81,7('67$7(6',675,&7&2857 )257+(',675,&72)&2/80%,$ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 678$570,//6'$9(13257et al. 3ODLQWLIIV Y &LYLO$FWLRQ1R $%- %$%$.'-285$%&+,et al. 'HIHQGDQWV BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 0(025$1'8023,1,21$1'25'(5
3HQGLQJEHIRUHWKH&RXUWLVDPRWLRQILOHGE\SODLQWLIIV6WXDUW0LOOV'DYHQSRUWDQG%LJ
%HDU &DIp //& VHHNLQJ UHFRQVLGHUDWLRQ RI WKH &RXUW¶V 1RYHPEHU RUGHU JUDQWLQJ
GHIHQGDQWV¶PRWLRQWRGLVPLVV3OV¶0RWIRU5HFRQV3XUVXDQWWR)HG5XOHRI&LY3 H
E >'NW @ ³3OV¶ 0RW´ 7KH &RXUW SUHYLRXVO\ UXOHG WKDW SODLQWLIIV¶ FODLPV DJDLQVW
GHIHQGDQWV%DEDN'MRXUDEFKLDQG0RQLFD:HOWZHUHSUHFOXGHGXQGHUWKHGRFWULQHRIres judicata
Davenport v. Djourabchi ) 6XSS G ''& EXW LW FRQFOXGHV KHUH WKDW
UHFRQVLGHUDWLRQLVZDUUDQWHG
7KHGRFWULQHRIres judicata EDUVSDUWLHV³IURPUHOLWLJDWLQJLVVXHVWKDWZHUHRUFRXOGKDYH
EHHQUDLVHG´LQDSUHYLRXVDFWLRQAllen v. McCurry 86 FLWLQJCromwell v.
Cty. of Sacramento 86 8QGHUWKLVSULQFLSOH³DVXEVHTXHQWODZVXLWZLOOEH
EDUUHG LI WKHUH KDV EHHQ SULRU OLWLJDWLRQ LQYROYLQJ WKH VDPH FODLPV RU FDXVH RI DFWLRQ
EHWZHHQWKHVDPHSDUWLHVRUWKHLUSULYLHVDQG WKHUHKDVEHHQDILQDOYDOLGMXGJPHQWRQWKH
PHULWV E\DFRXUWRIFRPSHWHQWMXULVGLFWLRQ´Smalls v. United States)G '&
'HIHQGDQWVRSSRVHGWKHPRWLRQRQ1RYHPEHU 'HIV¶0HPRI3 $LQ2SS WR3OV¶0RW>'NW@ ³'HIV¶2SS´ $QGRQ'HFHPEHUSODLQWLIIVILOHGDUHSO\ 3OV¶5HSO\3 $LQ)XUWKHU6XSSRI3OV¶0RW>'NW@ ³3OV¶5HSO\ &LU FLWDWLRQVRPLWWHG 7KH&RXUWIRXQGWKDWDOOIRXUHOHPHQWVRIres judicataKDGEHHQPHW
LQFRQQHFWLRQZLWKSULRUEDQNUXSWF\SURFHHGLQJVDQGWKDWSODLQWLIIVZHUHWKHUHIRUHEDUUHGIURP
EULQJLQJWKHLUFLYLOVXLWSee Davenport )6XSSGDW±
3ODLQWLIIVDVNWKH&RXUWWR³UHFRQVLGHUZKHWKHUWKHµVDPHFODLP¶HOHPHQWRIres judicata LV
PHWLQWKLVDFWLRQ´3OV¶0RWDW Q3RLQWLQJWRDXWKRULW\WKH\GLGQRWUDLVHLQFRQQHFWLRQ
ZLWKWKHPRWLRQWRGLVPLVVSODLQWLIIVFRQWHQGWKDWWKH&RXUW³GLGQRWFRQVLGHUDQLQWHUYHQLQJUXOLQJ
RIWKH8QLWHG6WDWHV&RXUWRI$SSHDOVIRUWKH'LVWULFWRI&ROXPELD&LUFXLWGHPRQVWUDWLQJWKDW
'DYHQSRUW¶V EDQNUXSWF\ DFWLRQ ZDV QRW WKH VDPH FODLP DV WKRVH EURXJKW E\ >S@ODLQWLIIV LQ WKLV
DFWLRQ´Id. DW HPSKDVLVRPLWWHG )XUWKHUWKH\DUJXHWKDWWKH&RXUW¶VGHFLVLRQ³UHIOHFWVFOHDU
HUURULQFRQFOXGLQJWKDW>S@ODLQWLIIVµFRXOGKDYHEURXJKWWKHLUFODLPVLQWKHSULRUEDQNUXSWF\
SURFHHGLQJ¶ ZKHQ %DQNU 5XOHV E DQG VSHFLILFDOO\ prohibited >S@ODLQWLIIV IURP
EULQJLQJWKRVHVWDWHODZFODLPV´Id. DW LQWHUQDOFLWDWLRQRPLWWHG HPSKDVLVLQRULJLQDO
%HFDXVHSODLQWLIIVZHUHSURKLELWHGIURPEULQJLQJWKHLUVWDWHDQGFRPPRQODZFODLPVIRU
GDPDJHVLQWKHSULRUEDQNUXSWF\SURFHHGLQJWKHLUFXUUHQWFODLPVGRQRWFRQVWLWXWHWKHVDPHFDXVH
RIDFWLRQIRUres judicata SXUSRVHV7KHUHIRUHWKH&RXUWZLOOJUDQWSODLQWLIIV¶PRWLRQ
%$&.*5281'
7KHIDFWXDODQGSURFHGXUDOEDFNJURXQGRIWKLVFDVHWKHQDWXUHRISODLQWLIIV¶FODLPVDJDLQVW
GHIHQGDQWV DQG WKH EDVLV IRU WKH &RXUW¶V SUHYLRXV UXOLQJ DUH ODLG RXW LQ GHWDLO LQ WKH &RXUW¶V
GHFLVLRQsee Davenport )6XSSGVRWKH&RXUWZLOODGGUHVVWKHIDFWVRQO\EULHIO\KHUH
3ODLQWLII'DYHQSRUWLVWKHRSHUDWRUDQGVROHRZQHURI%LJ%HDU&DIp//&DUHVWDXUDQWRQ
WKH ORZHU OHYHO RI WKH PXOWLVWRU\ URZKRXVH ZKHUH KH DQG KLV IDPLO\ OLYH $P &RPSO
>'NW @± 'HIHQGDQWV ZHUH 'DYHQSRUW¶V QHLJKERUV id. DQG WKH\ ORDQHG KLP
LQH[FKDQJHIRUDQH[HFXWHG3URPLVVRU\1RWHIRU%XVLQHVVDQG&RPPHUFLDO3XUSRVHV
Id. ([WR$P&RPSO>'NW @ ³1RWH´ 7KHORDQZDVVHFXUHGE\%LJ%HDU&DIp
Id. see 1RWH ([WR$P&RPSO>'NW @ ³'HHGRI7UXVW´ 7KLVFDVHDULVHVRXW
RIGHIHQGDQWV¶HIIRUWVWRFROOHFWRQWKHGHEWDQGWKHEDQNUXSWF\SURFHHGLQJVWKDWIROORZHG
2Q2FWREHU'DYHQSRUWILOHGIRU&KDSWHUEDQNUXSWF\SURWHFWLRQLQWKH86
%DQNUXSWF\&RXUWIRUWKH'LVWULFWRI&ROXPELDWRSUHYHQWDWKUHDWHQHGIRUHFORVXUHRQKLVSURSHUW\
E\GHIHQGDQWV$P&RPSO±'HIHQGDQWVILOHGDSURRIRIFODLPZLWKWKHEDQNUXSWF\
FRXUWDOOHJLQJWKDW'DYHQSRUWZDVLQGHIDXOWRQWKH1RWHDQGWKDWKHRZHGWKHP
Id. 'DYHQSRUW FRQWHVWHG WKLV DOOHJDWLRQ E\ ILOLQJ DQ REMHFWLRQ WR WKH SURRI RI FODLP
Id. ±7KHEDQNUXSWF\FRXUWWKHQKHOGDWULDOWRGHWHUPLQHWKHDPRXQWGXHXQGHUWKH1RWH
DQGRQ-XO\LWUXOHGWKDW'DYHQSRUWZDVQRWLQGHIDXOWEXWWKDWKHRZHG
