Filed: Oct. 07, 1998
Latest Update: Mar. 02, 2020
Summary: United States Court of Appeals FOR THE EIGHTH CIRCUIT No. 95-3852/3884SDFS Clifton Berglee, * * Appellant/Cross-Appelle, * * Appeal from the United States vs. * District Court for the First National Bank, Bookings, * District of South Dakota South Dakota, * * Appellee/Cross-Appellant. * Appellant/cross-appellee Berglee’s petition for panel rehearing is granted, and the clerk is directed to vacate the court’s June 11, 1998 opinion and judgment. The clerk is directed to file the attached revised o
Summary: United States Court of Appeals FOR THE EIGHTH CIRCUIT No. 95-3852/3884SDFS Clifton Berglee, * * Appellant/Cross-Appelle, * * Appeal from the United States vs. * District Court for the First National Bank, Bookings, * District of South Dakota South Dakota, * * Appellee/Cross-Appellant. * Appellant/cross-appellee Berglee’s petition for panel rehearing is granted, and the clerk is directed to vacate the court’s June 11, 1998 opinion and judgment. The clerk is directed to file the attached revised op..
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United States Court of Appeals
FOR THE EIGHTH CIRCUIT
No. 95-3852/3884SDFS
Clifton Berglee, *
*
Appellant/Cross-Appelle, *
* Appeal from the United States
vs. * District Court for the
First National Bank, Bookings, * District of South Dakota
South Dakota, *
*
Appellee/Cross-Appellant. *
Appellant/cross-appellee Berglee’s petition for panel
rehearing is granted, and the clerk is directed to vacate the
court’s June 11, 1998 opinion and judgment. The clerk is directed
to file the attached revised opinion and to issue a new judgment in
accordance with the revised opinion.
October 7, 1998
Order Entered at the Direction of the Court:
Clerk, U.S. Court of Appeals, Eighth Circuit
United States Court of Appeals
FOR THE EIGHTH CIRCUIT
_______________
Nos. 95-3852/3884
_______________
Clifton Berglee, *
*
Appellant/Cross-Appellee, *
* Appeals from the United States
v. * District Court for the
* District of South Dakota.
First National Bank, Brookings, *
South Dakota, *
*
Appellee/Cross-Appellant. *
___________
Submitted: April 16, 1998
Filed: October 7, 1998
___________
Before HANSEN, MORRIS SHEPPARD ARNOLD, and MURPHY, Circuit Judges.
___________
PER CURIAM.
Clifton Berglee appeals from the district court&s order granting First National
Bank (Bank) summary judgment on four of his claims for relief against the Bank
because of res judicata. The Bank cross-appeals from the grant of summary judgment
for Berglee on his claim for coercive relief. Berglee further appeals from the court&s
calculation of prejudgment interest awarded on his coercive-relief claim, and both
parties appeal the denial of their postjudgment motions. We reverse and remand.
This case has a long history and is a somewhat tangled skein. On October 4,
1989, the Bank paid $252,876.71 out of Berglee&s account--a line of credit supported
by a promissory note--to a cattle feeder named Woehlhaff without Berglee&s personal
authorization. In 1990, Berglee filed an action in Montana state court seeking a
declaratory judgment that he did not owe the Bank for these unauthorized
disbursements. The Bank removed the suit to the Montana federal district court and
filed a setoff and an unjust enrichment counterclaim; the Bank later dismissed its setoff
counterclaim, and following a bench trial the district court--applying Montana law--
dismissed the unjust enrichment counterclaim, ruled the disbursements were
unauthorized, and awarded Berglee monetary damages in the amount of the
disbursements. The Ninth Circuit, however, vacated the judgment; remanded the case
for application of South Dakota law; and ordered the district court to enter only a
declaratory judgment, because Berglee did not sue for a money judgment, and “did not
offer evidence upon which such a judgment could properly be based.” See Berglee v.
First Nat&l Bank, No. 92-35242, 1993 WL 61388, at *3 (9th Cir. Mar. 8, 1993)
(unpublished opinion) (Berglee I).
On remand, Berglee filed an amended complaint alleging new claims for
monetary relief, which were discovered at trial. In February 1994, the court granted
the Bank&s motion for summary judgment on these new claims, stating the court could
not deviate from the Ninth Circuit&s instructions to enter a declaratory judgment, but
noting “this opinion does not address Berglee&s right to assert these claims in a separate
action filed in the appropriate jurisdiction. Rather, this order solely addresses Berglee&s
right to assert new claims for monetary relief in what was charged, tried, adjudged,
appealed and finally remanded as a declaratory judgment.” J.A. at 85. In September
1994, the Montana district court reformulated its prior judgment as a declaratory
judgment for Berglee, dismissing the Bank&s unjust enrichment counterclaim due to the
Bank&s wrongful conduct, unclean hands, and lack of good faith; and declaring the
Bank was not entitled to a setoff against the unauthorized disbursements to Woehlhaff.
In February 1995, the court denied Berglee&s 22 U.S.C. § 2202 motion for coercive
relief in the amount of the declaratory judgment, relying on the Ninth Circuit&s prior
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mandate not to award monetary damages. Neither Berglee nor the Bank appealed.
Also in December 1994, Berglee filed this present action for coercive relief in
Montana state court. The case was removed to the Montana federal district court on
diversity grounds and transferred to the United States District Court for the District of
South Dakota. Berglee asserted four “tort claims,” and sought a coercive judgment to
enforce the Montana district court&s declaratory judgment. The South Dakota district
court granted the Bank summary judgment on Berglee&s tort claims, summarily
concluding Berglee was precluded by res judicata from raising claims he had failed to
raise in the prior declaratory judgment litigation. After determining the Montana
district court had not ruled on the merits of Berglee&s coercive-relief claim, the court
granted Berglee summary judgment on that claim and awarded Berglee prejudgment
interest. The court subsequently denied both the Bank's and Berglee&s postjudgment
motions pertaining to the calculation of the award of coercive relief and prejudgment
interest. Both Berglee and the Bank appeal.
