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Miller v. Soo Line Railroad Co.

Court of Appeals of Minnesota

March 11, 2019

Daniel T. Miller, et al., Plaintiffs,
v.
Soo Line Railroad Company d/b/a Canadian Pacific, defendant and third party plaintiff, Respondent,
v.
Knoedler Manufacturers, Inc., et al., third party defendants, Appellants.

          Hennepin County District Court File No. 27-CV-14-8066

          Randall J. Pattee, Alex L. Rubenstein, Fox Rothschild LLP, Minneapolis, Minnesota; and Daniel J. Mohan, Daley Mohan Groble, P.C., Chicago, Illinois (for respondent)

          James T. Smith, Huffman, Usem, Crawford & Greenberg, P.A., Minneapolis, Minnesota (for appellants)

          Considered and decided by Bratvold, Presiding Judge; Halbrooks, Judge; and Jesson, Judge.

         SYLLABUS

         I. When a defendant/third-party plaintiff in a FELA action prevails on its claim for contribution and receives a money judgment, the third-party plaintiff is entitled to prejudgment interest under Minn. Stat. § 549.09, subd. 1(b) (2018).

         II. Prejudgment interest for a judgment of contribution damages is computed as provided in Minn. Stat. § 549.09, subd. 1(b), and runs from the date the damages were incurred, not from the date the contribution action was commenced.

          OPINION

          BRATVOLD, JUDGE

         In lawsuits that were later consolidated, three railroad employees sued their employer, respondent Soo Line Railroad Company d/b/a Canadian Pacific (Canadian Pacific), for personal injuries caused when their locomotive seats collapsed. Canadian Pacific filed a third-party complaint seeking contribution and/or indemnity from the seat manufacturers, appellants Knoedler Manufacturers Inc., and Knoedler Manufacturers Canada LTD (collectively, Knoedler). Knoedler filed a motion for summary judgment, arguing that Canadian Pacific's claims are preempted by federal law, specifically the Locomotive Inspection Act (the LIA). The district court disagreed, and denied Knoedler's motion.

         Canadian Pacific settled with the three employees, and its contribution claims against Knoedler went to trial. The jury's special verdict determined that Knoedler and Canadian Pacific both violated the LIA and their violations caused each employee's injuries. The jury's special verdict also allocated fault, finding that Knoedler and Canadian Pacific were each 50% at fault for each employee's injuries. The district court adopted the jury's special verdict, and based on its earlier finding that Canadian Pacific's settlements with the employees were reasonable, the district court directed entry of a judgment in Canadian Pacific's favor for half of the total settlement amount.

         Canadian Pacific then moved to amend the judgment to add prejudgment interest under Minn. Stat. § 549.09, subd. 1. Over Knoedler's opposition, the district court awarded prejudgment interest. At Canadian Pacific's request, the district court agreed to allow further briefing on how to compute the interest. The district court concluded that, under section 549.09, Canadian Pacific was entitled to prejudgment interest from the date that it commenced its consolidated third-party action against Knoedler. The district court directed entry of an amended judgment that included $110, 737 in prejudgment interest.

         Knoedler raises three issues on appeal. First, Knoedler argues that Canadian Pacific's contribution and/or indemnification claims are wholly preempted by federal law, therefore, the district court erred in denying Knoedler's motion for summary judgment. Second, Knoedler argues that Canadian Pacific is not entitled to prejudgment interest under Minn. Stat. § 549.09, subd. 1(b), because federal law governs the claim. Third, Knoedler argues, in the alternative, that if this court determines Canadian Pacific is entitled to prejudgment interest, then the district court used the wrong start date for its calculation of prejudgment interest.

         We affirm in part, reverse in part, and remand the district court's decision. The district court correctly rejected Knoedler's preemption challenge because the Minnesota Supreme Court determined in Engvall v. Soo Line Railroad Co. that the LIA does not preempt state common-law claims for contribution or indemnity that are asserted by a railroad against a manufacturer. 632 N.W.2d 560, 570-71 (Minn. 2001). Because Engvall is binding precedent and governs our analysis of this issue, we affirm the district court's denial of Knoedler's summary-judgment motion. The district court also correctly determined that Canadian Pacific is entitled to prejudgment interest under Minnesota law. While it is true that prejudgment interest is not recoverable in a FELA action brought in state court, Canadian Pacific commenced a common-law claim for contribution. The district court erred, however, in determining that Canadian Pacific is entitled to prejudgment interest from the date it commenced its consolidated third-party action. We conclude that Canadian Pacific is entitled to prejudgment interest from the date its contribution damages "were incurred," which is the date Canadian Pacific settled with each employee. See Minn. Stat. § 549.09, subd. 1(b).

         FACTS

         In 2013, three Canadian Pacific employees, Daniel Miller, Brandon Wolf, and Joseph Heilman, were injured as a result of the unexpected backwards collapse of their locomotive seats. Each of the three employees sued Canadian Pacific in a separate action, asserting that the railroad caused their injuries by (1) providing them with "unsafe" locomotives in violation of the Locomotive Inspection Act (LIA), and (2) failing to provide a "reasonably safe" place to work in accordance with the Federal Employers Liability Act (FELA).

