United States Court of Appeals

For the First Circuit

No. 07-2753

ROSALIND HERMAN, Individually and as Trustee of

FINANCIAL RESOURCES NETWORK, INC.

401(k) Profit Sharing Plan; GREGG D. CAPLITZ;

FINANCIAL RESOURCES NETWORK, INC.,

Plaintiffs, Appellants,

v.

RUDY K. MEISELMAN, Individually and as Trustee of the

Rudy K. Meiselman Revocable Trust; HOPE E. MEISELMAN,

Individually and as Trustee of the Laura Jane Meiselman Trust,

Paula Sue Meiselman Trust and Trust of Laura, Janet and Paula

Meiselman; LAURA PATTERSON; JANET MEISELMAN, Individually and

as General Partner of Meiselman Life Insurance Limited

Partnership; PAULA SUE MEISELMAN,

Defendants, Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. William G. Young, U.S. District Judge]

Before

 Torruella, Lipez and Howard,

Circuit Judges.

Robert D. Cohan, with whom Cohan Rasnick Myerson LLP was on

brief, for appellants.

Charles P. Kazarian, P.C., with whom Law Office of Charles

P. Kazarian was on brief, for appellees.

September 10, 2008
Indianapolis Life Ins. Co. v. Herman, 204 Fed. App'x 908, 910 (1st 1

Cir. 2006) (per curiam); Indianapolis Life Ins. Co. v. Herman, 516

F.3d 5, 11 (1st Cir. 2008).

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HOWARD, Circuit Judge. Appellants Rosalind Herman, Gregg

Caplitz and Financial Resources Network, Inc. ("FRNI") filed suit

in Massachusetts state court against appellees Rudy K. Meiselman

and various members of his family. The suit stemmed from

Meiselman's employment with FRNI and his participation in a profitsharing plan under the Employee Retirement Income Security Act of

1974 ("ERISA"). Meiselman removed the matter to federal court and

moved to dismiss on the ground that a 2005 judgment by the district

court against appellants and in favor of Meiselman barred the

current action. The district court agreed and dismissed on claim

preclusion grounds. We affirm.

I.

This is the latest installment of a dispute that has oft

darkened our doorstep. We take appellants' allegations as true 1

for purposes of reviewing the Rule 12(b)(6) motion to dismiss. 

Meiselman, a retired doctor, became employed by FRNI in

late 2001 to provide investment strategy services. FRNI set up an

investment plan (the FRNI Plan) so that Meiselman could roll his

accumulated funds over from a previous employer's profit-sharing

plan free from negative tax consequences. Herman, who was

President, Secretary and a Director of FRNI during the relevant
While Meiselman has maintained that certain preconditions to the 2

Rule 41 dismissal were allegedly not performed, Herman and Caplitz

say that those conditions were not part of the Release or

Settlement Agreement executed by the parties. In any event, the

dismissal was filed with and accepted by the district court.

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time, was also the FRNI Plan Trustee. Caplitz provided financial

planning services to FRNI as an independent contractor. 

By 2003, the parties began to disagree on certain

investment and management decisions surrounding the FRNI Plan. In

2004, Meiselman sued Herman, Caplitz and the FRNI Plan in federal

court in Massachusetts (the "First Action"), claiming breach of

contract and breach of fiduciary duty in violation of ERISA and

seeking to compel the release of his funds from the Plan account.

That suit was dismissed by the district court after the filing of

a Stipulation of Dismissal under Fed. R. Civ. P. 41(a) and

execution of a Settlement Agreement, as well as Meiselman's

execution of a Release, purporting to relinquish any and all claims

arising out of the employment relationship.2

The saga was far from over. In late 2004, the

Indianapolis Life Insurance Company ("Indianapolis Life") brought

suit in U.S. District Court for the District of Massachusetts (the

"Second Action"). The suit sought rescission of a life insurance

policy issued to FRNI insuring Meiselman and his spouse and a

determination of Indianapolis Life's rights and obligations under
At issue in the suit were alleged misrepresentations concerning 3

Meiselman's health, whether Caplitz had made sure that the

Meiselmans' finances had been reviewed by a certified public

accountant, and whether the Meiselmans had sought to rescind the

policy. The suit also sought restitution of the commission paid to

Caplitz in the course of his conduct as an agent for Indianapolis

Life. 

