Opinion
89-121.
December 8, 1989. Rehearing Denied March 16, 1990.
Appeal from the Circuit Court, Jefferson County, No. CV-87-156, Arthur J. Hanes, Jr., J.
Gould H.K. Blair, Birmingham, for appellant.
John F. Kizer, Jr. of Kizer Bennitt, Birmingham, for appellee.
This present action was commenced in the Circuit Court of Jefferson County, Alabama, by Imperial Crown Marketing Corporation to domesticate a judgment that it had recovered against Rusty Wright, on October 19, 1985, in the Nineteenth Judicial Circuit of Illinois (that earlier proceeding will be referred to as the "Illinois action"). Wright's answer in this action included the affirmative defenses of collateral estoppel and res judicata predicated upon a subsequent judgment, specifically one dated January 20, 1987, in Wright's favor against Imperial Crown in a proceeding in the United States District Court for the Northern District of Alabama, Southern Division (referred to herein as the "federal action").
The Uniform Enforcement of Foreign Judgments Act, Ala. Code 1975, §§ 6-9-230 to 6-9-238, provides a means of enforcing a foreign judgment that is entitled to full faith and credit in this State. The judgment creditor can bring an action to enforce his judgment instead of proceeding under the Uniform Enforcement of Foreign Judgments Act, Ala. Code 1975, § 6-9-236; this is what Imperial Crown did when it filed the present action.
The parties in the federal action were designated as Rusty Wright, d/b/a Sandy's Designs Unlimited v. Royalty Products, Inc., a subsidiary of Imperial Crown Marketing Corporation. All parties to this appeal admit that this was a proceeding by Wright against Imperial Crown that arose out of the same transaction that was involved in the Illinois action.
In the case now before this Court, both parties filed motions for summary judgment and each opposed the other party's motion for summary judgment. A certified copy of the judgment in the Illinois action was attached to Imperial Crown's motion for summary judgment. In opposition to Imperial Crown's motion, and in support of his own motion, Wright attached a properly authenticated copy of pertinent portions of the record in the federal action. Imperial Crown filed an affidavit of its attorney in opposition to Wright's motion. The trial court denied Imperial Crown's motion for summary judgment and granted Wright's motion for summary judgment. Imperial Crown appeals. We affirm.
The excerpts from the federal action show that in that action Imperial Crown asserted that Wright's complaint constituted a compulsory counterclaim that should have been asserted in the Illinois action; that Imperial Crown filed a counterclaim in the federal action, alleging that "[t]he subject matter of the judgment [in the Illinois action] involved the identical contractual relationship between [Imperial Crown and Wright] that is at issue [in the federal action]; and, that should "the Illinois judgment not be asserted [in the federal action], it may later be argued that res judicata bars [Imperial Crown's] domesticating the judgment and collecting on it." On the day before trial, Imperial Crown withdrew its counterclaim, wherein it had attempted to affirmatively recover on the judgment in the Illinois action. However, there is nothing showing that Imperial Crown withdrew its answer asserting that this action was a compulsory counterclaim that had to be filed in the Illinois action. The jury returned a verdict for Wright in the federal action. For all that appears in the record before us, Imperial Crown did not file a motion for a judgment notwithstanding the verdict or for a new trial in the federal action, and did not appeal from the judgment entered in the federal action, but filed the present case.
In opposition to Wright's motion for summary judgment in this case, Imperial Crown filed an affidavit in which its attorney gave its reasons for not asserting the judgment in the Illinois suit as a counterclaim in the federal action. In pertinent part, it reads:
"First, I was not and am not aware that by filing an action against a judgment creditor wherever and whenever he chooses, a judgment debtor (Wright here) can, in effect, require his creditor to domesticate its foreign judgment in the forum of the debtor's choosing, and at the time of his choice.
"Second, reflection convinced me that no amount of charging on the part of Judge Guin in the federal court would suffice to get it through the jury's heads that in asking (by way of counterclaim) that Crown's judgment be domesticated in Alabama, Crown was asking for anything other than a second judgment in the same amount as the first. Crown already has its judgment, the jury would reason. The result would be denial of the counterclaim and, with it, possible loss of the Illinois judgment for purposes of collection in Alabama."