Id. ± ([ WR $P &RPSO >'NW @ ³%DQNU 0HP´ ([ WR $P &RPSO
>'NW @ ³%DQNU2UGHU´
$IWHU WKH EDQNUXSWF\ FRXUW HVWDEOLVKHG WKDW 'DYHQSRUW ZDV QRW LQ GHIDXOW RQ WKH 1RWH
'DYHQSRUWDQGWKHFDIpILOHGWKLVFLYLOODZVXLWDJDLQVWGHIHQGDQWVSee $P&RPSO7KH\EURXJKW
VHYHQ FODLPV DOOHJLQJ WKDW WKURXJKRXW WKH SDUWLHV¶ LQWHUDFWLRQV GHIHQGDQWV KDYH KDUDVVHG
'DYHQSRUWDQGWKDWSODLQWLIIVKDYHVXIIHUHGDVDUHVXOWRIGHIHQGDQWV¶PLVUHSUHVHQWDWLRQVUHJDUGLQJ
WKH 1RWH See id. ± ± ± ± 3ODLQWLIIV VRXJKW DW OHDVW
LQGDPDJHVLQDGGLWLRQWRSXQLWLYHGDPDJHVDQGDWWRUQH\V¶IHHVId.DW
67$1'$5'2)5(9,(:
³0RWLRQVXQGHU)HG5&LY3 H DUHGLVIDYRUHGDQGUHOLHIIURPMXGJPHQWLVJUDQWHG
RQO\ZKHQWKHPRYLQJSDUW\HVWDEOLVKHVH[WUDRUGLQDU\FLUFXPVWDQFHV´Niedermeier v. Office of
,Q'HFHPEHUSODLQWLII'DYHQSRUWILOHGDFRPSODLQWLQWKLV&RXUWDJDLQVWGHIHQGDQWV DQGKHDPHQGHGWKHFRPSODLQWDVRIULJKWRQ)HEUXDU\DGGLQJ%LJ%HDU&DIp//&DVD VHFRQGSODLQWLIISee &RPSO>'NW@ see also $P&RPSO Max S. Baucus)6XSSG ''& FLWLQJAnyanwutaku v. Moore)G
'&&LU ³$5XOH H PRWLRQLVGLVFUHWLRQDU\DQGQHHGQRWEHJUDQWHGXQOHVV
WKHGLVWULFWFRXUWILQGVWKDWWKHUHLVDQLQWHUYHQLQJFKDQJHRIFRQWUROOLQJODZWKHDYDLODELOLW\RI
QHZHYLGHQFHRUWKHQHHGWRFRUUHFWDFOHDUHUURURUSUHYHQWPDQLIHVWLQMXVWLFH´Ciralsky v. CIA
)G '&&LU TXRWLQJFirestone v. Firestone)G '&&LU
$PRWLRQWRDOWHURUDPHQGWKHMXGJPHQWXQGHU5XOH H ³PD\QRWEHXVHGWRUHOLWLJDWH
ROGPDWWHUVRUWRUDLVHDUJXPHQWVRUSUHVHQWHYLGHQFHWKDWFRXOGKDYHEHHQUDLVHGSULRUWRWKHHQWU\
RIMXGJPHQW´Exxon Shipping Co. v. Baker86Q TXRWLQJ&KDUOHV$
:ULJKW $UWKXU 5 0LOOHU Federal Practice and Procedure G HG 5DWKHU
PRWLRQVWRDOWHURUDPHQGDMXGJPHQW³DUHLQWHQGHGWRSHUPLWWKHFRXUWWRFRUUHFWHUURUVRIIDFW
DSSHDULQJRQWKHIDFHRIWKHUHFRUGRUHUURUVRIODZ´Hammond v. Kempthorne)6XSSG
''& TXRWLQJIndep. Petroleum Ass’n of Am. v. Babbit)5'
''&
$1$/<6,6
3ODLQWLIIV DUH RQO\ FKDOOHQJLQJ WKH&RXUW¶V SUHYLRXV FRQFOXVLRQ WKDW WKHLU FXUUHQWFODLPV
FRQVWLWXWHWKHVDPHFDXVHRIDFWLRQDVWKRVHEURXJKWLQ'DYHQSRUW¶VEDQNUXSWF\FDVH³:KHWKHU
WZRFDVHVLPSOLFDWHWKHVDPHFDXVHRIDFWLRQWXUQVRQZKHWKHUWKH\VKDUHWKHVDPHµQXFOHXVRI
IDFWV¶´Drake v. FAA )G '&&LU TXRWLQJPage v. United States )G
'& &LU ³>,@W LV WKH IDFWV VXUURXQGLQJ WKH WUDQVDFWLRQ RU RFFXUUHQFH ZKLFK
$OWKRXJKSODLQWLIIVDOVRFLWHWR5XOH E LQWKHLUPRWLRQWKHLUDUJXPHQWVUHYROYHDURXQG 5XOH H WKHRULHVRIUHOLHISee 3OV¶0RWDW± )XUWKHUSODLQWLIIV¶5XOH H PRWLRQZDV ILOHGZHOOZLWKLQWKHWZHQW\HLJKWGD\WLPHSHULRGDOORWWHGIRUVXFKPRWLRQV6RWKH&RXUWVHHV QRUHDVRQWRHYDOXDWHSODLQWLIIV¶PRWLRQXQGHU5XOH
RSHUDWHWRFRQVWLWXWHWKHFDXVHRIDFWLRQQRWWKHOHJDOWKHRU\XSRQZKLFKDOLWLJDQWUHOLHV´Page
)GDWTXRWLQJExpert Elec., Inc. v. Levine)G G&LU 7KH
'& &LUFXLW KDV ³HPEUDFHG WKH Restatement (Second) of Judgments’ SUDJPDWLF WUDQVDFWLRQDO
DSSURDFK WR GHWHUPLQLQJ ZKDW FRQVWLWXWHV D FDXVH RI DFWLRQ´ DQG KDV H[SODLQHG WKDW WKH
5HVWDWHPHQWJLYHV³ZHLJKWWRVXFKFRQVLGHUDWLRQVDVZKHWKHUWKHIDFWVDUHUHODWHGLQWLPHVSDFH
RULJLQRUPRWLYDWLRQ´U.S. Indus., Inc. v. Blake Constr. Co.)G '&&LU
TXRWLQJ5HVWDWHPHQW 6HFRQG RI-XGJPHQWV 7KHGHWHUPLQDWLRQRIZKHWKHUWZR
FDVHVLQYROYHWKHVDPHFDXVHRIDFWLRQUHTXLUHVFRQVLGHUDWLRQRIQRWRQO\FODLPVWKDWZHUHDFWXDOO\
UDLVHGLQSULRUOLWLJDWLRQEXWDOVRPDWWHUVWKDW³FRXOGKDYHEHHQUDLVHGLQWKDWDFWLRQ´Allen
86DW FLWLQJCromwell 86DW
3ODLQWLIIVDUJXHWKDWWKHLUWZRFDVHVGRQRWFRQVWLWXWHWKHVDPHFODLPRUFDXVHRIDFWLRQ
EHFDXVHWKHUHOLHIWKH\VHHNQRZZDVQRWDYDLODEOHLQWKHEDQNUXSWF\DFWLRQ3OV¶0RWDW7R
VXSSRUW WKHLU SRVLWLRQ WKH\ LQVLVW WKDW DQ LQWHUYHQLQJ '& &LUFXLW RSLQLRQ KHOG WKDW ³WKH
WUDQVDFWLRQDOµVDPHQXFOHXV¶RIIDFWVWHVWWKH&RXUWDSSOLHGKHUHLVnot DSSOLFDEOHZKHUHWKHVHFRQG
DFWLRQVHHNVDUHPHG\XQDYDLODEOHLQWKHILUVWDFWLRQ±PRQH\GDPDJHV´Id. HPSKDVLVLQRULJLQDO
FLWLQJHurd v. District of Columbia Gov’t)G ± '&&LU 7KH\PDLQWDLQ
WKDW D PRQHWDU\ UHPHG\ ZDV XQDYDLODEOH LQ WKH ILUVW SURFHHGLQJ EHFDXVH WKH EDQNUXSWF\ UXOHV
SURKLELWHG'DYHQSRUWIURPEULQJLQJVWDWHRUFRPPRQODZGDPDJHVFODLPVLQKLVFRQWHVWHGPDWWHU
Id.
