Salt Lake City v. Mark C. Haik

This opinion is subject to revision before final
publication in the Pacific Reporter
2017 UT 14
IN THE
SUPREME COURT OF THE STATE OF UTAH
MARK C. HAIK,
Appellant,
v.
SALT LAKE CITY CORPORATION,
Appellee.
No. 20160019
Filed March 10, 2017
On Direct Appeal
Third District, Salt Lake
The Honorable Andrew H. Stone
No. 140900915
Attorneys:
Paul R. Haik, Minneapolis, MN, for appellant
Shawn E. Draney, Scott H. Martin, Dani N. Cepernich,
Salt Lake City, for appellee
JUSTICE HIMONAS authored the opinion of the Court in which
CHIEF JUSTICE DURRANT, ASSOCIATE CHIEF JUSTICE LEE,
JUSTICE DURHAM, and JUSTICE PEARCE joined.
JUSTICE HIMONAS, opinion of the Court:
INTRODUCTION
¶ 1 In 1997, Mark Haik litigated a lawsuit in federal court based
on strikingly similar facts to the one that he now seeks to pursue in the
third district, and he lost on the merits. See Haik v. Town of Alta, No. 97-
4202, 1999 WL 190717, at *1 (10th Cir. Apr. 5, 1999). In 2012, Mr. Haik
litigated a lawsuit in federal court based on exactly the same facts as the
one before us, and he lost again. See Haik v. Salt Lake City Corp., 567 F.
HAIK v. SALT LAKE CITY CORP.
Opinion of the Court
App’x 621, 623 (10th Cir. 2014). To be sure, Mr. Haik did not raise each
and every legal claim in the federal court that he now seeks to raise—
just some of them. But he could have raised them all. And he should
have. And now they are barred.
BACKGROUND
¶ 2 Mr. Haik has spent the better part of the last twenty years
asking courts to order Salt Lake City to supply his undeveloped
property in the Albion Basin Subdivision with enough water (at least
400 gallons per day) to allow him to build houses on it. His first foray
into the courts occurred in 1997, when he argued before the federal
district court that Salt Lake City and Alta’s refusal to extend adequate
municipal water services to his unimproved land in the Albion Basin
amounted to an unconstitutional taking and was a violation of equal
protection of law. Haik v. Town of Alta, No. 2:96-cv-732-BSJ, 1997 U.S.
Dist. LEXIS 24541, at *1, *34 (D. Utah Oct. 31, 1997), aff’d, No. 97-4202,
1999 WL 190717 (10th Cir. Apr. 5, 1999). The federal court ruled against
Mr. Haik on the merits of both his takings and equal protection claims,
concluding that Salt Lake City owed “no legal duty to furnish water to
users outside its own city limits.” Id. at *36. With respect to Mr. Haik’s
equal protection claim, the court reasoned that Salt Lake City’s refusal
to provide Mr. Haik with water was a rational exercise in line-drawing
connected to a legitimate interest—the curtailment of “environmentally
harmful development.” Haik v. Town of Alta, No. 97-4202, 1999 WL
190717, at *5 (10th Cir. Apr. 5, 1999). The federal court also ruled that no
taking occurred because “mere expectation of municipal water service
in the future is not a legal right that constitutes property subject to
taking.” Id. at *7.
¶ 3 In 2012, Mr. Haik filed yet another lawsuit—also litigated in
federal court—in which he again sought a determination that Salt Lake
City was required to supply him with enough water to develop his
Albion Basin property. This lawsuit alleged different legal claims, but,
for the most part, the facts remained the same. In the 2012 lawsuit,
Mr. Haik again sought a court order requiring Salt Lake City to supply
his lots in the Albion Basin with enough water to permit him to
develop the property. This time, Mr. Haik added to his equal protection
claims allegations of misrepresentation and fraud on the court, a civil
conspiracy between Salt Lake City and Alta, and violations of due
process. Haik v. Salt Lake City Corp., 567 F. App’x 621, 625–26 (10th Cir.
2014). He also sprinkled his complaint with citations to several Utah
constitutional provisions (although he did not plead separate state
constitutional violations as claims). And he alleged, as new facts, that
2
Cite as: 2017 UT 14
Opinion of the Court
Salt Lake City had sought and obtained authorization from the State
Engineer to supply properties in the Albion Basin with enough water to
permit development, that some properties falling within Salt Lake
City’s water service area had received 400 gallons of water per day, and
that some properties in the Albion Basin Subdivision had been
receiving water in unmetered amounts. Id.
