Opinion
Case No. 8:02CV68
June 5, 2002
MEMORANDUM AND ORDER
This matter is before the Court on Defendant Physicians Mutual Insurance Company's Motion for Summary Judgment (Filing No. 4). The parties have fully briefed the issues, and the Defendant has submitted evidence in support of its motion (Filing Nos. 5 and 9). This is the third lawsuit that Plaintiff Henry Thomas Jones commenced against Defendant Physicians Mutual Insurance Company ("PMIC"). PMIC seeks summary judgment on the basis that Jones' claims are barred by the doctrine of res judicata, and, in the alternative, by Nebraska's four-year statute of limitations applicable to fraud claims.
Factual Background
Jones is a resident of Nebraska, and PMIC is a mutual insurance company that was organized under the laws of Nebraska and has its principal place of business in Omaha, Nebraska. On August 9, 1990, Jones began working for PMIC pursuant to an Agent's Agreement. On or about August 1, 1991, PMIC terminated its relationship with Jones. The reasons for the termination are in dispute.
A chronology of the legal actions is important to the Court's analysis and is provided herein. On March 11, 1992, Jones filed an action against PMIC in the United States District Court for the Eastern District of Louisiana ("First Action"). Filing No. 5, Frost Aff. at Ex. 1. On October 14, 1992, upon a joint motion of the parties, the First Action was dismissed without prejudice. Id. at Exs. 2 and 3.
On March 23, 1994, a group of former PMIC agents filed an original petition in the District Court of Bexar County, Texas, against PMIC ("Class Action"). Id. at Ex. 4. An order conditionally certifying the class for settlement purposes was entered in the action, but on January 28, 1998, Jones filed his Request for Exclusion, opting out of the class settlement. Id. at Ex. 5.
On March 20, 2000, Jones filed his second individual action against PMIC in the Civil District Court for the Parish of Orleans, Louisiana ("Second Action"). Id. at Ex. 6. PMIC removed this action to the United States District Court for the Eastern District of Louisiana, where, on August 14, 2000, the court entered an "Order and Reasons" granting in its entirety PMIC's motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). The court expressly found that Jones' claim of fraud was barred under the one-year prescriptive period available under Louisiana law. Id. at Ex. 7. Jones sought reconsideration of the court's dismissal of the Second Action, but the court determined that Jones was not entitled to relief from its final judgment under Federal Rule of Civil Procedure 60(b). Filing No. 9, Supplemental Affidavit of Frost at Ex. 8.
Jones filed this action in the District Court for Douglas County, Nebraska, on or about January 25, 2002. PMIC removed the state court action to this Court, and now seeks summary judgment from this Court.
Summary Judgment Standard
With respect to summary judgment, the Court must examine the record in the light most favorable to the nonmoving party, in this case Jones. U.S. ex rel. Quirk v. Madonna Towers, Inc., 278 F.3d 765, 767 (8th Cir. 2001). However, summary judgment is "properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed `to secure the just, speedy and inexpensive determination of every action.'" Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986).
The proponent of a motion for summary judgment "bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of `the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact." Id. at 322 (quoting Fed.R.Civ.P. 56(c)). The proponent need not, however, negate the opponent's claims or defenses. Id. at 324-25.
In response to the proponent's showing, the opponent's burden is to "come forward with `specific facts showing that there is a genuine issue for trial.'" Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986) (quoting Fed.R.Civ.P. 56(e)). A "genuine" issue of material fact is more than "some metaphysical doubt as to the material facts." Id.
Applicability of the Doctrine of Res Judicata
What law applies to consideration of the Defendant's motion is worthy of analysis. The U.S. Court of Appeals for the Eighth Circuit was presented with a similar issue in Austin v. Super Value Stores, Inc., 31 F.3d 615 (8th Cir. 1994). In the Austin case, as in this case, the earlier judgment had been issued by a federal district court exercising diversity jurisdiction over the parties, and the subsequent action was brought in a federal district court exercising diversity jurisdiction. The Eighth Circuit Court stated:
The judgment which is sought to be given preclusive effect was entered by a federal district court sitting in diversity. The district court here also had diversity jurisdiction. Thus, if res judicata applied, one federal court would be giving preclusive effect to the judgment of another federal court, a question which arguably would be a matter of federal law. "However, cases from [this circuit] have consistently concluded that collateral estoppel in a diversity action is a question of substantive law controlled by state common law." Therefore, we apply state, not federal, law.Id. at 617-618, footnotes added and original citations provided therein. Thus, this Court will look to the law of Nebraska to determine whether the doctrine of res judicata applies to bar this litigation based on a dismissal of a prior action as time-barred.
See, e.g., Steve D. Thompson Tructing, Inc. v. Dorsey Trailers, Inc., 870 F.2d 1044, 1045 (5th Cir. 1989) (applying federal res judicata rules); Hauser v. Krupp Steel Producers, Inc., 761 F.2d 204, 207 (5th Cir. 1985) (same); cf. Shoup v. Bell Howell Co., 872 F.2d 1178, 1180 (4th Cir. 1989) (applying Fed.R.Civ.P. 41(b)); see also 18 Charles Alan Wright, Arthur R. Miller Edward H. Cooper, Federal Practice Procedure § 4472 (1981 Supp. 1994).