Herman, Caplitz and FRNI sought relief from the default judgment, 4

alleging excusable neglect by their then-counsel. The district

court denied relief, and also entered summary judgment against all

of the defendants in favor of Indianapolis Life on intentional

misrepresentation grounds. Indianapolis Life Ins. Co. v. Herman,

No. 04-12481 (D. Mass. Jan. 27, 2006) (order granting summary

judgment), aff'd, 204 Fed. App'x at 910. Appellants have filed a

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the policy. The suit named as defendants Herman, Caplitz (who had 3

acted as agent when the policy issued), the FRNI Plan and Meiselman

and his spouse. In response, Meiselman cross-claimed against his

co-defendants Herman, Caplitz and FRNI (as administrator of the

FRNI Plan). In the cross-claim, Meiselman sought a declaratory

judgment that the 2004 Release was void under ERISA, 29 U.S.C. §

1110(a), and also alleged several state law claims including breach

of employment contract, breach of fiduciary duty, breach of

contract and conversion. The state law claims were accompanied by

demands for money damages.

Herman, Caplitz and FRNI, the cross-claim defendants,

failed to respond to the cross-claim. A notice of default was

entered in Meiselman's favor under Fed. R. Civ. P. 55(a), and

thereafter the district court entered a default judgment against

Herman, Caplitz and FRNI jointly and severally in the amount of

$938,640.4
malpractice action against their former counsel.

Appellants point to Kaspar Wire Works, Inc. v. Leco Eng'g & Mach. 5

Inc., 575 F.2d 530, 537 (5th Cir. 1978) and Arizona v. California,

530 U.S. 392, 414 (2000) to argue that claim preclusion does not

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The present episode of this litigation was commenced the

following year when appellants Herman, Caplitz and FRNI filed suit

in Massachusetts state court against Meiselman and members of his

family, alleging state law claims of breach of contract, fraud,

negligent misrepresentation, negligence, negligent and intentional

infliction of emotional distress and unfair and deceptive business

practices. The complaint concerns acts in connection with the

employment relationship, the administration of the FRNI Plan, the

Release and Settlement Agreement and a specific harassing statement

allegedly made by Meiselman. Meiselman removed the matter to the

district court and moved to dismiss. He argued that the default

judgment against appellants in the Second Action served to bar suit

under the doctrine of claim preclusion. The district court agreed

and dismissed the claim, prompting this appeal.

II.

We review the granting of a motion to dismiss de novo.

Ezra Charitable Trust v. Tyco Int'l, Ltd., 466 F.3d 1, 5 (1st Cir.

2006).

Appellants have raised a plethora of issues, although

their ability to withstand a motion to dismiss hinges upon only

one: is their action barred by claim preclusion?5
operate in the declaratory judgment context, and that they should

prevail under issue preclusion principles. These two cases concern

consent decrees, however, in which a court does not make a specific

declaration but rather endorses an agreement reached by the

parties. See Carteret Sav. & Loan Ass'n., F.A. v. Jackson, 812

F.2d 36, 38 (1st Cir. 1987) (distinguishing consent decrees from

declarations of a court). In this case, on January 27, 2006, the

district court actually entered a comprehensive judgment resolving

all claims in the Second Action, including an award of money

damages from the cross-claim defendants to Meiselman. Thus we will

not address the appellants' arguments that issue preclusion should

operate instead of claim preclusion.

Lurking in this case is an interesting question about whether the 6

claim preclusion law of the forum state plays a role in deciding

the federal common law question of whether the new complaint by

appellants is barred. See Semtek Int'l Inc. v. Lockheed Martin

Corp., 531 U.S. 497, 507-08 (2001); see also Taylor v. Sturgell,

128 S. Ct. 2161, 2171 (2008). Because both Massachusetts law and

federal common law apply the same analytical factors in deciding

claim preclusion questions, we needn't decide this issue. See,

e.g., TLT Const. Corp. v. A. Anthony Tappe & Assocs., Inc., 716

N.E.2d 1044, 1049 (Mass. App. Ct. 1999).

