Kansas Public Employees Retirement System v. Reimer & Roger Associates, Inc.

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________

No. 98-3528
___________

Kansas Public Employees Retirement, *
System, *
*
Plaintiff - Appellant, *
*
v. *
*
Reimer & Koger Associates, Inc., a, *
Kansas Corporation; Ronald Reimer, an *
individual; Kenneth H. Koger, an *
individual; Clifford W. Shinski, an *
individual; Brent Messick, an individual; *
Robert Crew, an individual; Sherman * Appeal from the United States
Dreiseszun, an individual; I. I. Ozar, an * District Court for the Western
individual; Frank Sebree, an individual; * District of Missouri.
*
Defendants - Appellees, *
*
Michael K. Russell, an individual, *
*
Defendant, *
*
Gage & Tucker, a law partnership; Peat, *
Marwick, Mitchell & Co., an *
accountancy firm; KPMG Peat *
Marwick, an accountancy firm; Robert *
Spence, an individual; Thomas S. *
Morgan, co-executor of the estate of *
Frank S. Morgan; Marilyn J., *
Co-Executor of the Estate of Frank *
Morgan, *
*
Defendants - Appellees, *
*
C. Patrick McLarney, substituted for *
Shook Hardy law firm, *
*
Intervenor Defendant - Appellee. *

--------------------------------------------------

Kansas Public Employees Retirement *
System, *
*
Plaintiff - Appellant *
*
v. *
*
Blackwell, Sanders, Peper, Martin, *
L.L.P.; William H. Sanders, Sr., *
individually and as the representative of *
a defendant class, *
*
Defendants - Appellees. *

___________

Submitted: May 11, 1999

Filed: October 5, 1999
___________

Before McMILLIAN, BOWMAN, and JOHN R. GIBSON, Circuit Judges.
___________

JOHN R. GIBSON, Circuit Judge.

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 Kansas Public Employees Retirement System appeals the district court's1 denial
of its motion for relief from final judgment under Fed.R.Civ.P. 60(b). In the underlying
case, summary judgment was entered against KPERS in favor of all the defendants in
this case (except Michael Russell) on the ground that KPERS's claims were barred by
the applicable Kansas statutes of limitations. KPERS v. Blackwell, Sanders, Matheny,
Weary & Lombardi, 114 F.3d 679 (8th Cir. 1997)(KPERS VI), cert. denied, 118 S.Ct.
738 (1998), leave to file for rehearing denied, 118 S. Ct. 1834 (1998). Shortly after our
decision in KPERS VI affirming the summary judgment, the Kansas Supreme Court
decided KPERS v. Reimer & Koger Assoc., Inc., 941 P.2d 1321, 1343 (Kan. 1997),
disapproving of our interpretations of Kansas law that led to the summary judgment
against KPERS. KPERS received the benefit of this change in state law in KPERS v.
Russell, 140 F.3d 748 (8th Cir. 1998) (KPERS VII), which held that Michael Russell
was not entitled to summary judgment under the statute of limitations defense. KPERS
moved to reopen the case under Rule 60(b) in light of the change in Kansas law. The
district court denied KPERS's motion and we affirm.

KPERS initially filed this action in state court in Kansas against its investment
advisors to recoup KPERS's investment of some $65 million in debentures of Home
Savings Association, a thrift that failed. When KPERS joined as defendants certain
former directors of Home Savings, the directors impleaded the Resolution Trust
Corporation, receiver of Home Savings. Acting under 12 U.S.C. § 1441a(l)(3), the
RTC removed the case to the Western District of Missouri, which resulted in the
application of Missouri, rather than Kansas, limitations law. KPERS v. Reimer &
Koger, Inc., 61 F.3d 608, 614 (8th Cir. 1995) (KPERS III), cert. denied, 516 U.S. 1114
(1996). Under Missouri's borrowing statute, the Kansas statute of limitations would
apply if it were shorter than the five-year Missouri statute. Id. We concluded that
under Kansas law the Kansas ten-year statute for actions by KPERS would not apply

1
The Honorable D. Brook Bartlett, Chief Judge for the United States District
Court for the Western District of Missouri.

