United States Court of Appeals,
Fifth Circuit.
No. 95-10513.
Odell JONES, III and Jones Program Management, Inc., Plaintiffs-
Appellants,
v.
SHEEHAN, YOUNG & CULP, P.C., Defendant-Appellee.
May 20, 1996.
Appeal from the United States District Court for the Northern
District of Texas.
Before HIGGINBOTHAM and DUHÉ, Circuit Judges, and SCHWARZER,1
District Judge.
DUHÉ, Circuit Judge:
Appellants' damages suit against their former attorneys was
dismissed on summary judgment on the basis of collateral estoppel.
We affirm, but do so on the basis of res judicata.
I. BACKGROUND
Jones Program Management, Inc., ("JPM"), acting through its
President, Odell Jones, III, ("Jones"), and Jones, acting as
guarantor for JPM, entered into an agreement for legal services
with Sheehan, Young & Culp, P.C., ("SYC"), to collect sums owed JPM
by Richter's Entertainment Group, Inc., ("REG"). SYC accordingly
filed suit on JPM's behalf against REG in the 134th Judicial
District Court of Dallas County, Texas, (the "REG litigation").
JPM later discharged SYC and retained another law firm to conclude
the REG litigation. Three suits subsequently ensued concerning
1
District Judge of the Northern District of California,
sitting by designation.
1
SYC's claim for unpaid attorney's fees incurred in representing JPM
in the REG litigation.
A. The state court action
SYC intervened in the REG litigation (hereafter the "state
court action") to recover from JPM the balance of unpaid attorney's
fees. JPM moved to strike the intervention, but did not file an
answer or counterclaims against SYC. JPM did answer an
interrogatory propounded by SYC, asserting in its answer a right to
an offset against SYC's attorney's fees claim because of SYC's
alleged "legal malpractice, negligence, gross negligence, fraud,
and deceptive trade practices." SYC's intervention was tried
without a jury in JPM's absence, and the state court awarded SYC a
money judgment against JPM.
B. The county court action
SYC also filed suit in the County Court at Law No. 1, Dallas
County, Texas, (hereafter the "county court action") against Jones,
individually, to enforce his guaranty on the JPM/SYC agreement.
Jones answered and counterclaimed against SYC on grounds of legal
malpractice, negligence, malfeasance, gross negligence, fraud,
conspiracy, and violations of the Texas Deceptive Trade Practices
Act. The county court action was dismissed without prejudice
pursuant to Jones' motion alleging lack of jurisdiction, but was
subsequently reinstated. After a bench trial, at which Jones did
not appear, the county court entered judgment awarding SYC a money
judgment against Jones and ordering that Jones take nothing on his
counterclaims.
2
C. The federal court action
After dismissal of the county court action, but prior to its
reinstatement, Jones sued, on his own behalf, in the United States
District Court for the Northern District of Texas (hereafter the
"federal court action") seeking damages from SYC arising from SYC's
representation of JPM in the REG litigation. Jones' claims include
legal malpractice, negligence, malfeasance, gross negligence,
fraud, conspiracy, and violations of the Texas Deceptive Trade
Practices Act. SYC answered, alleging that Jones, individually,
lacked standing to assert claims based upon SYC's representation of
JPM. SYC also asserted counterclaims for the unpaid legal fees.
SYC moved to dismiss, claiming JPM, and not Jones, was the real
party in interest, or alternatively that JPM was an indispensable
party. In response, Jones amended his complaint to add JPM as a
plaintiff.
After both the county and state court actions had been
concluded, SYC moved for summary judgment in the federal court
action based on claims of res judicata, collateral estoppel, and
the doctrine of sole remedy, alleging that Jones and JPM had had
their opportunity in the earlier suits to litigate the claims and
issues asserted in the federal court action. SYC's motion was
granted on the basis that collateral estoppel precluded Jones and
JPM from relitigating issues settled by the Texas courts. The
judgment ordered that Jones and JPM take nothing on their claims
against SYC and that SYC recover its court costs. Jones and JPM
timely filed a joint notice of appeal.
