IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

 

No. 93-7613

 

CYCLES, LTD.,

Plaintiff-Appellant,

versus

NAVISTAR FINANCIAL CORPORATION,

Defendant-Appellee.

 

Appeal from the United States District Court

for the Southern District of Mississippi 

 

(October 27, 1994)

Before JOHNSON, HIGGINBOTHAM, and DAVIS, Circuit Judges.

HIGGINBOTHAM, Circuit Judge:

Cycles challenges the district court's decision to reverse its

original ruling in Cycles' favor. We are persuaded that although

the district court had the power to revise its original decision,

it wrongly believed itself bound by the contrary findings of a

later court. We vacate and remand.

Cycles leased certain truck trailers to W.J. Digby. In August

1980, their deal collapsed, Digby refused to return the trailers to

Cycles, and a complicated chain of lawsuits followed. First,

Cycles sued Digby for conversion (Digby I). The Southern District

of Mississippi ruled for Cycles, finding that the lease agreement

required Digby to return the trailers to Cycles.
2

Second, Cycles sued Navistar in the Southern District of

Mississippi. In this second suit, the present action, Cycles

claims that three years after Digby's conversion of Cycles'

trailers, Navistar also converted Cycles' trailers. Navistar had

financed Cycles' original purchase of the trailers and held Cycles'

installment payment note and certificates of title for the

trailers. In early 1983, Navistar transferred the certificates of

title to Digby in exchange for full payment of the installment

payment note.

At first, the district court agreed that Navistar converted

the trailers by transferring the certificates to Digby. It held

that delivering the certificates of title to Digby put the trailers

further out of Cycles' reach, and Navistar at least should have

known at the time that the trailers belonged to Cycles, not to

Digby. As the district court then saw it, Navistar's action both

aided Digby's conversion, and itself converted property. The court

on June 30, 1989, filed a "Final Judgment" and awarded damages to

Cycles. Navistar filed post-judgment motions to amend the findings

of fact and conclusions of law under Rule 52(b) and to alter or

amend the judgment under Rule 59(e).

Cycles, however, could not persuade the court to cement this

judgment into a final, appealable order. Instead of resolving the

post-judgment motions, the court waited four years for the

resolution of a third suit: Digby II.

Digby II grew out of the demise of Digby I. In 1989, we

vacated Digby I for lack of jurisdiction over Digby. See Cycles,
3

Ltd. v. W. J. Digby, Inc., 889 F.2d 612 (5th Cir. 1989). Cycles

then filed Digby II, an action against Digby in federal district

court for the Eastern District of Arkansas. The Arkansas federal

court ruled for Digby. It determined that Cycles had agreed to

Digby's disposition of the trailers and that Digby had a qualified

right of refusal to return them to Cycles.

The court below then revised its original opinion and entered

judgment for Navistar, explaining that principles of res judicata

and collateral estoppel compelled it to reverse its original

judgment for Cycles and to render judgment for Navistar. Cycles

appeals this ruling.

The district court's concern with the Arkansas judgment is

understandable. The premise of its original opinion finding

Navistar liable was that Digby's possession of the trailers was

tortious. From that premise, it originally concluded that

Navistar's later delivery of the trailers' certificates of title to

Digby was also tortious, since it aided Digby's wrongful possession

of the trailers and made it harder for Cycles to get the trailers

back.

In short, the Arkansas judgment denied the premise of the

Mississippi court's conclusion. The Arkansas court ruled that

Digby did not convert Cycles' property. If Digby did not,

Navistar's transfer of the certificates to Digby could not. The

two acts of claimed conversion were separate, but logically

dependent. 
4

In reviewing its original opinion on Navistar's motions, the

district court did not rest its decision on the persuasive force of

the Arkansas court's reasoning. Rather, it revised its original

opinion, persuaded that the Arkansas judgment compelled it to do

so. 

This was error. The Arkansas judgment had no preclusive

effect upon decisions already reached after full litigation, like

the original ruling. Judgments are final for purposes of issue

preclusion when fully litigated, even if not yet appealable. See

Chemetron Corp. v. Business Funds, Inc., 682 F.2d 1149, 1191 (5th

Cir. 1982) (holding that a fully litigated, if non-final, decision

enjoys issue-preclusive effect); vacated and remanded on other

grounds, 460 U.S. 1007 (1983); reinstated on remand as to this

ground, 718 F.2d 725, 728 (5th Cir. 1983); reh'g en banc ordered,

id. at 730 (vacating opinion for rehearing en banc, which never

occurred because parties settled); see also 18 Charles A. Wright &

Arthur R. Miller, Federal Practice and Procedure § 4434, at 321

(1981) (surveying leading cases that consider non-appealable

judgments to be final for purposes of issue preclusion); 1B James

W. Moore et al., Moore's Federal Practice ¶ 0.416[3.-1] (2d ed.

1993) (endorsing rule that pendency of post-trial motions to change

the judgment or set it aside does not suspend issue-preclusive

effect of the judgment); Restatement (Second) of Judgments § 13

cmt. f (1982) (pendency of motions to set aside a judgment

otherwise final for collateral estoppel purposes or to grant a new

trial does not suspend issue-preclusive effect of the judgment).
5

Such fully litigated judgments, strong enough to preclude later

inconsistent judgments, are a fortiori strong enough to withstand

preclusion by inconsistent later judgments. 

