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The PPW Royalty Trust, etc. v. George Barton, 15-1464 (2016)

Court: Court of Appeals for the Eighth Circuit Number: 15-1464 Visitors: 25
Filed: Aug. 11, 2016
Latest Update: Mar. 03, 2020
Summary: United States Court of Appeals For the Eighth Circuit _ No. 15-1464 _ The PPW Royalty Trust Dated September 27, 1989, by and through Donald G. Petrie, its Trustee; The Estate of Patricia P. Willits, by and through Donald G. Petrie, its Personal Representative; The Estate of William G. Parrott, Jr., by and through Peggy Parrott, its Personal Representative; The Patricia P. Willits Trust Dated July 31, 2003, by and through Donald G. Petrie, its Trustee; The Parrott Revocable Trust dated March 16,
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                  United States Court of Appeals
                              For the Eighth Circuit
                          ___________________________

                                  No. 15-1464
                          ___________________________

    The PPW Royalty Trust Dated September 27, 1989, by and through Donald G.
    Petrie, its Trustee; The Estate of Patricia P. Willits, by and through Donald G.
   Petrie, its Personal Representative; The Estate of William G. Parrott, Jr., by and
   through Peggy Parrott, its Personal Representative; The Patricia P. Willits Trust
    Dated July 31, 2003, by and through Donald G. Petrie, its Trustee; The Parrott
 Revocable Trust dated March 16, 2012, by and through Peggy Parrott, its Trustee;
     The David E.C. Parrott Irrevocable Trust Dated November 23, 2009, by and
 through Donald G. Petrie, its Trustee; The Delyn P. Drake Irrevocable Trust Dated
  November 23, 2009, by and through Donald G. Petrie, its Trustee; The Dianne P.
    Spook Irrevocable Trust Dated November 23, 2009, by and through Donald G.
  Petrie, its Trustee; The Pamela P. Waugh Irrevocable Trust Dated November 23,
    2009, by and through Donald G. Petrie, its Trustee; The William G. Parrott III
Irrevocable Trust Dated November 23, 2009, by and through Donald G. Petrie, its Trustee,

                        lllllllllllllllllllll Plaintiffs - Appellants,

                                             v.

    George A. Barton; The Law Offices of George A. Barton, P.C.; Gerard T.
Carmody; David H. Luce; Carmody MacDonald, P.C.; John C. Holstein; Polsinelli,
                                   P.C.,

                       lllllllllllllllllllll Defendants - Appellees.
                                        ____________

                      Appeal from United States District Court
                 for the Western District of Missouri - Kansas City
                                  ____________
                           Submitted: November 19, 2015
                              Filed: August 11, 2016
                                  ____________

Before COLLOTON, GRUENDER, and SHEPHERD, Circuit Judges.
                        ____________

COLLOTON, Circuit Judge.

       The PPW Royalty Trust and nine additional trusts and estates (collectively, “the
Trusts”) claim rights as the beneficiaries, successors, or assigns of the owners of coal
mining royalty interests in Kentucky. Over the course of two-and-a-half decades, the
Trusts and their predecessors have sued in both federal and state court over the scope
of their rights to receive royalty payments. In this case, the Trusts sued their former
attorneys, alleging legal malpractice based on the adverse outcome of one of these
cases. The Trusts assert that the attorneys committed malpractice by failing to raise
preclusion arguments based on the outcome of a prior case. The Trusts also assert that
the attorneys committed malpractice by failing to raise certain constitutional
arguments at an earlier phase. The district court1 dismissed the Trusts’ complaint,
concluding that assertion of these arguments would not have changed the outcome of
the case. We affirm.

                                           I.