We review a grant of summary judgment de novo, see Madewell v. Downs, 68
F.3d 1030, 1036 (8th Cir. 1995), and apply South Dakota&s preclusion rules to
determine the preclusive effect of the Montana district court&s prior judgment, see
Follette v. Wal-Mart Stores, Inc.,
41 F.3d 1234, 1237 (8th Cir. 1994), reh&g,
47 F.3d
311 (8th Cir.), cert. denied,
516 U.S. 814 (1995).
We conclude res judicata does not bar Berglee from litigating his tort claims,
because in the prior dismissal of these claims, the United States District Court for the
District of Montana explicitly stated that the court was not addressing Berglee&s right
to bring these claims in a separate action. Such a dismissal is not a decision on the
merits. See Allan v. Sheesley, 447 N.W.2d 361, 363 (S.D. 1989) (prior action
accorded res judicata effect only if judgment on merits rendered). Furthermore, the
Montana district court, relying on the Ninth Circuit's mandate, specifically precluded
Berglee from bringing these claims--which were discovered at the trial of the
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declaratory judgment action--as part of that declaratory judgment action. Although
Berglee was permitted to state his new additional tort claims in the form of an amended
complaint in the declaratory judgment case after the Ninth Circuit's remand, the
Montana district court made it clear that he was not given leave to expand the issues
and strictly enforced the Ninth Circuit's remand. See Mem. and Order (Feb. 3, 1994),
J.A. at 84. Consequently, the tort claims dismissed by the South Dakota district court
could not have been brought in the prior declaratory judgment action.
We further conclude that Berglee is not entitled to summary judgment on his
claim for coercive relief. As the district court recognized, South Dakota law seemingly
permits Berglee to pursue further, coercive relief to enforce the original declaratory
judgment. See Carver v. Heikkila, 465 N.W.2d 183, 186 (S.D. 1991) (plaintiff who
wins declaratory relief may pursue further coercive relief in action for same claim
underlying declaratory judgment, even if plaintiff could have requested such relief
initially). However, no money judgment is supported by the evidence presented. The
Bank made unauthorized disbursements "to Woehlhaff in the amount of $252,876.71"
(Berglee I,
1993 WL 61388 at *1) and was instructed by the court that Berglee "did not
owe this money to the Bank on the note."
Id. at *3. To force the bank both to credit
Berglee's debt for this amount and to pay him that same amount would constitute a
double recovery for Berglee.
On the other hand, there is no evidence in the record before us that the Bank
actually did credit Berglee with $252,876.71, as of October 4, 1989, the date of the
unauthorized disbursements, as mandated by the Ninth Circuit and the district court
of Montana. In response to Berglee's petition for rehearing of our original panel
opinion, the Bank asserts that we should infer it has complied with the Ninth Circuit's
mandate from the fact that it has not attempted to collect that debt from Berglee without
showing us in a simple, straightforward way that it has done so. There are many other
inferences which could be drawn from the asserted decision not to pursue the debt,
many of which do not tend to prove the Bank's compliance. One such inference is that
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the Bank sold Berglee's cattle, applied the proceeds of the sale against his promissory
note, but never issued him credit for the $252,876.71. If one infers this, the Bank
would not initiate collection action because it has retained a greater portion of the
proceeds from the cattle sale than that to which it was entitled. In such a case, it would
not be eager to initiate a collection proceeding which might clarify the accounting.
We decline to draw this or any other inference. We have remanded for trial
Berglee's claim that the Bank converted his cattle, along with the rest of his claims
against the Bank. Berglee alleges that the Bank sold nearly $1.2 million worth of cattle
and applied the proceeds against a debt of a considerably smaller amount. If he proves
this, he may be entitled to a recovery. If his proof fails, he may not recover. But
whatever else he may show regarding the value of cattle sold or the amount he owed
the Bank, it is long since settled that his debt to the Bank does not include the
$252,876.71 disbursed on October 4, 1989, or any interest assessed on that amount.
(See, e.g., Mont. Dist. Ct. J. (Sept. 20, 1994); J.A. at 88.)
The district court, in awarding Berglee his requested coercive relief, also granted
him prejudgment interest from the date of the Montana district court judgment. Our
resolution of this case precludes an award of prejudgment interest at this stage of the
litigation. Nonetheless, we make clear that, as a result of the previous proceedings in
the Ninth Circuit, the Bank must credit Berglee's account with $252,876.71, and that
credit must be given as of October 4, 1989, the date of the unauthorized disbursement.
Berglee did not receive a money judgment from the Montana district court, and
therefore his relief cannot be increased by an amount of interest, as though he had
actually prevailed on his claim at an earlier date. But, by entering the credit to which
he is entitled as of the very date on which the Bank made its unauthorized
disbursements, Berglee is absolved of responsibility for paying any interest on the
unauthorized $252,876.71 from October 4, 1989, forward. However, as the litigation
over his remaining claims advances, the correct assessment of the parties' obligations
will undoubtedly hinge on the effective date of that credit.
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Since Berglee is not entitled to coercive relief enforcing the judgment of the
Montana district court, the parties' appeals from the denials of their postjudgment
motions are dismissed as moot.
Accordingly, we reverse the judgment of the district court awarding coercive
relief to Berglee and dismissing Berglee's tort claims. We remand for further
proceedings consistent with this opinion.
A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
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