¶ 4 As in his first federal suit, the federal court again ruled against
Mr. Haik. It noted that there was a “substantial overlap between [the
facts in the first federal lawsuit] and the allegations supporting the
Haiks’ [current claims].” Id. at 633. It found that his civil conspiracy
claim was barred by claim preclusion because he could have raised it in
his first federal lawsuit, but neglected to do so. Id. at 633–34. It also
found that his due process claims were precluded by issue preclusion,
because they depended on his having a protected property interest in
the water that Salt Lake City refused to supply him, and this question
was resolved against him in his first lawsuit. Id. at 627–31. And it
concluded that his misrepresentation and equal protection claims,
though to an extent predicated on new facts, failed to state a claim. Id.
at 631–33, 634–35.
¶ 5 After Mr. Haik lost his second federal suit, Salt Lake City sued
him in state court seeking to adjudicate Mr. Haik’s and others’ interests
in water rights in Little Cottonwood Creek and to quiet title to a
portion of the flow of the South Despain Ditch that several defendants,
including Mr. Haik, allegedly claim for themselves. Mr. Haik has used
this suit as an opportunity to take yet a third bite at the apple.
Adducing exactly the same facts that he put before the federal district
court in 2012, Mr. Haik has alleged as counterclaims that he is entitled
to water under the state constitution’s due process and uniform
operation of law provisions as well as article XI, section 6 of the Utah
Constitution. He also claims that the City has invalidly appropriated
certain water rights and that the City’s management of water is subject
to scrutiny under Salt Lake County v. Salt Lake City, 570 P.2d 119 (Utah
1977).
¶ 6 The district court dismissed Mr. Haik’s counterclaims on the
grounds that they were res judicata. After the court certified this
dismissal as a final order under rule 54(b) of the Utah Rules of Civil
3
HAIK v. SALT LAKE CITY CORP.
Opinion of the Court
Procedure, Mr. Haik appealed. 1 Utah Code section 78A-3-102(3)(j) gives
us jurisdiction.
STANDARD OF REVIEW
¶ 7 “Whether res judicata, and more specifically claim preclusion,
bars an action presents a question of law that we review for
correctness.” Mack v. Utah State Dep’t of Commerce, Div. of Sec., 2009 UT
47, ¶ 26, 221 P.3d 194 (internal quotation marks omitted). When a court
dismisses a counterclaim on a motion to dismiss, this court “view[s] the
facts and construe[s] the complaint in the light most favorable to the
plaintiff and indulge[s] all reasonable inferences in his favor.” Energy
Claims Ltd. v. Catalyst Inv. Grp. Ltd., 2014 UT 13, ¶ 2 n.1, 325 P.3d 70
(internal quotation marks omitted).
ANALYSIS
¶ 8 Federal law controls the claim-preclusive effect of prior
federal judgments. See Oman v. Davis Sch. Dist., 2008 UT 70, ¶ 28 n.5,
194 P.3d 956; see also Semtek Int’l Inc. v. Lockheed Martin Corp., 531 U.S.
497, 508 (2001). But federal law embodies different substantive rules of
claim preclusion depending on the jurisdiction exercised by the federal
court in rendering the underlying judgment. If the rendering court
resolved a federal question—exercising jurisdiction under 28 U.S.C.
section 1331—then federal law requires a subsequent court to apply
substantive federal rules of claim preclusion in determining the
preclusive effect of the rendering court’s judgment. See Heck v.
Humphrey, 512 U.S. 477, 488 n.9 (1994). If, on the other hand, the
rendering court sat in diversity and resolved questions of state law—
exercising jurisdiction under 28 U.S.C. section 1332—then federal law
requires a subsequent court to determine the claim-preclusive effect of
the rendering court’s judgment in accordance with “the law that would
be applied by state courts in the State in which the federal diversity
court sits.” Semtek, 531 U.S. at 508; see also Taylor v. Sturgell, 553 U.S. 880,
891 n.4 (2008) (“For judgments in diversity cases, federal law
incorporates the rules of preclusion applied by the State in which the
rendering court sits.”).
1After Mr. Haik appealed, Salt Lake City filed a motion asking the
court to summarily affirm the district court’s dismissal of Mr. Haik’s
counterclaims. We deferred ruling on this motion until plenary
presentation on the merits and now deny it as moot.
4
Cite as: 2017 UT 14
Opinion of the Court
¶ 9 In Utah, however, the rules of claim preclusion are “virtually
identical” to the federal rules, so it is of no practical consequence
whether we apply Utah or federal rules in deciding whether Mr. Haik’s
counterclaims are barred. Oman, 2008 UT 70, ¶ 28 n.5. Under both state
and federal law, “[c]laim preclusion requires: (1) a judgment on the
merits in the earlier action; (2) identity of the parties or their privies in
both suits; and (3) identity of the cause of action in both suits.” Yapp v.