3
II. DISCUSSION
A. Standard of Review
We review grants of summary judgment de novo, guided, as was
the district court, by the standards of Federal Rule of Civil
Procedure 56. Stults v. Conoco, Inc., 76 F.3d 651, 654 (5th
Cir.1996); Blanchard v. Forrest, 71 F.3d 1163, 1166 (5th
Cir.1996). Accordingly, a party may obtain summary judgment when
"the pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, show that
there is no genuine issue as to any material fact and that the
moving party is entitled to judgment as a matter of law."
Fed.R.Civ.P. 56(c).
The district court granted SYC's summary judgment motion
based on collateral estoppel, or issue preclusion. SYC's motion,
however, pled collateral estoppel, res judicata, and the doctrine
of sole remedy in the alternative. We may affirm a district
court's ruling on summary judgment based on any legally sufficient
ground, even one not relied upon by the district court. BMG Music
v. Martinez, 74 F.3d 87, 89 (5th Cir.1996); Missouri P. R.R. v.
Harbison-Fischer Mfg. Co., 26 F.3d 531, 538 (5th Cir.1994). Making
use of such latitude, we affirm the district court's granting of
SYC's motion for summary judgment based on the application of the
doctrine of res judicata.
B. Res Judicata
When a federal court is asked to give res judicata effect to
a state court judgment, the federal court must determine the
4
preclusiveness of that state court judgment under the res judicata
principles of the state from which the judgment originates.
Production Supply Co. v. Fry Steel Inc., 74 F.3d 76, 78 (5th
Cir.1996); Hogue v. Royse City, 939 F.2d 1249, 1252 (5th
Cir.1991). Because SYC interposes the judgments of Texas courts as
bars to JPM's and Jones' current suit, we look to Texas res
judicata law to resolve this dispute.
In Texas, "[r]es judicata, or claims preclusion, prevents the
relitigation of a claim or cause of action that has been finally
adjudicated, as well as related matters that, with the use of
diligence, should have been litigated in the prior suit." Barr v.
Resolution Trust Corp., 837 S.W.2d 627, 628 (Tex.1992). To invoke
the doctrine, the proponent must prove: (1) a prior final judgment
on the merits by a court of competent jurisdiction, (2) identity of
the parties or those in privity with them, and (3) a second action
based on the same claims as were raised or should have been raised
in the first action. See Texas Water Rights Comm'n v. Crow Iron
Works, 582 S.W.2d 768, 771-72 (Tex.1979).
1. Prior final judgment on the merits by a court of competent
jurisdiction
Jones and JPM contend that the county and state courts,
respectively, lacked jurisdiction to issue final, binding judgments
against them.2 At this point, we reiterate that, while Jones and
JPM are co-plaintiffs in the federal court action, only Jones was
2
Although default judgments were entered in both the state
court and county court actions, neither JPM nor Jones contests
their finality.
5
a party to the county court action, and only JPM was a party to the
state court action.
a. Jones and the county court action
Jones contends that the county court was not a court of
competent jurisdiction. His attacks are numerous; yet, as to
most, his response to SYC's summary judgment fails to point to
evidence in the record sufficient to create an issue as to the
county court's jurisdiction. Once the movant presents a properly
supported motion for summary judgment, the non-movant must "go
beyond the pleadings and by [his] own affidavits, or by the
"depositions, answers to interrogatories, and admissions on file,'
designate "specific facts showing that there is a genuine issue for
trial.' " Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct.
2548, 2553, 91 L.Ed.2d 265 (1986) (quoting Fed.R.Civ.P. 56(e)).
