dissenting. This case requires close attention to the factual situation and careful application of the law in order to reach the correct result.
We can start with the fact that prior to the filing of this case in an Arkansas state court, the appellant filed a suit in federal court alleging violations of a federal law — the Equal Credit Opportunity Act (ECOA). However, the complaint also made allegations that were sufficient to state a cause of action for the “tort of outrage” under Arkansas law. See Deitsch v. Tillary, 309 Ark. 401, 405-06, 833 S.W.2d 760, 761-62 (1992).
Pursuant to the defendant’s motion to dismiss filed in federal court, that court dismissed the plaintiff’s complaint by an order which characterized the cause of action as follows:
This is an individual action alleging discrimination and denial of equal credit opportunity, based upon place of employment, in violation of the Equal Credit Opportunity Act.
The federal court order also stated that the court would accept the plaintiff’s allegation that the defendant bank denied the plaintiff’s credit request because of her place of employment, but the order held that this did not violate the ECOA because a person’s employment status is not a protected category. The order then stated that the complaint was dismissed. Also, it is important to note that the order made no mention at all about the plaintiff’s tort-of-outrage allegations.
After the dismissal of the complaint in federal court, the plaintiff filed the present suit in an Arkansas circuit court and alleged a cause of action for the tort of outrage based upon substantially the same allegations made as to that cause of action in federal court. Pursuant to the defendant’s motion for summary judgment, based upon the doctrine of res judicata, the circuit court dismissed the plaintiff’s complaint, and she brings this appeal.
Her argument in this court is based, as the majority opinion states, upon the case of Swofford v. Stafford, 295 Ark. 433, 748 S.W.2d 660 (1988), and she argues that two prongs of the five-prong test set out in that opinion (and quoted by the majority opinion in this case) have not been satisfied. Those prongs are:
(3) the first suit was fully contested in good faith;
(4) both suits involve the same claim or cause of action which was litigated or could have been litigated but was not;
To make sure we understand that the appellant has clearly raised these points, I will quote from her brief portions of her argument on both points.
Appellant asserts, however, that the third prong of the test, whether the claim was fully contested in good faith, was not met because appellee’s failure to file an answer left the appellant without notice of its position or defenses on the allegations included in the complaint.
Furthermore, it is undisputed that Appellee’s Motion to Dismiss, filed in federal court, exclusively addressed the narrow issue of whether the ECOA applied to the facts of appellant’s case. Consequently, the court’s opinion and grounds for dismissal were exclusively limited to that narrow issue; consistent with appellee’s Motion to Dismiss. The court rendered no opinion and indeed, did not mention any other allegations of the complaint.
Succinctly, appellant’s allegation of appellee’s outrageous conduct, was not contested at all, leaving appellant without any opportunity to litigate this issue.
The fourth prong of the test in Swofford states that the doctrine of res judicata applies when:
“both suits involve the same claim or cause of action which were litigated or could have been litigated but were not.”
[295] Ark. at 434, 748 S.W.2d at 661.
It is appellant’s position, that neither was the claim litigated nor could it have been litigated when appellee failed to file the necessary responsive pleading.
Appellant’s failure to file an answer to the complaint resulted in none of the issues being joined. Indeed, no response, pleading or notice was given by appellee concerning any of the allegations, ....
The appellant also cites Kremer v. Chemical Construction Corp., 456 U.S. 461, 480-81 (1981), and says it held “essentially, that the judicially created doctrinefs] of collateral estoppel and res judicata do not apply when a party against whom an earlier decision is asserted did not have a full and fair opportunity to litigate the claim or issue.” And appellant cites Seaboard Finance Co. v. Wright, 223 Ark. 351, 356, 266 S.W.2d 70, 73 (1994), for its holding that “[a] dismissal of a cause of action with prejudice is a final adjudication on the merits within the rule of res judicata,” and points out that the federal court order in the present case is “silent regarding whether its dismissal was with or without prejudice.” (Emphasis in the opinion quoted.)
The majority opinion responds to the appellant’s argument with the assertion that “We cannot agree that appellant was left without the opportunity to litigate the tort claim in federal court” and then, in specious justification of its assertion, says “a federal court has the authority to entertain supplemental jurisdiction over pendent state claims even though it dismisses the claims over which it has original jurisdiction.” The majority opinion cites 28 U.S.C.A. § 1367 as authority for this quoted statement, and the opinion also cites two cases to support the rationale upon which the majority opinion is based — which is — that even after a federal claim is dismissed, the federal court has the discretion to retain jurisdiction over a state claim alleged in the case. Therefore, the majority opinion reasons, “It thus cannot be said that appellant could not have proceeded with her claim in federal court.”
I respectfully submit, however, that this rationale overlooks two points. One, the federal court may choose not to retain jurisdiction over the state claim after the federal claim is dismissed, and two, the fact that the court could retain jurisdiction and try the state claim does not mean that the third and fourth prongs set out in the Swqffbrd case have been satisfied. In simple fact the state claim was neither “fully contested” nor “litigated” in federal court and it is neither fair nor just to bar the plaintiff’s right to try the merits of her state tort claim by holding that she could have tried it in her suit in federal court.
