Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-89-01023/USCOURTS-ca10-89-01023-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

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FI LED 

United States Court of Appeals 

Tt>nth Cimiit 

UNITED STATES COURT OF APPEALS 

FOR THE TENTH CIRCUIT 

SEP 2 7 1989 

ROBERT L. HOECKER 

Clerk 

BRIAN M. FREEMAN; BRIAN M. FREEMAN & ) 

CO., INC.; and BRIAN M. FREEMAN & CO. ) 

INVESTMENTS, INC., ) 

) 

Plaintiffs-Appellants, ) 

) 

v. ) 

) 

RKO ENTERPRISES, INC., OF OHIO; THE ) 

GENERAL TIRE & RUBBER co., as Sole ) 

Shareholder and as Incorporator of RKO ) 

Enterprises, Inc., of Ohio; GENCORP, ) 

INC., as Successor-in-Interest to RKO ) 

Enterprises, Inc., of Ohio and the ) 

General Tire & Rubber Company, and ) 

as Dissolver and Sole Shareholder ) 

of RKO Enterprises, Inc., of Ohio; and ) 

M. GERALD O'NEIL, ) 

) 

Defendants-Appellees. ) 

ORDER AND JUDGMENT* 

No. 89-1023 

(D.C. No. 87-C-978) 

(D. Colo.) 

Before MOORE, ANDERSON, and BRORBY, Circuit Judges. 

After examining the briefs and appellate record, this panel 

has determined unanimously that oral argument would not materially 

assist the determination of this appeal. See Fed. R. App. P. 

34(1); 10th Cir. R. 34.1.9. 

submitted without oral argument. 

The cause is therefore ordered 

* This order and judgment has no precedential value and shall 

not be cited, or used by any court within the Tenth Circuit, 

except for purposes of establishing the doctrines of the law of 

the case, res judicata, or collateral estoppel. 10th Cir. R. 

36.3. 

Appellate Case: 89-1023 Document: 01019974012 Date Filed: 09/27/1989 Page: 1 
Brian M. Freeman; Brian M. Freeman & Co., Inc.; and Brian M. 

Freeman & Co. Investments, Inc. (Freeman) appeals the dismissal of 

its Complaint under the doctrine of collateral estoppel. We 

affirm. 

The significant facts are undisputed. In 1984 Frontier 

Airlines, Inc. (Frontier) hired Freeman, an investment broker, to 

advise Frontier and five employee unions in what proved to be an 

unsuccessful effort by the employees to purchase the financially 

troubled airline. At the time in question, RKO owned 45% of 

Frontier's stock. The agreement between Frontier and Freeman was 

set forth in the form of a letter agreement. Frontier terminated 

Freeman's services in less than one month and the union did the 

same in less than two months. 

In 1985, Freeman filed the first lawsuit against RKO 

Enterprises, et al. (RKO), asserting claims for breach of 

contract, breach of the covenant of good faith and fair dealing, 

tortious interference with contractual relations, and quantum 

meruit for services rendered. By this action, Freeman sought to 

collect sums he believed were owed to him under the letter 

agreement. The suit was dismissed with prejudice on October 15, 

1985, after the parties entered into a settlement agreement and 

release. 

In September, 1987, Freeman filed the instant diversity 

action against RKO, alleging tortious interference with 

contractual relations under Colorado law for allegedly causing 

Frontier or its agents not to pay certain compensation owed to 

Freeman pursuant to the same letter agreement between Freeman and 

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Appellate Case: 89-1023 Document: 01019974012 Date Filed: 09/27/1989 Page: 2 
Frontier. At the same time Freeman also filed a proof of claim in 

the bankruptcy court, seeking to recover upon the same claim 

against Frontier. 1 

Pursuant to Fed R. Civ. P. 12(b)(6) and 12(c), RKO moved the 

district court to dismiss the action on the ground that the 

settlement and dismissal, with prejudice, of the prior lawsuit, 

rendered the second suit res judicata. Freeman argued that the 

previous settlement agreement did not bar future claims, and the 

tortious interference claim could not be litigated until now. On 

reviewing the pleadings, the district court found: 

[T]he plaintiff's [sic] second lawsuit is based on the 

same claim, arising out of the same transactions and 

occurrences as raised in the first lawsuit. The issues 

are identical to issues previously adjudicated, the 

parties are identical or in privity to the parties to 

the earlier proceeding, a final judgment was entered on 

the merits in the previous proceeding, and the 

plaintiffs had a full and fair opportunity to litigate 

the issues now raised in the earlier proceeding. 

We agree with the district court. 