, 7KH&RXUWRI$SSHDOV¶'HFLVLRQLQHurd
:KLOHLWLVXQFOHDULIWKH&RXUWRI$SSHDOV¶GHFLVLRQLQHurd LVDQ³LQWHUYHQLQJFKDQJHWR
FRQWUROOLQJODZ´VLQFHWKH RSLQLRQSUHGDWHVWKLV&RXUW¶VRSLQLRQDQGLWDSSOLHGDOUHDG\H[LVWLQJ
OHJDOSULQFLSOHVHVSRXVHGE\WKH6XSUHPH&RXUWsee Walsh v. Hagee)5' ''&
KROGLQJWKDWDQLQWHUYHQLQJFDVHGHFLGHGRQ³ZHOOHVWDEOLVKHGSULQFLSOHV´GLGQRWFRQVWLWXWH
DQ³LQWHUYHQLQJFKDQJHRIFRQWUROOLQJODZ´ see Hurd)GDW ± FLWLQJPRVWO\6XSUHPH
&RXUW FDVHV IRU LWV LQWHUSUHWDWLRQ RI WKH SUHFOXVLYH HIIHFW RI WKH SODLQWLII¶V VWDWH FRXUW KDEHDV
SURFHHGLQJRQKLVIHGHUDOVHFWLRQ FODLP WKH&RXUWILQGVWKHFDVHWREHDXVHIXOFODULILFDWLRQ
RQZKHQWZRFDVHVFRQVWLWXWHWKHVDPHFDXVHRIDFWLRQIRUSXUSRVHVRIres judicata
,QHurd WKH &RXUW RI $SSHDOVKHOGWKDWDQLQPDWH¶VVHFWLRQ FLYLOODZVXLWZDVQRW
EDUUHGE\WKHGRFWULQHRIres judicataGHVSLWHWKHIDFWWKDWWKHLQPDWHKDGSUHYLRXVO\EURXJKWD
KDEHDVSURFHHGLQJLQ'&6XSHULRU&RXUWFKDOOHQJLQJKLVFRQILQHPHQWDVDYLRODWLRQRISURFHGXUDO
DQGVXEVWDQWLYHGXHSURFHVV)GDW± ±,QWKH)HGHUDO%XUHDXRI3ULVRQV
UHOHDVHG0LFKDHO+XUGIURPSULVRQDIWHUKHKDGVHUYHGDSSUR[LPDWHO\WKLUWHHQPRQWKVRIDIRUW\
WZRPRQWKVHQWHQFHId. DW+HEHOLHYHGWKDWKLVPRWLRQIRUDVHQWHQFHUHGXFWLRQKDGEHHQ
JUDQWHGDQGKHSURFHHGHGWRSDUWLFLSDWHLQWKUHH\HDUVRIVXSHUYLVHGUHOHDVHId. ,Q+XUG
,QGHHGWKHHurd GHFLVLRQZDVLVVXHGDSSUR[LPDWHO\WKUHHPRQWKVDIWHUEULHILQJFRQFOXGHG RQ GHIHQGDQWV¶ PRWLRQ WR GLVPLVV DQG WKUHH PRQWKV EHIRUH WKH &RXUW LVVXHG LWV 0HPRUDQGXP 2SLQLRQ :KLOH'&&LUFXLWDXWKRULW\LVELQGLQJRQWKLV&RXUWHurdLQYROYHGWKHSUHFOXVLYHHIIHFW RIDVWDWHFRXUWMXGJPHQWRQDIHGHUDOSURFHHGLQJZKLFKWXUQVLQSDUWXSRQ³FRQFHUQVRIFRPLW\ DQGIHGHUDOLVP´Marrese v. Am. Acad. of Orthopaedic Surgeons86 WKDW DUHQRWUHOHYDQWLQGHWHUPLQLQJWKHSUHFOXVLYHHIIHFWRIDIHGHUDOEDQNUXSWF\FRXUWSURFHHGLQJRQD IHGHUDOGLVWULFWFRXUWDFWLRQ$QGZKLOHWKH&RXUWRI$SSHDOVQHYHUGHILQLWLYHO\DGGUHVVHGZKDW ODZ JRYHUQHG LQ Hurd LW DSSHDUHG WR LQWHUSUHW WKH GRFWULQH RI res judicata XQGHU 'LVWULFW RI &ROXPELDODZZKLFKLVQRWWKHDSSOLFDEOHODZLQWKLVFDVHSee Taylor v. Sturgell86 ³7KHSUHFOXVLYHHIIHFWRIDIHGHUDOFRXUWMXGJPHQWLVGHWHUPLQHGE\IHGHUDOFRPPRQ ODZ´ Migra v. Warren City Sch. Dist. Bd. of Educ.86 FRQFOXGLQJWKDWWKH ³SUHFOXVLYHHIIHFWLQIHGHUDOFRXUWRI>WKHSODLQWLII¶V@VWDWHFRXUWMXGJPHQWLVGHWHUPLQHGE\>VWDWH@ ODZ´ Marrese 86DW REVHUYLQJWKDWWKHIHGHUDO)XOO)DLWKDQG&UHGLW6WDWXWH³GLUHFWV DIHGHUDOFRXUWWRUHIHUWRWKHSUHFOXVLRQODZRIWKH6WDWHLQZKLFKMXGJPHQWZDVUHQGHUHG´ SOHDGHGJXLOW\WRSRVVHVVLRQRIPDULMXDQDLQ'&6XSHULRU&RXUWDQGKHZDVVHQWHQFHGWRVHUYH
WKUHH FRQVHFXWLYH ZHHNHQGV LQ '& MDLO Id. DW ± $IWHU WKH VHFRQG ZHHNHQG WKH '&
'HSDUWPHQWRI&RUUHFWLRQVGLVUHJDUGHGWKH6XSHULRU&RXUWRUGHUVSHFLI\LQJ+XUG¶VUHOHDVHDQG
LQVWHDGNHSWKLPLPSULVRQHGIRUDQDGGLWLRQDOWZHQW\VHYHQPRQWKV±DSSDUHQWO\WKHUHPDLQGHURI
KLVRULJLQDOVHQWHQFHId. DW 2Q1RYHPEHUKHILOHGDKDEHDVSHWLWLRQDJDLQVWWKH
8QLWHG6WDWHVLQ'&6XSHULRU&RXUWFKDOOHQJLQJKLVFRQILQHPHQWDVDYLRODWLRQRISURFHGXUDODQG
VXEVWDQWLYHGXHSURFHVVId. 7KHFRXUWGHQLHGKLVSHWLWLRQIURPWKHEHQFKLQ-XO\DQGHYHQ
WKRXJK +XUG DSSHDOHG WKH GHFLVLRQ WKH DSSHDO ZDV GLVPLVVHG DV PRRW EHFDXVH LW ZDV QRW
FRQVLGHUHGXQWLODIWHUKHKDGEHHQUHOHDVHGId.
+XUGWKHQILOHGDGDPDJHVDFWLRQDJDLQVWWKH'LVWULFWRI&ROXPELDXQGHU86&
DJDLQSXUVXLQJERWKSURFHGXUDODQGVXEVWDQWLYHGXHSURFHVVFODLPVHurd)GDW7KH
GLVWULFW FRXUW GLVPLVVHG KLV VXEVWDQWLYH GXH SURFHVV FODLP DV SUHFOXGHG E\ WKH '& 6XSHULRU
&RXUW¶VGHFLVLRQEXWWKH'&&LUFXLWUHYHUVHGWKLVGHFLVLRQId.7KH&RXUWFRQFOXGHGWKDW
³WKH 6XSHULRU &RXUW¶V GHFLVLRQ ODFNV WKH SUHFOXVLYH HIIHFW WKH GLVWULFW FRXUW
SHUFHLYHGEHFDXVHVHFWLRQ FODLPVFDQQRWEHMRLQHGLQDKDEHDVSURFHHGLQJ´Id.
