Jefftex International Ltd. v. JPI Trading Corp.

09-2544-cv
Jefftex Int’l Ltd v. JPI Trading Corp.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
R ULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT . C ITATION TO A SUMMARY ORDER FILED ON OR AFTER J ANUARY 1,
2007, IS PERMITTED AND IS GOVERNED BY F EDERAL R ULE OF A PPELLATE P ROCEDURE 32.1 AND THIS COURT ’ S L OCAL R ULE 32.1.1.
W HEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT , A PARTY MUST CITE EITHER THE F EDERAL A PPENDIX OR AN
ELECTRONIC DATABASE ( WITH THE NOTATION “ SUMMARY ORDER ”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON
ANY PARTY NOT REPRESENTED BY COUNSEL .
1 At a stated term of the United States Court of Appeals
2 for the Second Circuit, held at the Daniel Patrick Moynihan
3 United States Courthouse, 500 Pearl Street, in the City of
4 New York, on the 16 th day of March, two thousand and ten.
5
6 PRESENT: PIERRE N. LEVAL,
7 ROBERT D. SACK,
8 RICHARD C. WESLEY,
9 Circuit Judges.
10
11
12 JEFFTEX INTERNATIONAL LTD.,
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14 Plaintiff-Appellant,
15
16 -v.- 09-2544-cv
17
18 JPI TRADING CORP. and JOSEPH SAFDIEH,
19
20 Defendants-Appellees.
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1 FOR APPELLANT: STEWART W. LEE (Steven Weinberg, on
2 the brief), Gottesman, Wolgel,
3 Malamy, Flynn & Weinberg P.C., New
4 York, NY.
5
6 FOR APPELLEES: THOMAS G. CARULLI, Kaplan Massamillo
7 & Andrews, New York, NY.
8
9 Appeal from the United States District Court for the
10 Southern District of New York (Griesa, J.).
11
12 UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED
13 AND DECREED that the judgment of the United States District
14 Court for the Southern District of New York be AFFIRMED.
15 Plaintiff-appellant Jefftex International Ltd.
16 (“Jefftex”) appeals the district court’s dismissal of its
17 claims based on the doctrine of res judicata. We presume
18 the parties’ familiarity with the facts, procedural history,
19 and issues on appeal.
20 We review de novo a district court’s dismissal of a
21 complaint based on the preclusive effect of a state-court
22 judgment. Conopco, Inc. v. Roll Int’l, 231 F.3d 82, 86 (2d
23 Cir. 2000). The Full Faith and Credit Clause requires that
24 we apply the preclusion law of the state that rendered the
25 judgment; in this case, New York. See id. at 87; see also
26 U.S. Const. art. IV, § 1; 28 U.S.C. § 1738. New York takes
27 a transactional approach to res judicata. “[O]nce a claim
2
1 is brought to a final conclusion, all other claims arising
2 out of the same transaction or series of transactions are
3 barred, even if based upon different theories or if seeking
4 a different remedy.” O’Brien v. Syracuse, 54 N.Y.2d 353,
5 357 (N.Y. 1981).
6 Jefftex concedes that this is an action “against the
7 same defendants for the same relief under the same theories
8 and causes of action as were asserted in [a] prior New York
9 State Supreme Court lawsuit.” The prior state-court action
10 was resolved pursuant to a September 14, 2006 oral order
11 from the Honorable Ira Gammerman, Judicial Hearing Officer
12 of the New York State Supreme Court, Commercial Division.
13 When counsel informed Justice Gammerman that they were
14 unwilling to proceed with jury selection on the scheduled
15 trial date, he dismissed Jefftex’s claims, as well as
16 crossclaims against it, for failure to prosecute. He also
17 denied the parties’ request to file a stipulation
18 voluntarily dismissing the action without prejudice,
19 see N.Y. C.P.L.R. § 3217(a), and expressly indicated that
20 his dismissal was to operate “with prejudice.” Justice
21 Gammerman explained to Jefftex’s counsel that “[i]f the
22 lawsuit is started again and nobody raises [the prior]
3
1 dismissal, the judge to whom that case will be assigned will
2 be totally unaware of” his ruling. On the other hand, he
3 warned, “[m]aybe [one of the parties] . . . will decide he
4 wants to enforce the dismissal with prejudice and that may
5 be some interesting litigation in the future.”
6 On November 19, 2007, Jefftex commenced this diversity
7 action based on identical claims. Justice Gammerman’s
8 warning that one of the parties might “want[] to enforce the
9 dismissal with prejudice” came to fruition, and defendants-
10 appellees moved to dismiss the complaint. The district
11 court granted the motion, holding that res judicata
12 precludes Jefftex from re-litigating its claims.
13 On appeal, Jefftex spends much of its brief contesting
14 the merits of Justice Gammerman’s dismissal of the state-
15 court action. However, irrespective of whether these
16 arguments are couched in terms of procedural error or
17 Justice Gammerman’s authority to ignore the parties’
18 stipulation, we may not rule on these questions in the stead
19 of the Appellate Division. Moreover, assuming, arguendo,
20 that Justice Gammerman’s dismissal was erroneous, that error
21 does not limit the application of the doctrine of res
22 judicata in subsequent litigation. Generally speaking,
4
1 “‘[a] judgment merely voidable because based upon an
2 erroneous view of the law is not open to collateral attack,
3 but can be corrected only by a direct review and not by
4 bringing another action upon the same cause [of action].”
5 Federated Dep’t Stores, Inc. v. Moitie, 452 U.S. 394, 398
6 (1981) (quoting Baltimore S.S. Co. v. Phillips, 274 U.S.
7 316, 325 (1927)). “The indulgence of a contrary view would
8 result in creating elements of uncertainty and confusion and
9 in undermining the conclusive character of judgments,
10 consequences which it was the very purpose of the doctrine
11 of res judicata to avert.” Reed v. Allen, 286 U.S. 191, 201
12 (1932). Therefore, the merits of Justice Gammerman’s
13 disposition of the prior state-court action are irrelevant
14 in this appeal.
15 Finally, Jefftex argues that the state-court dismissal
16 “with prejudice” is not entitled to res judicata effect
17 because it did not sufficiently resolve the merits of its
18 claims. However, the New York Court of Appeals has noted
19 that “[a] dismissal ‘with prejudice’ generally signifies
20 that the court intended to dismiss the action ‘on the
21 merits,’ that is, to bring the action to a final conclusion
22 against the plaintiff.” Yonkers Contracting Co., Inc. v.
5
1 Port Auth. Trans-Hudson Corp., 93 N.Y.2d 375, 380 (N.Y.
2 1999); see also id. (“We have used the words ‘with
3 prejudice’ interchangeably with the phrase ‘on the merits’
4 to indicate the same preclusive effect.”). Having reviewed
5 the transcript from the September 14, 2006 proceedings
6 conducted by Justice Gammerman, it is clear that he intended
7 his dismissal to operate with that effect. Therefore, for
8 substantially similar reasons to those stated by the
9 district court, the state-court dismissal is entitled to res
10 judicata effect in this litigation.
11 We have considered each of Jefftex’s arguments and find
12 them to be without merit. Accordingly, the judgment of the
13 district court is hereby AFFIRMED.
14
15 FOR THE COURT:
16 Catherine O’Hagan Wolfe, Clerk
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