NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS FILED
FOR THE NINTH CIRCUIT NOV 19 2013
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
LEN WALLACE and PAMELA No. 12-35423
WALLACE,
D.C. No. 1:11-cv-00084-RFC
Plaintiffs - Appellants,
v. MEMORANDUM*
NORMAN HAYES; et al.,
Defendants - Appellees.
Appeal from the United States District Court
for the District of Montana
Richard F. Cebull, Senior District Judge, Presiding
Submitted November 5, 2013**
Portland, Oregon
Before: M. SMITH and HURWITZ, Circuit Judges, and MAHAN, District
Judge.***
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
***
The Honorable James C. Mahan, District Judge for the U.S. District
Court for the District of Nevada, sitting by designation.
Len and Pamela Wallace appeal from the district court’s judgment
dismissing the action for lack of jurisdiction under the Rooker-Feldman doctrine,
or alternatively, as barred by res judicata. The Wallaces also challenge the district
court’s imposition of sanctions under Federal Rule of Civil Procedure 11. Because
the parties are familiar with the facts and procedural history of this case, we repeat
only those facts necessary to resolve the issues raised on appeal. We affirm.
The district court properly dismissed the action for lack of subject matter
jurisdiction under the Rooker-Feldman doctrine because the Wallaces’ complaint
was a de facto appeal of Montana state court decisions. See Kougasian v. TMSL,
Inc., 359 F.3d 1136, 1140 (9th Cir. 2004). Because the Wallaces already litigated
their contentions of extrinsic fraud in Montana state court, the claims of extrinsic
fraud that are the basis for this federal action are inextricably intertwined with the
state court decisions. Therefore, adjudication of these claims in federal court
would undercut the state rulings. See Reusser v. Wachovia Bank, N.A., 525 F.3d
855, 859–60 (9th Cir. 2008).
Additionally, the Wallaces’ claims are barred by res judicata. Under
Montana law, res judicata applies if: “1. The parties or their privies are the same;
2. The subject matter of the present and past actions is the same; 3. The issues are
the same and relate to the same subject matter; and 4. The capacities of the parties
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are the same to the subject matter and issues between them.” Touris v. Flathead
Cnty., 258 P.3d 1, 4 (Mont. 2011); see also Hawkins v. Risley, 984 F.2d 321, 324
(9th Cir. 1993) (“[F]ederal courts apply state law to determine the preclusive effect
of state court judgments . . . .”). All four elements are present in this case.
The district court properly imposed sanctions against the Wallaces and their
counsel for bringing a frivolous lawsuit. See Metabolic Research, Inc. v. Ferrell,
693 F.3d 795, 802 n.8 (9th Cir. 2012). The district court did not abuse its
discretion in concluding that the Wallaces’ complaint is legally baseless, and that
counsel did not conduct a reasonable and competent inquiry before filing it. See
Strom v. United States, 641 F.3d 1051, 1059 (9th Cir. 2011); Holgate v. Baldwin,
425 F.3d 671, 676 (9th Cir. 2005).
Nevertheless, we decline to impose sanctions against the Wallaces under
Federal Rule of Appellate Procedure 38 for filing a frivolous appeal, because
Norman Hayes only requested sanctions in his answering brief, which did not
provide sufficient notice to the Wallaces. See Fed. R. App. P. 38; Gabor v. Frazer,
78 F.3d 459, 460–61 (9th Cir. 1996) (citing advisory committee notes).
AFFIRMED.
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