Title: National Diversified Business Services, Inc. v. Corporate Financial Opportunities, Inc.

State: oklahoma

Issuer: Oklahoma Supreme Court

Document:

National Diversified Business Services, Inc. v. Corporate Financial Opportunities, Inc.  National Diversified Business Services, Inc. v. Corporate Financial Opportunities, Inc. 1997 OK 36 946 P.2d 662 68 OBJ 1167 Case Number: 84331 Decided: 04/01/1997 Supreme Court of Oklahoma NATIONAL DIVERSIFIED BUSINESS SERVICES, INC., Plaintiff-Appellant, v. CORPORATE FINANCIAL OPPORTUNITIES, INC., BILL D. BURNETT, and BOB BELL, Defendants-Appellees. ON CERTIORARI TO THE COURT OF CIVIL APPEALS, DIV. I ¶0 In an action by an Oklahoma company against a Texas company to recover for violations of the Oklahoma Business Opportunity Sales Act, the District Court, Oklahoma County, Niles Jackson, Judge, dismissed the claim as barred by an earlier dismissal rested on a forum-selection clause in the parties' contract. The Court of Civil Appeals reversed. On certiorari granted upon the Texas company's petition, THE COURT OF CIVIL APPEALS' OPINION IS VACATED AND THE TRIAL COURT'S DISMISSAL ORDER John B. Davis John B. Davis, P.C. Metheny, Mitchell, Davis & Klein Oklahoma City, Oklahoma For Appellant Herman D. Brandon Oklahoma City, Oklahoma For Appellees OPALA, J. [946 P.2d 663] ¶1 The dispositive issue on certiorari is whether the earlier dismissal without prejudice (National I)1 operates as a bar against relitigation of the forum-selection issue that is pressed in the present case (National II)? We answer in the affirmative. I THE ANATOMY OF LITIGATION ¶2 Corporate Financial Opportunities, Inc. [CFO or Texas company] is a business incorporated under the laws of the State of Texas. In January 1991 CFO published an advertisement in an Oklahoma newspaper, which contained a solicitation for inquiries regarding financial brokerage opportunities. When National Diversified Business Services, Inc. [National or Oklahoma company], an entity incorporated under the laws of Oklahoma, responded to the ad, CFO's agents made representations of CFO's ability to provide access to numerous lenders and informational databases. ¶3 CFO and National entered into a written contract (entitled broker agreement), dated February 22, 1991, by which CFO agreed to furnish National with services, information, and materials for the establishment of a brokerage business. The contract includes a forum-selection clause2 that requires the [946 P.2d 664] parties to litigate in a Texas forum any dispute arising from their agreement. National I Litigation ¶4 National brought suit in Oklahoma against CFO in 1991, alleging (a) breach of contract, (b) fraud in the inducement, and (c) fraud.3 CFO moved to dismiss for (a) lack of in personam jurisdiction, (b) mislaid venue, and (c) failure to state a claim upon which relief can be granted. On September 11, 1991 the trial court dismissed the claim without prejudice to its refiling in a Texas forum.4 The dismissal was explicitly grounded on the contract's forum-selection clause. No appeal was taken from that decision. National II Litigation ¶5 On September 8, 1993 National brought the present suit against CFO and two of its agents. By changing its theory of recovery from a contractual to a noncontractual basis (violations of the Oklahoma Business Opportunity Sales Act [OBOSA or Act]),5 National now seeks to escape the prior decision's preclusive effect. The earlier suit was rested on the contractual character of the claim. The present petition, although abandoning the theories urged in National I (i.e., fraud, fraud in the inducement, and breach of contract), alleges many of the same facts and seeks the same relief as that pressed in the first suit.6 ¶6 CFO moved to dismiss on the ground that the petition fails to state a claim upon which relief may be granted. According to CFO, the first (September 11) dismissal order bars the second suit by interposition of res judicata (claim preclusion). The earlier dismissal order is binding on the parties, CFO urged, because (a) National did not appeal from that ruling and (b) the present (National II) litigation is based on the same facts and transactions as those in the first suit.7 ¶7 National's response urged that (a) CFO's motion to dismiss is but a quest for summary relief because CFO was relying on facts not found in the petition, ¶7 National's response urged that (a) CFO's motion to dismiss is but a quest for summary relief because CFO was relying on facts not found in the petition, ¶8 The trial court dismissed the second suit, resting its decision on the earlier (September11) adverse (to National) adjudication of the forum-selection clause.10 The Court of Civil Appeals reversed, holding that the prior dismissal order does not bar National's later OBOSA-based action in Oklahoma. The appellate court reasoned that (a) because the dismissal of an action for mislaid venue is not a decision on the merits, the first dismissal did not have preclusive effect under the doctrine of "res judicata or [of] collateral estoppel," (b) National could not relitigate any fact or law issue settled by the first dismissal,11 (c) a forum-selection clause in a contract does not prevent a court from exercising its jurisdiction,12 (d) the dismissal of the first suit did not become the "law of the case" since there was no appellate pronouncement upon the correctness of the trial court's ruling, and (e) a forum-selection clause, which would require that suit to enforce a statutory civil remedy must be brought in another state, is unenforceable on public policy grounds. II THE STANDARD OF REVIEW ¶9 A motion to dismiss for failure to state a claim upon which relief can be granted may not be sustained unless it should appear without doubt that the plaintiff can prove no set of facts in support of the stated claim for relief.13 Under this State's pleading [946 P.2d 666] regime,14 if the dismissal motion also tenders for consideration materials dehors the pleadings, summary process must be utilized.15 Since evidentiary materials were indeed presented for nisi prius consideration,16 CFO's quest for dismissal must be treated as though it were one for summary adjudication. A motion for summary disposition submits the