      This case arises out of a lengthy and complex series of events involving coal
mining rights in Kentucky. In 1946, W.G. Parrott conveyed certain land in Ohio
County, Kentucky, to Beaver Dam Coal Company, and Beaver Dam leased the coal
mining rights on that land back to Parrott. Willits v. Peabody Coal Co. (Willits I),
Nos. 98-5458, 98-5527, 
1999 WL 701916
, at *1 (6th Cir. Sept. 1, 1999). This lease

      1
        The Honorable Beth Phillips, United States District Judge for the Western
District of Missouri.

                                          -2-
is described by the parties as the Beaver Dam lease. At the time, Parrott controlled
two companies known as Rough River Coal Company and Alston Coal Company.
Parrott assigned his mining rights under the Beaver Dam lease to Rough River in
exchange for a royalty interest on coal mined by Rough River within certain defined
boundary areas. In 1947, Rough River assigned the coal leases to Alston. 
Id. In 1954,
Alston and Parrott substituted two new royalty agreements for those
that arose from Parrott’s transaction with Rough River. 
Id. One agreement
granted
royalties to Parrott and his wife, Pauline, and the other granted royalties to Pauline and
the couple’s children, Patricia Willits and William G. Parrott, Jr. Under the new
agreements, Alston agreed to pay the Parrotts a portion of the average gross
realization on coal mined within certain defined boundary areas. The 1954 royalty
agreements granted the Parrotts a smaller royalty percentage than the original 1946
agreement and expanded the boundary areas covered by the agreement. Peabody Coal
Company later assumed Alston’s obligations and liabilities under the royalty
agreements. The Parrotts assigned their royalty interests in equal shares to their
children in 1959, and the Parrott children later distributed their interests to a collection
of trusts.

                                            A.

       In 1990, Willits, Parrott, Jr., and the PPW Royalty Trust (collectively, “the
Parrott plaintiffs”) sued Peabody Coal Company in federal court in the Western
District of Kentucky, alleging breach of contract and fraud based on underpayment
of royalties. See Willits I, 
1999 WL 701916
, at *2. Attorney George Barton
represented the Parrott plaintiffs in Willits I. Peabody filed a counterclaim,
contending that the royalty agreements violated the rule against perpetuities. 
Id. Peabody argued
that the agreements purported to grant the Parrott plaintiffs the right
to receive royalties based on coal mined from land within the boundary areas but



                                            -3-
acquired by Alston—and later Peabody—after the date of the agreement. For this
reason, Peabody asserted, the agreements violated the rule against perpetuities.

      On July 3, 1991, the district court issued an order dismissing Peabody’s
counterclaim. The court observed that “the agreements in question create no interest
whatsoever in land or in the coal leases themselves” but rather created “obligations
personal to the parties to those agreements.” The court concluded that “[t]he Royalty
Agreements therefore are not subject to and do not violate the Rule Against
Perpetuities, whether they cover ‘after-acquired’ property or not.” The case proceeded
on other claims.

       Several years later in 1997, the district court revisited its 1991 order. The
Parrott plaintiffs argued that the court’s 1991 order dismissing Peabody’s
counterclaim necessarily held that the royalty agreements required Peabody to pay
royalties for coal mined from “after-acquired” property. The district court observed
that the 1991 order did not determine whether the agreements covered “after-
acquired” property and that a 1995 order found a genuine issue of material fact on that
question. Yet the court noted that “the defendant has conceded that, barring its statute
of limitations and relation back objections, summary judgment for the plaintiff is
appropriate.” Relying on that concession and rejecting Peabody’s statute of
limitations argument, the court granted summary judgment for the Parrott plaintiffs
on royalty claims based on coal mined from three “after-acquired” properties (Count
VIII of the Third Amended Complaint).

       The case went to trial on the remaining claims, and the jury returned a verdict
in favor of the Parrott plaintiffs on one breach of contract claim and in favor of
Peabody on all remaining claims. 
Id. at *4.
Both parties appealed to the Sixth Circuit.
Peabody challenged, among other things, the district court’s 1991 order dismissing its
counterclaim. 
Id. at *5.
The Sixth Circuit affirmed the district court’s determination
that the royalty agreements did not violate the rule against perpetuities, but declined

                                          -4-
to accept “the district court’s reasoning that the perpetual nonparticipating royalty
interests at issue are contractual rights, as opposed to interests in property.” 
Id. at *19.
The court of appeals concluded instead that “the royalty interest vested when it was
created, even though it was uncertain in the enjoyment.” 
Id. at *20.
The court thus
determined that “[t]he royalty holder owns a fee simple interest in Peabody’s
contingency” and that none of the plaintiffs’ claims were precluded by operation of
the rule against perpetuities. 
Id. The Sixth
Circuit also reversed the district court’s determination on the statute
of limitations that governed the Parrott plaintiffs’ claim concerning after-acquired
property. 
Id. at *19.
On remand, therefore, the district court entered an amended
judgment in favor of Peabody on the Parrott plaintiffs’ claim for royalties from the
three after-acquired properties. Add. 42.

