Title: Arkansas Louisiana Gas Co. v. Taylor
Citation: 314 Ark. 62, 858 S.W.2d 88
Docket Number: 92-581
State: Arkansas
Issuer: Arkansas Supreme Court
Date: July 12, 1993

858 S.W.2d 88 (1993) 314 Ark. 62 ARKANSAS LOUISIANA GAS COMPANY, A DIVISION OF ARKLA, INC.; Arkla Exploration Company, Arkoma Production Company; Stephens Production Company and Stephens, Inc., Appellant, v. David P. TAYLOR, Appellee. No. 92-581. Supreme Court of Arkansas. July 12, 1993. Jerry L. Canfield, Fort Smith, E.J. Ball, Fayetteville, for appellants. Charles S. Chambers, Lubbock, TX, James C. Mainard, Ozark, for appellee. DALE PRICE, Special Chief Justice. At issue in this case is whether a decision in a federal court case operates as res judicata to bar the litigant from participating as a passive claimant in a subsequent class action suit brought in state chancery court. *89 In 1983, appellee Taylor filed a complaint in federal court in the Western District of Arkansas seeking to cancel or reform thirty-one (31) of his oil and gas leases, twelve (12) of which are included in the present suit. Taylor also requested other relief that was substantially the same as that requested in the present litigation. A thirteenth lease between the parties known as the Stubblefield Lease was in existence at the time of the federal litigation, but was not included in the 1983 federal court suit. It was, however, stipulated that the Stubblefield Lease was not only in existence, but that gas wells located on the existing drilling unit were in production when the federal court suit was litigated. The district court found in favor of the appellants, and the Eight Circuit Court of Appeals affirmed. Taylor v. Arkansas Louisiana Gas Co., 604 F. Supp. 779 (W.D.Ark.1985), aff'd, 793 F.2d 189 (8th Cir.1986). In 1986, several other mineral rights owners of the Cecil Gas Field with identical fixed rate leases filed suit against the appellants in Franklin County Chancery Court. Three separate actions were filed, and all were consolidated into one class action. A representative plaintiff was named, and the court certified the lessors as a class under ARCP Rule 23. Appellee was a member of the class. The class was defined as: The issues, grounds, and relief sought in the class action suit were substantially the same as in Taylor's complaint filed in 1983. The appellants answered the complaint with various defenses. They specifically pled that Taylor could not participate in the class action because his rights in the leases had been settled by the federal court, and, therefore, Taylor's claims were barred by res judicata and collateral estoppel. On December 13, 1989, the trial court entered an interim decree which found that the parties' actions over the years effectively modified the "fixed-price" leases into "market-value" leases. The parties then voluntarily entered into a class-action settlement which provided that payment to Taylor was subject to his class claim not being barred by res judicata. Appellants filed a motion for summary judgment to determine whether Taylor's participation in the class was barred. The chancellor ruled that the federal court's decision did not involve the three wells located in a drilling unit that was not included in the federal suit. The chancellor also ruled that appellee's participation in the class action with respect to wells that were not in the 1983 suit was an additional reason why appellee was not barred by res judicata. The court denied appellants' motion for summary judgment. Taylor then filed his own motion for summary judgment. The appellants filed a motion to reconsider their own motion for summary judgment. By agreement of the parties, Stephens's and Arkla's motion for reconsideration and Taylor's motion were submitted to the court for decision on stipulated facts. The trial court granted Taylor's motion for summary judgment and denied Stephens's and Arkla's motion for reconsideration. The order was entered on January 21, 1992, and Stephens and Arkla appeal to this court. Appellants argue that Taylor is precluded from participation in the settlement agreement by the doctrine of res judicata. This court restated the general rules relating to res judicata in Robinson v. Buie, 307 Ark. 112, 114, 817 S.W.2d 431, 432-33 (1991), as follows: As stated earlier, Taylor owned thirteen (13) "fixed rate" gas leases at issue here. Twelve (12) of the leases were at issue and litigated in the federal court action, while the thirteenththe Stubblefield Lease was in existence when that case was litigated. Some wells on the Stubblefield Lease were in production at the time the federal court suit was litigated and could have been included in the federal litigation, but appellee failed to do so. Appellants take the position that Taylor's present claim for relief could have been raised by him in Taylor v. Arkansas Louisiana Gas Co., 604 F. Supp. 779 (W.D.Ark. 1985), and the judgment rendered against Taylor in that case constitutes a complete bar to any recovery in this case. We agree. American Standard v. Miller Eng'g, 299 Ark. 347, 351, 772 S.W.2d 344, 346 (1989). In Ward v. Davis, 298 Ark. 48, 765 S.W.2d 5 (1989), we set forth the required elements for res judicata to apply. We stated: Id. at 50, 765 S.W.2d at 6. The chancellor relied upon Harris v. Whitworth, 213 Ark. 480, 211 S.W.2d 101 (1948), in holding that the 1986 federal court decision did not constitute res judicata or collateral estoppel. The chancellor found additional support for his ruling that res judicata did not apply in the fact that this was a class action, that three of the wells had not been drilled at the time of the 1986 federal