controversy to the court for application of the pertinent law to uncontroverted facts. The tendered evidentiary materials will warrant summary relief if all material facts are undisputed and supportive of but a single inference that favors the movant.17 For the reasons to be stated, we hold, on de novo review of the record, that the trial court's summary ruling for CFO is free from error.18 III SINCE NATIONAL II IS PREDICATED ON A RELATIONSHIP CREATED BY AND THEREFORE ARISING OUT OF THE UNDERLYING CONTRACT, IT FALLS WITHIN THE OUTER RANGE OF ISSUE PRECLUSION A. The Relitigation Bar ¶10 CFO's quest for dismissal at nisi prius was rested on a claim-preclusion bar, but we conclude that issue preclusion is the correct concept that governs here. ¶11 Under the doctrine of issue preclusion (formerly known as collateral estoppel), ¶12 The issue-preclusion bar is distinct from that of claim preclusion (formerly known as res judicata). Under the latter principle, a final judgment on the merits of an action precludes the parties from relitigating not only the adjudicated claim but also any theories or issues that were actually decided, or could have been decided, in that action. ¶13 The first lawsuit came in the framework of a cause of action different from the statutory claim that is now asserted in this case. For invocation of issue preclusion, there need not be a judgment on the merits (as it is often the case with res judicata), but only a final determination of a material issue (common to both cases). ¶14 The first (September 11, 1991) dismissal, based on an adjudication upon the tendered forum-selection clause, determined a single issue dehors the merits. It decided no issues upon the claim or defenses pressed in National I. III SINCE NATIONAL II IS PREDICATED ON A RELATIONSHIP CREATED BY AND THEREFORE ARISING OUT OF THE UNDERLYING CONTRACT, IT FALLS WITHIN THE OUTER RANGE OF ISSUE PRECLUSION A. The Relitigation Bar ¶10 CFO's quest for dismissal at nisi prius was rested on a claim-preclusion bar, but we conclude that issue preclusion is the correct concept that governs here. ¶11 Under the doctrine of issue preclusion (formerly known as collateral estoppel), ¶12 The issue-preclusion bar is distinct from that of claim preclusion (formerly known as res judicata). Under the latter principle, a final judgment on the merits of an action precludes the parties from relitigating not only the adjudicated claim but also any theories or issues that were actually decided, or could have been decided, in that action. ¶13 The first lawsuit came in the framework of a cause of action different from the statutory claim that is now asserted in this case. For invocation of issue preclusion, there need not be a judgment on the merits (as it is often the case with res judicata), but only a final determination of a material issue (common to both cases). ¶14 The first (September 11, 1991) dismissal, based on an adjudication upon the tendered forum-selection clause, determined a single issue dehors the merits. It decided no issues upon the claim or defenses pressed in National I. B. ¶15 National rests its second lawsuit on violations of the statutory (OBOSA) requirements [946 P.2d 668] for the offer and sale of a business opportunity in Oklahoma. It seeks recovery for lost profits caused by CFO's failure to furnish reliable lender data under the agreement's terms. ¶16 Although this theory of liability is different from that pressed in National I, the underlying foundation of the tendered controversy remains the same. Both lawsuits are predicated on a relationship that was created by - and therefore arises out of - the very same contract of which the forum-selection clause is a part. ¶17 The precluded issue in National I clearly targets the contract-based relationship that limited litigation to the situs prescribed in that document. Even though issue preclusion may be viewed as more narrow in scope than claim preclusion, the outer boundaries of a precluded issue must be firmly charted along the character of the litigation.29 Tendered in NationalI was a controversy arising out of a contractual relationship. That did not change in National II. Albeit on different theories, in both lawsuits contract-generated rights were sought to be redressed. The issue that stands barred by National I's preclusion is co-extensive with any controversy that owes its origin or existence to the contract-derived relationship between the parties. In short, because National II, much like National I, seeks to redress rights arising from the same contract, the forum-selection clause in that document governs, regardless of the theory selected by the pleader for the agreement's vindication. ¶18 Because all issues in this controversy arise out of the February 22, 1991 contract, National cannot escape the issue-preclusion bar by now changing its theory of recovery. Inasmuch as the September 11 order fully and fairly settles the binding effect of the forum-selection clause for all of the parties' disputes that are derived from their single contract, and the present action re-presents the same facts under the garb of a different basis for liability, issue preclusion operates in National II to bar from relitigation the previously adjudicated effect of the contested forum-selection clause. SUMMARY ¶19 Once an issue has been reached and decided, the doctrine of issue preclusion operates to bar its relitigation in a later action that is once again rested on rights derived from the same contract, though they are pressed on a different theory of recovery. The trial court's decision in National I "fully and fairly" settled the forum-selection dispute by ruling that only Texas affords the correct forum for adjudication of rights derived from the parties' conduct under their contract. Because National II, much like National I, seeks to redress interests acquired from the very same contract whose critical clause's effect now stands settled by the precluded issue, National may not again interpose that clause for another judicial inquiry into its breadth. ¶20 On certiorari granted upon the Texas company's petition, the Court of Civil Appeals' opinion is vacated and the trial court's dismissal order is affirmed. ¶21 KAUGER ¶22 HODGES FOOT