         Beginning in August 2014, Canadian Pacific brought third-party contribution and/or indemnity claims against Knoedler in each of the three FELA lawsuits.[1] The third-party complaints alleged that the locomotive seats involved in all three cases were Knoedler brand seats, and that Knoedler failed to design and manufacture seats that complied with the LIA and "applicable federal regulations." Canadian Pacific asserted that if it was "found to be liable" to its employees, it was "entitled to indemnity or appropriate contribution" from Knoedler.

         The three FELA lawsuits were consolidated on October 16, 2015. Canadian Pacific served Knoedler with its consolidated third-party complaint on October 20, 2015. Between December 2015 and October 2016, Canadian Pacific reached settlements with each employee in the combined amount of $2, 464, 446.40.[2] Consistent with the settlement agreements, the district court dismissed the three FELA claims against Canadian Pacific.

         Knoedler filed a motion for summary judgment and argued that Canadian Pacific's contribution and/or indemnification claims are "preempted by federal law, namely the Locomotive Inspection Act." Knoedler asserted that Canadian Pacific's claims are based entirely "upon violations of the LIA and applicable federal regulations," and that the United States Supreme Court decided in Napier v. Atlantic Coast Line Railroad, 272 U.S. 605, 612-13, 47 S.Ct. 207, 209-10 (1926), that the "LIA fully occupies the field of locomotive design to the exclusion of all other state laws."

         Canadian Pacific opposed summary judgment and argued that the Minnesota Supreme Court previously rejected Knoedler's argument in a 2001 decision which reasoned, according to Canadian Pacific, that "the field preempted by the LIA does not include state common law actions based on a violation of the LIA." Engvall, 632 N.W.2d at 570-71. At a hearing on the motion, Knoedler argued that Engvall is no longer controlling because the United States Supreme Court had "revisited the issue" in Kurns v. R.R. Friction Prod. Corp., 565 U.S. 625, 132 S.Ct. 1261 (2012). The district court denied Knoedler's motion after determining that Engvall is still good law and held that claims for "contribution and indemnity [are] not preempted."

         Before the jury trial, Knoedler and Canadian Pacific exchanged written "global" settlement offers under Minn. R. Civ. P. 68.01. On February 27, 2017, Canadian Pacific made a settlement offer in the amount of $1, 750, 000. On March 2, 2017, Knoedler rejected Canadian Pacific's offer and made a counter-offer of $810, 000. No settlement was reached.

         At the close of a seven-day trial, the district court determined that Canadian Pacific's settlements with its three employees were reasonable as a matter of law.[3] The jury returned a verdict in favor of Canadian Pacific on its contribution claims. In its special verdict, the jury found that Knoedler violated the LIA by "providing seats which were (a) not in proper condition and safe to use in locomotives without unnecessary danger of personal injury and/or were (b) not securely mounted and braced." The jury also determined that Knoedler's LIA violation caused the injuries sustained by each of the three Canadian Pacific employees. Additionally, the jury determined that Canadian Pacific violated the LIA, and also caused each employee's injuries. Finally, the jury allocated the fault of each party for the injuries sustained by each employee, finding that Knoedler was 50% at fault, as was Canadian Pacific. After the jury verdict, the district court directed entry of judgment for Canadian Pacific in the amount of $1, 232, 223.20.

         In April 2017, Canadian Pacific filed a motion for prejudgment interest under Minn. Stat. § 549.09, subd. 1, arguing that the district court should award interest on the judgment running from the dates that it had settled with each employee. Knoedler opposed and argued, in part, that the district court should award prejudgment interest only on the amount of Knoedler's final settlement offer to Canadian Pacific, which was $810, 000, because Knoedler's offer was "closer to the jury's verdict sum than [Canadian Pacific's offer]." See Minn. Stat. § 549.09, subd. 1(b) ("If the amount of the losing party's offer was closer to the judgment or award than the prevailing party's offer, the prevailing party shall receive interest only on the amount of the settlement offer or the judgment or award, whichever is less . . . .").

         In a written decision, the district court granted Canadian Pacific's motion for prejudgment interest, but agreed with Knoedler that section 549.09 "limits the sum by which prejudgment interest can be calculated to $810, 000." The district court also determined that prejudgment interest should be computed from the dates that Knoedler was notified of the three FELA settlements and end on the date of Knoedler's $810, 000 settlement offer. Following this reasoning, the district court determined that Canadian Pacific is entitled to $47, 702.52 in prejudgment interest.

         Canadian Pacific requested leave, via letter, to file a motion to reconsider the amount of prejudgment interest because "the starting dates used to calculate [Canadian Pacific's] prejudgment interest [are] inconsistent with existing law and [are] in error." Canadian Pacific conceded in its letter that the "amount upon which pre-judgment interest should be calculated is $810, 000" and stated that "the end date of the pre-judgment interest calculation should be March 2, 2017," the date of Knoedler's settlement offer. Canadian Pacific argued, however, that the district court should have calculated prejudgment interest from the commencement of Canadian Pacific's consolidated third-party action against Knoedler, October 20, 2015.

         The district court granted Canadian Pacific's request and both parties filed briefs. Knoedler argued that Canadian Pacific is not entitled to prejudgment interest because federal law governed the claim. Alternatively, Knoedler argued that the district court correctly calculated the prejudgment interest award from the date that Knoedler was notified of "the settlement amounts and corresponding releases." Knoedler also contended that Canadian ...


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