If I were alone in my belief, I would be less sure of my position, but I am not alone in my view. In Johnson v. State, 631 N.Y.S.2d 795 (Ct. Cl. 1995), the claimant had filed a suit in state court seeking damages for “myriad acts purportedly perpetrated” upon him by state and federal law-enforcement personnel, and the case was removed to federal court. The appellant also filed suit in the state court of claims. Summary judgment was granted by the federal court in favor of the state law-enforcement personnel and this was relied upon in the state court of claims as a basis for dismissal of the suit there under the doctrine of res judicata. The appellant argued that the doctrine did not apply to the negligence cause of action alleged in the state court.
The state court agreed with the claimant, and the opinion explained that the “judicially-created” concept of pendent jurisdiction approved in United Mine Workers of America v. Gibbs, 383 U.S. 715 (1966), had been codified by 28 U.S.C. § 1367 under the term “supplemental jurisdiction” which allows a federal court in a case before it to assume jurisdiction and dispose of a state claim which could not be before the court if standing alone. But the court said that jurisdiction was discretionary and that:
It is not feasible for this court to speculate that a federal court would have exercised its discretion to allow the negligence cause of action under its supplemental jurisdiction and then use such speculation as a basis to foreclose a claim under the doctrine of res judicata.
631 N.Y.S.2d at 798.
Also, in Andujar v. National Property and Casualty Underwriters, 659 So. 2d 1214 (Fla. App. 1995), the court stated the issue involved as follows:
In the case before us today, a defendant who has previously prevailed in a federal employment discrimination action under Title VII of the Civil Rights Act of 1964 successfully argued to the circuit judge that its victory on the federal claim was res judicata as to the plaintiff’s employment discrimination claim under the Florida Human Rights Act of 1977 arising from the same facts. We disagree and reverse the judgment dismissing the state law claim.
In discussing the issue, the court said in regard to the “pendent jurisdiction” approved by the United States Supreme Court in the United Mine Workers of America v. Gibbs case, supra, and codified in 28 U.S.C. § 1367, that this jurisdiction “is a doctrine of discretion, not of plaintiff’s right” and that the federal court would have been competent to decide the pendent state claims only if the court, “in its discretion, agreed to assume jurisdiction over them.” 659 So. 2d at 1217-18.
Thus there is authority for my view that in the present case the fourth prong of the Swofford test was not satisfied because that prong provides that if the claim was not actually litigated in the first suit (and it was not in this case) then res judicata applies only if it could have been litigated in the first suit. My view and the view of the New York and Florida cases cited above hold that where the first court only exercises jurisdiction in its discretion the could-have-been-litigated requirement is satisfied only when the court exercises its jurisdiction by acting upon the claim — not by failing to act (which is what happened here). And the attempt of the majority opinion to obfuscate this fact by distinguishing the facts in the New York and Florida cases does not change the force of those cases on the point under discussion in this case.
I, therefore, dissent from the decision of the majority opinion, and in regard to that opinion’s reluctance to discuss the federal court’s jurisdiction on the basis that it was not an issue argued by the parties, I would note that the argument made by the appellant, as set out and described by this dissent, very plainly points out that under the Arkansas Supreme Court decision of Seaboard Finance Co. v. Wright, supra, a dismissal of a cause of action with prejudice is a final adjudication; that the federal court’s dismissal of the case here involved was not dismissed with prejudice; therefore, by the Seaboard criterion the federal court’s dismissal was without prejudice; and therefore, that dismissal did not satisfy the third and fourth prongs of the Swofford test. I also note that the majority opinion deals with that argument by pointing out that Seaboard was an Arkansas case but the state claim here was dismissed by a federal court and stating that “we are unwilling to assume, particularly without benefit of argument from either party, that the federal court, by its silence, dismissed appellant’s state claim without prejudice.”
However, I have no problem with looking at the issue presented here in greater depth than that argued by the parties. This is done time after time in both trial and appellate courts. There is a great deal of difference between deciding a case on an issue not presented by the parties and doing additional research on an issue presented. Here, I did read more cases on the issue presented than the parties cited. For that matter all of the judges in this case were furnished a memorandum by one of our staff attorneys that cited many cases, and contained thoughts and perspectives, not disclosed by the briefs filed by the parties.
In his book One Life in the Law, at 112, Robert A. Leflar, whose legal career as an attorney, teacher, and appellate judge surely qualifies his opinion as worthy of note, has this to say:
The adversary system does not perfectly serve the lawmaking function of the appellate judicial process. Ultimately, it is the judges’ diligence and wisdom that must be relied upon to assure that the function is properly performed. They must think not only of the litde sets of facts that the immediate cases present but of an undetermined number of sets of facts to which the precedent may in the future be applied. Judges may rely upon the writings of scholars not employed to represent the interests of litigants, but concerned rather with sound correlation of law with the socioeconomic and political needs of the community. These are the ones who today most conscientiously present to the courts the needs and concerns of society. Their work may be cited in briefs of counsel, or it may not, but wise judges avail themselves of it whether it is cited or not. And in their opinions good courts do cite it, or at least make use of it.
I would reverse the trial court’s dismissal of this case and remand for further proceedings.