Rule 56, therefore, saddles the non-movant with the duty to
"designate" the specific facts in the record that create genuine
issues precluding summary judgment, and does not impose upon the
district court a duty to survey the entire record in search of
evidence to support a non-movant's opposition. Forsyth v. Barr, 19
F.3d 1527, 1537 (5th Cir.) (quoting Skotak v. Tenneco Resins, Inc.,
953 F.2d 909, 915 n. 7 (5th Cir.), cert. denied, 506 U.S. 832, 113
S.Ct. 98, 121 L.Ed.2d 59 (1992)), cert. denied, --- U.S. ----, 115
S.Ct. 195, 130 L.Ed.2d 127 (1994); Nissho-Iwai Am. Corp. v. Kline,
845 F.2d 1300, 1307 (5th Cir.1988). Nor is it our duty to so
6
scrutinize the record on appeal.3 Forsyth, 19 F.3d at 1537.
3
Like the district court, out of an abundance of caution, we
have searched the record for support for Jones' complaints. Our
efforts only confirm that his attacks, for the most part, are
frivolous.
Jones contests the county court's jurisdiction over his
person. Surprisingly, however, in the same breath, Jones
admits that by filing his answer and asserting his
counterclaims in the county court, he "submitt[ed] [himself]
to the jurisdiction of the County Court." Brief for
Appellants at 7. By his own admissions, Jones has foretold
the futility of his attack on the county court's in personam
jurisdiction. See Tex.R.Civ.P.Ann. r. 121 (West 1979);
Morris v. Morris, 894 S.W.2d 859, 862 (Tex.App.—Fort Worth
1995, n.w.h.) ("Once a party enters an appearance by filing
an answer without challenging jurisdiction, he is before the
court for all purposes.").
Jones also argues that the county court lacked subject
matter jurisdiction over this suit because the requisites
for diversity jurisdiction in the federal court existed.
Implicitly, Jones' complaint is that the existence of
diversity jurisdiction in a federal court deprives a state
court of general jurisdiction of its authority. Jones is
clearly misguided. Indeed, federal diversity jurisdiction
permits state and federal courts to exercise concurrent
jurisdiction. See Colorado River Conservation Dist. v.
United States, 424 U.S. 800, 809, 96 S.Ct. 1236, 1242, 47
L.Ed.2d 483 (1976) ("There is no irreconcilability in the
existence of concurrent state and federal jurisdiction.
Such concurrency has ... long existed under federal
diversity jurisdiction.").
Additionally, Jones complains that the county court
divested itself of jurisdiction when it entered the order of
dismissal. As such, Jones' filing of suit in federal court
before the county court granted SYC's motion to reinstate
the county court action provided the federal court with
"dominant" jurisdiction over the matter. Whether the order
of dismissal in fact deprived the county court of
jurisdiction during the interval between dismissal and
reinstatement, and if so the effect of Jones' intervening
filing in federal court, is irrelevant. When two suits are
pending simultaneously in two different courts,
preclusiveness of one as to the other is determined not by
which was filed first, but by which reaches judgment first.
Mower v. Boyer, 811 S.W.2d 560, 563 (Tex.1991). See also
Hansler v. Mainka (In re Hansler ), 988 F.2d 35, 38 (5th
Cir.1993); Hogue, 939 F.2d at 1256. In this case, the
7
One of Jones' contentions, however, does warrant discussion.
Jones argues that the damages sought in his counterclaims exceeded
the jurisdictional limit of the statutory county court, and thus
the county court lacked jurisdiction to adjudicate those
counterclaims. Counterclaims are treated as separate suits and
must independently comport with the trial court's jurisdiction.
Color Tile, Inc. v. Ramsey, 905 S.W.2d 620, 623 (Tex.App.—Houston
[14th Dist.] 1995, n.w.h.); Tejas Toyota, Inc. v. Griffin, 587
S.W.2d 775, 776 (Tex.Civ.App.—Waco 1979, writ ref'd n.r.e.). See
also Smith v. Clary Corp., 917 S.W.2d 796, 797-98 (Tex.1996) ("A
counterclaim, whether permissive or compulsory, must be within the
court's jurisdiction."); Gimbel v. Gomprecht, 89 Tex. 497, 35 S.W.
