Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-06-01687/USCOURTS-ca8-06-01687-0/pdf.json

Parties Involved:
Americo Life
Appellee
Robert L. Myer
Appellant

Document Text:

1

 The Honorable Richard H. Kyle, United States District Judge for the District

of Minnesota, sitting by designation.

2

 The Honorable Dean Whipple, United States District Judge for the Western

District of Missouri.

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 06-1687

___________

Robert L. Myer, *

*

Appellant, *

* Appeal from the United States

v. * District Court for the

* Western District of Missouri.

Americo Life, Inc., *

*

Appellee. *

___________

Submitted: September 29, 2006

Filed: November 15, 2006

___________

Before RILEY and COLLOTON, Circuit Judges, and KYLE,1

 District Judge.

___________

KYLE, District Judge.

Robert L. Myer appeals the dismissal by the district court2

 of his petition to

vacate an arbitration award. The district court concluded that it should abstain from

exercising jurisdiction over Myer’s petition under Colorado River Water Conservation

District v. United States, 424 U.S. 800 (1976). We affirm, although not on abstention

grounds.

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3

 There is some dispute as to the exact date Myer filed his petition, but the date

is not germane to the Court’s resolution of Myer’s appeal.

4

 In Colorado River, the Supreme Court held that, in certain circumstances, a

federal court may dismiss a properly filed federal action in favor of a parallel statecourt action. 424 U.S. at 817-18.

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I. BACKGROUND

In 1998, Myer agreed to sell several companies he owned to Appellee Americo

Life, Inc. (“Americo”). As part of that sale, Myer and Americo entered into a

Consulting Agreement, pursuant to which Americo agreed to make periodic payments

to Myer in return for consulting services. The Consulting Agreement contained an

arbitration clause requiring the parties to arbitrate any disputes arising thereunder in

Dallas, Texas.

In January 2004, Americo commenced an arbitration proceeding against Myer,

alleging that he had breached certain non-competition and non-solicitation clauses in

the Consulting Agreement. An arbitration hearing was held in Texas in March and

April 2005; in June 2005, the arbitration panel ruled in Americo’s favor and awarded

it over $1.4 million in damages and injunctive relief.

On August 10, 2005, Myer filed a petition in the district court seeking to vacate

the arbitration award. The following day, Americo filed a petition in Texas state court

seeking to confirm the award.3

 Americo then moved to dismiss the federal action; it

argued that the district court should abstain from exercising jurisdiction over Myer’s

petition under Colorado River.

4

After considering the factors set forth in Colorado River and Moses H. Cone

Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 16 (1983), the district

court concluded that abstention in favor of the Texas action was appropriate.

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5

 The Texas state court’s judgment was not part of the record below. Americo

has filed a motion requesting that we take judicial notice of the judgment. Judicial

notice is appropriate in these circumstances, see Stutzka v. McCarville, 420 F.3d 757,

760 n.2 (8th Cir. 2005) (taking judicial notice of default judgment issued in separate

Bankruptcy Court action and noting that this Court “may take judicial notice of

judicial opinions and public records”), and Americo’s motion is therefore granted.

6

 Texas Rule of Civil Procedure 329b(c) provides, in pertinent part, that “[i]n

the event [a] motion for new trial . . . is not determined by written order signed within

seventy-five days after the judgment was signed, it shall be considered overruled by

operation of law on expiration of that period.” 

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Accordingly, by Order dated November 8, 2005, the district court granted Americo’s

motion to dismiss. Myer then moved the district court for reconsideration or, in the

alternative, for a “new trial,” but the district court denied Myer’s motion on February

28, 2006. This appeal followed.

During the course of the federal litigation, meanwhile, the parties proceeded

with the Texas state-court litigation. On April 12, 2006, the Texas state court issued

a final judgment confirming the arbitration award.5

 On May 12, 2006, Myer filed a

motion seeking a “new trial” in the state-court action. The Texas state court did not

act on Myer’s motion, and it was denied “by operation of law” on July 26, 2006.6

 The

Texas state court enjoyed plenary power to modify its judgment for an additional 30

days, see Tex. R. Civ. P. 329b(e), but it did not do so.