7KH&RXUWREVHUYHGWKDWWKHLQTXLU\IRUDVVHVVLQJZKHWKHUDFODLPLVSUHFOXGHGE\DSULRU
MXGJPHQWLVEDVHGRQWKHIROORZLQJTXHVWLRQV ³ ZKHWKHUWKHFODLPZDVDGMXGLFDWHGILQDOO\LQ
WKHILUVWDFWLRQ ZKHWKHUWKHSUHVHQWFODLPLVWKHVDPHDVWKHFODLPZKLFKZDVUDLVHGRUZKLFK
PLJKWKDYHEHHQUDLVHGLQWKHSULRUSURFHHGLQJ DQG ZKHWKHUWKHSDUW\DJDLQVWZKRPWKHSOHD
RISUHFOXVLRQLVDVVHUWHGZDVDSDUW\RULQSULYLW\ZLWKDSDUW\LQWKHSULRUFDVH´Hurd )G
DW TXRWLQJPatton v. Klein$G '& 7KXVSODLQWLIIV¶VXJJHVWLRQWKDW
WKHHurd &RXUWFUHDWHGDQH[FHSWLRQWRWKHWUDQVDFWLRQDO³VDPHQXFOHXVRIIDFWV´WHVWsee 3OV¶
0RWDWLVLQFRUUHFWVLQFHWKH&RXUWUHFLWHGWKHZHOOHVWDEOLVKHGVHWRIFRQVLGHUDWLRQVJRYHUQLQJ
FODLPSUHFOXVLRQDQGDSSOLHGWKRVHSULQFLSOHVWR+XUG¶VFDVH
2QDSSHDO+XUGFRQWHQGVWKDWKLVVHFWLRQ GDPDJHVFODLPZDVQRWWKH VDPHDVKLVKDEHDVFODLPEHFDXVHWKHGDPDJHVFODLPZDVQRWDQGFRXOGQRW KDYH EHHQ UDLVHG LQ WKH KDEHDV SURFHHGLQJ :H DJUHH 3UHFOXVLRQ LV GHVLJQHGWROLPLWDSODLQWLIIWRRQHELWHDWWKHDSSOHQRWWRSUHYHQWHYHQWKDW VLQJOHELWH,WWKXVSUHFOXGHVODWHUWKHRULHVRUSOHDVIRUUHOLHIDULVLQJRXWRI WKHVDPHFODLPRQO\LIWKH\FRXOGKDYHEHHQDVVHUWHGLQWKHHDUOLHUFDVH$V WKH 6XSUHPH &RXUW KDV REVHUYHG ³FODLP SUHFOXVLRQ JHQHUDOO\ GRHV QRW DSSO\ZKHUHµWKHSODLQWLIIZDVXQDEOHWRUHO\RQDFHUWDLQWKHRU\RIWKHFDVH RUWRVHHNDFHUWDLQUHPHG\EHFDXVHRIWKHOLPLWDWLRQVRQWKHVXEMHFWPDWWHU MXULVGLFWLRQRIWKHFRXUWV¶´
Hurd)GDW TXRWLQJMarrese86DW
7KH&RXUWFRQWLQXHG
&DVHVDSSO\LQJFODLPSUHFOXVLRQZKHUHDGLIIHUHQWDPRXQWRIGDPDJHVZDV DYDLODEOH LQ WKH VHFRQG DFWLRQ FRPSDUHG WR WKH ILUVW FDQ KDUGO\ VXSSRUW SUHFOXVLRQZKHUHno GDPDJHVZKDWVRHYHUZHUHDYDLODEOHLQWKHILUVWDFWLRQ $QGLWLVIDUIURPFOHDUWKDW+XUGFRXOGKDYHMRLQHGKLVGDPDJHVFODLPZLWK KLVKDEHDVSHWLWLRQ*HQHUDOO\VSHDNLQJWKH6XSUHPH&RXUWKDVUHVHUYHG KDEHDV IRU WKRVH VHHNLQJ UHOHDVH IURP FRQILQHPHQW DQG VHFWLRQ IRU WKRVHVHHNLQJRWKHUUHOLHIVXFKDVGDPDJHV
Id.DW FLWDWLRQRPLWWHG see also Burgos v. Hopkins)G G&LU ³>:@KHUH
DSODLQWLIIZDVSUHFOXGHGIURPUHFRYHULQJGDPDJHVLQWKHLQLWLDODFWLRQE\IRUPDOMXULVGLFWLRQDORU
VWDWXWRU\EDUULHUVQRWE\SODLQWLII¶VFKRLFHDVXEVHTXHQWDFWLRQIRUGDPDJHVZLOOQRWQRUPDOO\EH
EDUUHG E\ UHV MXGLFDWD HYHQ ZKHUH LW DULVHV IURP WKH VDPH IDFWXDO FLUFXPVWDQFHV DV WKH LQLWLDO
DFWLRQ´
5HO\LQJRQHurdSODLQWLIIVDVNWKH&RXUWWR³UHFRQVLGHULWVµVDPHFODLP¶ILQGLQJLQOLJKWRI
WKHGLIIHUHQWremedies DYDLODEOHWR'DYHQSRUWLQWKHEDQNUXSWF\SURRIRIFODLPREMHFWLRQDQGWR
>S@ODLQWLIIVLQWKLVOLWLJDWLRQ´3OV¶0RWDW HPSKDVLVLQRULJLQDO 7KH\PDLQWDLQWKDW%DQNUXSWF\
5XOH E SURKLELWHG'DYHQSRUWIURPILOLQJFODLPVVHHNLQJPRQHWDU\ UHOLHI LQ WKH FRQWHVWHG
DFWLRQ Id.DW± 7KH&RXUWDJUHHVWKDWWKHHurd RSLQLRQ LQ FRPELQDWLRQ ZLWK SODLQWLIIV¶
FXUUHQW DUJXPHQW WKDW WKH %DQNUXSWF\ 5XOHV SURKLELWHG 'DYHQSRUW IURP EULQJLQJ KLV GDPDJHV
FODLPVLQWKHFRQWHVWHGDFWLRQSURFHHGLQJUHTXLUHVWKLV&RXUWWRUHFRQVLGHULWVSUHYLRXVUXOLQJ
,, 7KH,PSDFWRIWKH%DQNUXSWF\5XOHV
,Q D PXOWLSDUW\ EDQNUXSWF\ FDVH WKHUH DUH WZR GLIIHUHQW IRUPV RI SURFHVV ³FRQWHVWHG
PDWWHUV´DQG³DGYHUVDU\SURFHHGLQJV´See &ROOLHURQ%DQNUXSWF\3 WKHG
$Q REMHFWLRQ WR D SURRI RI FODLP LQLWLDWHV D FRQWHVWHG PDWWHU JRYHUQHG E\ )HGHUDO 5XOH RI
%DQNUXSWF\3URFHGXUH See )HG5%DQNU3 )HG5%DQNU3 see also
&ROOLHURQ%DQNUXSWF\3 OLVWLQJW\SHVRIFRQWHVWHGPDWWHUV ³&RQWHVWHGPDWWHUV´DUH
GHVLJQHGWRDGMXGLFDWHVLPSOHLVVXHVRQDQH[SHGLWHGEDVLVDQGDUHWKHUHIRUHQRWJRYHUQHGE\WKH
IXOO SDQRSO\ RI UXOHV WKDW SHUWDLQ WR IHGHUDO FLYLO DFWLRQV See &ROOLHU RQ %DQNUXSWF\
3 see also )HG5%DQNU3 F OLPLWLQJWKHDSSOLFDWLRQRI3DUW9,,RIWKH)HGHUDO
5XOHVRI%DQNUXSWF\3URFHGXUHJRYHUQLQJDGYHUVDU\SURFHHGLQJVZKLFKLQFRUSRUDWHVWKH)HGHUDO