470, 470 (1896) ("The plea in reconvention filed by the defendants
in this case was in effect a suit by them against the plaintiffs,
and the amount in controversy was the damages claimed in that
plea...."). A statutory county court has jurisdiction in "civil
cases in which the amount in controversy exceeds $500 but does not
exceed $100,000, excluding interest, statutory or punitive damages
county court action concluded prior to the federal court
action.
Finally, Jones contends that SYC, by receiving service
of summons and citation, filing an answer and counterclaims,
and pursuing discovery in the federal court action,
"evidence[d] their relinquishment of state court
jurisdiction and assent to federal court jurisdiction."
Brief for Appellant at 17. Accordingly, SYC either waived
the county court's jurisdiction over its claims or is
estopped from asserting that the county court had
jurisdiction over its claims. Jones provides no authority
to support these claims, nor, not surprisingly, have we
uncovered any. Consequently, we find these claims
unavailing, too.
8
and penalties, and attorney's fees and costs, as alleged on the
face of the petition." Tex.Gov't Code Ann. § 25.0003(c)(1) (West
Supp.1996) (emphasis added). To determine whether Jones alleged
claims seeking relief beyond the jurisdiction of the county court,
we look to the amount alleged in Jones' pleading. See Kitchen
Designs, Inc. v. Wood, 584 S.W.2d 305, 306 (Tex.Civ.App.—Texarkana
1979, writ ref'd n.r.e.); Tejas Toyota, Inc., 587 S.W.2d at 776
(citing Gimbel, 89 Tex. 497, 35 S.W. 470 (1896)).
Jones argues that his pleadings expressly alerted the county
court that he sought relief on his counterclaims in excess of
$100,000.4 Jurisdiction, however, is determined by the amount in
controversy at the time the original pleading is filed. Smith v.
Texas Improvement Co., 570 S.W.2d 90, 92 (Tex.Civ.App.—Dallas 1978,
no writ). Jones first raised counterclaims against SYC in his
first amended original answer.5 Def.'s Summ.J.Ex.C. For
4
Support for this contention comes from a single statement
in Jones' second amended original answer in the county court
action. Therein, Jones stated: "Jurisdiction is not proper in
this Court because the amount in controversy, exclusive of
interest and costs, exceeds $100,000.00 and the matter in
controversy is between citizens of different states." As this
pleading was not made part of the summary judgment record,
however, we cannot rely on its contents in ruling on SYC's
motion. See Skotak, 953 F.2d at 915; Nissho-Iwai Am. Corp., 845
F.2d at 1307.
5
Under Texas law, once jurisdiction attaches it cannot be
defeated by any subsequent fact or event. Flynt v. Garcia, 587
S.W.2d 109, 109-10 (Tex.1979). Accordingly, assuming Jones'
allegations in his second amended original answer are sufficient
to affirmatively plead him out of the jurisdiction of the county
court, and assuming we could consider those allegations in
evaluating the summary judgment, we recognize that a claimant
cannot deprive the court of jurisdiction already properly
obtained simply by amending his pleading to allege damages in
excess of the court's jurisdictional limits. Smith, 570 S.W.2d
9
determining jurisdiction, then, we regard Jones' first amended
original answer as the original pleading in his cross action, and
we look to its allegations to determine the amount in controversy.
In his first amended original answer, Jones alleged:
"Jurisdiction is not proper in this Court pursuant to 28 U.S.C. §
1332 because the ... amount actually in controversy, exclusive of
interest and costs, exceeds $50,000." Def.'s Summ.J.Ex.C at para.
11 (emphasis added). Further, Jones repeatedly contended that
SYC's conduct rendered it "liable to [Jones] for an amount in
excess of the minimum jurisdictional limits of this Court." Id. at
para. 33, 47 (emphasis added).6 These allegations are ambiguous,
at best, as to the amount actually in controversy pursuant to
Jones' counterclaims. In this case, such ambiguity works against
Jones.