Lane v. Sullivan, 900 F.2d 1247, 1250 (8th Cir.), cert. denied, 498 U.S. 847, 111 S.Ct. 134, 112 L.Ed.2d 101 (1990); see Iowa Electric Light Power Co. v. Mobile Aerial Towers, Inc., 723 F.2d 50, 52 (8th Cir. 1983); Gatzemeyer v. Vogel, 589 F.2d 360, 362 (8th Cir. 1978); cf. Gerrard v. Larsen, 517 F.2d 1127, 1131-32 (8th Cir. 1975) (noting conflict but refusing to decide because same result under either state or federal preclusion law).
The Nebraska Court of Appeals recently restated the underpinnings of the res judicata doctrine.
The doctrine of res judicata is based on the principle that a final judgment on the merits by a court of competent jurisdiction is conclusive upon the parties in any later litigation involving the same cause of action. Acosta v. Seedorf Masonry, Inc., 253 Neb. 196, 569 N.W.2d 248 (1997). Under the traditional rule of res judicata, sometimes called claim preclusion, any rights, facts, or matter in issue directly adjudicated or necessarily involved in the determination of an action before a competent court in which a judgment or decree is rendered upon the merits is conclusively settled by the judgment therein and cannot again be litigated by the parties and privies. Vann v. Norwest Bank Neb., 256 Neb. 623, 626, 591 N.W.2d 574, 577 (1999). Accord Pipe Piling Supplies v. Betterman Katelman, 8 Neb. App. 475, 596 N.W.2d 24 (1999).Cole v. Wilson, 10 Neb. App. 156, 160, 627 N.W.2d 140, 144 (Neb.App. 2001). Nebraska's application of the res judicata doctrine has been described by the Eighth Circuit Court of Appeals as follows:
Under Nebraska law the doctrine of res judicata bars the relitigation of a claim if 1) the prior judgment was rendered by a court of competent jurisdiction; 2) the prior judgment was a final judgment on the merits; and 3) the same cause of action and the same parties or their privies were involved in both cases. Kerndt v. Ronan, 236 Neb. 26, 458 N.W.2d 466 (1990); State v. Gerdes, 233 Neb. 528, 446 N.W.2d 224 (1989); NC+Hybrids v. Growers Seed Assn., 228 Neb. 306, 422 N.W.2d 542 (1988); Murphy v. Jones, 877 F.2d 682, 684 (8th Cir. 1989).King v. Hoover Group, Inc., 958 F.2d 219, 222 (8th Cir. 1992). This standard is nearly identical to the standard articulated in this federal court. See County of Boyd v. US Ecology, Inc., 858 F. Supp. 960, 966 (D.Neb. 1994) (identifying the doctrine's four elements as (1) a prior judgment was rendered by a court of competent jurisdiction; (2) the prior decision was a final judgment on the merits; (3) the same cause of action is involved in all cases; and (4) the same parties or those in privity are involved in all cases.)
The Court finds that each of the elements is present in this case for the reasons that follow. This Court readily acknowledges, and the parties do not dispute, that the United States District Court in the District of Louisiana, which rendered the judgment in the Second Action, is a court of competent jurisdiction. Thus, the first element has been satisfied.
The second element is in dispute. Jones contends that the "Order and Reasons" issued by Judge Vance (Exhibit 7) does not constitute a final judgment on the merits. The Court disagrees. In applying the res judicata doctrine, Nebraska courts have specifically found that a prior dismissal based on statute of limitations grounds constitutes an adjudication on the merits. See Cole v. Wilson, 10 Neb. App. 156, 162, 627 N.W.2d 140, 145 (Neb.App. 2001) (trial court properly sustained defendant's demurrer to plaintiff's petition based upon the doctrine of res judicata where prior action was dismissed based on expiration of statute of limitations). See also, Pearson v. Jaros, 2001 WL 1602957, 3 (Neb.App. 2001) (finding it "plain that the issues raised by Pearson in his amended petition in the instant case are the same issues that were raised by Pearson in his prior action, which was dismissed because it was barred by the applicable statute of limitations," and affirming the trial court's application of the doctrine of res judicata to dismiss plaintiff's claims.)
This Court has previously held that:
[A]ny dismissal "operates as an adjudication upon the merits" unless the court specifies otherwise, or unless the dismissal is based upon a lack of jurisdiction, improper venue, or failure to join a party. Fed.R.Civ.P. 41(b). See also Myers v. Bull, 599 F.2d 863, 865 (8th Cir.) cert. denied, 444 U.S. 901, 100 S.Ct. 213, 62 L.Ed.2d 138 (1979) (plaintiff's attempt to resurrect two claims raised in previous complaint was barred by res judicata effect of district court's previous decision that claims were brought outside of the period of the applicable statute of limitations); Cannon v. Loyola Univ. of Chicago, 784 F.2d 777, 781 (7th Cir. 1986), cert. denied, 479 U.S. 1033, 107 S.Ct. 880, 93 L.Ed.2d 834 (1987) (disposition of applicant's actions under Title IX of Education Amendments of 1972 and 42 U.S.C. § 1983 on grounds of laches was a judgment on the merits for res judicata purposes).County of Boyd v. US Ecology, Inc., 858 F. Supp. 960, 967 (D.Neb. 1994).
