UNITED STATES CO URT OF APPEALS

FOR THE TENTH CIRCUIT

KRISTY A. GONZALES; SHAWN A. GONZALES; ANARCHY ARTS, LLC, Plaintiffs-Appellants,

v. ARTSPACE AFFORDABLE HOUSING, LP; ARTSPACE RUBBER COMPANY, LC; EVERGREEN MANAGEMENT GROUP, LLC, Defendants-Appellees. No. 12-4070 (D.C. No. 2:09-CV-00465-BCW) (D. Utah)

ORDER AND JUDGMENT *

Before HARTZ , BALDOCK , and GORSUCH , Circuit Judges.

This is an appeal from an order dism issing the suit on the grounds of res judicata. We have juri sdiction under 28 U.S.C. § 129 1, and we reverse.

* After examining the briefs and appella te record, this pa nel has determined unanimously that oral argument would not mate rially assist the de termination of this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore ordered submitted without oral argument. This order and judgment is not binding precedent, except under the doctr ines of law of the case, res judicata, and collateral estoppel. It may be cite d, however, for its persuasi ve value consistent with Fed. R. App. P. 32.1 a nd 10th Cir. R. 32.1. FILED United States Court of Appeals Tenth Circuit 

### August 14, 2013

Elisabeth A. Shumaker Clerk of Court- 2 - BACKGROUND Litigation in this case began in 2008, when Artspace Afford able Housing, LP and Artspace Rubber Company (the Landlord) filed a state court unlawful detainer action in Utah against Anarchy Arts, LLC (Anarchy) as a result of its default on a lease for the premises used to operate a co ffee shop. The court later issued an order

of restitution in favor of the Landlord. The Landlord did a llow Anarchy and its principals, Kristy A. Gonzal es and Shawn A. Gonzales (t he Gonzaleses) to remove some of their property. The remaining property, however, wa s placed in storage pending public auction. Anarchy filed in the stat e court action an amended answer and claims against the Landlord and Evergreen Management Group, LLC (Evergreen) and Chris Montoya for breach of contract, breach of th e implied covenant of good faith and fair dealing, and misrepresentati on. As to the underlying unl awful detainer action, the court entered judgment agains t Anarchy for $43,472, which was followed by entry of a writ of execution. The public auction yielded $3,920, which was applied to reduce the judgment. Shortly after the public auction, Anar chy and the Gonzaleses filed suit in federal court against the La ndlord, Evergreen, and Kirk A. Cullimore, the Landlord’s lawyer. Their toehold in federal court wa s a claim under 42 U.S.C. § 1983, in which they alleged that the Landlord, Evergreen and Mr. Cullimore “have deprived [them] of their property under color of state action without due pro cess of law in violation of- 3 - their Federal and State Constitutional rights.” Aplt. App. at 20. More particularly, they alleged that the Landlord and Ever green unlawfully sei zed and sold the Gonzales’s personal property as part of the state court pro ceedings. In addition to the § 1983 claim, they asserted state law claims for convers ion, unjust enrichment and civil conspiracy. 1 In the meantime, back in state court, Anarchy filed a motion to set aside the judgment, which was denied. The court al so denied Anarchy’s later-filed motion in which it argued that the writ of execution ha d been unlawfully obtained and that the auction was conducted in a commercially unreasonable manner. The parties agree that Anarchy’s claims in the state court suit against the Landlord, Evergreen and Mr. Montoya have not been resolved. The Landlord and Evergreen moved to dismiss the federal suit on the grounds of res judicata. Anarchy and the Gonzal eses opposed the moti on and filed a motion for partial summary judgment on their § 198 3 and conversion claims . The magistrate judge granted the motion to dismiss. 2 This appeal followed.

