Opinion
Case No. A1-03-79, Docket Number: 17
December 31, 2003
ORDER DENYING DEFENDANTS' MOTION TO DISMISS
Summary : Defendants filed a motion to dismiss on the grounds of the doctrines of res judicata, collateral estoppel and law of the case alleging that a state district court judgment dismissing a similar case for improper venue precluded the relitigation of the Plaintiff's claims in federal court. Plaintiff responded by asserting that the judgment was not a final judgment because a motion to vacate the judgment had been filed and that the Plaintiff had not had the opportunity to appeal to the North Dakota Supreme Court. The Court concluded that dismissing the case on res judicata, collateral estoppel or law of the case grounds would be premature and denied the Defendants' motion to dismiss without prejudice, subject to renewal once the state district court has resolved the pending motion to vacate and/or the time for appeal has expired.
Before the Court is a Motion by Defendant Mitsui O.S.K. Lines, Ltd, and Mitsui O.S.K. Lines (America), Inc. to dismiss this case on the grounds of the doctrines of res judicata, collateral estoppel and law of the case. This motion was joined by Defendants King Well Express, Inc. and Caretrans Freight Service, Inc. The plaintiff, Barbara Lloyd Designs, Inc., resists the motion and asserts that the doctrines of res judicata, collateral estoppel, and law of the case are not applicable to this action and, in the alternative, asserts that the action should be stayed pending the completion of the post-trial motions proceeding in state court. For the reasons set forth below, the Court denies the motion to dismiss.
Defendant W.J. Brynes Company of Los Angeles, Inc. was dismissed from this action on December 23, 2003. (Docket No. 16).
I. BACKGROUND
This action arises out of a shipment of goods from Best Craft and Design Company, Ltd., a Taiwanese-based corporation, to Barbra Lloyd Designs, Inc., a Bismarck, North Dakota, company. Best Craft and Design Company is not a party to this action. The goods were shipped from China to Los Angeles, California, and then from Los Angeles to Bismarck.
Defendant Mitsui O.S.K. Lines, Ltd., an ocean carrier, is a foreign corporation organized under the laws of Japan and has its principal place of business in Tokyo, Japan. Defendant MOL (America) is the United States general agent for Mitsui O.S.K. Lines, Ltd., and is a corporation organized under the laws of one of the 50 states with its principal place of business in Edison, New Jersey. Defendant King Well Express, Inc., a non-vessel operating common carrier, is a foreign corporation organized under the laws of Taiwan with its principal place of business in Taiwan. Defendant Caretrans Freight Service, Inc., a freight forwarder and a non-vessel operating common carrier, is a corporation organized under the laws of one of the 50 states with its principal place of business in El Segundo, California, and is King Well's United States shipping agent. The goods arrived in Bismarck, North Dakota, on July 3, 2002. Immediately upon receipt and inspection of the goods, Barbara Lloyd Designs found that the goods were mold-infested.
On February 14, 2003, Barbara Lloyd Designs filed suit in state district court alleging that the Defendants were responsible for the damaged condition of the goods. On September 18, 2003, the state district court granted the Defendants' motion to dismiss for improper venue and a judgment was entered on November 4, 2003. Barbara Lloyd Designs filed a motion to vacate the judgment on November 24, 2003.
While the state court action was pending, Barbara Lloyd Designs also filed a lawsuit in federal district court setting forth the same claims alleged in the state court action. On November 10, 2003, following the entry of judgment in the state court case, the Defendants moved to dismiss the federal action based on the doctrines of res judicata, equitable estoppel, and law of the case. Barbara Lloyd Designs responded by contending that the judgment entered by the state district court is not final for the purposes of determining res judicata and that the federal court should stay its decision on the motion to dismiss until the state district court has resolved the motion to vacate judgment or until Barbara Lloyd Designs has had a chance to appeal the state district court decision to the North Dakota Supreme Court.
