No. 95-537
IN THE SUPREME COURT OF THE STATE OF MONTANA
1996
MARILYN HOLLISTER,
Plaintiff and Appellant,
8::; fj I',' 'I>~"',
v. j"
JOHN FORSYTHE, a public officer,
and ROSEBUD COUNTY a Montana
Political Subdivision,
Defendants and Respondents.
APPEAL FROM: District Court of the Sixteenth Judicial District,
In and for the County of Rosebud,
The Honorable John C. McKeon, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
K.D. Peterson; Peterson & Schofield, Billings,
Montana
For Respondents:
K. Kent Koolen, Nancy Bennett; Moulton, Bellingham,
Longo & Mather, Billings, Montana
Steven J. Lehman; Crowley, Haughey, Hanson, Toole &
Dietrich, Billings, Montana
Submitted on Briefs: March 14, 1996
Decided: June 17, 1996
Filed:
Justice W. William Leaphart delivered the Opinion of the Court
Marilyn Hollister (Hollister) appeals from the Rosebud County,
Sixteenth Judicial District Court's dismissal of her 42 U.S.C. §
1983 claim against Rosebud County and John Forsythe (collectively
"Forsythe") . We affirm.
The sole issue before us is whether the District Court erred
in dismissing Hollister's 42 U.S.C. 5 1983 claim based on res
judicata.
BACKGROUND
The background facts of this case are presented in Hollister
v. Forsythe (1995), 270 Mont. 91, 92-93, 889 P.2d 1205, 1206.
Hollister initially filed a complaint for deprivation of rights in
the United States District Court for Montana. The United States
District Court granted Forsythe's motion for partial summary
judgment and dismissed Hollister's federal claims with prejudice.
She appealed the United States District Court's judgment. The
Ninth Circuit Court of Appeals affirmed in Hollister v. Forsythe
(9th Cir. 1994), 22 F.3d 950. She then filed a complaint for
wrongful discharge and other torts in Montana state district court.
Pursuant to Forsythe's motion to dismiss, the state district court
dismissed her suit based on the statute of limitations. We
reversed in Hollister, 889 P.2d 1205.
In Hollister, we held that Hollister's claims in state court
were not barred by the statute of limitations because:
under Montana's renewal statute, § 27-2-407, MCA, use of
the word "termination" refers to the ultimate termination
which occurs after final appellate action. Accordingly,
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the one-year period begins to run from the date that the
time for appeal expires or, in the event of an appeal,
from the date of the remittitur or judgment of the
appellate court.
Hollister, 889 P.2d at 1208. Because her state court complaint was
filed within one year of the Ninth Circuit's decision on appeal, it
was within the statutory period.
On remand, Montana's Sixteenth Judicial District Court
considered the remaining issues in Forsythe's motion to dismiss.
Under Rule 12(b) (6), M.R.Civ.P., Forsythe moved for dismissal for
failure to state a claim upon which relief can be granted.
Forsythe's motion to dismiss raised the following issues: Whether
Hollister's claims outside the Montana Wrongful Discharge from
Employment Act (WDFEA), §§ 39-2-901 through -915, MCA, were
preempted by WDFEA and, whether her 42 U.S.C. § 1983 claim was
barred by i-es judicata. The court dismissed all claims outside of
WDFEA and ordered the case to proceed only on Hollister's claim of
wrongful discharge under WDFEA. In the present appeal, we are
called upon to review the Sixteenth Judicial District Court's
holding that Hollister's claimunder 42 U.S.C. § 1983 was barred by
the Ninth Circuit's holding that Hollister had no property interest
in her job thus there could be no constitutional violation and no
claim under 42 U.S.C. § 1983. Hollister, 22 F.3d 950.
In the mean time, in federal court, Hollister filed a Rule 60,
Fed.R.Civ.P., Motion for Relief from Judgment based on our decision
in Boreen v. Christensen (1994), 267 Mont. 405, 884 P.2d 761. In
Boreen, we disagreed with the Ninth Circuit's reasoning regarding
Hollister's potential property right in her employment with Rosebud
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County. Boreen, 884 P.2d at 769; see Hollister, 22 F.3d at 953.
The federal district court denied her motion and the matter is
currently pending before the Ninth Circuit Court of Appeals.
