Fogleman v. Meaux Surface Protection, Inc.

58 So. 3d 1057, 10 La.App. 3 Cir. 1210, 2011 La. App. LEXIS 305, 2011 WL 799033
CourtLouisiana Court of Appeal
DecidedMarch 9, 2011
DocketNo. 10-1210
StatusPublished
Cited by15 cases

This text of 58 So. 3d 1057 (Fogleman v. Meaux Surface Protection, Inc.) is published on Counsel Stack Legal Research, covering Louisiana Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Fogleman v. Meaux Surface Protection, Inc., 58 So. 3d 1057, 10 La.App. 3 Cir. 1210, 2011 La. App. LEXIS 305, 2011 WL 799033 (La. Ct. App. 2011).

Opinion

SAUNDERS, Judge.

_|jThis is a case involving whether a claim for a bonus due under an employment contract was barred by the res judicata effect of a prior federal court judgment that awarded the former employer damages due to the former employees’ breach of fiduciary duty. The trial court granted the former employer’s exception. We reverse.

FACTS AND PROCEDURAL HISTORY:

Michael Fogleman and Charles Kotrla (collectively appellants) were employees at Meaux Surface Protection, Inc. (Meaux) under an employment contract. After appellants resigned from Meaux, they started a competing business wherein they solicited employees and clients from Meaux.

In Texas, Meaux filed suit for damages against appellants for breach of fiduciary duty.1 Judgment was reached by a Texas Federal District Court on February 24, 2009, that awarded Meaux $1,430,000.00 in damages for breach of fiduciary duty.

On July 23, 2007, appellants filed a petition for unpaid wages in the 15th Judicial District Court in Lafayette Parish, Louisiana. Appellants alleged in that petition that Meaux owed them wages and bonuses under an employment contract. On June 15, 2010, Meaux filed an exception of res judicata. After hearing argument from counsel at a hearing on the merits of the exception, the trial court maintained Meaux’s exception. Thereafter Meaux entered into evidence a portion of the record from the Texas litigation. The trial court signed a judgment dismissing appellants’ petition with prejudice on June 28, 2010. Appellants have appealed, alleging a single assignment of error.

DISCUSSION OF THE MERITS:

Appellants contend that “the trial court erred in its application of the doctrine 12of res judicata to the facts of this case.” We agree.

“The standard of review of a ruling sustaining an exception of res judicata is manifest error when the exception is raised prior to the case being submitted and evidence is received from both parties.” Jones ex rel. Jones v. GEO Group, Inc., 08-1276, p. 4 (La.App. 3 Cir. 4/1/09), 6 So.3d 1021, 1024. Appellants argue that the standard of review applicable is de novo because, while the exception was raised prior to the case being heard and Meaux submitted evidence, they submitted no evidence. Thus, according to appellants, evidence was not “received from both parties.” Id. We are not swayed by this argument. The trial court received no evidence from appellants because they chose not to submit any, not because of a lack of opportunity to do so.

However, appellants correctly point out that the manifest error standard of review is only applicable to questions of fact. See Stobart v. State, Through DOTD, 617 So.2d 880 (La.1993); Sistler v. Liberty Mut. Ins. Co., 558 So.2d 1106 (La.1990). Here, the trial court did not express any factual determinations in reaching its judgment. It opined that the res judicata effect of the previous judgment rendered in the Texas litigation barred appellants’ suit against Meaux. “The res judicata effect of a prior judgment is a question of law that is reviewed de novo.” Morales v. Parish of Jefferson, 10-273 (La.App. 5 Cir. 11/9/10), 54 So.3d 669, citing [1060]*1060Jefferson Marine Towing, Inc. v. Kostmayer Const., LLC, 09-310, p. 5 (La.App. 5 Cir. 1/26/10), 32 So.3d 255, 259, writ denied, 10-378 (La.4/23/10), 34 So.3d 265. Therefore, we will conduct a de novo review to determine whether the trial court was legally correct in finding that Meaux’s judgment barred appellants’ suit due to its res judicata effect.

Federal law is applicable when a determination is made of what res judicata |seffect, if any, a federal judgment has on a subsequent litigation. Jones ex rel. Jones, 6 So.3d 1021; Green v. Iberia Parish Sch. Bd., 06-1060 (La.App. 3 Cir. 12/20/06), 945 So.2d 940, writ denied, 07-111 (La.3/16/07), 952 So.2d 697; Terrebonne Fuel & Lube, Inc. v. Placid Refining Co., 95-654, 95-671 (La.1/16/96), 666 So.2d 624.

“Under res judicata, a final judgment on the merits of an action precludes the parties or their privies from relitigat-ing issues that were or could have been raised in that action.” Allen v. McCurry, 449 U.S. 90, 94, 101 S.Ct. 411, 414, 66 L.Ed.2d 308 (1980). “[A]ny judgment under federal res judicata law, bars a subsequent suit if all of the following tests are satisfied: 1) both cases involve the same parties; 2) the prior judgment was rendered by a court of competent jurisdiction; 3) the prior decision was a final judgment on the merits; and 4) the same cause of action is at issue in both cases”. Terrebonne Fuel & Lube, Inc., 666 So.2d at 633, citing Matter of Baudoin, 981 F.2d 736 (5th Cir.1993); Eubanks [v. FDIC, 977 F.2d 166 (5th Cir.1992) ].

There is no disagreement that the parties are the same in both litigations, that the Texas federal court which rendered the Texas judgment was competent, and that the Texas judgment was a final judgment on the merits. Thus, the only question we must answer is whether “the same cause of action is at issue in both” the Texas litigation and the litigation before us. Id.

The United States Fifth Circuit, in Test Masters Educational Services, Inc. v. Singh, 428 F.3d 559, 571 (5th Cir.2005), cert. denied, 547 U.S. 1055, 126 S.Ct. 1662, 164 L.Ed.2d 397 (2006) (citations, internal quotations, and parentheticals omitted), discussed the proper test used by federal courts in determining whether two suits involve the same cause of action when it stated:

In order to determine whether both suits involve the same cause of action, this Court uses the transactional |4test. Under the transactional test, a prior judgment’s preclusive effect extends to all rights of the plaintiff with respect to all or any part of the transaction, or series of connected transactions, out of which the original action arose. What grouping of facts constitutes a transaction or a series of transactions must be determined pragmatically, giving weight to such considerations as whether the facts are related in time, space, origin, or motivation, whether they form a convenient trial unit, and whether their treatment as a unit conforms to the parties’ expectations or business understanding or usage. If a party can only win the suit by convincing the court that the prior judgment was in error, the second suit is barred. The critical issue is whether the two actions are based on the same nucleus of operative facts.

Appellants first argue that Meaux’s failure to include the entire record from the Texas litigation is fatal to Meaux’s exception of res judicata. They base their argument on Union Planters Bank v. Commercial Capital Holding Corp., 04-871 (La.App. 1 Cir. 3/24/05), 907 So.2d 129, where our first circuit reversed a trial court’s grant of an exception of res judica-[1061]*1061ta because the party pleading res judicata failed to introduce any of the prior litigation’s record.

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Bluebook (online)
58 So. 3d 1057, 10 La.App. 3 Cir. 1210, 2011 La. App. LEXIS 305, 2011 WL 799033, Counsel Stack Legal Research, https://law.counselstack.com/opinion/fogleman-v-meaux-surface-protection-inc-lactapp-2011.