DocketNumber： No. 12-P-432
Citation Numbers： 83 Mass. App. Ct. 432
Judges： Meade
Filed Date： 3/13/2013
Status： Precedential
Modified Date： 6/25/2022
Lawrence D. Korn, a resident of the State of Michigan, appeals from an order that granted summary judgment to The Paul Revere Life Insurance Company (Paul Revere) on res judicata grounds. On appeal, Korn claims his present claim was not barred by claim preclusion, and the judge erred in granting the motion for summary judgment. We affirm.
a. Federal court. In 2004, Kom brought suit in the United States District Court for the Eastern District of Michigan (District Court) against Paul Revere for breach of contract, claiming that Paul Revere wrongfully withheld disability benefits that were due under the policy. In 2005, a District Court judge initially allowed Paul Revere’s motion to dismiss the suit as untimely under a contractual limitation period. In 2007, the United States Court of Appeals for the Sixth Circuit (Sixth Circuit), in an unpublished decision, reversed in part and remanded the case to the District Court. On remand, the District Court required that discovery be completed by September 30, 2008, and that all pretrial motions be filed by October 30, 2008.
While the case was on appeal in 2005, the insurance regulators of all fifty States conducted an investigation into questionable claims-handling practices of various insurance companies, including Paul Revere. The investigation resulted in a regulatory settlement agreement (RSA) between the regulators and the targeted insurance companies, in which the companies agreed to heightened claims assessment requirements and to reevaluate certain claims that had previously been denied.
On October 30, 2008, Paul Revere moved for summary judgment in District Court, claiming that Korn had failed to provide adequate proof of loss to qualify for benefits and that Paul Revere was therefore entitled to judgment as a matter of law. On November 13, 2008, Korn moved for leave to amend his complaint to state an additional breach of contract claim based on Paul Revere’s alleged breach of the RSA between it and the
On the merits, the Sixth Circuit concluded that Korn did not adequately document his claimed disability and loss of income and that Paul Revere did not breach the policy by so deciding. As to Korn’s motion to amend, the court concluded that Korn had failed to show “good cause” or “excuse” for his late request. The court held that the RSA — the contract on which Korn’s proposed amendment is based — had been publicly available since its implementation in January of 2005. The court also held that “Korn was clearly aware of the RSA when he asked [a Paul Revere employee] about it in her deposition on October 23, 2008. . . . Yet Korn did not move to add his claim for breach of the RSA until November 13, 2008, forty-four days after the close of discovery and fourteen days after the deadline for filing pretrial motions requiring extensive briefing. Because Korn [did] not explain his delay in moving to amend, Korn [did not satisfy] the ‘good cause’ requirement.”
Similarly, because Korn did not explain why, after receiving actual knowledge of the RSA, he waited to seek leave to amend until after the expiration of the discovery and motion-filing deadlines, the court held that Korn did not satisfy “the requirement imposed by the scheduling order that motions to amend the complaint ‘be made promptly after receipt of the information upon which the proposed amendment is based.’ ” In the end, the court determined that the District Court’s denial of the motion to amend was not an abuse of discretion.
b. State court. In April, 2010, while Korn’s appeal of Korn I was pending in the Sixth Circuit, Korn filed the instant matter in the Superior Court (Korn II). In this complaint, Korn alleged the same claim that he unsuccessfully attempted to add to his suit in District Court in Michigan, i.e., that Paul Revere had breached the RSA by, essentially, failing to notify him that he
2. Discussion, a. Standard of review. Summary judgment is proper where there is no genuine issue of material fact, and when viewing the evidence in the light most favorable to the nonmoving party, the moving party is entitled to judgment as a matter of law. See Kourouvacilis v. General Motors Corp., 410 Mass. 706, 716 (1991); Boazova v. Safety Ins. Co., 462 Mass. 346, 350 (2012); Mass.R.Civ.P. 56(c), as amended, 436 Mass. 1404 (2002). “[A] party moving for summary judgment in a case in which the opposing party will have the burden of proof at trial is entitled to summary judgment if he demonstrates, by reference to material described in [role] 56(c), unmet by countervailing materials, that the party opposing the motion has no reasonable expectation of proving an essential element of that party’s case.” Kourouvacilis v. General Motors Corp., supra. Our review is de nova, see Matthews v. Ocean Spray Cranberries, Inc., 426 Mass. 122, 123 n.1 (1997); we consider the record and the legal principles involved without deference to the judge’s reasoning. See Clean Harbors, Inc. v. John Hancock Life Ins. Co., 64 Mass. App. Ct. 347, 357 n.9 (2005).