In Ultracashmere House, Ltd. v. Meyer, 664 F.2d 1176 (11th Cir. 1981), the following appears:
"The full faith and credit clause of the Federal Constitution, U.S. Const. art. 4, § 1, is binding only on state courts. In 1790, however, Congress enacted the predecessor to Title 28 U.S.C. § 1738, which imposes on federal courts as well as state courts the duty to give full faith and credit to judgments rendered by state tribunals. Mills v. Duryee, 11 U.S. (7 Cranch) 481, 485, 3 L.Ed. 411 (1813). Section 1738 provides that state court proceedings shall be given 'the same full faith and credit in every court within the United States . . . as they have by law or usage in the courts of such state . . . from which they are taken.' Thus, where the parties and the cause of action litigated are the same, a judgment rendered by a state court if it would by operation of res judicata preclude a subsequent suit in state court must similarly be treated as conclusive by federal courts, and parties may not relitigate such a claim even where a federal question is comprised within the dispute. Allen v. McCurry, 449 U.S. 90, 101 S.Ct. 411, 66 L.Ed.2d 308 (1980). Under Alabama law, res judicata precludes relitigation of an action where four 'essential elements' are satisfied: (1) a prior judgment has been rendered by a court of competent jurisdiction; (2) there is substantial identity of the parties in the two suits; (3) there is identity of issues in the two suits; and (4) the prior judgment was rendered on the merits. Ozley v. Guthrie, 372 So.2d 860, 861 (Ala. 1979) (citing Wheeler v. First Alabama Bank of Birmingham, 364 So.2d 1190 (Ala. 1978)). 'Where these elements are present . . . the former judgment is an absolute bar to any subsequent suit on the same cause of action, including any issue which was or could have been litigated in the prior action.' Ozley, supra, at 861 (citing McGruder v. B L Construction Co., 331 So.2d 257 (Ala. 1976))."
664 F.2d at 1183-84. The judgment in the Illinois action could have been enforced in the federal action.
Res judicata is an affirmative defense and if it is not raised in the trial court, it is deemed to have been waived. Hendricks v. Blake, 291 Ala. 575, 285 So.2d 82 (1973). As a trial strategy, Imperial Crown decided not to pursue its counterclaim to domesticate its Illinois judgment in the federal action, which it could have done. The record does not reflect whether Imperial Crown pursued this defense during the trial of the federal action; however, even if it did, it did not seek a JNOV after the verdict was rendered for Wright, nor did it seek a new trial, and Imperial Crown did not appeal from the judgment entered in the federal action. Therefore, since Imperial Crown's right under the judgment in the Illinois action could have been litigated in the federal action, Ultracashmere, supra, it is deemed to have been waived. The mere fact that Imperial Crown decided in the federal action not to pursue its prior adjudication of the issues does not in the present case prohibit or estop Wright from raising res judicata and collateral estoppel arising from the judgment in the federal action. Wright did so by answer and motion for summary judgment. We are persuaded that Wright produced substantial evidence of every element of the res judicata defense and that, thereafter, Imperial Crown failed to produce evidence that made a fact question for resolution by the trier of fact regarding any element of that affirmative defense. The trial court did not err in granting Wright's motion for summary judgment.
AFFIRMED.
HORNSBY, C. J., and JONES, SHORES and KENNEDY, JJ., concur.
ON APPLICATION FOR REHEARING
The application for rehearing is overruled.
OVERRULED.
HORNSBY, C.J., and MADDOX, ALMON, SHORES and KENNEDY, JJ., concur.
JONES and STEAGALL, JJ., dissent, with opinion by JONES, J.
I respectfully dissent.