In cases of doubt, all intendments of the claimant's pleading
will be construed in favor of jurisdiction. Peek v. Equipment
Serv. Co., 779 S.W.2d 802, 804 (Tex.1989); Pecos & N. Tex. Ry. v.
Rayzor, 106 Tex. 544, 172 S.W. 1103, 1105 (1915). Indeed, unless
it is clear from the face of the pleadings that the court lacks
jurisdiction of the amount in controversy, the court should retain
the case. Id.; Taliancich v. Betancourt, 807 S.W.2d 891, 892
at 92; Cook v. Jaynes, 366 S.W.2d 646, 647 (Tex.Civ.App.—Dallas
1963, no writ). Again, Jones' reliance on the allegations of his
second original amended answer is unavailing.
6
Jones also alleges that SYC is liable to him for punitive
damages and attorney's fees. Def.'s Summ.J.Ex.C at para. 34, 48,
& 49. Section 25.0003, however, explicitly excludes such items
from the amount-in-controversy determination. Tex.Gov't Code
Ann. § 25.0003(c)(1) (West Supp.1996).
10
(Tex.App.—Corpus Christi 1991, no writ). In other words, to avoid
the jurisdiction of the court, the claimant must affirmatively
"plead[ ] himself out of court." Peek, 779 S.W.2d at 804
(discussing Richardson v. First Nat'l Life Ins. Co., 419 S.W.2d 836
(Tex.1967)). See also Pecos & N. Tex. Ry., 172 S.W. at 1105;
Taliancich, 807 S.W.2d at 892. Jones' allegations fall far short
of affirmatively pleading an amount in excess of the county court's
statutory maximum jurisdictional limit, and therefore the county
court properly maintained jurisdiction over Jones' counterclaims.
b. JPM and the state court action
JPM argues that the state court lacked jurisdiction over it
with respect to SYC's intervention because SYC never served JPM
with citation and process. "Although the plaintiff is charged with
notice of all pleadings filed in defense of his suit, he is
entitled to notice of interventions and cross-actions affirmatively
setting up causes of action against him, and judgments rendered
against him upon such interventions and cross-actions, in the
absence of notice, waiver, or appearance, will be set aside."
Early v. Cornelius, 120 Tex. 335, 39 S.W.2d 6, 8 (1931) (emphasis
added). See also Mallia v. Bousquet, 813 S.W.2d 628, 630
(Tex.App.—Houston [1st Dist.] 1991, no writ). SYC admits on the
face of its intervention petition that no service of process was
made on JPM. Def.'s Summ.J.Ex.G at 1. Thus, JPM's claim has merit
unless it waived service or entered a general appearance in the
intervention.
A party makes a general appearance whenever it invokes the
11
judgment of the court on any question other than jurisdiction. St.
Louis & S.F. R.R. v. Hale, 109 Tex. 251, 206 S.W. 75 (1918); Fridl
v. Cook, 908 S.W.2d 507, 515 (Tex.App.—El Paso 1995, writ
requested); Moore v. Elektro—Mobil Technik GmbH, 874 S.W.2d 324,
327 (Tex.App.—El Paso 1994, writ denied). In determining whether
conduct is sufficient to be considered a general appearance, the
focus is on affirmative action that impliedly recognizes the
court's jurisdiction over the parties. Fridl, 908 S.W.2d at 515.
In response to SYC's intervention petition, JPM filed a Motion to
Strike Intervention. In its motion, JPM asked the court to deny
SYC the right to intervene because to do so would unnecessarily
complicate the REG litigation and because SYC's claims should more
properly be filed as counterclaims in the pending federal court
action. JPM's motion to strike the intervention was an affirmative
act recognizing the court's jurisdiction. See, e.g., Fridl, 908
S.W.2d at 515 (holding that motion to compel arbitration and to
stay litigation was a general appearance). See also National Union
Fire Ins. Co. v. Pennzoil Co., 866 S.W.2d 248, 250 (Tex.App.—Corpus
Christi 1993, no writ) ("We hold a motion to strike a plea in
intervention akin to a special exception or to a motion for summary
judgment, asserting that, as a matter of law, the opposing party
could not have brought the action or would not be able to defeat
recovery."). JPM, accordingly, entered a general appearance in the
intervention, rendering service unnecessary. See Tex.R.Civ.P.Ann.
r. 120 (West 1979). Hence, the state court had jurisdiction over
JPM with respect to SYC's intervention, and its judgment thereon is
12
valid and binding on JPM.