b. Choice of law. The parties disagree as to the applicable law in the circumstances of this case. Korn utilizes Massachusetts res judicata law to fashion his argument that it was error to allow Paul Revere summary judgment. Paul Revere and the Superior Court judge analyzed the claim under Michigan law because “in diversity cases, federal law incorporates the rules of preclusion applied by the State in which the rendering court sits.” Taylor v. Sturgell, 553 U.S. 880, 891 n.4 (2008). While Korn I was a diversity action brought pursuant to 28 U.S.C. § 1332(a)(1), Korn II, brought in Superior Court, is not. “When a State court is faced with the issue of determining the preclusive effect of a Federal court’s judgment, it is the Federal law of res judicata which must be examined.” Anderson v. Phoenix Inv. Counsel of Boston, Inc., 387 Mass. 444, 449 (1982). See
In Federal court, “[t]he preclusive effect of a judgment is defined by claim preclusion and issue preclusion, which are collectively referred to as ‘res judicata.’ Under the doctrine of claim preclusion, a final judgment forecloses ‘successive litigation of the very same claim, whether or not relitigation of the claim raises the same issues as the earlier suit.” Taylor v. Sturgell, 553 U.S. at 892, quoting from New Hampshire v. Maine, 532 U.S. 742, 748 (2001) (footnote omitted). See Allen v. McCurry, 449 U.S. 90, 94 (1980) (under claim preclusion, “a final judgment on the merits of an action precludes the parties or their privies from relitigating issues that were or could have been raised in that action”). “Issue preclusion, in contrast, bars ‘successive litigation of an issue of fact or law actually litigated and resolved in a valid court determination essential to the prior judgment,’ even if the issue recurs in the context of a different claim.” Taylor, supra, quoting from New Hampshire, supra at 748-749. These two doctrines protect against “the expense and vexation attending multiple lawsuits, conserv[e] judicial resources, and foster[] reliance on judicial action by minimizing the possibility of inconsistent decisions.” Montana v. United States, 440 U.S. 147, 153-154 (1979). See Allen v. McCurry, supra.
Under Federal law, the three elements of claim preclusion are
Kom claims that summary judgment should have been denied in Korn II because the Federal courts never addressed the merits of his RSA claim, which did not exist at the time he filed the complaint in Korn I. We disagree. Under Federal law, “[i]t is well settled that denial of leave to amend constitutes res judicata on the merits of the claims which were the subject of the proposed amended pleading.” Hatch, supra at 45-46, quoting from King v. Hoover Group, Inc., 958 F.2d 219, 222-223 (8th Cir. 1992). See Huck v. Dawson, 106 F.3d 45, 49-50 (3d Cir.), cert. denied, 520 U.S. 1276 (1997). This is the mie even when the denial of the motion to amend was not appealed. See Qualicare-Walsh, Inc. v. Ward, 947 F.2d 823, 826 (6th Cir. 1991) (where the judge denied a request to amend the complaint and the plaintiffs chose not to appeal, the judge’s determination became a final judgment and the doctrine of res judicata applied); EFCO Corp. v. U.W. Marx, Inc., 124 F.3d 394, 399-400 (2d Cir. 1997) (“Where a plaintiff’s motion to amend its com
Even if we were not applying Federal law, or even if we were to conclude that the denial of a motion to amend was not a decision on the merits, see Curtis v. Citibank, N.A., 226 F.3d 133, 139 (2d Cir. 2000), Kom’s argument misplaces what had to be decided on the merits for purposes of claim preclusion. In Korn I, the Federal court concluded that Kom did not adequately document his claimed disability and loss of income, and that Paul Revere did not breach the policy by denying Korn’s claim. This was a decision on the merits. Claim preclusion does not require a decision on the merits of a claim that could have been brought but was not. That would defy common sense. Indeed, if a judgment on the merits had occurred on the RSA claim in Federal court, resort to claim preclusion would be unnecessary, as any relitigation of the RSA in Korn II would have been barred by issue preclusion. See Taylor v. Sturgell, 553 U.S. at 892.