'HIHQGDQWVDUJXHWKDWSODLQWLIIV¶PRWLRQ³VKRXOGEHVXPPDULO\GHQLHGEHFDXVH>S@ODLQWLIIV DUHPHUHO\UDLVLQJQHZOHJDODUJXPHQWVUHJDUGLQJ%DQNUXSWF\5XOH E WKDWZHUHDYDLODEOHWR WKHPDWWKHWLPHRIWKHGLVPLVVDOEULHILQJ´'HIV¶2SSDW'HIHQGDQWVDUHFRUUHFWDERXWWKH RPLVVLRQV LQ SODLQWLIIV¶ SULRU SOHDGLQJV ,Q WKHLU RSSRVLWLRQ WR GHIHQGDQWV¶ PRWLRQ WR GLVPLVV SODLQWLIIVDUJXHGWKDWWKHLUQHZFODLPVZHUHQRWWKHVDPHDVWKHRQHVUDLVHGLQWKHEDQNUXSWF\DFWLRQ IRUWZRUHDVRQV WKHLUFODLPVGLGQRWVDWLVI\WKH³WUDQVDFWLRQDOWHVW´ DQG DOORZLQJWKHFODLPV WRJRIRUZDUGZRXOGQRWLPSDLUWKHSULRUEDQNUXSWF\FRXUWMXGJPHQWSee 3OV¶2SSWR'HIV¶0RW >'NW@DW±/DWHULQWKHLURSSRVLWLRQSODLQWLIIVGLGVHSDUDWHO\FRQWHQGWKDW³LWZRXOG KDYH EHHQ XWWHUO\ LPSUDFWLFDEOH IRU >S@ODLQWLIIV WR EULQJ WKHLU FXUUHQW FODLPV´ LQ WKH ³QDUURZ REMHFWLRQWRFODLPSURFHHGLQJ´Id.DW± %XWWKHRQO\UHDVRQWKH\JDYHZDVWKDWWKHFXUUHQW FODLPV³ZHUHFRQWLQJHQWXSRQWKHEDQNUXSWF\FRXUW¶VUHVROXWLRQRI>G@HIHQGDQWV¶SURRIRIFODLP´ Id. DW 3ODLQWLIIVQHYHUDUJXHGWKDWWKH\ZHUHprohibitedIURPEULQJLQJWKHFODLPVEHFDXVHWKH EDQNUXSWF\UXOHVSUHYHQWHGWKHPIURPGRLQJVRDQGWKH\FHUWDLQO\KDGWKHRSSRUWXQLW\WRPDNH VXFKDUJXPHQWV%HFDXVHDPRWLRQWRDOWHURUDPHQGWKHMXGJPHQWXQGHU5XOH H ³PD\QRWEH XVHGWRUHOLWLJDWHROGPDWWHUVRUWRUDLVHDUJXPHQWVRUSUHVHQWHYLGHQFHWKDWFRXOGKDYHEHHQUDLVHG SULRUWRWKHHQWU\RIMXGJPHQW´Exxon Shipping Co. v. Baker86DWQ TXRWLQJ &KDUOHV$:ULJKW $UWKXU50LOOHUFederal Practice and Procedure GHG WKH&RXUWFRXOGGHQ\SODLQWLIIV¶PRWLRQRQWKHVHJURXQGV%XWJLYHQWKHHIIHFWRIWKH&RXUW¶VSULRU UXOLQJ RQ SODLQWLIIV¶ FODLPV DQG LWV FRQFOXVLRQ WKDW WKH %DQNUXSWF\ 5XOHV UHTXLUH D GLIIHUHQW RXWFRPHWKH&RXUWZLOOH[HUFLVHLWVGLVFUHWLRQWRJUDQWUHFRQVLGHUDWLRQ
5XOHVRI&LYLO3URFHGXUHWRFRQWHVWHGPDWWHUV 5DWKHUWKH\RQO\LQYROYHPRWLRQVSUDFWLFHDQG
³UHDVRQDEOHQRWLFHDQGRSSRUWXQLW\IRUDKHDULQJ´)HG5%DQNU3 D
,QFRPSDULVRQ³DGYHUVDU\SURFHHGLQJV´DUHJRYHUQHGE\3DUW9,,RIWKH)HGHUDO5XOHVRI
%DQNUXSWF\ 3URFHGXUH ZKLFK LQFRUSRUDWHV WKH )HGHUDO 5XOHV RI &LYLO 3URFHGXUH See )HG 5
%DQNU3$QDGYHUVDU\SURFHHGLQJLVFRPPHQFHGE\ILOLQJDFRPSODLQWDQGVHUYLQJDFRS\
RIWKHFRPSODLQWDQGWKHVXPPRQVSee )HG5%DQNU3±5XOHOLVWVWKH
W\SHVRIDFWLRQVWKDWUHTXLUHDQDGYHUVDU\SURFHHGLQJDQG5XOH VWDWHVWKDWDQDFWLRQ³WR
UHFRYHUPRQH\RUSURSHUW\´PXVWEHPDGHLQDQDGYHUVDU\SURFHHGLQJ)HG5%DQNU3
+HUH GHIHQGDQWV ILOHG D SURRI RI FODLP DJDLQVW 'DYHQSRUW DQG 'DYHQSRUW LQLWLDWHG D
FRQWHVWHGPDWWHUE\ILOLQJDQREMHFWLRQWRWKHSURRIRIFODLPSee $P&RPSO± 3OV¶
0RWDW3ODLQWLIIVDUJXHWKDWEHFDXVH'DYHQSRUWLQLWLDWHGDFRQWHVWHGDFWLRQ%DQNUXSWF\5XOH
E SURKLELWHGKLPIURPVHHNLQJWKHNLQGRIPRQHWDU\GDPDJHVWKDWFDQEHREWDLQHGLQDQ
DGYHUVDU\SURFHHGLQJ3O¶V0RWDWFLWLQJ )HG5%DQNU3 E 7KXVWKH\DUJXHWKDWWKH\
FRXOGQRWKDYHEURXJKWWKHLUFODLPVVHHNLQJPRQHWDU\GDPDJHVLQWKHEDQNUXSWF\SURFHHGLQJDQG
WKDWSODLQWLIIV¶FODLPVLQWKHFLYLODFWLRQDUHQRW³WKHVDPHFODLP´IRUres judicata SXUSRVHV3OV¶
0RWDW 3OV¶5HSO\DW7KH&RXUWDJUHHV
%DQNUXSWF\5XOHZKLFKJRYHUQVREMHFWLRQVWRFODLPVOLNHWKHRQHDWLVVXHKHUHZDV
DPHQGHGLQ6XEVHFWLRQ D SUHYLRXVO\SURYLGHGLQLWVILQDOVHQWHQFH
,I DQ REMHFWLRQ WR D FODLP LV MRLQHG ZLWK D GHPDQG IRU UHOLHI RI WKH NLQG VSHFLILHGLQ5XOHLWEHFRPHVDQDGYHUVDU\SURFHHGLQJ
&ROOLHURQ%DQNUXSWF\3 WKHG :LWKWKHDPHQGPHQWWKDWVHQWHQFH
ZDVUHSODFHGE\VXEVHFWLRQ E
$SDUW\LQLQWHUHVWVKDOOQRWLQFOXGHDGHPDQGIRUUHOLHIRIDNLQGVSHFLILHG LQ5XOHLQDQREMHFWLRQWRWKHDOORZDQFHRIDFODLPEXWPD\LQFOXGH WKHREMHFWLRQLQDQDGYHUVDU\SURFHHGLQJ
)HG5%DQNU3 E
7KH $GYLVRU\ &RPPLWWHH 1RWHV FRQFHUQLQJ WKH DPHQGPHQW WR 5XOH UHLWHUDWH WKH
GLIIHUHQFHLQWKHUHOLHIDYDLODEOHLQWKHWZRW\SHVRISURFHHGLQJV
)LUVWWKHDPHQGPHQWprohibits DSDUW\LQLQWHUHVWIURPLQFOXGLQJLQDFODLP REMHFWLRQDUHTXHVWIRUUHOLHIWKDWUHTXLUHVDQDGYHUVDU\SURFHHGLQJ$SDUW\ LQLQWHUHVWPD\KRZHYHULQFOXGHDQREMHFWLRQWRWKHDOORZDQFHRIDFODLP LQ DQ DGYHUVDU\ SURFHHGLQJ 8QOLNH D FRQWHVWHG PDWWHU DQ DGYHUVDU\ SURFHHGLQJUHTXLUHVWKHVHUYLFHRIDVXPPRQVDQGFRPSODLQWZKLFKSXWV WKH GHIHQGDQW RQ QRWLFH RI WKH SRWHQWLDO IRU DQ DIILUPDWLYH UHFRYHU\ 3HUPLWWLQJWKHSODLQWLIILQWKHDGYHUVDU\SURFHHGLQJWRLQFOXGHDQREMHFWLRQ WRDFODLPZRXOGQRWXQIDLUO\VXUSULVHWKHGHIHQGDQWDVPLJKWEHWKHFDVHLI WKH DFWLRQ ZHUH EURXJKW DV D FRQWHVWHG PDWWHU WKDW LQFOXGHG DQ DFWLRQ WR REWDLQUHOLHIRIDNLQGVSHFLILHGLQ5XOH
7KHUXOHDVDPHQGHGGRHVQRWUHTXLUHWKDWDSDUW\LQFOXGHDQREMHFWLRQWR WKHDOORZDQFHRIDFODLPLQDQDGYHUVDU\SURFHHGLQJ,IDFODLPREMHFWLRQLV ILOHG VHSDUDWHO\ IURP D UHODWHG DGYHUVDU\ SURFHHGLQJ WKH FRXUW PD\ FRQVROLGDWHWKHREMHFWLRQZLWKWKHDGYHUVDU\SURFHHGLQJXQGHU5XOH
)HG5%DQNU3$GYLVRU\&RPP1RWHV HPSKDVLVDGGHG
7KXV 5XOH E DQG WKH $GYLVRU\ &RPPLWWHH 1RWHV PDNH LW FOHDU WKDW D FRQWHVWHG
PDWWHULQLWLDWHGE\WKHILOLQJRIDQREMHFWLRQWRDSURRIRIFODLPDQGDQDGYHUVDU\SURFHHGLQJDUH
GLVWLQFW EDQNUXSWF\ SURFHHGLQJV DQG WKDW FHUWDLQ GHPDQGV IRU UHOLHI FDQQRW EH EURXJKW LQ D
