807 F.2d 435, 438 (5th Cir. 1987). CN/IC
did not answer KCS’ complaint; instead, pursuant to Rule 12(b)
(party may raise lack-of-subject-matter-jurisdiction defense by
motion), its first responsive pleading was its motion to dismiss,
in which it properly asserted res judicata concerning subject
matter jurisdiction and indemnity. See
Nagle, 807 F.2d at 439.
Apparently, the district court adopted CN/IC’s res judicata
7
contention when it held “it [was] without jurisdiction to hear
these previously decided issues”. Kansas City, 2004 WL 1638115, at
*5.
In any event, this matter fits both exceptions for addressing
res judicata sua sponte. A court may do so “in the interest of
judicial economy when [,as here,] both actions were brought before
the same court”. Mowbray v. Cameron County, Tex., 274 F.3d 269,
281 (5th Cir. 2001), cert. denied,
535 U.S. 1055 (2002) (citing
Boone v. Kurtz,
617 F.2d 435, 436 (5th Cir. 1980)). Also, “where
all of the relevant facts are contained in the record ... and all
are uncontroverted”, a court “may not ignore their legal effect,
nor may [it] decline to consider the application of controlling
rules of law to dispositive facts, simply because neither party has
seen fit to invite [the court’s] attention by technically correct
and exact pleadings”.
Id. at 281 (citing Am. Furniture Co. v.
Int’l Accommodations Supply,
721 F.2d 478, 482 (5th Cir. Unit A
Mar. 1981)). KCS’ motion to reopen the Crump and Lentz action and
KCS’ instant action concern CN/IC’s responsibility vel non to
indemnify KCS, and they were brought before the same court. The
underlying facts are uncontroverted; and the district court
previously, conclusively held it lacks jurisdiction over KCS’
indemnity claims.
8
2.
A prior judgment acts as res judicata to preclude further
consideration when: “(1) ... the prior judgment [was] rendered by
a court of competent jurisdiction; (2)... there [was] a final
judgment on the merits; (3) ... the parties, or those in privity
with them, [were] identical in both suits; and (4) ... the same
cause of action [was] involved in both suits”. Mowbray, 274 F.3d
at 282 (internal quotation omitted). “It has long been the rule
that principles of res judicata apply to jurisdictional
determinations – both subject matter and personal.” Ins. Corp. of
Ir., Ltd. v. Compagnie des Bauxites de Guinee,
456 U.S. 694, 702
n.9 (1982).
In denying KCS’ motion to reopen the Crump and Lentz action,
the district court ruled it lacked subject matter jurisdiction over
KCS’ indemnity claim because that claim was covered by the binding
arbitration agreement in the JFA. Crump, 2003 WL 21999334, at *2
(“The arbitration clause requires all claims to be arbitrated.”).
This was a final determination of the court’s subject matter
jurisdiction for this claim; rendered by a court of competent
jurisdiction; involving the same parties and the same claim as the
current action.
“If the parties against whom judgment was rendered did not
appeal, the judgment becomes final and the court’s subject matter
jurisdiction is insulated from collateral attack.” Royal Ins. Co.
9
of Am. v. Quinn-L Capital Corp., 960 F.2d 1286, 1293 (5th Cir.
1992), cert. denied,
511 U.S. 1032 (1994). As discussed, KCS did
not appeal the denial of its motion to reopen the Crump and Lentz
action; it may not now re-litigate subject matter jurisdiction.
B.
In general, “the dismissal of a complaint for lack of [subject
matter] jurisdiction does not adjudicate the merit[s] so as to make
the case res judicata on the substance of the asserted claim”.
Boone, 617 F.2d at 436 (emphasis added); see also Home Builders
Ass'n of Miss., Inc. v. City of Madison, Miss.,
143 F.3d 1006, 1013
(5th Cir. 1998). As discussed, because the district court held in
a previous, final decision that it lacked subject matter
jurisdiction over KCS’ indemnity claim against CN/IC for damages
arising from the Crump and Lentz action, it held it was without
jurisdiction over the instant complaint. In upholding the
dismissal, we decide neither the merits of the indemnity issue nor
whether the parties may return to arbitration to resolve them.
III.
For the foregoing reasons, the judgment is
AFFIRMED.
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