Bishay v. Citizens Bank of Ma

Not for Publication in West's Federal Reporter
Citation Limited Pursuant to 1st Cir. Loc. R. 32.1.0
United States Court of Appeals
For the First Circuit
No. 06-1364
BAHIG F. BISHAY,
Plaintiff, Appellant,
v.
CITIZENS BANK OF MASSACHUSETTS,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Richard G. Stearns, U.S. District Judge]
Before
Boudin, Chief Judge,
Torruella and Howard, Circuit Judges.
Bahig F. Bishay on brief pro se.
Elise Busny, James W. Stoll and Brown Rudnick Berlack Israels
LLP on brief for appellee.
January 19, 2007
Per Curiam. We affirm the judgment of dismissal
substantially for the reasons recited in the district court’s
memorandum and order, see 2005 WL 2514929 (D. Mass. 2005), adding
only the following comments.
To recover an unpaid loan, appellee Citizens Bank of
Massachusetts (“Citizens”) brought a state court action in 1995
against appellant Bishay and a company he owned (collectively
“Bishay”). Bishay filed two counterclaims and later applied for
bankruptcy protection. The ensuing reorganization plan contained
a reservation clause, which permitted Bishay to pursue his
counterclaims on condition that he procure a letter of credit
(“LOC”) to compensate Citizens for its expenses if it prevailed in
state court. Bishay did so and then added four new counterclaims
in an amended filing. At the summary judgment stage, the superior
court concluded that the four new claims were not covered by the
reservation clause and were subject to dismissal on preclusion
grounds. The court rejected the original two claims on other
grounds and later awarded attorney’s fees to Citizens. When Bishay
refused to make payment, Citizens collected its fees award in 1999
by drawing on the LOC. The state appeals court subsequently
affirmed. See 56 Mass. App. Ct. 1104 (2002).
Bishay filed the instant action in 2005. In six counts,
he charged that Citizens’ draw on the LOC violated the
reorganization plan and was actionable on various grounds including
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breach of contract. But his underlying allegations mirrored those
he had earlier advanced in state court. For example, the LOC draw
was supposedly unlawful (or at least premature) because the
reservation clause had been misinterpreted and he had been
wrongfully denied the opportunity to pursue his four new
counterclaims. The district court deemed the complaint “an
improper collateral attack” on the state court judgment and
concluded that “Bishay’s recasting of his dissatisfaction with the
adverse rulings of [the state] courts into a breach of contract
claim ... does not alter the fact of preclusion.” We agree.
The precise nature of Bishay’s breach of contract claim--
the only claim he has pursued on appeal–-is unclear. At times, he
appears to be raising a procedural objection: that disposition of
his counterclaims at the summary judgment stage was improper
because the reservation clause entitled him to prosecute his claims
through trial. At other times, he appears to be raising a more
substantive objection: that the reservation clause barred Citizens
from relying on a preclusion defense, regardless of the procedural
mechanism chosen to do so. Yet this ambiguity need not be
resolved, since both of these arguments involve the scope of the
reservation clause. That issue has already been decided in state
court, whose rulings are entitled to full faith and credit. Bishay
cannot now relitigate the matter in federal court. See generally
McDonough v. City of Quincy, 452 F.3d 8, 16 (1st Cir. 2006)
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(applying Massachusetts law of claim preclusion); Johnson v.
Mahoney, 424 F.3d 83, 93 (1st Cir. 2005) (applying Massachusetts law
of issue preclusion).
Bishay argues that his contract claim is not subject to
preclusion because it did not exist in 1996 when he filed his
amended counterclaims in state court. But his attempt to lump all
such claims together for purposes of preclusion analysis is
misplaced. The superior court found the counterclaims to be
precluded by the bankruptcy court ruling. See, e.g., In re Belmont
Realty Corp., 11 F.3d 1092, 1095 (1st Cir. 1993) (noting that
“normal rules of res judicata apply to decisions of bankruptcy
courts”). By contrast, the district court found the contract claim
to be precluded by the state court judgment. That the contract
claim may not have existed in 1996 had no bearing on the district
court’s analysis.
Bishay also asserts that Citizens “opened the door” to
his bringing the contract claim when it drew on the LOC in 1999.
Yet his objections to the LOC draw, rather than advancing any new
basis for relief, simply reproduce the arguments earlier resolved
by the state court regarding the scope of the reservation clause.
The district court properly rejected this attempt to get a second
bite of the apple.
Affirmed.
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