                                            B.

       After Willits I, Peabody engaged in several land transactions. Peabody acquired
the Beaver Dam Coal Company and its interests within the defined boundaries. In
2007, the Beaver Dam lease, which predated and was subject to the 1954 royalty
agreements, was terminated by agreement. The mining rights under that lease merged
with the fee simple property interest, then owned by Peabody through its Beaver Dam
subsidiary. Additional tenancies in common that predated and were subject to the
1954 agreements were also joined into a single owner in one of Peabody’s
subsidiaries, terminating the tenancies in common. Peabody sold the land that
formerly made up the tenancies in common to the Armstrong Coal Company, which
then began mining coal from the property without paying royalties to the Parrott
plaintiffs.

       In 2008, the Parrott plaintiffs sued Peabody and Armstrong in Missouri state
court, alleging that the companies had failed to pay royalties under the 1954

                                            -5-
agreements. The Parrott plaintiffs also sought a declaratory judgment that the
agreements required the companies to pay royalties on coal mined by Armstrong as
its “successor or assignee.” Willits v. Peabody Coal Co. (Willits II), 
332 S.W.3d 260
,
262-63 (Mo. Ct. App. 2010). Peabody and Armstrong moved for summary judgment,
arguing that the termination of the Beaver Dam lease and the tenancies in common
ended the royalty agreements and that Armstrong was not an assign of Peabody.
Attorney Barton again represented the Parrott plaintiffs in Willits II; he was joined as
co-counsel by attorneys Gerard Carmody and David Luce.

       The Missouri circuit court granted summary judgment for Peabody and
Armstrong. The court observed that the case hinged on “whether the 1954 royalty
agreements between Alston Coal Co. and William and Pauline Parrott are a product
of and dependent upon the Beaver Dam lease and [the tenancies in common].” The
court noted that “[a]s a matter of law, the royalty obligation cannot encumber anything
greater than the estate held by Alston Coal Co. at the time the agreement was entered
into and may only obligate future assignees to the extent that the Alston interests
continue to exist.” Because Alston held interests as a lessee and tenant in common
when it entered into the 1954 royalty agreements, the court determined that Alston
“lacked the capacity to grant anything but an overriding royalty,” and could not
“obligate subsequent fee simple landowners” to pay royalties.

       The court went on to conclude that the royalty interests “depend[ed] on the
existence of the original Parrott mineral lease and the tenancies in common.”
Therefore, the termination of the Beaver Dam lease and the tenancies in common
extinguished the plaintiffs’ royalty interests in question. The court further determined
that Armstrong was not a successor or assign of Peabody because the obligations
imposed by the agreements did not survive the termination of the underlying property
interests. The circuit court thus granted summary judgment for Peabody and
Armstrong, having concluded that they “have no further obligation to pay royalties to
plaintiffs on coal mined on or after January 31, 2007.”