2. Identity of parties
Having determined that both the state court and the county
court were courts of competent jurisdiction, we turn to the second
element of res judicata—identity of parties. That two separate
judgments are interposed by SYC places this case in a novel light.
Nonetheless, the identity of parties element is easily satisfied.
"Identity of parties" requires that both parties to the current
litigation be parties to the prior litigation or in privity with
parties to the prior litigation. See Coalition of Cities for
Affordable Utility Rates v. Public Util. Comm'n, 798 S.W.2d 560,
563 (Tex.1990), cert. denied, 499 U.S. 983, 111 S.Ct. 1641, 113
L.Ed.2d 736 (1991). In the state court action, SYC opposed JPM.
JPM opposes SYC in the federal court action. In the county court
action, SYC opposed Jones. In the federal court action, Jones
opposes SYC. Thus, identity of parties exists with respect to each
of the Texas court judgments.
3. Second action in which parties seek to adjudicate claims that
were, or should have been, raised in prior action
Finally, res judicata applies if there is shown to be a second
action in which the parties seek to adjudicate the same claims that
were, or should have been, raised in the first action.
a. Jones and the county court action
In the federal court action, Jones is suing SYC on theories
of legal malpractice, negligence, malfeasance, gross negligence,
fraud, conspiracy, and violations of the Texas Deceptive Trade
Practices Act. When the allegations in Jones' first amended
13
complaint in the federal court action are compared with the
allegations in his first amended original answer in the county
court action, we see that the allegations are identical in all
material respects. Further, we note that the county court
specifically addressed Jones' counterclaims in issuing its
judgment, making explicit findings of fact and conclusions of law
adverse to Jones in every respect on the claims he asserted.
Def.'s Summ.J.Ex.E at 8-15. As such, the doctrine of res judicata
precludes Jones from relitigating in the federal court action the
exact claims that were previously decided adversely to him in the
county court action.7
b. JPM and the state court action
Unlike Jones, JPM asserted no counterclaims against SYC in
the state court action. Regardless, res judicata precludes JPM
from pressing claims in the federal court action that, through the
exercise of diligence, should have been litigated in the state
court action. To determine what claims should have been litigated
7
To thwart SYC's claim of res judicata, Jones refers us to §
31.004 of the Texas Civil Practice and Remedies Code. Section
31.004 limits the preclusive effect of judgments from courts of
limited jurisdiction, such as county courts. Tex.Civ.Prac. &
Rem.Code Ann. § 31.004 (West 1986). "[A] judgment rendered in a
[county] court is binding on the parties thereto[, however,] as
to recovery or denial of recovery." Id. (emphasis added). This
language has been interpreted as giving res judicata effect to
claims actually litigated in county court, but not as barring
claims that might have been, but were not, brought in county
court. See Webb v. Persyn, 866 S.W.2d 106 (Tex.App.—San Antonio
1993, no writ); McClendon v. State Farm Mut. Auto. Ins. Co., 796
S.W.2d 229 (Tex.App.—El Paso 1990, writ denied). In this case,
the identical claims raised by Jones in the federal court action
were litigated and determined in the county court action.
Consequently, § 31.004 poses no impediment to SYC's claim of res
judicata.
14
in an earlier suit, Texas courts employ a "transactional approach."
Barr, 837 S.W.2d at 631; Getty Oil Co. v. Insurance Co. of N. Am.,
845 S.W.2d 794, 798 (Tex.1992), cert. denied, --- U.S. ----, 114
S.Ct. 76, 126 L.Ed.2d 45 (1993). This approach dictates that "[a]
subsequent suit will be barred [by res judicata] if it arises out
of the same subject matter of a previous suit." Barr, 837 S.W.2d
at 631 (emphasis added).
