Hill v. AMMC, Inc. ( 2018 )

Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
07/26/2018 01:08 AM CDT
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Nebraska Supreme Court A dvance Sheets
300 Nebraska R eports
HILL v. AMMC, INC.
Cite as 300 Neb. 412
Michelle M. Hill, appellant, v.
AMMC, Inc.,
doing business asMorrissey Motor
Company, appellee.
___ N.W.2d ___
Filed June 29, 2018. No. S-17-1075.
1. Motions to Dismiss: Summary Judgment: Pleadings. When matters
outside the pleadings are presented to and not excluded by the court, a
motion to dismiss is treated as one for summary judgment.
2. Summary Judgment: Appeal and Error. An appellate court will
affirm a lower court’s grant of summary judgment if the pleadings and
admitted evidence show that there is no genuine issue as to any material
fact or as to the ultimate inferences that may be drawn from the facts
and that the moving party is entitled to judgment as a matter of law.
3. Judgments: Claim Preclusion: Issue Preclusion: Appeal and Error.
The applicability of claim and issue preclusion is a question of law. On
a question of law, an appellate court reaches a conclusion independent
of the court below.
4. Judgments: Jurisdiction: Claim Preclusion. Under Nebraska law,
claim preclusion bars relitigation of any right, fact, or matter directly
addressed or necessarily included in a former adjudication if (1) the
former judgment was rendered by a court of competent jurisdiction, (2)
the former judgment was a final judgment, (3) the former judgment was
on the merits, and (4) the same parties or their privies were involved in
both actions.
5. Judgments: Claim Preclusion: States: Courts. A Nebraska state court
must apply federal law to determine the preclusive effect of a federal
court judgment.
6. Judgments: Jurisdiction: Claim Preclusion: States: Courts. For judg-
ments in federal question jurisdiction cases, federal claim preclusion law
applies to the analysis, but for judgments in federal diversity jurisdiction
cases, federal common law applies to the preclusion analysis. Federal
common law, in turn, incorporates the rules of preclusion applied by
state courts in the state in which the federal diversity court sits.
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Nebraska Supreme Court A dvance Sheets
300 Nebraska R eports
HILL v. AMMC, INC.
Cite as 300 Neb. 412
7. Claim Preclusion: Final Orders: States: Courts. Under federal law
as stated by the U.S. District Court for the District of Nebraska, claim
preclusion bars the relitigation of a claim if the prior judgment was a
final judgment on the merits rendered by a court of competent jurisdic-
tion and if the same cause of action and the same parties or their privies
were involved in both cases.
Appeal from the District Court for Lancaster County: Jodi L.
Nelson, Judge. Affirmed.
Joy Shiffermiller, of Shiffermiller Law Office, P.C., L.L.O.,
for appellant.
Robert S. Keith and Philip O. Cusic, of Engles, Ketcham,
Olson & Keith, P.C., for appellee.
Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke, and
Papik, JJ., and Welch, Judge.
Stacy, J.
The Lancaster County District Court dismissed an action
filed by Michelle M. Hill, finding it was barred by the doctrine
of claim preclusion. Hill filed this timely appeal. We affirm.
I. FACTS
1. Hill’s 2016 Complaint
On July 14, 2016, Hill filed a complaint in the district court
for Lancaster County against her former employer, AMMC,
Inc., doing business as Morrissey Motor Company. The com-
plaint presented two claims: one alleging a violation of title
VII of the Civil Rights Act of 1964,1 and the other alleging
“wrongful discharge . . . in violation of Nebraska law and pub-
lic policy.”
According to the factual allegations of Hill’s complaint, she
was hired by AMMC in May 2014. AMMC sold motor vehi-
cles, and Hill alleged that during the course of her employ-
ment she was (1) subjected to severe and pervasive sexual
1
See 42 U.S.C. § 2000e et seq. (2012 & Supp. IV 2016).
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HILL v. AMMC, INC.
Cite as 300 Neb. 412
comments by a coworker in violation of title VII and (2)
asked to physically alter customers’ credit scores and indicate
to financing companies that vehicles subject to purchase by
AMMC customers were “fully loaded” when the vehicles actu-
ally were not. The complaint alleged Hill was constructively
discharged in October 2014 when she resigned rather than
falsify records.