                                          -6-
        The Parrott plaintiffs appealed to the Missouri Court of Appeals. The court of
appeals agreed that the royalty interest did not survive the termination of the Beaver
Dam lease and the tenancies in common. 
Id. at 264-65.
The court characterized the
royalty interest as an “overriding royalty interest” which “is an interest in the lease out
of which it is carved, and cannot be a property interest of greater dignity than the lease
itself.” 
Id. at 264
(quoting Olson v. Continental Res., Inc., 
109 P.3d 351
, 354 (Okla.
Civ. App. 2004)). Because the court concluded that the royalty interest had been
terminated, the court did not reach the question whether Armstrong was an assign or
successor of Peabody under the royalty agreements. 
Id. at 265.
       After the decision of the Missouri Court of Appeals, the Parrott plaintiffs
retained attorney John Holstein to act as co-counsel with attorneys Barton, Carmody,
and Luce to file a motion for rehearing and/or transfer to the Missouri Supreme Court.
In their motion, the Parrott plaintiffs argued that the Missouri Court of Appeals
decision in Willits II contradicted the unambiguous terms of the 1954 royalty
agreements and case law regarding the interpretation and enforcement of
unambiguous contracts. They further argued that the Willits II court’s decision
“overlooks, does not address, and directly conflicts with [Willits I].” The Missouri
Court of Appeals denied both rehearing and transfer. 
Id. at 260.
The Parrott plaintiffs
then filed an application for transfer with the Missouri Supreme Court, which was also
denied. 
Id. C. Dissatisfied
with the outcome of Willits II, the Parrott plaintiffs filed another
lawsuit against Peabody, Armstrong, and the State of Missouri in Missouri state court.
 Willits v. Peabody Coal Co. (Willits III), 
400 S.W.3d 442
, 447 (Mo. Ct. App. 2013).
Attorney Barton represented the Parrott plaintiffs in Willits III. The Parrott plaintiffs
alleged several constitutional claims against the State of Missouri: that the Willits II
courts had violated the Full Faith and Credit Clause by refusing to adhere to the earlier

                                           -7-
federal court judgments in Willits I, that the decisions of Willits II courts were an
unconstitutional judicial taking under both the federal and Missouri constitutions, and
that the Willits II decisions violated the Parrott plaintiffs’ substantive due process
rights under both the federal and Missouri constitutions. The Parrott plaintiffs did not
assert any claims against Peabody or Armstrong in Willits III but joined them as
“affected parties” under Missouri law. 
Id. at 447
n.8.

       Peabody, Armstrong, and the State of Missouri moved to dismiss the complaint.
The circuit court questioned whether the State could be liable for acts of the state
judiciary, but determined in any event that the Willits II courts exercised a “judicial
function” in deciding the previous cases and were therefore protected by judicial
immunity. The court further reasoned that the Parrott plaintiffs raised the issue of full
faith and credit in Willits II and that the argument was rejected by both the trial court
and the appellate court. The court concluded that the Parrott plaintiffs did not
establish a due process violation and that the judicial takings claims failed because
“[t]he State did not initiate the action, change existing law, or derive any benefit as the
result of the decision.” As a result, the circuit court granted the defendants’ motion
to dismiss. The Missouri Court of Appeal affirmed on the alternative ground that the
Parrott plaintiffs waived their constitutional arguments by failing to raise them at the
first opportunity in Willits II. 
Id. at 448.
                                            D.

       This lawsuit was next. Willits and Parrott, Jr. died in 2012. Their estates and
a collection of trusts that received their respective royalty interests sued the attorneys
who represented the Parrott plaintiffs in the prior actions. As relevant to this appeal,
the Trusts alleged that the former attorneys committed malpractice by failing to raise
preclusion arguments in Willits II based on the federal court judgments in Willits I.
The Trusts further argued that their attorneys were negligent in waiving arguments
based on theories of judicial takings and substantive due process in Willits II. The

                                           -8-
attorneys moved to dismiss the complaint for failure to state a claim. See Fed. R. Civ.
P. 12(b)(6).

        The district court found that the Trusts failed to state a malpractice claim based
on failure to assert preclusion arguments, because Willits I and Willits II did not decide
the same issues and claims. The court observed that Willits I addressed whether the
1954 royalty agreements were void under the rule against perpetuities. Willits II, on
the other hand, considered whether the royalty interests survived the termination of
the Beaver Dam lease and certain tenancies in common. Further, the court determined
that “the claims and issues in Willits II could not have been litigated in Willits I,”
because the termination of the land interests at issue in Willits II did not occur until
after Willits I was decided. The court also noted that the Trusts’ attorneys did raise
full faith and credit arguments in Willits II, and that the attorneys “generally argued
that Willits I was a controlling authority.” The district court therefore determined that
assertion of these preclusion arguments would not have changed the outcome of
Willits II.