II. LEGAL ANALYSIS A. RES JUDICATA
The essence of the doctrine of res judicata, also known as claim preclusion, is that a final judgment on the merits bars further claims by the same parties or their privies based on the same cause of action.Costner v. URS Consultants, Inc., 153 F.3d 667, 673 (8th Cir. 1998); see U.S. v. Gurley, 43 F.3d 1188, 1195 (8th Cir. 1995) (stating that "a prior judgment is binding not only as to every matter which was offered and received to sustain or defeat the claim or demand, but as to any other admissible matter which might have been offered for that purpose"); Ohio Cas. Ins. Co. v. Clark, 583 N.W.2d 377, 383 (N.D. 1998) ("Res judicata means that a valid, existing final judgment from a court of competent jurisdiction, is conclusive, with regard to the issues raised, or those that could have been raised, and determined therein, as to the parties and their privies in all other actions"). The Eighth Circuit has held as follows:
A claim will be held to be precluded by a prior lawsuit when: (1) the first suit resulted in a final judgment on the merits; (2) the first suit was based upon proper jurisdiction; (3) both suits involve the same parties; and (4) both suits are based upon the same claims or causes of action.Costner v. URS Consultants, Inc., 153 F.3d 667, 673 (8th Cir. 1998).
This Court addressed the doctrine of res judicata in a recent case entitled Anderson v. Abraham, 214 F. Supp.2d 1036 (D.N.D. 2002):
The doctrine of res judicata prevents multiple lawsuits involving the same cause of action. See Lundquist v. Rice Memorial Hosp., 238 F.3d 975, 977 (8th Cir. 2001). In short, a final judgment on the merits of a claim operates to bar the same parties from relitigating issues that were or could have been raised in the earlier action. Id. Courts employ a three-part test when evaluating assertions of res judicata: "(1) whether the prior judgment was entered by a court of competent jurisdiction; (2) whether the prior decision was a final judgment on the merits; and (3) whether the same cause of action and the same parties or their privies were involved in both cases." Id. (citing Murphy v. Jones, 877 F.2d 682, 684 (8th Cir. 1989)).
Most fundamentally, res judicata bars not only relitigation of claims actually asserted, but also claims that "could have been raised in that action." Lundquist, 238 F.3d 977. Thus, the question is whether the claims made in these cases properly could and should have been raised in the first action. Id. The court concludes that all the claims now presented could and should have been raise din the earlier action and thus holds that they are barred by res judicata.Anderson, 214 F. Supp.2d 1036, 1038.
In another North Dakota case, Friez v. First American Bank Trust of Minot, 324 F.3d 580 (8th Cir. 2003), the Eighth Circuit summarized the law of res judicata as follows:
Res judicata prevents the splitting of a single cause of action and the use of several theories of recovery as the basis for separate lawsuits. Hartsel Springs Ranch of Colorado, Inc. v. Bluegreen Corp., 296 F.3d 982, 986 (10th Cir. 2002). In North Dakota, res judicata, also known as claim preclusion, prevents the relitigation of claims or issues that were raised or could have been raised in an earlier action between the same parties or their privies. Ohio Cas. Ins. Co. v. Clark, 1998 ND 153, 583 N.W.2d 377, 383 (N.D. 1998); see also Lundquist, 238 F.3d at 977.
Friez first argues his tort claims are not barred because they raise a different cause of action than his earlier ERISA claims. Even though Friez advances different legal theories in the two cases, his cause of action is the same: Friez relies on a common nucleus of operative fact (promises allegedly made by Kolb and Espegard about ERISA benefits in their capacity as Bremer Bank's officers and managers) and seeks effectively the same relief (ERISA benefits) in both cases. Costner v. URS Consultants, Inc., 153 F.3d 667, 674 (8th Cir. 1998). As we have stated, "[a] party may not litigate a claim and then, upon an unsuccessful disposition, revive the same cause of action with a new theory." Roach v. Teamsters Local Union No. 688, 595 F.2d 446, 450 (8th Cir. 1979).Friez, 324 F.3d 580, 581-582 (8th Cir. 2003).
There is no question that the first prong of the res judicata test has been met. The judgment entered by the state district court on November 4, 2003, was a judgment entered by a court of competent jurisdiction. Similarly, there is no question that the third prong of the res judicata test has been met as the same cause of action and the same parties or their privies are involved in both cases. This leave the second prong — whether the prior decision was a final judgment on the merits.