STANDARD OF REVIEW
A complaint should not be dismissed for failure to state a
claim unless it appears beyond doubt that the plaintiff can prove
no set of facts in support of her claim which would entitle her to
relief. Lockwood v. W.R. Grace & Co. (1995), 272 Mont. 202, 207,
900 P.2d 314, 317.
A motion to dismiss under Rule 12(b) (6), M.R.Civ.P., has
the effect of admitting all well-pleaded allegations in
the complaint. In considering the motion, the complaint
construed in the light most favorable to the
cfaintiff and all allegations of fact contained therein
are taken'as true.
Lockwood, 900 P.2d at 317 (quoting Boreen, 884 P.2d at 762). The
determination that a complaint fails to state a claim upon which
relief can be granted is a conclusion of law. We review a district
court's conclusions of law to determine whether the court's
interpretation of the law is correct. Lockwood, 900 P.2d at 317.
DISCUSSION
Did the District Court err in dismissing Hollister's 42
U.S.C. § 1983 claim based on res judicata?
The doctrine of res judicata prevents a party from re-
litigating a matter that the party has already had an opportunity
to litigate. Loney v. Milodragovich, Dale & Dye, P.C. (1995), 273
Mont. 506, 510, 905 P.2d 158, 161; Greenwood v. Steve Nelson
Trucking, Inc. (1995), 270 Mont. 216, 219, 890 P.2d 765, 767. Res
judicata is based on the public policy that there must be some end
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to litigation. Lonev, 905 P.2d at 161; Wellman v. Wellman (1983),
205 Mont. 504, 508, 668 P.2d 1060, 1062. The doctrine of res
judicata states that a final judgment on the merits by a court of
competent jurisdiction is conclusive as to causes of action or
issues thereby litigated, as to the parties and their privies, in
all other actions in the same or any other judicial tribunal of
concurrent jurisdiction. State ex rel. Harlem Irrigation Dist. v.
Montana Seventeenth Judicial Dist. Court (1995), 271 Mont. 129,
132, 894 P.2d 943, 944-45; Meagher County Water Dist. v. Walter
(1976), 169 Mont. 358, 361, 547 P.2d 850, 852.
A claim is res judicata when four criteria are met: the
parties or their privies are the same; the subject matter of the
claim is the same; the issues are the same and relate to the same
subject matter; and the capacities of the persons are the same in
reference to the subject matter and the issues. Lonev, 905 P.2d at
161; In re Marriage of Blair (1995), 271 Mont. 196, 203, 894 P.2d
958, 963. The most important of the four criteria for res judicata
is the identity of issues. Marriage of Blair, 894 P.2d at 963; In
re Marriage of Harris (1980), 189 Mont. 509, 513, 616 P.2d 1099,
1101. Additionally, the doctrine of res judicata bars not only
issues which were previously litigated, but also issues which could
have been litigated in the prior proceeding. Lonev, 905 P.2d at
161; SE Harlem, 894 P.2d at 946.
Hollister concedes that the first and fourth criteria of res
judicata are met. However, she argues that the second and third
criteria are not met. She alleges that the issue is not the same
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because the federal courts only addressed the threshold question of
whether Hollister had a property interest in her county employment.
She alleges that in light of our decision in Boreen, 884 P.2d 761,
the federal courts erred in concluding that, under Montana law,
Hollister did not have a property interest in her employment.
Because the court did not proceed beyond that threshold question,
Hollister also argues that her claims have not been judged on their
merits.
Forsythe counters that the issue in Hollister's state court
action is identical to the issue previously raised and decided by
the federal court. We agree. In federal court, Hollister alleged
that Forsythe's termination of her employment violated her
constitutional rights to substantive and procedural due process.
In state court, Hollister realleges the same claim and seeks the
same remedy. Forsythe argues that Boreen does not alter the
fundamental issue in Hollister's state court 5 1983 action, that
is, whether there is a property interest in employment. Boreen,
884 P.2d at 762-63. Moreover, even if the federal court
erroneously determined that there is no property interest in
employment under Montana law, i-es judicata still applies. Mills v.
Lincoln County (1993), 262 Mont. 283, 285, 864 P.2d 1265, 1267;
Brennan v. Jones (1935), 101 Mont. 550, 565, 55 P.2d 697, 701.
Hollister argues that the subject matter presented to the
courts differs because the instant case involves her civil rights,
constitutional rights and tort claims, not whether she has a
property interest in her employment. However, the subject matter
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in both actions is the termination of Hollister's employment as a
secretary for Rosebud County. In Harlem, we held that the same
subject matter that gave rise to the initial complaint was also the
basis for the subsequent causes of action. Harlem, 894 P.2d at
945. The same is true here, the underlying subject matter in both
federal and state forums is Hollister's termination from
employment.