       The district court also considered the Trusts’ argument that the attorneys were
negligent in failing to allege unconstitutional judicial takings and violations of
substantive due process in Willits II. The court observed that there was no taking of
private property for public use and that the Willits II ruling “did not so clearly deviate
from established precedent such that it amounted to ‘judicial elimination of
established property rights’” or a violation of due process. Concluding that the Trusts
failed to state a claim for legal malpractice, the district court dismissed the complaint.

                                           II.

      We review de novo the granting of a motion to dismiss. Murphy v. Aurora
Loan Servs., LLC, 
699 F.3d 1027
, 1033 (8th Cir. 2012). We accept as true the well-



                                           -9-
pleaded allegations in the complaint and draw all reasonable inferences in favor of the
non-moving party, but we are “not bound to accept as true a legal conclusion couched
as a factual allegation.” Ashcroft v. Iqbal, 
556 U.S. 662
, 678 (2009) (quoting Bell Atl.
Corp. v. Twombly, 
550 U.S. 544
, 555 (2007)). We also take judicial notice of the
opinions and orders from the prior Willits cases, including the facts of what issues and
claims were litigated, although we do not accept as true any historical facts found in
those decisions that would be material to the issues here. See Levy v. Ohl, 
477 F.3d 988
, 991 (8th Cir. 2007); Holloway v. Lockhart, 
813 F.2d 874
, 878-79 (8th Cir. 1987);
Fed. R. Evid. 201(b).2

       To state a claim for legal malpractice under Missouri law, the Trusts must
establish four elements: (1) that an attorney-client relationship existed; (2) that the
defendant attorneys acted negligently or in breach of contract; (3) that such acts were
the proximate cause of the Trusts’ damages; and (4) that, but for the defendant
attorneys’ conduct, the Trusts would have been successful in the prosecution of their
underlying claim. Nail v. Husch Blackwell Sanders, LLP, 
436 S.W.3d 556
, 561 (Mo.
2014). In a legal malpractice case, “causation in fact requires proof that ‘but for’ the
attorney’s negligence, the result would have been different.” 
Id. at 562.
In granting
the attorneys’ motion to dismiss, the district court determined that the Trusts failed to
allege adequately that the attorneys were negligent or that the outcome of Willits II
would have been different if the attorneys had raised any of the theories identified by
the Trusts in their complaint.


      2
        The defendant attorneys moved to strike portions of the Trusts’ addendum on
appeal. We deny the motion as it relates to the Willits I court documents, because “we
may take judicial notice of proceedings in other courts that relate directly to matters
at issue.” Great Plains Trust Co. v. Union Pac. R.R. Co., 
492 F.3d 986
, 996 (8th Cir.
2007). The motion is denied as moot with regard to the remaining document, because
the material is unnecessary to our decision, and we do not consider it. See Stewart v.
Prof’l Comput. Ctrs., Inc., 
148 F.3d 937
, 940 n.3 (8th Cir. 1998).


                                          -10-
                                           A.

       The Trusts’ primary theory of legal malpractice is that the attorneys acted
negligently in failing to raise preclusion arguments in Willits II. As a matter of federal
common law, state courts must give a final federal judgment in a diversity case like
Willits I the same preclusive effect that the judgment would receive under state law
in the State where the federal court sits. Semtek Int’l Inc. v. Lockheed Martin Corp.,
531 U.S. 497
, 506-08 (2001). Willits I was litigated in the Western District of
Kentucky, and the parties agree that the district court properly applied Kentucky
preclusion law. Under Kentucky law, the doctrine of res judicata is comprised of
issue preclusion and claim preclusion. The doctrine “stands for the principle that once
the rights of the parties have been finally determined, litigation should end.” Coomer
v. CSX Transp., Inc., 
319 S.W.3d 366
, 371 (Ky. 2010) (quoting Slone v. R & S
Mining, Inc., 
74 S.W.3d 259
, 261 (Ky. 2002)).