When considering the effect of the prior judgment "it is fundamental that the res judicata effect of the first forum's judgment is governed by the first forum's law, not by the law of the second forum." Canady v. Allstate Ins. Co., 282 F.3d 1005, 1014 (8th Cir. 2002) (citingHillary v. Trans World Airlines, Inc., 123 F.3d 1041, 1043 (8th Cir. 1997)). The North Dakota Supreme Court has opined that "[o]rdinarily, a decision of a court is final, absent an appeal; the decision is res judicata, and the court has no further jurisdiction to consider the issues decided." Fichter v. Kadrman, 507 N.W.2d 72, 74 (N.D. 1993) (internal citations omitted). However, "[t]he fact that an appeal is pending bears on the question whether preclusive effect should be `presently decided' by the trial court in the subsequent matter or postponed until the proceedings related to the judgment appealed from have been concluded." Westman v. Dessellier, 459 N.W.2d 545, 547 (N.D. 1990). The North Dakota Supreme Court has looked favorably upon a trial court's decision to postpone a decision on a question of res judicata until the appeal of the judgment in the initial case was concluded. Westman v. Dessellier, 459 N.W.2d 545, 547 (N.D. 1990) ("The trial court appropriately postponed decision of the questions in this case until the appeal of the workers compensation decision was concluded."). Thus, the Court finds it would premature to give the November 4, 2003, state district court's judgment preclusive effect as to the issue of res judicata.
B. COLLATERAL ESTOPPEL
Collateral estoppel, or issue preclusion, "means simply that when an issue of ultimate fact has once been determined by a valid and final judgment, that issue cannot again be litigated between the same parties in any future lawsuit." Stoebner v. Parry, Murray, Ward Moxley, 91 F.3d 1091, 1094 (8th Cir. 1996); see Hofsommer v. Hofsommer Excavating, Inc., 488 N.W.2d 380, 383 (N.D. 1992) (collateral estoppel "generally forecloses the relitigation, in a second action based on a different claim, of particular issues of either fact or law which were, or by logical and necessary implication must have been, litigated and determined in the prior suit").
Again, federal courts look to state law to determine the issue of collateral estoppel in a non-diversity action in federal court.See Ruple v. City of Vermillion, S.D., 714 F.2d 860, 862 (8th Cir. 1983)("If by that law a second action would be precluded in a state court, then it is also normally precluded in a federal court");Burks v. County of Miller, Mo., 750 F. Supp. 408, 411-12 (W.D. Miss. 1990) ("[I]f state preclusion law would bar litigation of claims or issues raised in a subsequent action that could have been raised in a prior action, then the federal court should give the same preclusive effect to the state court judgment as would a subsequent state court");see also D'Amario v. Butler Hosp., 921 F.2d 8, 10 (1st Cir. 1990) (The res judicata effect of a state judgment is governed by state law); Town of Deerfield, N.Y. v. F.C.C., 992 F.2d 420, 429 (2d Cir. 1993).
In this case, there is no dispute that the prior judgment at issue was a state court judgment. Accordingly, to accord full faith and credit to the state court judgment, the Court will apply North Dakota's principles of collateral estoppel. In North Dakota, four tests must be met before collateral estoppel will bar re-litigation of a fact or issue involved in an earlier lawsuit:
(1) Was the issue decided in the prior adjudication identical to the one presented in the action in question?;
(2) Was there a final judgment on the merits?;
(3) Was the party against whom the plea is asserted a party or in privity with a party to the prior adjudication?; and
(4) Was the party against whom the plea is asserted given a fair opportunity to be heard on the issue?
There is no dispute that prongs one, three, and four have been met. However, whether the state court judgment was a final judgment on the merits is hampered by the same problems as previously noted. Thus, the Court finds it would also be premature to give the November 4, 2003, state district court's judgment preclusive effect as to the issue of collateral estoppel.
C. LAW OF THE CASE
Finally, the Defendants argue that the doctrine of the law of the case provides justification for dismissing this action. The law of the case doctrine provides that "when a court decides upon a rule of law, that decision should continue to govern the same issues in subsequent stages in the same case." Arizona v. California, 460 U.S. 605, 618 (1983). "The doctrine prevents the relitigation of settled issues in a case, thus protecting the settled expectations of the parties, ensuring uniformity of decisions, and promotion judicial efficiency." Little Earth of the United Tribes, Inc. v. United States Dep't of Housing Urban Dev., 807 F.2d 1433, 1441 (8th Cir. 1986).
For the same reasons the Court has declined to issue a final ruling on the issues of res judicata and collateral estoppel, the Court finds that, given the current posture of the action, it would also be premature to dismiss based on the doctrine of the law of the case.
III. CONCLUSION
For the reasons set forth above, the Court DENIES the Defendants' Motion to Dismiss (Docket Nos. 5 7) WITHOUT PREJUDICE, subject to renewal once the state district court has resolved the pending motion to vacate and/or the time for appeal has expired. The Court also finds it unnecessary to entertain oral arguments on the motion to dismiss at this time and DENIES the Plaintiff's Motion for a Hearing (Docket No. 15).
IT IS SO ORDERED.