FRQWHVWHGPDWWHU%HFDXVH5XOH FRYHUVGLVSXWHV³WRUHFRYHUPRQH\RUSURSHUW\´5XOH
E SUHFOXGHVDGHEWRUIURPPDNLQJWKRVHFODLPVLQDFRQWHVWHGPDWWHU7KHUHIRUH'DYHQSRUW
FRXOGQRWKDYHEURXJKWKLVFODLPVIRUGDPDJHVZKHQKHFRQWHVWHGGHIHQGDQWV¶SURRIRIFODLPLQ
WKHEDQNUXSWF\FDVH
&DVH ODZ LQWHUSUHWLQJ WKH LQWHUDFWLRQ EHWZHHQ WKH DPHQGHG YHUVLRQ RI %DQNUXSWF\ 5XOH
E DQG5XOHUHLQIRUFHVWKH&RXUW¶VFRQFOXVLRQ)RUH[DPSOHLQIn re DonsonDGHEWRU
ILOHG D SHWLWLRQ IRU UHRUJDQL]DWLRQ XQGHU &KDSWHU RI WKH %DQNUXSWF\ &RGH DQG KHU ODUJHVW
FUHGLWRUILOHGDSURRIRIFODLPWRZKLFKWKHGHEWRUREMHFWHG%5± %DQNU6'
7H[ +HU REMHFWLRQV IRFXVHG RQ ZKHWKHU WKH FUHGLWRU¶V FODLPV ZHUH QRQGLVFKDUJHDEOH
GRPHVWLFVXSSRUWREOLJDWLRQVId. 7KHGLVWULFWFRXUWFRQFOXGHGWKDWWKHGHEWRU¶V³REMHFWLRQVWR>WKH
FUHGLWRU¶V@ FODLPV VKRXOG QRW KDYH EHHQ ILOHG LQ KHU PDLQ EDQNUXSWF\ FDVH´ EHFDXVH ³>V@XFK
REMHFWLRQVPXVWEHPDGHLQDQDGYHUVDU\SURFHHGLQJ´Id. DW±7KHFRXUWREVHUYHGWKDWD
GLVSXWHUHJDUGLQJWKHGLVFKDUJHDELOLW\RIDGHEWPXVWEHUHVROYHGLQDQDGYHUVDU\SURFHHGLQJXQGHU
5XOH DQGWKDWEHFDXVH%DQNUXSWF\5XOHZDV³VXEVWDQWLDOO\DPHQGHG´LQWKH
UXOHQRZ³SUHFOXGHVDGHEWRUIURPREMHFWLQJWRDFODLP¶VGLVFKDUJHDELOLW\LQWKHPDLQEDQNUXSWF\
FDVH´ Id. DW ± see also )HG 5 %DQNU 3 ³7KH IROORZLQJ DUH DGYHUVDU\
SURFHHGLQJV DSURFHHGLQJWRGHWHUPLQHWKHGLVFKDUJHDELOLW\RIDGHEW´ 7KXVDGHPDQGIRU
UHOLHIIDOOLQJXQGHU5XOHFRXOGQRWEHEURXJKWZLWKLQWKHFRQWHVWHGPDWWHU
$WOHDVWRQHEDQNUXSWF\FRXUWKDVLQGLFDWHGWKDWWKHLQWHUSOD\EHWZHHQ5XOHV E DQG
KDVDQLPSDFWRQres judicata DQDO\VLV,QIn re J.S. II, L.L.C.WKHGHEWRUVFRQVLVWLQJRID
JURXSRIOLPLWHGOLDELOLW\FRPSDQLHVHVWDEOLVKHGWRGHYHORSUHDOHVWDWHREMHFWHGWRDSURRIRIFODLP
ILOHGE\WKHFUHGLWRUDQRWKHUOLPLWHGOLDELOLW\FRPSDQ\ %5± %DQNU1',OO
7KHFUHGLWRUKDGSUHYLRXVO\DFWHGDVWKHGHEWRUV¶PDQJHUDQGDJHQWDQGLWILOHGDWKLUG
SDUW\FRPSODLQWIRUHTXLWDEOHVXERUGLQDWLRQDJDLQVWWKHGHEWRUV¶FXUUHQWPDQDJHUVId. 7KHGHEWRUV
See also In re MF Global Inc.%5 %DQNU6'1< REVHUYLQJWKDW GXHWRWKHDPHQGPHQWWR%DQNUXSWF\5XOHWKH5XOH³QRORQJHUSHUPLWVDFODLPREMHFWLRQWR DXWRPDWLFDOO\FRQYHUWWRDQDGYHUVDU\SURFHHGLQJ´DQGWKDW³LI>DQ@>R@EMHFWLRQVHHNVUHOLHIRI WKHW\SHWKDWPXVWEHVRXJKWLQDQDGYHUVDU\SURFHHGLQJsuch relief cannot be sought in a claim objectionDQGPXVWLQVWHDGEHSXUVXHGLQDQDGYHUVDU\SURFHHGLQJ´ HPSKDVLVDGGHG In re J.S. II, L.L.C. %5 %DQNU1',OO RYHUUXOLQJFODLPREMHFWLRQRQWKHJURXQGWKDWWKH REMHFWLRQ YLRODWHG %DQNUXSWF\ 5XOH E EHFDXVH 5XOHV E DQG WRJHWKHU PDQGDWHGWKDWFODLPVIRUHTXLWDEOHVXERUGLQDWLRQEHSXUVXHGLQDQDGYHUVDU\SURFHHGLQJDQGQRW LQWKHFRQWHVWHGPDWWHU DQGFXUUHQWPDQDJHUVILOHGPRWLRQVWRGLVPLVVDUJXLQJWKDWWKHFUHGLWRU¶VFODLPVZHUHEDUUHGE\
res judicataId.
,Q ILQGLQJ WKDW WKH HTXLWDEOH VXERUGLQDWLRQ FODLP ZDV QRW EDUUHG E\ res judicata WKH
EDQNUXSWF\FRXUWFRQFOXGHGWKDWWKHFUHGLWRU¶VFXUUHQWFODLPVZHUH³QRWEDVHGRQWKHVDPHFRUHRI
RSHUDWLYHIDFWV´DVWKHXQGHUO\LQJSURFHHGLQJGHDOLQJZLWKWKHVDOHRIWKHSURSHUW\LQZKLFKWKH
GHEWRUVKDGREMHFWHGWRWKHFUHGLWRU¶VSURRIRIFODLP %5 DW7KHFRXUWKHOGWKDWWKH
FUHGLWRU³VKRXOGQRWKDYHEHHQUHTXLUHGWRVHHNHTXLWDEOHVXERUGLQDWLRQ´LQWKHSULRUSURFHHGLQJ
³EHFDXVH HTXLWDEOH VXERUGLQDWLRQ PXVW SURFHHGYLD DQ DGYHUVDU\ SURFHHGLQJ DV UHTXLUHG XQGHU
)HG5%DQNU3 E DQG ´Id. )XUWKHUWKHFRXUWREVHUYHGWKDWUHTXLULQJWKHLQLWLDWLRQ
RIDQDGYHUVDU\SURFHHGLQJZRXOGKDYHFUHDWHGDQ³LPSUDFWLFDOGHOD\´VLQFH³DQDGYHUVDU\
SURFHHGLQJWDNHVORQJHUWRUHVROYHEHFDXVHLWHQWDLOVGLVFRYHU\DQGPRWLRQSUDFWLFH´Id. DW
±7KHUHIRUHWKHGHEWRUV¶PRWLRQVWRGLVPLVVRQres judicata JURXQGVZHUHGHQLHGId.DW
'HIHQGDQWV DGPLW WKDW ³>D@GYHUVDU\SURFHHGLQJVDQGFRQWHVWHG PDWWHUVDUHWZRGLIIHUHQW
W\SHVRIOLWLJDWHGSURFHHGLQJV´DQGWKDW³'DYHQSRUW¶VDIILUPDWLYHHOHFWLRQWRILOHDQGSURVHFXWHWR
FRPSOHWLRQDIUHHVWDQGLQJFODLPREMHFWLRQDVDFRQWHVWHGPDWWHUOLPLWHGZKDWKHFRXOGDVVHUW
DQGREWDLQLQVLGHWKHFRQWHVWHGPDWWHU´'HIV¶2SSDW± Q%XWWKH\DUJXHWKDWQRWKLQJ
VWRSSHG 'DYHQSRUW IURP DVVHUWLQJ WKH FDXVHV RI DFWLRQ DQG PRQHWDU\ GDPDJHV LQ DQ DGYHUVDU\
SURFHHGLQJDQGWKHQVHHNLQJWRFRQVROLGDWHKLVFODLPREMHFWLRQZLWKLWId.DW7KH\FRQWHQG
WKDWVLQFH'DYHQSRUWKDGWKHDELOLW\WREULQJKLVFODLPVE\ZD\RIDGLIIHUHQWVWUDWHJLFSDWKWKLV
VDWLVILHV WKH TXHVWLRQ RI ZKHWKHU SODLQWLIIV ³FRXOG KDYH EURXJKW´ WKHLU FODLPV LQ WKH SULRU
SURFHHGLQJSee id.