        Issue preclusion “bars the parties from relitigating any issue actually litigated
and finally decided in an earlier action.” Yeoman v. Commonwealth, 
983 S.W.2d 459
,
465 (Ky. 1998). It has five elements: (1) at least one party to be bound in the second
case must have been a party in the first case, (2) the issue in the second case must be
the same as the issue in the first case, (3) the issue must have been actually litigated
in the first case, (4) the issue must have been actually decided in that case, and (5) the
decision on the issue in the prior action must have been necessary to the court’s
judgment and adverse to the party to be bound. Miller v. Admin. Office of Courts, 
361 S.W.3d 867
, 872 (Ky. 2011).

      Claim preclusion “prohibits the relitigation of claims that were litigated or
could have been litigated between the same parties in a prior action.” 
Miller, 361 S.W.3d at 871
. For claim preclusion to apply, three elements must be shown:




                                          -11-
(1) identity of the parties, (2) identity of the causes of action, and (3) the prior action
must have been resolved on the merits. 
Yeoman, 983 S.W.2d at 465
.

                                            1.

       The Trusts first assert that their attorneys were negligent in failing to argue that
Willits I precluded relitigation of issues presented in Willits II. The Trusts identify
two propositions that they contend were established in Willits I: (1) that Peabody was
required to pay royalties on coal mined from “after-acquired” property, and (2) that
their royalty interest was “a vested fee simple property interest in perpetuity.” The
Trusts claim that the attorneys committed malpractice in Willits II by failing to
advance these preclusion theories.

       We reject the “after-acquired” property preclusion argument for two reasons.
First, on the Parrott plaintiffs’ claim in Willits I involving royalties from after-
acquired properties, the district court ultimately entered final judgment for Peabody
based on the statute of limitations. Add. 42; see Willits I, 
1999 WL 701916
, at *19.
Therefore, any decision about the Parrott plaintiffs’ entitlement to royalties from after-
acquired properties was not necessary to the judgment. Second, anything the district
court in Willits I said about royalties from after-acquired properties before it was
reversed did not address the same issue that was litigated in Willits II—i.e., whether
the royalty interests continued after termination of the Beaver Dam lease or the
tenancies in common. See 
Yeoman, 983 S.W.2d at 465
-66. The attorneys thus would
not have succeeded by arguing this aspect of issue preclusion.

       The Trusts next assert that Willits I determined that the royalty interest was “a
vested fee simple property interest in perpetuity.” The quoted phrase does not appear
in any order from Willits I. The Sixth Circuit ultimately characterized the royalty
interest as “a fee simple interest in Peabody’s contingency.” Willits I, 1999 WL



                                           -12-
701916, at *20. The Trusts contend, however, that Willits I determined that the
royalty interest was a perpetual nonparticipating royalty interest. They argue that if
their attorneys had asserted issue preclusion on that point, then the Willits II courts
could not have concluded that the royalty was instead an overriding royalty interest
that ended when the underlying lease terminated.

       We see no merit to this claim. As relevant to the Trusts’ claims, the Sixth
Circuit’s decision in Willits I was narrowly focused on whether the royalty interest
violated the rule against perpetuities. The court did not determine the precise nature
of the royalty interest. 
Id. at *19-20.
Although the court once referred to “the district
court’s reasoning that the perpetual nonparticipating royalty interests are contractual
rights, as opposed to interests in property,” 
id. at *19
(emphasis added), the opening
line of the opinion described the interests as “overriding royalty interests,” and twice
referred to Parrott receiving or assigning an “overriding royalty interest.” 
Id. at *1.
Therefore, the issue decided in Willits II—the continued validity of the royalty
interests after termination of the Beaver Dam lease and the tenancies in
common—was not actually decided or necessary to the court’s judgment in Willits I.
As such, the attorneys did not commit malpractice by failing to advance the issue
preclusion argument. See 
Nail, 436 S.W.3d at 562
.3




      3
        The Trusts argue on appeal that the attorneys were negligent in failing to argue
in Willits II that Willits I established that Armstrong was an “assign” under the royalty
agreements. The Trusts forfeited this argument by failing to raise it in the district
court, and the contention has no merit in any event. The court of appeals in Willits II
deemed it unnecessary to decide whether Armstrong was an assign, because the
answer did not affect the outcome of the 
case. 332 S.W.3d at 265
.


                                          -13-
                                           2.