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retroactively to revive a barred claim. Id. at 615. In KPERS VI we rejected the
argument that KPERS's investment activities were a governmental function so that
claims based on those activities were not subject to a statute of limitations, and we
decided that the Kansas two- and three-year statutes of limitations barred KPERS's
claims. 114 F.3d at 687-88.

While KPERS VI was under submission, the Kansas courts were entertaining
an appeal by KPERS in another case, concerning which, if any, Kansas statute of
limitations applied to claims arising out of KPERS's investments. KPERS asked this
Court to certify the statute of limitations question to the Kansas Supreme Court, see
KPERS VI, 114 F.3d at 688 n.11, but we declined to do so and we issued our KPERS
VI opinion on May 13, 1997. We denied rehearing on June 12, 1997, and our mandate
issued on June 20, 1997.

A week after our mandate issued, on June 27, 1997, the Kansas Supreme Court
decided its KPERS case, holding that, contrary to our rulings, KPERS's investment
activities were governmental in nature, and therefore no statute of limitations applied
to them until the Kansas ten-year statute was enacted. 941 P.2d at 1343.

On July 17, 1997, KPERS filed a motion in this Court for leave to file a second
rehearing petition in KPERS VI or, in the alternative, for us to recall our mandate in
light of the Kansas decision. We denied the motion. On September 10, 1997, KPERS
filed a petition for a writ of certiorari, arguing that the case should be remanded in light
of the Kansas decision. The Supreme Court denied certiorari on January 12, 1998.
KPERS v. Blackwell, Sanders, Matheny, Weary & Lombardi, 118 S. Ct. 738 (1998).

In the meantime, the one remaining defendant in this case, Michael Russell, who
was unrepresented by counsel, obtained summary judgment in the district court on the
ground that KPERS's claim was time-barred. KPERS appealed that judgment, and we
decided the appeal after the Kansas decision. Russell filed no brief in the appeal.

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Because we were obliged to follow Kansas law on the statute of limitations issue, we
reversed the judgment in favor of Russell in light of the new Kansas decision. KPERS
VII, 140 F.3d at 751. We held that under the new decision the Kansas ten-year statute
was the only statute of limitation applicable to KPERS's claim, and that the claim was
therefore timely filed. Id. at 752.

Our decision in KPERS VII was filed on March 30, 1998. On May 21, 1998,
KPERS filed the Rule 60(b) motion for relief from judgment at issue in this appeal.
The district court denied the motion on two independent grounds: first, that KPERS
had already presented the change in law argument to this Court on its motion for leave
to file a second rehearing petition or to recall mandate, and we had denied the motion;
and second, that KPERS had not presented exceptional circumstances warranting Rule
60(b)(6) relief.

We review the district court's Rule 60(b) rulings only for abuse of discretion.
Carter v. Romines, 593 F.2d 823, 824 (8th Cir. 1979). Rule 60(b)(6) authorizes relief
from final judgments in extraordinary circumstances. Cornell v. Nix, 119 F.3d 1329,
1332-33 (8th Cir. 1997). Generally, a change in the law that would have governed the
dispute, had the dispute not already been decided, is not by itself an extraordinary
circumstance. See, e.g., Carter, 593 F.2d at 824; Cincinnati Ins. Co. v. Flanders Elec.
Motor Serv., Inc., 131 F.3d 625, 628 (7th Cir. 1997); Batts v. Tow-Motor Forklift Co.,
66 F.3d 743, 748 (5th Cir. 1995), cert. denied, 517 U.S. 1221 (1996); DeWeerth v.
Baldinger, 38 F.3d 1266, 1272-74 (2d Cir.), cert. denied, 513 U.S. 1001 (1994);
Dowell v. State Farm Fire & Cas. Auto Ins. Co., 993 F.2d 46, 48 (4th Cir. 1993).
Society's powerful countervailing interest in the finality of judgments simply requires
that each case have an end, though the law continues to evolve. "[The common law
could not safely develop if the latest evolution in doctrine became the standard for
measuring previously resolved claims." Biggins v. Hazen Paper Co., 111 F.3d 205,
212 (1st Cir.), cert. denied, 118 S.Ct. 373 (1997). Moreover, there is nothing in the