Hill’s complaint alleged she had filed “charges” with both
the Nebraska Equal Opportunity Commission (NEOC) and the
federal Equal Employment Opportunity Commission (EEOC).
The complaint alleged the EEOC issued a right to sue letter
on July 6, 2016, but was silent as to any final action taken by
the NEOC.
On August 17, 2016, AMMC removed Hill’s action to the
U.S. District Court for the District of Nebraska. After the action
was removed, AMMC filed a motion to dismiss Hill’s state law
wrongful discharge claim, arguing it was time barred under
the statute of limitations in the Nebraska Fair Employment
Practice Act (NFEPA).2 Specifically, AMMC argued Hill failed
to file her state law claim within 90 days of the NEOC’s final
action in the case.3 At the hearing on the motion to dismiss,
evidence was received without objection, so the federal court
treated the motion as one for partial summary judgment.4
Hill resisted the motion, arguing her state law claim was
not brought under the NFEPA, but instead was a common-law
tort claim subject to a 4-year statute of limitations. In an order
entered October 7, 2016, the federal court granted summary
judgment in favor of AMMC on Hill’s state law wrongful
discharge claim, specifically finding the claim was governed
by the NFEPA and was not a general state law tort claim for
wrongful discharge. Hill’s title VII claim remained pending in
the federal court.
2
Neb. Rev. Stat. §§ 48-1101 to 48-1125 (Reissue 2010 & Cum. Supp.
2016).
3
See § 48-1120.01.
4
See Fed. R. Civ. P. 12(d) and 56.
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Nebraska Supreme Court A dvance Sheets
300 Nebraska R eports
HILL v. AMMC, INC.
Cite as 300 Neb. 412
2. Hill’s 2017 Complaint
Approximately 5 months later, on March 1, 2017, Hill
filed the instant complaint against AMMC in the district
court for Lancaster County. Her complaint alleged only one
claim: that AMMC wrongfully discharged Hill “in violation
of Nebraska law and public policy.” The factual allegations
regarding wrongful discharge were substantially identical to
those alleged in her 2016 complaint. However, the 2017 com-
plaint contained additional detail regarding the illegality of
the actions AMMC allegedly asked Hill to take regarding
customers’ credit scores and vehicle financing. Specifically,
Hill’s 2017 complaint alleged the actions AMMC asked her
to take would have amounted to forgery under Neb. Rev. Stat.
§ 28-603 (Reissue 2016) and would have violated Neb. Rev.
Stat. § 28-619 (Reissue 2016), which prohibits issuing a false
statement for the purpose of obtaining a financial transac-
tion device.
AMMC moved to dismiss the 2017 complaint, asserting it
failed to state a claim under Neb. Ct. R. Pldg. § 6-1112(b)(6).
AMMC argued the state law claim was barred by the doctrine
of claim preclusion, because the federal court had already
decided the claim on the merits and dismissed it as time
barred.
A hearing on AMMC’s motion was held, and evidence was
offered by both parties and received without objection. The
court concluded Hill’s wrongful discharge claim was barred
by the doctrine of claim preclusion. It specifically found the
federal court’s dismissal of Hill’s state law claim was a final
judgment on the merits, was rendered by a court of competent
jurisdiction, involved the same issues, and involved the same
parties. The district court subsequently entered an order dis-
missing the complaint and taxing costs to Hill.
Hill filed this timely appeal, which we moved to our docket
on our own motion.5
5
See Neb. Rev. Stat. § 24-1106(3) (Supp. 2017).
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HILL v. AMMC, INC.
Cite as 300 Neb. 412
II. ASSIGNMENTS OF ERROR
Hill assigns, restated, that the district court erred in (1) find-
ing her state law claim was not governed by the general 4-year
tort statute of limitations and (2) finding her state law claim
was barred by the doctrine of claim preclusion.