What remains to be determined is whether claim preclusion may operate to bar a claim like the RSA claim in Korn II that did not exist at the time Korn I was commenced. In the circumstances of this case, we believe that it does. As the Sixth Circuit concluded, Kom had ample opportunity to timely amend his complaint to add the RSA claim. The RSA had been publicly available since 2005, and Korn knew of the RSA during the course of discovery, having mentioned it at a deposition. Despite this, Korn waited forty-four days after discovery closed and fourteen days after the deadline for filing pretrial motions to move to amend. In the end, the court held that Korn did not satisfy the “good cause” requirement. Whatever the reason for Korn’s dilatoriness in Korn I, it has proved fatal in Korn II, and we decline to reward Kom for his own delinquency by permitting Korn II to go forward.
At bottom, we see no principled distinction between a claim that could have been brought (but was not), and one that was untimely brought when it could have been added to the suit properly. In other words, because the RSA claim came into existence during a period when it could have been timely added to Korn I but was not, claim preclusion operates to bar its appearance in Korn II. See Bagley v. Moxley, 407 Mass. 633, 638 (1990), quoting from Heacock v. Heacock, 402 Mass. 21, 23 (1988) (“Claim preclusion applies ‘even though the claimant is prepared in a second action to present different evidence or legal theories to support his claim’ ”). “Public policy dictates that there be an end of litigation; that those who have contested an issue shall be bound by the result of the contest, and that
Judgment affirmed.
The exception to this rule is that if the Federal court in the first action would clearly not have had jurisdiction to hear the claim now being raised in State court, “or if, having jurisdiction, clearly would have declined to exercise it as a matter of discretion, then a second action in a State court should not be precluded.” Anderson, supra at 450. Korn does not argue that this exception applies, and we note that neither the District Court nor the Sixth Circuit determined that jurisdiction was lacking for Korn’s RSA claim.
We have not, nor has either party, discovered any apparent distinction in the development of the law of res judicata in Massachusetts or Michigan or on the Federal level that would affect this case in any material way. See Heacock v. Heacock, 402 Mass. 21, 23-26 (1988); Bagley v. Moxley, 407 Mass. 633, 636-639 (1990); Pierson Sand & Gravel, Inc. v. Keeler Brass Co., 460 Mich. 372, 380-381 (1999); Adair v. Michigan, 470 Mich. 105, 121 (2004). Massachusetts, Michigan, and the Federal courts have adopted a broad transactional approach to the application of res judicata. See Hatch v. Trail King Indus., Inc., 699 F.3d 38, 47 (1st Cir. 2012), quoting from Andre Robinson Intl., Inc. v. Hartford Fire Ins. Co., 547 F.3d 48, 54 (1st Cir. 2008) (“Massachusetts
There is no question the parties in Korn I and Korn II are identical. Nor is there any question that the gravamen of Korn’s complaint in each action grew out of the same transaction for purposes of res judicata. That is, the facts underlying each action were “related in time, space, origin or motivation,” they “formfed] a convenient trial unit,” and treating them as a unit would “conformQ to the parties’ expectations.” Airframe Sys., Inc. v. Raytheon Co., 601 F.3d 9, 15 (1st Cir. 2010), quoting from In re Iannochino, 242 F.3d 36, 46 (1st Cir. 2001). See Restatement (Second) of Judgments § 24. Furthermore, “[t]o bring claim preclusion into play, a cause of action need not be a clone of the earlier cause of action.” Massachusetts Sch. of Law at Andover, Inc. v. American Bar Assn., 142 F.3d 26, 38 (1st Cir. 1998). Korn offers no argument to the contrary.
To the extent Korn argues that the judge in Korn II erred in blaming him for the delay in bringing the amendment, that matter is foreclosed by issue preclusion. The issue of delay was actually litigated and resolved in Korn I, and relitigation here is barred. See New Hampshire v. Maine, 532 U.S. at 748-749; Taylor v.