:KLOHLWLVWUXHWKDW'DYHQSRUWKDGWKLVRSWLRQWKHILUVWSURQJRIWKHres judicata LQTXLU\
GRHVQRWORRNWRZKHWKHUDFODLPFRXOGKDYHEHHQEURXJKWLQWKHSUHYLRXVcourt LWH[DPLQHVLIWKH
VHFRQGFODLPFRXOGKDYHEHHQEURXJKWLQWKHILUVWproceeding2QWKLVLVVXHWKH&RXUW¶VUXOLQJLQ
Hurd LVLQVWUXFWLYH
,QHurdWKH&RXUWRI$SSHDOVDFNQRZOHGJHGWKDWLWZDVXQFOHDULI³+XUGFRXOGKDYHMRLQHG
KLVGDPDJHVFODLPZLWKKLVKDEHDVSHWLWLRQ´LQ6XSHULRU&RXUW)GDW %XWWKH&RXUW
GLGQRWILQGWKDWSRVVLELOLW\WREHGLVSRVLWLYHLQDQ\HYHQW5DWKHULWIRFXVHGRQKRZWKH³6XSUHPH
&RXUWKDVUHVHUYHGKDEHDVIRUWKRVHVHHNLQJUHOHDVHIURPFRQILQHPHQWDQGVHFWLRQ IRUWKRVH
VHHNLQJRWKHUUHOLHIVXFKDVGDPDJHV´DQGFRQFOXGHGWKDWUHJDUGOHVVRIZKHWKHUWKHFODLPVFRXOG
KDYHEHHQMRLQHGLQRQHDFWLRQ³WKHGDPDJHVFODLPZDVQRWDQGFRXOGQRWKDYHEHHQUDLVHGLQWKH
KDEHDVSURFHHGLQJ´LWVHOIId.
6LPLODUO\ FRQWHVWHG PDWWHUV DUH UHVHUYHG IRU WKRVH VHHNLQJ WR UHVROYH QDUURZ LVVXHV
TXLFNO\ $QG UHJDUGOHVV RI ZKHWKHU 'DYHQSRUW FRXOG KDYH EURXJKW KLV VWDWH DQG FRPPRQ ODZ
FODLPVLQDVHSDUDWHDGYHUVDU\SURFHHGLQJDQGWKHQFRQVROLGDWHGWKHPZLWKKLVFODLPREMHFWLRQWKH
GDPDJHVFODLPVFRXOGQRWKDYHEHHQUDLVHGLQWKHFODLPREMHFWLRQSURFHHGLQJLWVHOISee 5XOH
$GYLVRU\&RPP1RWHV SURYLGLQJWKDW5XOH E H[SOLFLWO\³SURKLELWVDSDUW\LQLQWHUHVWIURP
LQFOXGLQJ LQ D FODLP REMHFWLRQ D UHTXHVW IRU UHOLHI WKDW UHTXLUHV DQ DGYHUVDU\ SURFHHGLQJ´
:KHWKHUWKHEDQNUXSWF\FRXUWZRXOGKDYHEHHQDFRXUWRIFRPSHWHQWMXULVGLFWLRQWRUHVROYH DOORISODLQWLIIV¶VWDWHODZDQGFRPPRQODZFODLPVKDVDOUHDG\EHHQGHFLGHGE\WKH&RXUWSee Davenport )6XSSGDW±$QGSODLQWLIIVKDYHQRWFKDOOHQJHGWKH&RXUW¶VILQGLQJRQ WKLVHOHPHQWRIres judicata 'DYHQSRUWWKHUHIRUHFRXOGQRWKDYHEURXJKWKLVGDPDJHVFODLPVLQWKHFRQWHVWHGPDWWHUWKDWZDV
OLWLJDWHGLQWKHEDQNUXSWF\FRXUWDQGKHLVQRWEDUUHGE\res judicata IURPEULQJLQJWKHPQRZ
,,, 3XUSRVHVRIRes Judicata
7KH&RXUW¶VFRQFOXVLRQFRPSRUWVZLWKWKHRYHUDOOJRDOVRIres judicataDVZHOO³>7@KH
GRFWULQHLVGHVLJQHGWRFRQVHUYHMXGLFLDOUHVRXUFHVDYRLGLQFRQVLVWHQWUHVXOWVHQJHQGHUUHVSHFWIRU
MXGJPHQWVRISUHGLFWDEOHDQGFHUWDLQHIIHFWDQGWRSUHYHQWVHULDOIRUXPVKRSSLQJDQGSLHFHPHDO
2WKHUFRXUWVKDYHFRQFOXGHGWKDWLIDGHEWRUFRXOGKDYHREMHFWHGWRDSURRIRIFODLPDQG EURXJKWDQDGYHUVDU\SURFHHGLQJLQWKHEDQNUXSWF\FRXUWVXEVHTXHQWFODLPVDULVLQJIURPWKHVDPH QXFOHXVRIIDFWVDUHEDUUHGE\res judicataSee, e.g.Covert v. LVNV Funding, LLC )G ± WK&LU KROGLQJWKDWGHEWRUVZKRGRQRWREMHFWWRSURRIVRIFODLPGXULQJWKHLU EDQNUXSWF\ SURFHHGLQJ DUH SUHFOXGHG IURP ODWHU OLWLJDWLQJ WKH VXEMHFW PDWWHU RI WKRVH FODLPV Capitol Hill Grp. v. Pillsbury, Winthrop, Shaw, Pittman, LLC )G ± '&&LU DIILUPLQJ GLVWULFW FRXUW¶V FRQFOXVLRQ WKDW res judicata SUHFOXGHG VXEVHTXHQW PDOSUDFWLFH FODLPVDJDLQVWODZILUPWKDWUHSUHVHQWHGSODLQWLIILQXQGHUO\LQJEDQNUXSWF\FDVHEHFDXVHSODLQWLII FRXOGKDYHDVVHUWHGDGHIHQVHDJDLQVWWKHIHHDSSOLFDWLRQWKHEDQNUXSWF\MXGJHVSHFLILFDOO\DVNHG SODLQWLIILILWZDVZLWKKROGLQJDQ\IXUWKHUFODLPVDQGWKHEDQNUXSWF\FRXUWQRWHGWKDWIDLOXUHWR EULQJ DQ\ PDOSUDFWLFH FODLPV ZRXOG EDU WKHP IURP EULQJLQJ WKHP LQ WKH IXWXUH Grausz v. Englander )G WK &LU FRQFOXGLQJ WKDW SODLQWLII KDG DQ HIIHFWLYH RSSRUWXQLW\WROLWLJDWHKLVPDOSUDFWLFHFODLPEHFDXVHKH³FRXOGKDYHREMHFWHG´WRWKHODZILUP¶V IHHDSSOLFDWLRQLQWKHEDQNUXSWF\FDVH³DQGLQFOXGHGZLWKKLVREMHFWLRQDFODLPIRUDIILUPDWLYH UHOLHI RQ DFFRXQW RI WKH ILUP¶V DOOHJHG PDOSUDFWLFH´ DQG ³WKH >FRQWHVWHG@ PDWWHU ZRXOG KDYH EHFRPHDQDGYHUVDU\SURFHHGLQJ´ In re Intelogic Trace, Inc.)G WK&LU EDUULQJ VXEVHTXHQW PDOSUDFWLFH FODLPV EHFDXVH SODLQWLII FRXOG KDYH ³REMHFWHG WR WKH IHH DSSOLFDWLRQ DQG LQFOXGHG ZLWK LWV REMHFWLRQ D FODLP IRU DIILUPDWLYH UHOLHI RQ DFFRXQW RI DOOHJHG PDOSUDFWLFH>DQGWKH@PDWWHUZRXOGKDYHEHFRPHDQDGYHUVDU\SURFHHGLQJ´ Siegel v. Fed. Home Loan Mortg. Corp.)G WK&LU KROGLQJWKDWDGHEWRU¶VIDLOXUHWRREMHFWWR DFUHGLWRU¶VSURRIRIFODLPEDUUHGGHEWRU¶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¶V VHUYLFHV ZHUH DFFHSWDEOHVRDQ\OLWLJDWLRQRIDWWRUQH\VZRUNVKRXOGKDYHEHHQEURXJKWLQWKHEDQNUXSWF\FDVH +HUHWKHEDQNUXSWF\FRXUWRQO\ZDVDVNHGWRGHWHUPLQHWKHDPRXQWRIPRQH\GXHRQWKHQRWH QR HYDOXDWLRQRIWKHOHJLWLPDF\RIWKHIRUHFORVXUHRURIGHIHQGDQWV¶DFWLRQVWRRNSODFH$QGILQDOO\ DOPRVWDOORIWKHGHFLVLRQVDSSOLHG%DQNUXSWF\5XOH E EHIRUHLWZDVDPHQGHGWRPDNHLW FOHDUWKDWFHUWDLQGHPDQGVIRUDIILUPDWLYHUHOLHIFDQQRWEHEURXJKWZLWKLQDFRQWHVWHGPDWWHU OLWLJDWLRQ´Hardison v. Alexander)G '&&LU %DUULQJFODLPVWKURXJK