Case law supports our conclusion that a court is not compelled

to revise its fully litigated decision by later inconsistent

decisions of other courts. In American Postal Workers Union v.

United States Postal Serv., 736 F.2d 317, 319 (6th Cir. 1984)

(APWU), the Sixth Circuit found no preclusion in a similar case.

There, an action by a Columbus, Ohio local union survived the

Postal Service's motion to dismiss. Later, another local union

filed a similar suit in Dallas, Texas. A federal district court in

Dallas granted the Postal Service's motion to dismiss, and we

affirmed. Armed with our decision, the Postal Service moved for

summary judgment in the Ohio court, arguing that the preclusive

force of its Dallas victory compelled the Ohio district court to

revise its original ruling on the motion to dismiss. The Ohio

district court agreed and granted summary judgment for the Postal

Service.

The Sixth Circuit disagreed. In dicta, the court stated that

the preclusive force of the Dallas decision did not compel the Ohio

court to revise its prior opinion. Id. The Dallas decision would

preclude contrary determinations in all subsequent cases, but not

issues already decided. Id. The fact that the Ohio ruling was not

final for purposes of appeal made no difference. The Sixth Circuit

acknowledged that even though the Ohio court's ruling was not yet

appealable, it had preclusive force. Indeed, the Sixth Circuit
6

noted that the ruling "should have been given preclusive effect in

the Dallas case." Id.

In this respect, APWU differs from this case. In APWU, the

first decision should have precluded the second. Because two

plaintiffs were bringing separate actions against the same

defendant, the first plaintiff's victory in Ohio could have enjoyed

issue-preclusive effect in the second case in Dallas. See Parklane

Hosiery Co. v. Shore, 439 U.S. 322, 331 (1979) (permitting use of

non-mutual offensive collateral estoppel). Here, by contrast, the

first decision could not have precluded the second. One plaintiff,

Cycles, had been pursuing two actions against two defendants:

first Navistar, then Digby. Cycles could not have used its victory

against Navistar to win the case against Digby, since in the prior

case Digby neither had a chance to contest its liability nor was in

privity with a party that did. See, e.g., Blonder-Tongue Lab.,

Inc. v. University. of Illinois Found., 402 U.S. 313, 329-30 (1971)

(it is a violation of due process to preclude litigants who did not

appear in prior action from relitigating issue of prior action).

Yet the mark of a decision's maturity for the purposes of

issue preclusion is whether the decision was fully litigated. If

the first decision had the power to preclude relitigation of the

same issues, for our purposes it does not matter if a later case

ignores the opinion's preclusive power, as in APWU, or if no later

case had the opportunity to consider its preclusive power, as here.

In either event, the fully litigated opinion stands unaffected by

a later inconsistent judgment. 
7

We and the other circuits have similarly ruled that the

preclusive reach of decisions does not extend to prior decisions.

See, e.g., Freeman United Coal Mining. Co. v. Office of Workers'

Compensation Program, 20 F.3d 289, 294 (7th Cir. 1994) (subsequent

decision has no collateral estoppel effect on prior judgment

because, inter alia, the opportunity to economize judicial

resources is already lost by the time a second opinion is

rendered); Howell v. Thomas, 566 F.2d 469, 469-70 (5th Cir.) (per

curiam), cert. denied, 439 U.S. 826 (1978) (subsequent proceeding

cannot collaterally estop prior proceeding); Flood v. Harrington,

532 F.2d 1248, 1250 (9th Cir. 1976) (subsequent case does not

control outcome of prior case); see also 18 Wright & Miller, supra,

§ 4404, at 31 (where subsequent case conflicts with prior case on

"a matter of issue preclusion, it is very unlikely that the first

judgment should be set aside").

Navistar's proposed rule would unfairly force plaintiffs like

Cycles, who must pursue defendants in separate jurisdictions, to

play for all or nothing, recovering only with an uninterrupted

stream of victories. If, like Cycles, they won one fully litigated

judgment against one defendant but lost a second case to a second

defendant, they would lose everything. The second adverse judgment

would undo their prior, fully litigated victory. Our rejection of

this backward reach lies with the longstanding rule that plaintiffs

who lose against one defendant are collaterally estopped from

prevailing on the same issue in future cases against other
8

defendants. See Blonder-Tongue, 402 U.S. at 328-29 (permitting use

of non-mutual defensive collateral estoppel).

We are persuaded that the district court's original decision

was final for purposes of issue preclusion, and the district court

erred in concluding that it was bound by the later decision of the

Arkansas federal court to reverse its original ruling. We vacate

the decision below and remand to the district court for decision of

Navistar's post-judgment motions to amend the original findings of

fact and conclusions of law and to alter or amend the original

judgment, free of any binding effect of the ruling by the Arkansas

court.

VACATED and REMANDED.