III. STANDARD OF REVIEW
[1,2] AMMC moved to dismiss Hill’s complaint pursu-
ant to § 6-1112(b)(6), arguing it failed to state a claim under
Nebraska law. However, at the hearing on the motion to dis-
miss, the district court received exhibits from both parties with
no objection. When matters outside the pleadings are presented
to and not excluded by the court, a motion to dismiss is treated
as one for summary judgment.6 An appellate court will affirm
a lower court’s grant of summary judgment if the pleadings
and admitted evidence show that there is no genuine issue as
to any material fact or as to the ultimate inferences that may
be drawn from the facts and that the moving party is entitled
to judgment as a matter of law.7
[3] The applicability of claim and issue preclusion is a ques-
tion of law.8 On a question of law, an appellate court reaches a
conclusion independent of the court below.9
IV. ANALYSIS
1. District Court M ade No Finding on
A pplicable Statute of Limitations
In her first assignment of error, Hill argues the district court
erred in finding her wrongful discharge claim was governed
by the limitations period under the NFEPA rather than the gen-
eral 4-year tort statute of limitations. This assignment of error
lacks merit for two reasons.
6
See, § 6-1112; Brothers v. Kimball Cty. Hosp., 289 Neb. 879, 857 N.W.2d
789 (2015).
7
Brothers, supra note 6.
8
In re Interest of Noah B. et al., 295 Neb. 764, 891 N.W.2d 109 (2017).
9
Id.
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HILL v. AMMC, INC.
Cite as 300 Neb. 412
First, contrary to Hill’s assertion, the district court made no
independent finding regarding the nature of Hill’s claim or the
applicable statute of limitations. Instead, as discussed below,
the court’s decision was based solely on the conclusion that
the doctrine of claim preclusion applied to bar Hill’s 2017
wrongful discharge claim. In other words, the district court
determined the federal court had already conclusively decided
the question of which statute of limitations was applicable, and
expressed no opinion on whether the federal court’s conclusion
was correct.
Moreover, to the extent Hill argues the district court should
have concluded the federal court’s determination was errone-
ous, her complaint is of no moment.10 Hill may not overcome
the effect of claim preclusion by collaterally attacking the cor-
rectness of the federal court’s judgment.11
2. Claim Preclusion
[4] In her second assignment of error, Hill argues the dis-
trict court erred in finding her state law claim was barred by
the doctrine of claim preclusion. Under Nebraska law, claim
preclusion bars relitigation of any right, fact, or matter directly
addressed or necessarily included in a former adjudication if
(1) the former judgment was rendered by a court of competent
jurisdiction, (2) the former judgment was a final judgment,
(3) the former judgment was on the merits, and (4) the same
parties or their privies were involved in both actions.12 This
is the test the district court applied to determine whether the
federal court’s dismissal of Hill’s state law claim had preclu-
sive effect.
[5,6] Previously, this court has held that a Nebraska state
court must apply federal law to determine the preclusive effect
10
See VanDeWalle v. Albion Nat. Bank, 243 Neb. 496, 500 N.W.2d 566
(1993).
11
Id.
12
Fetherkile v. Fetherkile, 299 Neb. 76, 907 N.W.2d 275 (2018).
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HILL v. AMMC, INC.
Cite as 300 Neb. 412
of a federal court judgment.13 The U.S. Supreme Court has also
so held.14 However, in Semtek Int’l Inc. v. Lockheed Martin
Corp.,15 the U.S. Supreme Court clarified the application of
this rule. It explained that for judgments in federal question
jurisdiction cases, federal claim preclusion law applies to the
analysis,16 but for judgments in federal diversity jurisdiction
cases, federal common law applies to the preclusion analysis.17
Federal common law, in turn, incorporates the rules of preclu-
sion applied by state courts in the state in which the federal
diversity court sits.18
Here, the federal court was exercising federal question juris-
diction over Hill’s title VII claim19 and was exercising sup-
plemental jurisdiction over her state law claim.20 The U.S.
Supreme Court has not squarely addressed whether federal
preclusion rules or the federal common law (incorporating state
preclusion rules) apply in a case such as this.21 But this case
does not require us to decide the question, because, as relevant
here, the only difference between the two bodies of law is a
slight difference in how the elements of claim preclusion are
stated. And as explained below, whether we analyze these
elements under the federal or state authority, we reach the
same conclusion.