Beyond the criteria of res judicata, Hollister argues that she
has a right to have the merits of her case heard and that in
granting summary judgment to Forsythe, the United States District
Court did not decide the merits of her civil rights, constitutional
rights and tort claims. In federal court, Hollister alleged
federal question jurisdiction pursuant to 28 U.S.C. § 1331 and 42
U.S.C. § 1983. In determining the threshold issue of federal
jurisdiction, the federal court first examined Hollister's 5 1983
claim. The federal court determined that, to bring a § 1983 claim
based on a violation of procedural due process, Hollister had to
first establish that a property interest protected by the
Fourteenth Amendment was affected by Forsythe's termination
decision. The federal court held that Hollister had not
established a property interest in her employment, thus the court
granted summary judgment to Forsythe on the issue of Hollister's
§ 1983 claim. Having found no federal question jurisdiction, the
federal court dismissed Hollister's federal claims with prejudice
and dismissed her pendant state claims without prejudice stating
"the parties may simply resubmit the remaining issues to the
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appropriate state court." Hollister contends that because the
federal court found, at the threshold, that she could not establish
a property interest in her employment, her claims have not been
decided on their merits.
In Smith v. Schweigert (1990), 241Mont. 54, 59, 785 P.2d 195,
198, we held that summary judgment is a decision on the merits
because it is a conclusive determination of a legal issue presented
by the facts of a case. See Harlem, 894 P.2d at 945. In Mills, we
reaffirmed this proposition that summary judgment is, indeed, a
final judgment on the merits and that the res judicata bar is,
therefore, applicable. 864 P.2d at 1267.
In Mills, the United States District Court granted Lincoln
County's motion for summary judgment based on immunity under § 2-9-
111, MCA. Soon thereafter, the legislature significantly amended
§ 2-9-111, MCA, such that the county's immunity defense would be
negated. Mills did not file a motion for reconsideration in
federal court, instead she filed a complaint against the county in
state district court. The case came to trial and the jury found
that the county was not negligent. Sua sponte, the district court
ordered a new trial. On appeal, we held that Mills' state court
action was barred by res judicata.
The point to be noted is that, right or wrong, the
federal court entered summary judgment against Mills;
that judgment became final by Mills' failure to pursue
the available remedy in federal court; and she is now
bound by that judgment.
Mills, 864 P.2d at 1267 (emphasis added).
Throughout her appeal, Hollister argues that the federal
a
court's holding that she has no property interest in employment is
wrong. She bases her contention on our decision in Boreen, 884
P.2d 761. In Boreen, we discussed Hollister, 22 F.3d 950, in which
the Ninth Circuit concluded that Montana's Wrongful Discharge from
Employment Act does not create, in at-will employees, a property
interest in their jobs. Hollister, 22 F.3d at 953. We stated "we
simply do not agree with the court's application of our prior case
law to the facts in Hollister." Boreen, 884 P.2d at 769. Despite
our disagreement with the Ninth Circuit's conclusion regarding
Hollister's potential property interest in her employment, we are
in no position to change the Ninth Circuit's decision. As
previously stated in Mills, Hollister is bound by the judgment,
right or wrong, of the federal court in which she brought her
claim. Mills, 864 P.2d at 1267. If parties are allowed to
commence new lawsuits on litigated claims and issues every time a
subsequent change in the law might, arguably, alter the result of
the first litigation, it is safe to say that there will be few
"final judgments" ever entered. Mills
, 864 P.2d at 1267-68.
Hollister, in federal district court, litigated the question
of whether she had a property interest sufficient to sustain a
§ 1983 claim. The federal district court ruled that she did not,
and that decision was affirmed by~the Ninth Circuit. Hollister, 22
F.3d 950. Although, in Boreen, we subsequently disagreed with the
conclusions reached by the federal courts, the doctrine of res
judicata bars us from considering this litigated claim. Mills, 864
P.2d at 1267. As is her right, Hollister has sought Rule 60,
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Fed.R.Civ.P., relief in federal court in light of our decision in
Boreen. That matter is pending appeal to the Ninth Circuit. The
outcome of that appeal, however, will not affect the application of
the x-es judicata principles which we now find controlling of the
state court claim under 5 1983.
In the instant case, as in Mills, we hold that the federal
court summary judgment was a final judgment on the merits and that
x-es judicata bars Hollister's state court action under § 1983.