ANALYSIS We review de novo the legal question of whether a claim is barred by res judicata. Valley View Angus Ranch, Inc. v. Duke Energy Field Servs ., 497 F.3d 1096,

1 Mr. Cullimore was never se rved with process and was therefore dismissed.

2 The parties consented to the juri sdiction of the magi strate judge.- 4 - 1100 (10th Cir. 2007). “Under 28 U.S.C. § 1738, the preclusive effect of a state judgment is governed by the rules of preclusion of that state.” Id . (footnote omitted). “The doctrine of res judicata embraces tw o distinct branches: claim preclusion and issue preclusion.” Macris & Assoc., Inc. v. Neways, Inc ., 16 P.3d 1214, 1219 (Utah 2000). Although the elements of cl aim preclusion and issue preclusion are in some respects different, they share the common requirement that the first suit must have resulted in a final judgment. See id . (holding that one of the elements of claim preclusion is that “the firs t suit must have resulted in a final judgment on the merits”); see also Jensen ex rel. Jen sen v. Cunningham , 250 P.3d 465, 477 (Utah 2011) (holding that one of the elements of issue preclusion is that “the first suit resulted in a final judgment on the merits”) (ellipses omitted). Under Utah law, [f]or an order or judgment to be final, it must dispose of the case as to all the parties , and finally dispose of the s ubject-matter of the litigation on the merits of the case. In othe r words, a judgment is final when it ends the controversy betw een the parties litigant. Bradbury v. Valencia , 5 P.3d 649, 651 (Utah 2000) (internal quotation marks omitted

and citation omitte d). The magistrate judge and the parties acknowledged that there was not a final state court judgment. Nonetheless, the ma gistrate judge decided to disregard this requirement for two reasons: First, “[a]t or al argument, [Anarchy] admitted that in nearly four years [it] ha[d ] done nothing to move forward on those claims.” Aplt. App. at 251. Second, “the issues raised in the counterclaim[s] have been decided by- 5 - [the state court judge in] his findings of fact, rulings and orders.” Id . We disagree with this reasoning. The Landlord and Evergreen have not cite d any authority that excuses the need for a final judgment under circumstances of al leged dilatory conduct. To be sure, the magistrate judge was faced with a challenging situation at oral argument when Anarchy admitted that it had not “taken a ny [action] recently” in the state court suit because it “pursued” th e federal suit instead. Id . at 277. However, the fact remains that there is no final judgment in the state court action. Further, we have carefully

examined the state court orders referenced by the magistrate judge. While they may

not bode well for the ultimate fate of the state court coun terclaims, the orders cannot be read so broadly as to have disposed of them on th e merits or otherwise. See id . at

64-93. Initially, we were in clined to affirm the magistrate judge ’s order dismissing the § 1983 claim on the grounds that the co mplaint does not stat e a claim for relief under § 1983 because neither th e Landlord nor Evergreen appear to be state actors. See, e.g., Lugar v. Edmondson Oil Co ., 457 U.S. 922, 937 (1982) (explaining that private conduct constitutes stat e action when it is fairly a ttributable to the state and also explaining when that requirement is satisfied). In thei r motion for partial summary judgment, Anarchy and the Gon zaleses argued that the Landlord and Evergreen were “acting under the auspices of the Utah Courts — hence ‘under color of state law.’” Aplt. App. at 108 (bracket s omitted). Although we have discretion to- 6 - affirm on any ground adequa tely supported by the record and neither the allegations in the complaint nor the fleeti ng statements scattered throug hout the record appear to indicate that either the Landlord’s or Evergr een’s actions were fair ly attributable to the state, we nonetheless decline to affi rm on this ground because Anarchy and the

Gonzaleses have not ha d a fair opportunity to address the issue. See Elkins v. Comfort , 392 F.3d 1159, 1162 (10th Cir. 2004) (“In exercising [the] discretion [to affirm on any ground adequa tely supported by the record] we consider [among other things] whether the ground was fully briefed and argued here and be low.”). The judgment of the district court is reversed and the case is remanded for further proceedings.

Entered for the Court

Bobby R. Baldock Circuit Judge