13
Millennium Laboratories v. Ward, 289 Neb. 718, 857 N.W.2d 304 (2014);
VanDeWalle, supra note 10.
14
Semtek Int’l Inc. v. Lockheed Martin Corp., 531 U.S. 497, 121 S. Ct. 1021,
149 L. Ed. 2d 32 (2001).
15
Id.
16
See, also, Taylor v. Sturgell, 553 U.S. 880, 128 S. Ct. 2161, 171 L. Ed. 2d
155 (2008).
17
Taylor, supra note 16; Semtek, supra note 14.
18
Id.
19
See 28 U.S.C. § 1331 (2012).
20
See 28 U.S.C. § 1367 (2012).
21
See Paramount Pictures v. Allianz Risk Transfer, 31 N.Y.3d 64, 96 N.E.3d
737, 73 N.Y.S.3d 472 (2018).
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HILL v. AMMC, INC.
Cite as 300 Neb. 412
[7] As noted, under Nebraska law, claim preclusion bars
relitigation of any right, fact, or matter directly addressed or
necessarily included in a former adjudication if (1) the former
judgment was rendered by a court of competent jurisdiction,
(2) the former judgment was a final judgment, (3) the former
judgment was on the merits, and (4) the same parties or their
privies were involved in both actions.22 Under federal law as
stated by the U.S. District Court for the District of Nebraska,
claim preclusion bars the relitigation of a claim if the prior
judgment was a final judgment on the merits rendered by
a court of competent jurisdiction and if the same cause of
action and the same parties or their privies were involved in
both cases.23
In this case, Hill concedes that the wrongful discharge claim
presented in her 2017 complaint is the same state law claim
she presented in her 2016 complaint. And the parties agree the
federal court’s dismissal of Hill’s state law claim was rendered
by a court of competent jurisdiction and involved the same
parties as this action. The dispute on appeal centers on just two
elements of the claim preclusion analysis: whether the federal
court’s dismissal was on the merits and whether the federal
court’s dismissal was a final judgment. These elements are
considerations under both the state and the federal court’s artic-
ulation of the doctrine, and our analysis of these elements leads
us to the same conclusion regardless of the applicable law.
(a) Judgment Was on Merits
Hill argues the federal court’s judgment of dismissal was
based on the statute of limitations and therefore was not on the
merits. We disagree.
22
Fetherkile, supra note 12.
23
Jenkins v. General Collection Co., 538 F. Supp. 2d 1165 (D. Neb.
2008). See, also, Millennium Laboratories, supra note 13, citing Carlisle
Power Transmission Products v. The Union, 725 F.3d 864 (8th Cir.
2013); VanDeWalle, supra note 10, citing Armstrong v. Norwest Bank,
Minneapolis, N.A., 964 F.2d 797 (8th Cir. 1992).
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HILL v. AMMC, INC.
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Here, the issue decided by the federal court was not based
solely on the application of a statute of limitations. Rather,
the issue decided was whether Hill’s state law wrongful dis-
charge claim was a claim under the NFEPA or, as she argues, a
common-law claim. The federal court concluded it was a claim
subject to NFEPA, and consequently found the claim was time
barred under NFEPA’s 90-day limitations period. Although
the statute of limitations period was part of the federal court’s
analysis, its dismissal of the claim was not based solely on the
statute of limitations.
For the sake of completeness, we note that even if the fed-
eral court judgment is characterized as one based on the statute
of limitations, it was still on the merits. Generally, federal
claim preclusion law holds that a judgment dismissing a claim
based on a limitations period is on the merits and bars a second
action on the same claim if the limitations period examined
by the second court would be the same period examined by
the first court.24 Federal law further holds the second action is
barred even though the plaintiff may seek to advance new argu-
ments for avoiding the limitations period.25
Although Nebraska has never directly addressed whether
a judgment based on the statute of limitations is on the mer-
its, we have held that a judgment is on the merits when it
involves a determination of the substantive rights at issue in
the action.26 Judgments falling within this definition include
judgments based on the following: the outcome of a trial, the
grant of a motion for a directed verdict, the grant of a motion
for judgment notwithstanding the verdict, summary judgment,
consent judgment, default judgment, and orders to dismiss an
24
18A Charles Alan Wright et al., Federal Practice and Procedure § 4441 (3d
ed. 2017). See Martel v. Stafford, 992 F.2d 1244 (1st Cir. 1993).