Affirmed.
We concur:
c
Justices
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Justice Terry N. Trieweiler dissenting.
I dissent from the majority opinion based on my conclusion
that the interests of fundamental fairness preclude the application
of the judicially-created doctrine of res judicata under the
circumstances in this case.
This case is distinguishable from Millsv.LincolnCounty (1993), 262
Mont. 283, 864 P.2d 1265, which is the principle authority relied
on by the majority. In Mills, the Federal District Court dismissed
the plaintiff's complaint by summary judgment based on this Court's
decisions regarding the liability of local governments. After that
dismissal, the Legislature clarified its intent and in effect
changed the law. We held that a subsequent change in the law did
not preclude the application of resjudicata to a later action filed in
state district court. Mills, 262 Mont. at 286, 864 P.2d at 1267.
In this case, there was no change in the law subsequent to the
Federal District Court's dismissal of Marilyn Hollister's claim
made pursuant to 42 U.S.C. 5 1983. The Federal District Court and
the Ninth Circuit Court of Appeals simply misapplied Montana law
and arrived at an incorrect conclusion about the merits of her
claim. SeeBoreenv.Christensen (19941, 267 Mont. 405, 419, 884 P.2d 761,
769. Hollister's civil complaint was dismissed by those courts
based on the conclusion that she had no property interest in her
employment with the County. Whether she had a property interest
was properly an issue of state law. However, that issue was not
11
certified to this Court for determination. Instead, those courts
misapplied our prior decisions and simply arrived at an incorrect
conclusion.
Under these circumstances, absent reconsideration of its
decision by the Ninth Circuit Court of Appeals, Hollister will
never have an opportunity to present the true merits of her civil
rights claim. To avoid such a substantial injustice by blind
adherence to technical principles, I would follow the rationale of
the Federal District Court in Boucherv. Dramstad (D. Mont. 1981), 522
F. Supp. 604. In that case, that court held that:
[Rlesjudicata is a principle of public policy to be applied
so as to render rather than deny justice. The rule is
intended to serve the aims of fairness and efficient
judicial administration and need not be applied
mechanically where those ends would not be served.
Therefore, application of the rule must be rejected when
the application would result in manifest unfairness.
This Circuit has acknowledged that the doctrine must give
way to the overriding concern of simple justice.
. . .
. . . The decision by the Montana Supreme Court
regarding the unique question of law with which it was
presented resulted in the plaintiff not having an
opportunity to present at trial the merits of his action.
To deny the plaintiff the opportunity to present his
constitutional claims in the present § 1983 action would
result in the plaintiff never having had the opportunity
to have the events which transpired at the time of his
injury evaluated by a court of law. This court concludes
that the interests of justice mandate that the plaintiff
be given that opportunity. . In the interests of
fundamental fairness and simple justice this court
concludes that the judicially created doctrine of yes
judicata should not be mechanically applied to the present
situation but must be prudently applied so as not to
12
defeat those same principles upon which the doctrine is
founded.
Boucher , 522 F. Supp. at 607, 608 (footnotes omitted).
Based on the cited rationale, the Federal District Court
allowed Ronald S. Boucher to proceed in Federal District Court with
a claim based on 42 U.S.C. § 1983, even though it was based on
facts identical to those involved in a previously dismissed state
negligence action. The Federal District Court arrived at that
result because the state court dismissal involved a procedural
issue of first impression which the plaintiff could not have
anticipated and thereby avoided. Boucher , 522 F. Supp. at 608.
In Siate ex rel. Harlem Irrigation District v. District Court ( 19 9 5 ) , 2 7 1 Mont .
129, 133, 894 P.2d 943, 945, we declined to apply the manifest
unfairness principle from Boucher to the facts in that case.
However, we did not reject the concept under all circumstances.
I conclude that the circumstances in this case call for
application of the "manifest unfairness" principle and on that
basis decline to apply judicially-created principles of resjudicata to
bar Hollister's claim.
In this case, Hollister is out of court, through no fault of
her own, based on a misapplication of the law in federal court. To
deny her the opportunity to present her claim would mean that the
facts she alleged would never be examined by a court of law in the
context of her constitutional claims. Under these circumstances,
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the majority decision does not "serve the aims of fairness and
efficient judicial administrationg' but instead "mechanically"
applies an inappropriate judicial formula. Boucher, 522 F. Supp.
at 607.
For these reasons I dissent from the majority opinion.
Judice
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