court decision, and that the three wells were not mentioned in the federal court opinion. The Harris case, upon which the chancellor relied, was a probate case and is distinguishable on its facts. Those facts were that Ancel Harris sued the administrator of his father's estate alleging a partnership with his father and asked that he be given possession of the partnership assets to wind up the partnership affairs. Ancel next filed suit against his brother and sister seeking specific performance of one contract between himself and his father that allegedly was an agreement to convey a small farm to him. Both cases were dismissed for failure of proof on February 1, 1986, and were appealed. Ancel thereafter filed a claim against his father's estate on April 1, 1946, before the affirmance of the decisions by this court. No formal plea of res judicata was interposed, although it was insisted that the affirmance by this court constituted a bar since the witnesses and testimony were substantially the same as in the first two cases. We held that despite Ancel Harris's failure to establish an express contract and having been mistaken about the proper action he should have brought, he still had a right to seek to recover from the estate on a quantum meruit basis. The chancellor in this case also cites 46 Am.Jur.2d Judgments, § 402 (1969), which reads: We hold that there is no injustice or unfairness involved. Taylor had a full and fair trial in the federal district court and a full and fair appeal of the adverse judgment rendered against him. He also could have litigated the Stubblefield Lease had he so chosen. There have been no Arkansas cases decided on the issue of whether being certified as a member of a class would in and of itself nullify the application of the doctrine of res judicata. We adopt the position that res judicata can prevent a person from being certified as a class member in a class action. In McDonald v. Heckler, 612 F. Supp. 293 (D.C.Mass.1985), disability claimants brought an action challenging certain policies of the Secretary of Health and Human Services. The Secretary moved to dismiss the action, and the claimants moved for class certification. One of the Secretary's arguments for dismissal was that certain claimants who had previously appealed a denial of their benefits to the courts and received a final decision in that proceeding were barred under res judicata from participating in the class action. The federal court held that the claims of those proposed class members who had appealed their denial of benefits to the courts and received a final court decision were barred from participating in the class action by res judicata. The chancellor should have granted appellant's motion for summary judgment and dismissed Taylor's claim. Reversed and dismissed with prejudice. DUDLEY, NEWBERN, and CORBIN, JJ., concur. HOLT, C.J., and BROWN, J., not participating. NEWBERN, Justice, concurring. The result reached by the Court's opinion has my wholehearted support. Just as wholeheartedly, however, I must disagree with the rationale expressed. The correct basis of the opinion should be collateral estoppel and not res judicata. Since our decision in Smith v. Roane, 284 Ark. 568, 683 S.W.2d 935 (1985), we have struggled, with some success, to keep the distinction between the two doctrines clear in our minds and thus clear in application. See Toran v. Provident Life &amp; Acc. Ins. Co., 297 Ark. 415, 764 S.W.2d 40 (1989); East Texas Motor Freight Lines, Inc. v. Freeman, 289 Ark. 539, 713 S.W.2d 456 (1986); Bailey v. Harris Brake Fire Protection Dist., 287 Ark. 268, 697 S.W.2d 916 (1985). I fear this decision is a step back into the past when we tended not to know the difference. Res judicata does not apply here because the Stubblefield lease is a transaction separate from the others which were sued upon earlier. The majority opinion citation of language from Robinson v. Buie, 307 Ark. 112, 817 S.W.2d 431 (1991), is inapposite because the Stubblefield lease could not have been litigated in the previous action for the reason that it was not sued upon. While that may seem an overly simplistic statement, nothing in the law requires that a party having more than one claim, arising from separate transactions, bring all the claims at one time. Equally inapposite is the language cited from American Standard v. Miller Engineering, 299 Ark. 347, 772 S.W.2d 344 (1989). This is not a case where the second suit was based on the same "event" or "subject matter" as the previous litigation. It was an entirely different lease; an entirely different transaction although the same issue was involved in the previous litigation as is involved here. The Restatement of Judgments 2d, § 24., in speaking of claim preclusion, another name for res judicata, states: Here are two illustrations given under § 24 of the Restatement of series of connected transactions: While a plaintiff may not split a cause of action, it is obvious in a case such as this that he has more than one cause of action. Comment h. to § 24 of the Restatement gives this explanation: Arkansas R.Civ.P. 18(a) is not different from F.R.C.P. 18(a) in any way that would be significant here. In my view, the facts of this case fit squarely within the concept of collateral estoppel as that doctrine is described in Restatement of Judgments 2d, § 27: The issue now before us was litigated between these parties in the federal proceedings. The decisions there were essential to the judgment rendered. The doctrine of collateral estoppel applies, and Mr. Taylor is precluded from relitigating them. DUDLEY and CORBIN, JJ., join in this concurrence.