Excel Corp., 186 F.3d 1222, 1226 (10th Cir. 1999); see also Mack v. Utah
State Dep’t of Commerce, Div. of Sec., 2009 UT 47, ¶ 29, 221 P.3d 194
(Under state law, “[w]hether a claim is precluded from relitigation
depends on a three-part test. First, both cases must involve the same
parties or their privies. Second, the claim that is alleged to be barred
must have been presented in the first suit or be one that could and
should have been raised in the first action. Third, the first suit must
have resulted in a final judgment on the merits.”) (internal quotation
marks omitted). Federal courts employ “the transactional approach of
the Restatement (Second) of Judgments in determining what constitutes
identity of causes of action,” which looks to a variety of factors to
determine whether the “pertinent facts” of the old action are the same
as in the new. Yapp, 186 F.3d at 1227–28; see also Gillmor v. Family Link,
LLC, 2012 UT 38, ¶¶ 10, 14, 284 P.3d 622 (For purposes of Utah law,
whether a claim “could and should have been raised” in an earlier
action depends on whether that earlier action involved “the same
operative facts, or in other words . . . the same transaction.”).
¶ 10 Here, we are dealing not with a second action arising from the
same pertinent facts, but with a third. Mr. Haik has already sued on the
same pertinent facts twice in federal district court. The second time he
filed suit in federal court he at least made an effort—albeit a failed
effort—to plead new material facts. See Haik v. Salt Lake City Corp., 567
F. App’x 621, 627–28 (10th Cir. 2014) (“While . . . the material facts from
[the first of Mr. Haik’s federal lawsuits] are unchanged . . . we still
believe at least some are new . . . . The allegations still fail, but they fail
under [Federal] Rule [of Civil Procedure] 12(b)(6).”). This time,
however, Mr. Haik has based his suit on exactly the same facts as those
he lost on before the federal court in his 2012 lawsuit. 2
2 Mr. Haik’s counterclaim is not word-for-word identical to his
previous federal complaints. For example, Mr. Haik at one point
alludes to “Sewer Outfall Agreements” from the 1970s, which appear
not to have made it into his earlier complaints. But this trivia does not
(cont.)
5
HAIK v. SALT LAKE CITY CORP.
Opinion of the Court
¶ 11 It is true that Mr. Haik has attempted to state slightly different
legal claims from those that he put before the federal courts. But
Mr. Haik’s inexplicable failure to plead those claims in federal court
does not protect them from claim preclusion under either state or
federal law. See RESTATEMENT (SECOND) OF JUDGMENTS § 25, cmt. e
(1982) (“When the plaintiff brings an action on the claim in a court,
either state or federal, in which there is no jurisdictional obstacle to his
advancing both [federal and state] theories or grounds, but he presents
only one of them, and judgment is entered with respect to it, he may
not maintain a second action in which he tenders the other theory or
ground.”); see also Nwosun v. Gen. Mills Rests., Inc., 124 F.3d 1255, 1258
(10th Cir. 1997) (failure to bring supplemental state claim alongside
federal claim bars subsequent assertion of state claim even when it is
possible that the federal court might have dismissed the state claim
without prejudice had it been brought). 3 If Mr. Haik had any
meritorious legal arguments based on any of the transactional facts that
he has been placing before the courts for decades, it was incumbent on
him to raise them before now. “[Claim preclusion] bars claims that
were or could have been brought in the prior proceeding.” Haik, 567
F. App’x at 633 (alteration in original) (citation omitted); see also Macris
& Assocs. v. Neways, Inc., 2000 UT 93, ¶ 19, 16 P.3d 1214 (“Claim
preclusion . . . precludes the relitigation of all issues that could have
change the fact that, as the City has put it, “there is nothing new.”
Certainly, Mr. Haik has not briefed any factual differences between his
prior complaints and his current counterclaim. Nor did he identify any
such differences at oral argument, despite being repeatedly and
specifically pressed to name some.
3 The United States Supreme Court has not definitively resolved
whether federal or state claim-preclusion rules apply when
determining the preclusive effect of a failure to plead a supplemental
state law claim in a federal-question case. See Federated Dep’t Stores, Inc.
v. Moitie, 452 U.S. 394, 402 (1981) (declining to address the issue).
Because we are confident that, under both state and federal law, a
plaintiff’s inexplicable failure to plead supplemental state claims in a
prior federal case bars him from pleading them in a subsequent
proceeding, we have no need to wrestle with this question here. See St.
Paul Fire & Marine Ins. v. Commercial Union Assurance, 606 P.2d 1206,
1208 n.1 (Utah 1980) (“We perceive . . . no conflict of laws issue which
necessitates a decision on choice of law.”).
6
Cite as: 2017 UT 14
Opinion of the Court
been litigated as well as those that were, in fact, litigated in the prior
action.” (internal quotation marks omitted)). Mr. Haik cannot file a
lawsuit, lose, file another lawsuit, lose again, and then try yet a third
lawsuit with slightly different claims rooted in the same facts.