        The Trusts also assert that their attorneys committed malpractice by failing to
argue for claim preclusion in Willits II based on Peabody’s failure to raise a
compulsory counterclaim in Willits I. Peabody prevailed in Willits II on the ground
that the termination of the Beaver Dam lease and certain tenancies in common
extinguished the royalty interest of the Parrott plaintiffs. The Trusts assert that
Peabody allowed two so-called “Bennett leases” to expire in 1964, thus merging them
into a fee simple estate owned by the Bennett family. They argue that Peabody in
Willits I could have raised a counterclaim that the expiration of the Bennett leases
terminated the 1954 royalty agreements. The Trusts fault their attorneys in Willits II
for failing to argue that Peabody was precluded from relying on the termination of the
Beaver Dam lease in Willits II when Peabody did not rely on the expiration of the
Bennett leases in Willits I.

       We agree with the district court that the proffered argument would not have
changed the outcome in Willits II. The Missouri courts in Willits II ruled that the
Parrott plaintiffs had a royalty interest in the Beaver Dam lease, and that their interest
could not be “a property interest of greater dignity than the lease 
itself.” 332 S.W.3d at 264
(quotation omitted). Thus, when the Beaver Dam lease terminated, the royalty
interest arising from that lease terminated. Peabody could not have raised this
argument in Willits I, because the Beaver Dam lease was not terminated until after
Willits I was resolved. See 
Coomer, 319 S.W.3d at 371-72
. Any argument in Willits I
based on the termination of the Bennett leases would have been limited to
extinguishing the royalty interest of the Parrott plaintiffs arising from the Bennett




                                          -14-
leases. The Trusts thus have not stated a malpractice claim based on failure to press
this preclusion theory in Willits II.4

                                             B.

       The Trusts also contend that the attorneys were negligent in failing to assert
constitutional arguments concerning judicial takings and substantive due process in
Willits II. Citing Stop the Beach Renourishment, Inc. v. Florida Department of
Environmental Protection, 
560 U.S. 702
(2010), the Trusts argue that the Missouri
courts committed a judicial taking and a substantive due process violation in Willits II
when they determined that the royalty interests were terminated. The Trusts contend
that the attorneys would have prevailed if they had raised these constitutional claims
in Willits II.

       We agree with the district court (and the state circuit court in Willits III) that the
constitutional arguments lack merit. In Stop the Beach, a plurality concluded that
courts may violate the Takings Clause by “declar[ing] that what was once an
established right of private property no longer 
exists.” 560 U.S. at 715
. The plurality
observed, however, that where “courts merely clarify and elaborate property
entitlements that were previously unclear, they cannot be said to have taken an
established property right.” 
Id. at 727;
see also In re Lazy Days’ RV Ctr., Inc., 
724 F.3d 418
, 425 (3d Cir. 2013) (stating that “adjudication of disputed and competing
claims cannot be a taking”). Willits II did not eliminate an established property right,


       4
        We reject the Trusts’ argument that the doctrine of judicial estoppel precludes
certain arguments raised by the attorneys that are allegedly inconsistent with
arguments they presented in Willits III. The attorneys were not parties in Willits III,
so the doctrine is inapplicable. Cf. Heinze v. Bauer, 
178 P.3d 597
, 603 (Idaho 2008)
(concluding that “statements made on behalf of a client . . . are not personal
admissions that may be used against the attorney in subsequent litigation”).


                                            -15-
but instead addressed the open question “whether the 1954 royalty agreements . . . are
a product of and dependent upon the Beaver Dam lease and [the tenancies in
common].” Willits 
II, 332 S.W.3d at 264
. The Missouri court merely clarified and
elaborated the rights of the Parrott plaintiffs under the royalty agreements, so a claim
of judicial taking would have failed. For the same reasons, the decision did not
eliminate an established property right in a way that might have implicated the Due
Process Clause. Cf. Stop the 
Beach, 560 U.S. at 735
(Kennedy, J., concurring). We
therefore conclude that the Trusts have also failed to state a legal malpractice claim
based on their constitutional theories.

                                   *       *       *

      The judgment of the district court is affirmed.
                     ______________________________




                                         -16-

Source:  CourtListener

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