The Second Action was presented to the court for consideration upon the Defendant's Motion to Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted. The federal district court sitting in Louisiana considered each claim and disposed of all of them. The court specifically analyzed PMIC's defense that Jones' claims were barred by the one-year limitations period, noting that Jones had conceded that his fraud claim was time-barred. In concluding that Jones was not entitled to the benefit of a tolling of the limitations period pursuant to the doctrine of contra non valentum, the court found that PMIC's allegedly fraudulent acts occurred in 1991, and that Jones' 1992 complaint in the First Action "evinced an awareness of this cause of action [the fraud claim alleged in the Second Action]." The district court found that Jones' claim for fraud in the Second Action was time-barred and dismissed it and all other claims pursuant to Rule 12(b)(6) (Exhibit 7 at page 4). When Jones presented a motion for reconsideration, the court considered the motion under Rule 60(b) relating to requests for relief from final judgments and denied it (Exhibit 8).
The United States District Court in the Eastern District of Louisiana ordered dismissal pursuant to Rule 12(b)(6), based in part on the expiration of the limitations period. Under Cole v. Wilson, supra, and County of Boyd v. US Ecology, supra, such a dismissal is an adjudication on the merits. This Court holds that the decision of the federal district court for the Eastern District of Louisiana (Exhibit 7) constitutes a final judgment on the merits. Accordingly, the Court finds that the second element of doctrine of res judicata is satisfied.
Because there is no dispute that the parties to this action were the same parties to the Second Action, the only remaining issue is whether the same cause of action is advanced in the Second Action and this action. PMIC set forth in its brief a comparison of several allegations in the Second Action to those allegations in the Petition that commenced this action. With immaterial exceptions, the allegations are substantially the same. Without doubt, a comparison of Exhibit 6 and the Petition that commenced this action reveals that the same cause of action was raised in both cases. Indeed, Jones does not contend that he is advancing a different cause of action; Jones' arguments do not address the final element of the res judicata analysis. The Court concludes that the same cause of action, one based on allegations of PMIC's fraud, was raised in the Second Action and again in this action. Accordingly, all the elements for the application of the doctrine of res judicata are present, and PMIC's motion for summary judgment should be granted.
Jones contends that the four-year statute of limitations applicable to actions for fraud in Nebraska should apply to his claims, and that it would be unfair for this Court to invoke the doctrine of res judicata to bind him to application of Louisiana's one-year prescriptive period. La. Civ. Code Ann. art 3492 (West 2000). According to Neb. Rev. Stat. § 25-207 (Reissue 1995), actions that must be commenced within four years include "an action for relief on the ground of fraud, but the cause of action in such case shall not be deemed to have accrued until the discovery of the fraud. . . ." While it is true that Louisiana's prescriptive period is shorter than Nebraska's limitations period, even if this Court concluded that Jones had a viable claim under § 25-207, which it does not, this Court would not be inclined to permit Jones to shop indefinitely for a favorable limitations period. Jones chose to commence actions against PMIC in Louisiana, not once, but twice, and all the while a Nebraska forum that would have applied the four-year statute of limitation was available to him. Jones should not now be allowed to claim entitlement to extraordinary relief because of his earlier choices.
This Court agrees with the conclusion of the federal district court in Louisiana that Jones had sufficient information at the time he commenced his First Action on March 11, 1992, to pursue his claim of fraud against PMIC. Despite Jones' misinterpretation of Calvert Fire Ins. Co. v. Unigard Mut. Ins. Co., 526 F. Supp. 623 (D.Neb. 1980), Nebraska law provides that the statute of limitations period for fraud begins to run upon discovery of facts constituting fraud or facts sufficient to put a person of ordinary intelligence and prudence on inquiry which should lead to such discovery. See Jameson v. Graham, 159 Neb. 202, 66 N.W.2d 417 (1954). Jones' fourth count in the First Action's Complaint (Exhibit 1) is a fraud cause of action supported by allegations that are similar to the allegations pled in the Second Action and in this action. Thus, Jones' fraud claim would have been time-barred under the Nebraska statute, even allowing for tolling during the Class Action, by mid-January 2000. This action was not commenced until January 25, 2002.
For all these reasons, the Court will grant PMIC's motion for summary judgment in all respects.
IT IS ORDERED:
Defendant's Motion for Summary Judgment (Filing No. 4) is granted in its entirety.
All claims brought by Plaintiff Henry Thomas Jones against Physicians Mutual Insurance Company are dismissed with prejudice, the parties to pay their own costs and fees. Let judgment be entered accordingly.
JUDGMENT
In accordance with the Memorandum and Order filed simultaneously with this Judgment,