¶ 12 Valiantly, Mr. Haik attempts to distinguish this third lawsuit
from those that came before. But see WILLIAM SHAKESPEARE, THE FIRST
PART OF KING HENRY THE FOURTH act 5, sc. 4 (“The better part of valour
is discretion.”). First, Mr. Haik argues that things are different this time
because this time his claims are counterclaims in the lawsuit the City has
filed against him. This is deeply confused.
A valid and final personal judgment rendered in favor of
the defendant bars another action by the plaintiff on the
same claim . . . [and this rule] is applicable not only to a
case in which the plaintiff brings another action against
the defendant on the same claim, but also to one in which
the plaintiff seeks to avail himself of the original claim by
interposing it as a counterclaim in a subsequent action
brought by the defendant against him.
RESTATEMENT (SECOND) OF JUDGMENTS § 19 & cmt. c. Mr. Haik appears
to think that if he cannot press his counterclaims then he cannot mount
an effective defense. But whether a litigant is precluded from pursuing
counterclaims (as a matter of claim preclusion) is a different issue from
whether the litigant is collaterally estopped from mounting defenses in
a lawsuit. See Swainston v. Intermountain Health Care, Inc., 766 P.2d 1059,
1061 (Utah 1988) (to determine whether a party is barred from
relitigating a matter—such as a defense to a lawsuit—that has “no
meaning unless it is pendent to a claim” courts apply the law of issue
preclusion, not claim preclusion). It may be that a future appellate court
will be forced to address whether Mr. Haik is precluded from raising
certain defenses to the City’s lawsuit. But the only question presently
before us is whether Mr. Haik can assert a set of counterclaims that
arise from the same transactional facts that have already been passed
upon in previous federal cases. He cannot.
¶ 13 Mr. Haik also argues that he should be allowed to press state
constitutional claims before this court—even though he neglected to
raise them before the federal court—because ours is the court of last
resort for interpreting Utah law and because, unlike the federal courts,
our court sometimes employs a “primacy approach” on which we first
seek to resolve constitutional questions on state constitutional grounds.
See West v. Thomson Newspapers, 872 P.2d 999, 1006 (Utah 1994)
7
HAIK v. SALT LAKE CITY CORP.
Opinion of the Court
(explaining that “[a]ccording to the primacy approach, a state court
looks first to state constitutional law, develops independent doctrine
and precedent, and decides federal questions only when state law is not
dispositive” (internal quotation marks omitted)).
¶ 14 Nothing is further from the truth than this argument. Under
both federal and Utah claim-preclusion law, a final judgment precludes
a new action arising from the same operative facts. It does not matter
that the previous action was in federal court, that the federal court did
not employ a primacy approach, or that one of the parties now presses
a state law claim—even one rooted in the state constitution—that he
could have asserted in the earlier proceedings. See Penrod v. Nu Creation
Creme, Inc., 669 P.2d 873, 875 (Utah 1983) (“Since a negligent
misrepresentation claim [based in state law] was asserted in the prior
federal court action, the dispositive issue in this case is whether that
claim is now barred by the doctrine of claim preclusion, i.e., whether
plaintiffs’ second claim for relief was either litigated or could have been
litigated in the federal court action.”); see also Oman, 2008 UT 70, ¶ 27
(“[W]e conclude that the [state law wrongful termination] issue was
resolved by the federal district court and that the state district court
was bound by the federal court’s determination under the doctrine of
issue preclusion.”).
¶ 15 Things would, indeed, be different if the federal court had not
ruled on the merits of a claim that Mr. Haik put before it. If it had, for
example, dismissed one of Mr. Haik’s previous claims without
prejudice then he would not be barred by claim preclusion from
relitigating that claim because, on that claim, there would not be a final
judgment on the merits. See, e.g., Jensen ex rel. Jensen v. Cunningham,
2011 UT 17, ¶ 39, 250 P.3d 465 (when federal court declines to exercise
supplemental jurisdiction over state law claims, its eventual resolution
of the merits of the case before it cannot preclude future litigation of
those state law claims). But here the federal court resolved all of the
claims that Mr. Haik put before it on the merits, and Mr. Haik has given
us no reason to think that he should be allowed to litigate any new
claims based on the same operative facts that formed the basis of his
federal lawsuits. Which is all to say that, on the operative facts before
us, it is simply impossible for Mr. Haik to overcome the hurdle of claim
preclusion, no matter how hard (or how often) he tries.
8
Cite as: 2017 UT 14
Opinion of the Court
CONCLUSION
¶ 16 “What has been will be again, and what has been done will be
done again; there is nothing new under the sun.” Ecclesiastes 1:9.
Certainly not Mr. Haik’s lawsuit. We affirm.
9