A determination of what constitutes the subject matter of
a suit necessarily requires an examination of the factual
basis of the claim or claims in the prior litigation. It
requires an analysis of the factual matters that make up the
gist of the complaint, without regard to the form of action.
Any cause of action which arises out of those same facts
should, if practicable, be litigated in the same lawsuit.
Id. at 630. Borrowing from the Restatement (Second) of Judgments,
which also employs a transactional approach, the Barr court stated
that a "transaction" is not equivalent to a sequence of events;
instead, the determination is to be made pragmatically, giving
weight to whether the facts are related in time, space, origin, or
motivation, whether they form a convenient trial unit, and whether
their treatment as a trial unit conforms to the parties'
expectations or business understanding or usage. Barr, 837 S.W.2d
at 631. The question then is whether JPM's claims in the federal
court action arise out of the same subject matter or transaction
that supported SYC's claims for fees in the state court action.
SYC's petition for intervention sought to recover the unpaid
legal fees incurred by SYC in representing JPM in the REG
litigation pursuant to the JPM/SYC agreement. SYC's recovery was
based on sworn account, breach of contract, and quantum meruit
15
theories, and in support of its right to recovery SYC asserted that
it "fully and completely performed pursuant to the contract."
Def.'s Summ.J.Ex.G at 5. To such allegations, JPM responded
through interrogatories as follows:
INTERROGATORY NO. 9:
Describe the nature of each category of any type of
offset you [JPM] seek to assess against the monies sought to
be recovered in the Petition in Intervention.
ANSWER:
Legal malpractice, negligence, gross negligence, fraud, and
deceptive trade practices violations.
The state court, thereafter rendering judgment in SYC's favor,
specifically found that SYC properly billed JPM pursuant to the
agreement, and that "SYC fully performed the contract in a good and
workmanlike manner consistent with the written contract and the
expected standard of care for a lawfirm such as SYC." Def.'s
Summ.J.Ex.F at 2.
JPM's complaints in the federal court action8 mirror the
defensive allegations raised by it in the state court action.
Unlike in the state court action, JPM supports those complaints in
the federal court action with factual allegations. Enlightened by
these allegations, we discover that JPM's claims arise out of the
events surrounding the JPM/SYC agreement and SYC's actions in
representing JPM in the REG litigation in fulfillment of the terms
8
Only one complaint, joined in by both JPM and Jones, was
filed in the federal court action. Accordingly, the claims
raised by JPM in the federal court action are identical to those
raised therein by Jones, as discussed, supra, in part II.3a of
this opinion.
16
of that agreement. More particularly, we learn that JPM's basic
complaint is that the services rendered by SYC in the REG
litigation were substandard. That JPM's complaints of inadequate
performance arise from facts related in time and origin to facts
underlying SYC's allegations of adequate performance and
entitlement to payment is common sense. That these complementary
assertions form a convenient trial unit is likewise undeniable.
That JPM and SYC expected such complementary assertions to be
litigated as a single trial unit is evidenced not only by SYC's
interrogatory and JPM's response, but also by JPM's argument to the
state court that intervention be denied because SYC's claims would
be more appropriately litigated as counterclaims in the federal
court action. Thus, JPM's current complaints in the federal court
action arise out of the same subject matter or transaction that
gave rise to SYC's claims in the state court action. As such,
JPM's claims in the federal court action should have been raised
originally in the state court action. Because JPM failed to raise
these claims in the state court action, it is barred by the
doctrine of res judicata from raising them now in this federal
court action.
III. CONCLUSION
Based on the foregoing discussion, we hold that Jones' and
JPM's claims in the federal court action are barred by the doctrine
of res judicata, and accordingly the district court's granting of
summary judgment in favor of SYC is AFFIRMED.
17