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We consider the following factors in determining whether

the judgment is given claim preclusive effect: the finality of the

judgment, the identity of the parties and the identity of the

causes of action. In re Iannochino, 242 F.3d 36, 43 (1st Cir. 6

2001). Finality of the judgment is satisfied by the issuance of a

default judgment. See SMA Life Assur. Co. v. Sánchez-Pica, 960

F.2d 274, 275 (1st Cir. 1992); see also Acevedo-Villalobos v.

Hernández, 22 F.3d 384, 388 (1st Cir. 1994) (dismissal has claim

preclusive effect where it "ends the litigation on the merits and

leaves nothing for the court to do but execute the judgment"

(quoting Firestone Tire & Rubber Co. v. Risjord, 449 U.S. 368,
Appellants' only argument that there is insufficient identity of 7

parties is that Herman was not a party to the Second Action because

she was named only in her capacity as a trustee. We have

previously rejected this argument, however, making it clear that

Herman was a party to the Second Action and thus subject to claim

preclusion related to that action. Indianapolis Life, 516 F.3d at

11.

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373-74 (1981))). The requirement of identity of the parties also

is easily met here.7

Thus we need focus only on whether the appellants'

current claims are sufficiently identical to the claims at issue in

the Second Action to bar them. To do so, we inquire as to whether

a claim arose from the same "transaction, or series of connected

transactions, out of which the [prior] action arose." Restatement

(Second) of Judgments § 24; see also Negrón-Fuentes v. UPS Supply

Chain Solutions, 532 F.3d 1, 9 (1st Cir. 2008). "Although a set of

facts may give rise to multiple counts based on different legal

theories, if the facts form a common nucleus that is identifiable

as a transaction or series of related transactions, then those

facts represent one cause of action." Apparel Art Int'l, Inc. v.

Amertex Enters. Ltd., 48 F.3d 576, 583-84 (1st Cir. 1995). Facts

forming a common nucleus are those meeting the following criteria:

"1) whether the facts are related in time, space, origin or

motivation; 2) whether the facts form a convenient trial unit; and

3) whether treating the facts as a unit conforms to the parties'

expectations." Id. at 584. 
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An analysis of the above factors overwhelmingly suggests

that Meiselman's cross-claims in the Second Action and the claims

now raised by appellants are "rooted in the same nucleus of

operative facts." Id. The factual basis for these counts was

formed in the same time period and from the same essential dispute

as the prior action: the employment relationship, the profitsharing plan and the parties' differences over them, as well as the

validity of the Release given by Meiselman in the First Action.

The two sets of claims form a convenient trial unit

because the "witnesses or proof needed in the second action overlap

substantially with those used in the first action." Mass. Sch. of

Law at Andover, Inc. v. Am. Bar Ass'n, 142 F.3d 26, 38 (1st Cir.

1998) (quoting Porn v. Nat'l Grange Mut. Ins. Co., 93 F.3d 31, 36

(1st Cir. 1996) (internal quotation marks omitted)). The facts and

evidence necessary to appellants' complaint -- the employment

contract, documentation of investment and other management

decisions, and documentation of subsequent interactions between the

parties -- are the same as those that would have been involved in

the cross-claim.

Finally, the parties' expectations further point towards

considering these two suits as a single cause of action. We

consider whether appellants "knew all the facts necessary for

bringing [their present claims]" at the time of Meiselman's crossclaim. Iannochino, 242 F.3d at 49. Because appellants' present
We note that certain of appellants' claims arguably arose after 8

Meiselman filed his cross-claims. As appellants make no attempt to

differentiate their claims based on their timing, however, we will

not differentiate them now. See United States v. Zannino, 895 F.2d

1, 17 (1st Cir. 1990). 

To the extent appellants attempt to contest Meiselman's ability to 9

collect on the default judgment, we note only that the judgment is

final. For the reasons discussed, this action is not the

appropriate mechanism by which to mount what is essentially a

collateral attack on that judgment.

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claims concern the souring of the employment relationship and

related events, we conclude that appellants did, in fact, know

these facts. In sum, appellants' claims are precluded by the 8

resolution of the earlier suit and were properly dismissed by the

district court.9

III.

For the foregoing reasons, we affirm the district court's

dismissal.