25
See 18A Wright et al., supra note 24.
26
See DeVaux v. DeVaux, 245 Neb. 611, 514 N.W.2d 640 (1994) (superseded
by statute on other grounds as stated in Stacy M. v. Jason M., 290 Neb.
141, 858 N.W.2d 852 (2015)).
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action for failure to state a claim upon which relief can be
granted.27 Conversely, we have held that judgments on jurisdic-
tional or procedural grounds are not on the merits,28 including:
dismissal for lack of personal or subject matter jurisdiction,
failure to effect proper or timely service, failure to join a nec-
essary party, and failure to prosecute.29 In light of this body
of case law, we hold, as have other jurisdictions in similar
circumstances,30 that the federal judgment in the instant case is
a judgment on the merits.
Here, both the federal district court and a Nebraska state
court would apply a 90-day limitations period to a claim sub-
ject to the NFEPA. Thus, to the extent the federal judgment
was based on the 90-day statute of limitations, it was a judg-
ment on the merits under either federal claim preclusion law or
federal common law (incorporating Nebraska law).
(b) Final Judgment
Hill argues the federal court’s dismissal of her state law
claim was not final for purposes of claim preclusion because
it was not a final judgment for purposes of appeal. At the time
Hill filed her 2017 complaint in state court, the federal court
had dismissed her state law claim for wrongful discharge, but
her related title VII claim against AMMC remained pending.
The federal court’s order dismissing the state law claim did not
provide that it was immediately appealable,31 and Hill contends
she was procedurally unable to appeal the ruling on her state
27
John P. Lenich, Nebraska Civil Procedure § 8:7 (2018) (and cases cited
therein).
28
DeVaux, supra note 26.
29
Lenich, supra note 27.
30
See, Avery v. Auto-Pro, Inc., 313 Ill. App. 3d 747, 731 N.E.2d 319, 246
Ill. Dec. 791 (2000); Reese v. Barbee, 134 N.C. App. 728, 518 S.E.2d 571
(1999); Nitz v. Nitz, 456 N.W.2d 450 (Minn. App. 1990); Meegan S. v.
Donald T., 64 N.Y.2d 751, 475 N.E.2d 449, 485 N.Y.S.2d 982 (1984).
31
See 28 U.S.C. § 1292 (2012).
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law claim until the title VII claim was disposed of.32 Because
of this, Hill argues the district court erred in treating the
federal court’s dismissal as a final judgment for purposes of
claim preclusion.
We decline to address the merits of this argument because,
even if we found it had merit, it would have no effect on the
ultimate disposition of this appeal.33 At oral argument, the
parties advised the court that after the appeal in this case was
filed, the federal court dismissed Hill’s title VII claim on sum-
mary judgment. No party appealed that judgment, and the time
for appeal has now run. Consequently, regardless of whether
the district court erred in treating the federal court’s earlier
dismissal of the state law claim as final, there is no dispute
it is final now for purposes of claim preclusion under both
Nebraska law and federal law. The doctrine of claim preclusion
bars Hill from asserting her state law claim in another court,
and remanding the matter with directions to make a new final-
ity determination would serve no purpose.
V. CONCLUSION
Based on the foregoing, the wrongful discharge claim
asserted in Hill’s 2017 complaint is barred by the doctrine
of claim preclusion. We therefore affirm the district court’s
dismissal.
A ffirmed.
32
See, 28 U.S.C. § 1291 (2012); Spring Creek Expl. & Prod. v. Hess Bakken
Inv., 887 F.3d 1003 (10th Cir. 2018) (holding final decision is one that
ends litigation on merits and leaves nothing for court to do but execute
judgment).
33
See Eilts v. Bendt, 162 Neb. 538, 76 N.W.2d 623 (1956) (case will not be
reversed for errors against party not entitled to succeed in any event).