WKHXVHRIres judicata VKRXOGDOVR³UHOLHYHSDUWLHVRIWKHFRVWDQGYH[DWLRQRIPXOWLSOHODZVXLWV´
Allen 86DW FLWLQJMontana v. United States86± see also
Clark-Cowlitz Joint Operating Agency v. FERC)G '&&LU REVHUYLQJ
WKDWWKHSXUSRVHRIERWKFODLPDQGLVVXHSUHFOXVLRQLV³SURWHFWLRQRIOLWLJDQWVIURPWKHYH[DWLRQ
DQG H[SHQVH RI UHSHWLWLRXV OLWLJDWLRQ SURWHFWLRQ RI WKH FRXUWV IURP WKH EXUGHQ RI XQQHFHVVDU\
OLWLJDWLRQSURPRWLRQRIUHVSHFWIRUWKHMXGLFLDOSURFHVVDQGFRQILGHQFHLQWKHFRQFOXVLYHQHVVRI
MXGLFLDOGHFLVLRQPDNLQJDYRLGDQFHRIGLVFRQFHUWLQJO\LQFRQVLVWHQWUHVXOWVDQGVHFXULQJWKHSHDFH
DQGUHSRVHRIVRFLHW\´ rehearing granted, judgment vacated by )G '&&LU
7KHVHFRQFHUQVXQGHUOD\WKH&RXUW¶VRULJLQDOGHFLVLRQEXWWKH\DSSO\LQXQLTXHZD\VLQ
WKHSDUWLFXODUFRQWH[WLQZKLFKWKH\DULVHKHUH'DYHQSRUW¶VFDVHZDVILOHGXQGHU&KDSWHURI
WKH%DQNUXSWF\&RGHDQGKLVREMHFWLYHZDVWRREWDLQFRQILUPDWLRQRIDSODQWRPDNHSD\PHQWVWR
WKH&KDSWHUWUXVWHHZKRLQWXUQZRXOGPDNHGLVWULEXWLRQVWRFUHGLWRUVDVGLUHFWHGE\WKHSODQ
See In re Davenport&DVH1R FY %DQNU''& 7KHEDQNUXSWF\FRXUWFRXOG
QRWGHWHUPLQHWKHDPRXQWRZHGWRFUHGLWRUV'MRXUDEFKLDQG:HOWXQWLOWKHREMHFWLRQWRWKHSURRI
RIFODLPKDGEHHQGHFLGHGSee id.2UGHU&RQILUPLQJ3ODQ>'NW@7KXVLWZDVLPSRUWDQW
7KHFRXUW¶VRUGHUVWDWHG
2QFHWKHREMHFWLRQWRWKHFODLPRI%DEDN'MRXUDEFKLDQG0RQLFD:HOW LVGHFLGHGWKHSD\PHQWVWRWKHPXQGHUWKHSODQVKDOOEHEDVHGRQWKH FRXUW¶VGHWHUPLQDWLRQRIWKHDPRXQWRZHGWKHPDVRIWKHGDWHRIHQWU\ RIWKLVRUGHUFRQILUPLQJWKHGHEWRU¶VSODQ
8QWLOWKHREMHFWLRQWRFODLPLVGHFLGHGWKHWUXVWHHVKDOOPDNHPRQWKO\ GLVWULEXWLRQVWR%DEDN'MRXUDEFKLDQG0RQLFD:HOWHTXDOLQDPRXQWWR RUH[FHHGLQJ WKHPLQLPXPPRQWKO\SD\PHQWGXHWKHPXQGHUWKHSODQ EDVHG RQ WKH DPRXQW RZHG WKHP DV RI WKH GDWH RI HQWU\ RI WKLV RUGHU SXUVXDQWWRWKHLUSURRIRIFODLP DVWKRXJKQRREMHFWLRQWRFODLPKDG EHHQ ILOHG EXW VXFK SD\PHQWV LQ WKH DJJUHJDWH VKDOO QRW H[FHHG WKH DPRXQWWKHGHEWRUFRQFHGHVLVRZHGRQWKDWFODLP WRDOOSDUWLHVWKDWWKHUHEHDUHODWLYHO\SURPSWDGMXGLFDWLRQRI'DYHQSRUW¶VREMHFWLRQWRWKHFODLP
VR WKDW WKH DPRXQW RZHG WR WKHP ZRXOG EH IL[HG IRU SXUSRVHV RI GLVWULEXWLRQV XQGHU WKH SODQ
5HTXLULQJ'DYHQSRUWWRLQLWLDWHDQDGYHUVDU\SURFHHGLQJWRUHVROYHRWKHULVVXHVDWWKDWWLPHZRXOG
KDYHFRPSOLFDWHGPDWWHUVDQGFUHDWHGDQXQQHFHVVDU\GHOD\LQSURFHHGLQJVQHLWKHURIZKLFKDUH
JRDOVRIWKHGRFWULQHRIres judicataSee In re J.S. II, LLC %5 DW±/LWLJDWLQJWKH
OLPLWHGLVVXHRIZKDWDPRXQWZDVGXHRQWKHQRWHHQDEOHGWKHEDQNUXSWF\FRXUWWRHIILFLHQWO\GHFLGH
WKHPDWWHUWKDWQHHGHGWREHUHVROYHGZKLOHDOVRSUHVHUYLQJWKHMXGLFLDOUHVRXUFHVRIWKHEDQNUXSWF\
FRXUW
&21&/86,21
Res judicata³GRHVQRWEDUDOLWLJDQWIURPGRLQJLQWKHSUHVHQWZKDWKHKDGQRRSSRUWXQLW\
WR GR LQ WKH SDVW´ Drake )G DW %HFDXVH SODLQWLIIV FRXOG QRW EULQJ WKHLU VWDWH DQG
FRPPRQODZFODLPVIRUGDPDJHVZLWKLQWKHFODLPREMHFWLRQSURFHHGLQJLQWKHEDQNUXSWF\FRXUW
WKH\DUHQRWSUHFOXGHGIURPEULQJLQJWKRVHFODLPVLQWKHGLVWULFWFRXUWQRZ
7KHUHIRUHSODLQWLIIV¶PRWLRQIRUUHFRQVLGHUDWLRQ>'NW@LV*5$17('
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ee D-1 Enters., Inc. v. Commercial State Bank )G WK&LU FRQFOXGLQJWKDW res judicata GLGQRWEDUWKHGHEWRUIURPEULQJLQJIUDXG FODLPVDQGREVHUYLQJWKDWLWZRXOGEH³RGGLQGHHGIRU>WKHFRXUW@WRKROGWKDWWKHGHEWRUPXVW DVVHUWDOOUHODWHGFODLPVLQDµFRQWHVWHGPDWWHU¶WRZKLFKWKHFRPSXOVRU\FRXQWHUFODLPUXOHVGR QRWHYHQDSSO\´ In re Worldwide Wholesale Lumber, Inc.%5 %DQNU'6& FRQFOXGLQJWKDWWKHWUXVWHH¶VFDXVHVRIDFWLRQZHUHQRWEDUUHGE\res judicata EHFDXVHWKH\ FRXOGQRWKDYHEHHQUDLVHGLQWKHSULRUFRQWHVWHGPDWWHUVLQFHWKH\ZHUHPDWWHUVWKDWKDGWREH UDLVHGLQDQDGYHUVDU\SURFHHGLQJDQGEHFDXVHWKHWUXVWHHZDVQRWFRPSHOOHGWRUDLVHWKHFODLPV LQFRQWHVWHGDFWLRQEHFDXVHRIWKHLQDSSOLFDELOLW\RI5XOH 7KHSDUWLHVDUH25'(5('WRPHHWFRQIHUDQGILOHD-RLQW5HSRUWSXUVXDQWWR/RFDO5XOH
E\-XQH
6225'(5('
$0<%(50$1-$&.621 8QLWHG6WDWHV'LVWULFW-XGJH '$7( -XQH