II. DISCUSSION

Americo argues that Myer’s appeal is now moot because the Texas state court

has confirmed the arbitration award and that decision is res judicata of the underlying

issues in this case. This appeal is not moot, however, because Myer indicated at oral

argument that he would appeal the Texas state court’s decision. The current

controversy therefore “remains live.” Exxon Mobil Corp. v. Saudi Basic Indus. Corp.,

544 U.S. 280, 291 n.7 (2005) (appeal not moot despite fact that state courts had fully

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7

 Texas law determines the preclusive effect of the Texas state court’s

judgment. Canady v. Allstate Ins. Co., 282 F.3d 1005, 1014 (8th Cir. 2002) (“the res

judicata effect of the first forum’s judgment is governed by the first forum’s law, not

by the law of the second forum”) (internal quotation marks omitted) (citation omitted).

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resolved same claims as those presented in federal lawsuit, because losing party

indicated that it would appeal the state Supreme Court’s decision to the United States

Supreme Court).

Nevertheless, it is clear that res judicata now presents an insurmountable hurdle

for Myer’s claims. The Texas state court has issued a final judgment confirming the

arbitration award, and that action involved the same parties and the same issues as the

instant case. Notably, Myer specifically asked the Texas state court to vacate the

arbitration award, and the court expressly denied that motion when rendering its final

judgment. Accordingly, res judicata now bars Myer from litigating those same issues

in federal court (or elsewhere). See, e.g., Amstadt v. United States Brass Corp., 919

S.W.2d 644, 652 (Tex. 1996) (elements of res judicata are (1) prior final judgment on

the merits by court of competent jurisdiction, (2) identity of parties, and (3) second

action based on same claims as first action or claims that could have been raised in

first action).7

Myer initially had argued that the Texas state court’s judgment was not “final”

for res judicata purposes because he had filed a motion for a new trial in that action.

His motion has now been denied by operation of law, however, meaning that the

Texas state court’s judgment is “final” for claim-preclusion purposes. See Scurlock

Oil Co. v. Smithwick, 724 S.W.2d 1, 6 (Tex. 1986); Maffitt v. Weycer, Kaplan,

Pulaski & Zuber, P.C., No. 01-97-01031-CV, 1999 WL 695580, at *5 (unpublished)

(Tex. App. Sept. 9, 1999) (“for res judicata purposes, a judgment becomes final when

the trial court that signed the judgment loses plenary power over [it]”) (citing

Scurlock). Moreover, the fact that Myer may appeal the judgment (if he has not

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8

 The Consulting Agreement contains a Missouri choice-of-law clause.

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already done so) does not affect the judgment’s finality under Texas law. Scurlock,

721 S.W.2d at 6.

In an attempt to evade Scurlock’s reach, Myer cites the Restatement (Second)

of Judgments § 28, which was quoted favorably by the Scurlock court. Section 28

states, in pertinent part:

Although an issue is actually litigated and determined by a valid and

final judgment and the determination is essential to the judgment,

relitigation of the issue in a subsequent action between the parties is not

precluded in the following circumstances:

. . . 

(3) a new determination of the issue is warranted by differences in the

quality or extensiveness of the procedures followed in the two courts or

by factors relating to the allocation of jurisdiction between them.

Myer argues that this exclusion applies here because the district court is better able to

apply Missouri law than the Texas state court.8

 This argument is unavailing, for two

reasons.

First, there is no reason for this Court to conclude that the Texas state court is

any less able to apply Missouri law than the district court. Indeed, Texas courts often

are called upon to apply Missouri law, e.g., In re B.C., 52 S.W.3d 926 (Tex. App.

2001), as well as the laws of other states, e.g., Greenberg Traurig of N.Y., P.C. v.

