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Court Dismisses Action on Res Judicata Grounds: First Circuit
Practical Law Legal Update w-001-5028 (Approx. 3 pages)
Court Dismisses Action on Res Judicata Grounds: First Circuit
by Practical Law Litigation
| Published on 08 Mar 2016 • USA (National/Federal) |
In Medina-Padilla v. U.S. Aviation Underwriters, Inc., the US Court of Appeals for the First Circuit dismissed, on the grounds of res judicata, the tort action of plaintiffs who had previously brought a contract suit based on the same factual claims.
On March 4, 2016, in Medina-Padilla v. U.S. Aviation Underwriters, Inc., the US Court of Appeals for the First Circuit dismissed, on the grounds of res judicata, the tort action of plaintiffs who had previously brought a contract suit based on the same factual claims (No. 15-1467, (1st Cir. Mar. 4, 2016)).
In 2005, plaintiff Lopez & Medina Corp. (L&M) brought suit in the US District Court for the District of Puerto Rico against a number of insurers, claiming that the insurers were liable for L&M's breach of contract claims. The district court dismissed the case because the insurance policy only covered tort claims, not contract claims. On March 18, 2010, L&M filed a motion to alter or amend judgment, arguing that the district court erred by interpreting its complaint to advance only a breach of contract action. In the motion, L&M also claimed that it was seeking "concomitant tort damages." The district court denied the motion, stating that L&M's complaint failed to allege a tort violation. On appeal, the First Circuit addressed a matter of first impression and found that the relevant insurance policy language did not cover L&M's contract-based claims (see Lopez & Medina Corp. v. Marsh USA, Inc., 667 F.3d 58, 67 (1st Cir. 2012)).
On January 21, 2014, Heriberto Medina-Padilla (Medina-Padilla) and L&M brought tort-based claims arising out of the same underlying facts. Defendants moved to dismiss on res judicata grounds, and the district court dismissed the action. The plaintiffs appealed.
The First Circuit articulated that, under Puerto Rico law, a party asserting claim preclusion must establish that:
- A final and appealable prior judgment on the merits exists.
- The prior and current actions share a perfect identity of:
- "thing" and "cause";
- the identity of the parties; and
- the capacities in which the parties acted.
The First Circuit found that these elements were met in this case because:
- The prior district court decision was a final judgment on the merits.
- The complaint in the prior action and in the 2014 case were based on the same factual predicates, and "a mere difference in the legal theories on which two causes of action are grounded does not destroy the identity of thing or cause that otherwise exists between two suits arising out of a common nucleus of operative fact."
- There existed perfect identity of the parties as Medina-Padilla, the sole owner and principal of L&M, was in privity with L&M, the plaintiff from the prior lawsuit.
The First Circuit also rejected the plaintiff's arguments that res judicata did not apply because the defendants took inconsistent positions in the prior litigation that prevented full and fair litigation, and that a tort action was not available when L&M initiated its prior lawsuit. Explaining that "pouring old wine into a new bottle does not make the wine into new wine," the First Circuit upheld the district court's decision to dismiss the action on res judicata.