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Erie2 doctrine that requires federal courts to sacrifice the finality of their judgments
because state courts subsequently interpret state law differently than the federal courts
have done. DeWeerth, 38 F.3d at 1272-74; Batts, 66 F.3d at 749-50; Cincinnati Ins.
Co., 131 F.3d at 628-29. Therefore, even though the law has changed since judgment
was entered against KPERS, KPERS must show some extraordinary circumstance in
order to justify Rule 60(b) relief.

KPERS argues that several factors make this an extraordinary case. First, after
KPERS VII, different rules of law will govern the same issue in the same case
involving the same factual setting. See Pierce v. Cook & Co., 518 F.2d 720, 723 (10th
Cir. 1975) (en banc), cert. denied, 423 U.S. 1079 (1976); McGeshick v. Choucair, 72
F.3d 62, 64-65 (7th Cir. 1995), cert. denied, 517 U.S. 1212 (1996). Second, KPERS
did not choose to litigate in federal court with the attendant possibility of a
misinterpretation of state law, but landed in federal court as a result of removal by a
third party defendant. See Sargent v. Columbia Forest Prods., Inc., 75 F.3d 86, 90 (2d
Cir. 1996) (recalling mandate of Court of Appeals). Third, before judgment was
entered in this case, KPERS alerted the federal courts to the pendency of the issue in
the Kansas courts and asked for certification of the question. See Sargent, 75 F.3d at
90. Fourth and fifth, the disposition of KPERS's case was not on the merits, and
KPERS contends that the defendants would suffer no unfair prejudice from reopening
the case. See MIF Realty L.P. v. Rochester Assocs., 92 F.3d 752, 755-56 (8th Cir.
1996).

While these factors have been considered relevant in other cases, they do not
compel the conclusion that the district court abused its discretion in denying KPERS's
motion. The district court alluded to KPERS's course of conduct during this litigation,
stating: "Only passing familiarity with the history of this case in this court and in the
appellate courts would convince any fair-minded person that the time has come for this

2
Erie RR. Co. v. Tompkins, 304 U.S. 64 (1938).

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court to echo the Eighth Circuit Court of Appeals– this case is over." Early in this case,
KPERS obtained an ex parte severance from the Kansas state court in order to frustrate
removal. KPERS v. Reimer & Koger Assoc., Inc., 4 F.3d 614 (8th Cir. 1993)(KPERS
I), cert. denied, 511 U.S. 1126 (1994). KPERS later filed parallel state court actions
which were meant to subvert federal removal jurisdiction, KPERS v. Reimer & Koger
Assoc., Inc., 77 F.3d 1063, 1070 (8th Cir. 1996) (KPERS IV), cert. denied, 519 U.S.
948 (1996). The district court held the filing of those cases to be objectively
unreasonable and done in bad faith, and we affirmed. See KPERS v. Reimer & Koger
Assoc., Inc., 165 F.3d 627, 629 (8th Cir. 1999) (KPERS VIII) (affirming award of
attorney fees against KPERS for unreasonably and vexatiously multiplying
proceedings). The district court may properly give weight to equitable considerations
in exercising its discretion under Rule 60(b). MIF Realty, 92 F.3d at 755-56. Here,
the district court did so and declined to reopen this case. We see no abuse of discretion
in the district court's ruling.3

A true copy.

Attest:

CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.

3
The discretion vested in the district court in ruling on Rule 60(b) motions
distinguishes this case from Brenna v. Fed'l Cartridge Co., 183 F.2d 414 (8th Cir. 1950)
(per curiam), in which this Court granted rehearing of one of its own decisions based
on a change in the law.

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