Subsequent to Imperial Crown's obtaining a final and unappealable judgment against Wright in the Illinois Circuit Court, Wright sued Imperial Crown in the United States District Court for the Northern District of Alabama. In that federal action, by way of a motion for judgment on the pleadings, Imperial Crown raised the affirmative defense of res judicata, contending that the cause of action in the federal suit arose out of the same transaction that was the basis of the Illinois suit. The record before us does not reveal that Wright made any response to Imperial Crown's motion. The federal district court treated it as a motion for summary judgment and denied the motion, holding that, under the undisputed facts, Imperial Crown was not entitled to a judgment as a matter of law. Having not prevailed on its summary judgment motion, Imperial Crown then filed a counterclaim, seeking to domesticate its Illinois judgment, which the federal court included in its amended pre-trial order as an issue to be submitted for the jury's determination. Before trial, Imperial Crown withdrew its counterclaim. The jury returned a verdict in favor of Wright on his breach of contract claim
The fact that Imperial Crown raised the res judicata defense in the federal action by way of a ground for its summary judgment motion makes the adjudication against Imperial Crown on this issue no less valid and binding on the parties. The federal court's denial of Imperial Crown's res judicata defense, in legal effect, was tantamount to a ruling in Wright's favor that the two lawsuits did not arise out of the same transaction. Imperial Crown withdrew its counterclaim, which sought only to domesticate Imperial Crown's Illinois judgment, when it realized that, pursuant to the federal court's pre-trial order, it would be required to re-try the Illinois case before the jury on the merits. In this posture, one can conclude only that the trial judge necessarily rejected the res judicata plea on the ground that the federal claim by Wright did not arise out of the same transaction that formed the basis for Wright's Illinois lawsuit. Therefore, Wright did not have available to him the federal court adjudication as the basis for his res judicata plea in the instant case.
In the instant action, Wright should not have been permitted to change his position on the "same transaction" issue after he had successfully countered the defense of res judicata asserted in the federal action. Indeed, but for Wright's position on this issue (i.e., that Imperial Crown's Illinois action and Wright's federal action did not arise out of the same transaction), Imperial Crown would have been entitled to an absolute defense to the federal action, as a matter of law.
"The law is settled in Alabama that a party who has, with knowledge of the facts, assumed a particular position in a judicial proceeding is estopped from assuming a position inconsistent to the first one to the prejudice of an adverse party. Brown v. Terry, 375 So.2d 457 (Ala. 1979); United Security Life Insurance Co. v. Birmingham Trust National Bank, 282 Ala. 295, 211 So.2d 139 (1968); Maner v. Maner, 279 Ala. 652, 189 So.2d 336 (1966); Watt v. Lee, 238 Ala. 451, 191 So. 628 (1939); Bromberg v. First National Bank of Mobile, 235 Ala. 226, 178 So. 48 (1937); Wright v. Fannin, 229 Ala. 278, 156 So. 849 (1934); Brown v. French, 159 Ala. 645, 49 So. 255 (1909). Likewise, a party who, for the purpose of maintaining a cause or defense, has deliberately represented a fact or claim in one aspect, cannot be permitted to contradict his own representation by giving the same thing another aspect. Watt v. Lee, [supra]; Bromberg v. First National Bank of Mobile, [supra]; Wright v. Fannin, [supra]. . . . Thus, when a party defeats a judicial proceeding by alleging in his pleadings a particular state of facts, he cannot be heard to subsequently deny or disprove those facts in defense of another proceeding. Watt v. Lee, [supra]; Bromberg v. First National Bank of Mobile, [supra]; Wright v. Fannin, [supra]."
Russell v. Russell, 404 So.2d 662, 665 (Ala. 1981). Thus, Wright should be precluded from now asserting that both suits arose out of the same transaction.
Although we address the parties' contentions as to Wright's changing his position in the two actions, it is not material that the facts of the instant record are incomplete, because it is implicit in the federal court's order that it rejected Imperial Crown's argument that Wright's claim, asserted in the federal action, arose out of the same transaction that was made the basis of the Illinois action. Thus, it becomes apparent that Wright changed his position on this issue in the instant action.
The prohibition against a party's changing his position in a subsequent action, after he has prevailed in a prior action, is another dimension of res judicata. Once a court renders a final judgment, in light of the arguments presented to it, that judgment becomes the conclusive law of the case, subject only to appeal. United States v. Woods, 432 F.2d 1072 (7th Cir. 1970); and Blumberg v. Touche Ross Co., 514 So.2d 922 (Ala. 1987). A party can not thereafter, in a subsequent action, change his position and relitigate the issue.
The parties' contentions in the instant case, regarding what occurred in the federal court proceedings, are irrelevant here because the fact that the two actions did not arise out of the same transaction is the implicit basis for the federal court's ruling in favor of Wright. Furthermore, that the two lawsuits did "arise out of the same transaction" was the only ground offered by Imperial Crown for its res judicata defense in the federal action.