Freeman argues the trial court erred in dismissing the 

action because the claim was not expressly barred by the language 

of the settlement. He asserts that in his first action he sought 

only compensation pursuant to paragraphs four and five of the 

letter agreement, while in this action he seeks compensation 

under paragraphs six and seven of the same agreement. Paragraphs 

four and five provide for compensation for acting as an advisor, 

while paragraphs six and seven provide for compensation 

conditioned upon the execution and closing of a sale of stock to 

1 This decision was appealed to the District Court for Colorado 

and is not yet before this court. 

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Appellate Case: 89-1023 Document: 01019974012 Date Filed: 09/27/1989 Page: 3 
the union. Freeman argues that his claims under paragraphs 6 and 

7 arose "in the future," because they had not matured at the time 

of the execution of the settlement of the first suit, and arose 

thereafter. 

Freeman's argument is not supported by the pleadings. In 

his first complaint, Freeman does not specify or even intimate 

that his claim is limited to a mere portion of the letter 

agreement. In fact, in paragraph forty-eight of the first 

complaint, he alleges that he is entitled "to receive additional 

compensation under terms set forth in [the] Freeman Letter 

Agreement 1111 6 & 7." Al though Freeman argues this recitation is 

merely "for factual background," 

face of the pleadings do not support 

we reject his argument. 

Freeman's contention 

The 

that 

this second action raises different claims from those resolved in 

his first action. Consequently, we are not persuaded by his 

argument. 

Freeman next asserts the claims presented in the second suit 

are not barred by the doctrines of res judicata or collateral 

estoppel because the claims did not arise until after the first 

action was dismissed. Freeman does not challenge the fact that 

there was a prior lawsuit against the identical parties or those 

in privity with them, which was resolved by a settlement and a 

release resulting in a final order dismissing the action with 

prejudice. Rather, Freeman asserts that the claims in this 

second action are different from those in the first action, and 

these claims did not arise until after the first action was 

dismissed. He argues that because there was no existing claim 

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Appellate Case: 89-1023 Document: 01019974012 Date Filed: 09/27/1989 Page: 4 
under paragraphs 6 and 7 of the letter agreement at the time of 

the settlement agreement, that he could not have litigated the 

substance of lawsuit No. 2 at the time of lawsuit No. 1. Freeman 

further notes that the settlement agreement provides in part that 

the release does not extend to claims which may arise in the 

future. Again, we are not persuaded by Freeman's argument. 

Paragraph 6 of the settlement agreement reads: 

Each of the parties, by executing this instrument and by 

paying and receiving the consideration that this 

instrument calls for, intends this instrument to be 

effective as a full and final accord and satisfaction 

and release. To further this intention, the Parties 

acknowledge and agree that this Release does not extend 

to claims that Freeman, Frontier, or O'Neil do not know 

or suspect to exist in their favor at the time they 

execute this Release or that may arise in the future, 

which claims, if they had known them, would have 

materially affected this Settlement. 

Paragraph 3 reads: 

[T]o release and discharge any and all claims, 

demands, actions, or causes of action, whether in law or 

in equity, that he may now possess, including those for 

•.• tortious interference with contractual relations •... 

As the plain language of the settlement agreement indicates, the 

controlling question is not what facts were known to the parties, 

but which claims were known to the parties. Freeman's claims 

under paragraphs 6 and 7 of the letter agreement were contained 

within the first suit's pleadings. Freeman cannot now argue that 

this claim was then unknown. A dismissal with prejudice following 

a voluntary settlement agreement is accorded res judicata effect 

as to all the claims that were resolved or that could have been 

resolved in the action. Balles v. Cladis, 447 P.2d 224, 228 

(Colo. 1968), cert. denied, 395 U.S. 921 (1968); McDermott v. Bent 

County Colo. Irr. Dist., 308 P.2d 603 (Colo. 1957). 

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Appellate Case: 89-1023 Document: 01019974012 Date Filed: 09/27/1989 Page: 5 
Freeman attempts to characterize this case as one where new 

facts give rise to entirely new claims. He argues the 

applicability of: People v. D.A.K., 198 Colo. 11, 596 P.2d 747, 

appeal dismissed, 444 U.S. 987 (1979); United Pentecostal Church 

of Louisville v. Milan, 527 P.2d 1171 (Colo. App. 1974); Ogen 

Street Church of God in Christ v. Gospel Temple Church of God in 

Christ, 532 P.2d 757 (Colo. App. 1974). In each of the cited 

cases, unlike the instant case, the subsequent complaint contained 

allegations of new, wrongful acts that were not anticipated or 

alleged. In the instant case, Freeman made allegations in both 

suits which were virtually identical, and which arose out of 

paragraphs six and seven of the letter agreement. Consequently, 

the cited cases are inapplicable to the issue presented. 

The judgment of the United States District Court for the 

District of Colorado is AFFIRMED. 

The mandate shall issue forthwith. 

Entered for the Court: 

WADE BRORBY 

United States Circuit Judge 

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Appellate Case: 89-1023 Document: 01019974012 Date Filed: 09/27/1989 Page: 6