Moody, 161 S.W.3d 56 (Tex. App. 2004) (New York law), and foreign countries, e.g.,

Bridas Corp. v. Unocal Corp., 16 S.W.3d 893 (Tex. App. 2000) (law of Turkmenistan

and Afghanistan). Moreover, Myer has nowhere argued that Missouri law is complex

or differs in any material respect from Texas law. As the Texas Court of Appeals has

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9

 28 U.S.C. § 1738, the Full Faith and Credit statute, provides in pertinent part:

“Such Acts, records and judicial proceedings or copies thereof, so authenticated, shall

have the same full faith and credit in every court within the United States and its

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stated with respect to the application of Louisiana law, Missouri law is not “so

daunting that a Texas court would be unable to correctly apply it.” BDO Seidman,

LLP v. Bracewell & Patterson, LLP, No. 05-02-00636-CV, 2003 WL 124829, at *5

(Tex. App. Jan. 16, 2003).

Second, the exception in Section 28(3) of the Restatement is inapposite,

because it is intended for situations in which a court of limited or questionable

jurisdiction issues a judgment that the victor later attempts to use to preclude

relitigation. An illustration is given by the exception’s comments:

[A] determination in a state court action on a patent license agreement

upholding the defense that the patent was invalid for want of invention

would not be held binding in a subsequent federal court action for patent

infringement if the Congressional grant of exclusive jurisdiction in

patent infringement cases to the federal district courts is construed to

require otherwise. The question in [such a] case would be resolved in

light of the legislative purpose in vesting exclusive jurisdiction in a

particular court.

Restatement (Second) of Judgments § 28 cmt. e (1982). Earlier on, the comment

provides an example making clear that a judgment issued by a state court should be

given preclusive effect in federal court absent any jurisdictional uncertainty:

[I]n a state court action on a patent license agreement, a determination

may be made that the agreement terminated on a particular date; such a

determination would be conclusive in a subsequent federal court action

between the same parties for patent infringement. See 28 U.S.C. § 1738.

Id.9

 Here, there is no question that the Texas state court had jurisdiction to confirm

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Territories and Possessions as they have by law or usage in the courts of such State,

Territory, or Possession from which they are taken.”

10 Contrary to Myer’s argument in his Reply Brief, this is not an in rem action

concerning his right to certain stock under the terms of the Consulting Agreement, but

rather is an in personam action against Americo seeking to vacate the arbitration

award.

11 Myer also cites Section 28(4) of the Restatement. That exception applies

when the party invoking res judicata had a lower burden of persuasion in the earlier

proceeding than in the later proceeding. Here, the standards to be applied by the

district court and by the Texas state court are the same, because the Federal

Arbitration Act governs review of the arbitration award.

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the arbitration award. See Moses H. Cone, 460 U.S. at 25 (“the federal courts’

jurisdiction to enforce the Arbitration Act is concurrent with that of the state courts”);

In re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 739 (Tex. 2005) (same).10 Hence,

the exception in Section 28(3) of the Restatement is inapplicable.11

Finally, Myer argues that the district court’s judgment must be reversed

because, were the Texas state-court’s judgment to be reversed on appeal, he would

then be unable to seek review of the arbitration award in federal court due to the

Federal Arbitration Act’s 90-day statute of limitations. This Court will not reverse on

the basis of a speculative future possibility. Moreover, even if the Texas state court’s

judgment were reversed, Myer would then be able to argue in state court that the

arbitration award should be vacated. We therefore perceive no prejudice to Myer if

the statute of limitations precluded him from seeking relief in federal court should the

Texas state court’s judgment be reversed. Indeed, the Texas state court in that

instance would be required to apply the Federal Arbitration Act, just as the district

court would be required to do if we were to reverse the decision at issue here.

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III. CONCLUSION

The Texas state court has now fully and finally resolved the same issues Myer

pressed before the district court. Res judicata, therefore, bars the district court’s

consideration of Myer’s claims, which renders it unnecessary to reach the issues Myer

has raised on appeal. Accordingly, we affirm the judgment of the district court.

______________________________

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