Moreover, under the facts of this case, and especially in light of the federal district court's holding, it is an inescapable conclusion that Imperial Crown's domestication suit should be treated as a permissive counterclaim rather than as a compulsory counterclaim. Rule 13(b), A.R.Civ.P., provides that a permissive counterclaim is a "claim against an opposing party not arising out of the transaction or occurrence that is the subject matter of the opposing party's claim." This is exactly what the federal district court held, i.e., that the two claims did not arise out of the same transaction. Therefore, the domestication claim could have been litigated in the federal action; however, because it was not, a subsequent action to domesticate the Illinois judgment should not now be barred. See Rule 13(b), A.R.Civ.P., and the comments thereto.
The correctness of the federal court's decision rejecting Imperial Crown's res judicata defense is not an issue before us, but that decision, right or wrong, became the law of the case, and the federal court's adverse adjudication of Imperial Crown's res judicata defense is entitled to be honored in the present litigation. See Coker v. Amoco Oil Co., 709 F.2d 1433 (11th Cir. 1983); and Terrell v. City of Bessemer, 406 So.2d 337 (Ala. 1981). When the federal court's holding is taken into consideration, the reason for the rule against a party's taking inconsistent positions becomes manifest.
Moreover, I do not believe that all of the elements of res judicata are present in this case; more particularly, the element of "the same cause of action" is lacking. In the absence of any requisite element of res judicata, the "could have been litigated" language does not apply to preclude a subsequent action to domesticate the Illinois judgment.
The "same cause of action" exists if the issues in the two lawsuits are the same and if the same evidence would support a recovery in both suits. Dominex, Inc. v. Key, 456 So.2d 1047 (Ala. 1984). In the federal action, Wright sought recovery for fraud and breach of contract. All that Imperial Crown now seeks is to domesticate the Illinois judgment so that it may execute thereon. To succeed on his claims alleging fraud and breach of contract, Wright must prove the requisite elements of each of the theories alleged. To domesticate the foreign judgment, in the manner Imperial Crown has chosen, it must present to the court as evidence a properly authenticated copy of the Illinois judgment. Prado North Residences, Ltd. v. Prado North Condominium Association, Inc., 477 So.2d 396 (Ala. 1985).
Generally, the grounds for a collateral attack of a foreign judgment are lack of subject matter jurisdiction, lack of in personam jurisdiction, fraud, perjury, collusion, and other misconduct. See, generally, 50 C.J.S. Judgments § 893 et seq. (1947). Wright has not asserted any of those grounds for collaterally attacking the Illinois judgment; in fact, he has not attempted to attack the judgment on any basis. Rather, Wright asserts the res judicata effect of the federal court litigation in which the federal court rejected Imperial Crown's res judicata defense on the ground that the two actions did not arise out of the same transaction. Nevertheless, even if Wright were attempting to attack the Illinois judgment, it is inconceivable that the same evidence would support a recovery on his federal court claims and also support a collateral attack argument.
The majority apparently relies upon the fact that Imperial Crown amended its pleadings in the federal action by filing a counterclaim seeking to domesticate its Illinois judgment. However, before trial, the counterclaim was withdrawn. Therefore, the domestication issue was never before the federal court for its determination; only the issue of the res judicata effect of the judgment was before the federal court, and that issue was decided in Wright's favor. Thus, reliance on this fact is unwarranted.
I do not take issue with the majority's holding that Imperial Crown could have domesticated the Illinois judgment in the federal action. Ultracashmere House, Ltd. v. Meyer, 664 F.2d 1176 (11th Cir. 1981). However, for the above stated reasons, Imperial Crown, by choosing not to domesticate the judgment in the federal action, should not now be barred from domesticating the Illinois judgment in the Alabama circuit court. To be sure, under the law of the case, once the federal district court rejected Imperial Crown's res judicata defense, as a matter of law, if Imperial Crown's counterclaim had not been withdrawn, then neither Wright's claim nor Imperial Crown's counterclaim could have been used as a defensive matter against the other, because each formed a basis for an independent action. At most, then, the resulting two judgments (one for Wright on his claim, and one for Imperial Crown on its counterclaim) would have had an offsetting effect.
I, therefore, would reverse the trial court's summary judgment in favor of Wright. Thus, I dissent from the denial of rehearing.
STEAGALL, J., concurs.