Opinion ID: 478773
Heading Depth: 2
Heading Rank: 2

Heading: Issue Actually and Necessarily Decided

Text: 12 Under the doctrine of collateral estoppel, once an issue has been 'actually and necessarily determined, that determination is conclusive in subsequent suits based on a different cause of action' between the parties. EZ Loader Boat Trailers, Inc. v. Cox Trailers, Inc., 746 F.2d 375, 377 (7th Cir.1984) (quoting Montana v. United States, 440 U.S. 147, 153, 99 S.Ct. 970, 973, 59 L.Ed.2d 210 (1979)). Gilldorn argues that the Texas order is uncertain as to what issues it adjudicated and that without an opinion explaining the Texas order it is impossible to determine whether the Texas court even considered the compulsory counterclaim issue. Gilldorn contends that the Texas court could have based its order on any one of the four grounds in Gilldorn's dismissal motion. 13 In its motion to dismiss, Gilldorn claimed that all of Commerce's claims in the Texas action were compulsory counterclaims under Fed.R.Civ.P. 13(a) to the Illinois action and that, for various reasons, each of Commerce's three counts failed to state a claim under Fed.R.Civ.P. 12(b)(6). 3 Any one of these grounds alone would have been sufficient to require dismissal of the suit. Therefore, by denying the motion to dismiss, the Texas court implicitly rejected each of these four grounds. See 18 C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure Sec. 4421, at 203 (1981) (If all of the findings are necessary to support the judgment in the sense that it could not be reached absent any one of them, issue preclusion extends to all.). 14 Gilldorn also argues that Commerce cannot establish by a preponderance that the counterclaim issue was actually and necessarily decided because the Texas court did not explain its order in an opinion or memorandum. Although the party asserting estoppel has the burden of showing that the claim was actually litigated and decided, [p]roof is not limited to the formal record of the prior action, and may involve elaborate processes of inference in order to determine whether a particular issue has been decided. 18 C. Wright, supra, Sec. 4405, at 38. Although the Texas court did not make findings of fact in support of its decision nor explicitly consider each of the bases for the motion, the court implicitly rejected all four grounds in denying the motion. Had any one of the grounds been sufficient, a contrary result would have been unavoidable. 4 Thus, by denying the dismissal motion the Texas court necessarily decided all four issues in Commerce's favor. 15 Decision on each issue was necessary to the Texas order as each issue had to be resolved in order to reach the result. See C. Wright, supra, Sec. 4420, at 186. 16 In discovering what issues were determined by the judgment in a prior action, the court in the second action is free to go beyond the judgment roll, and may examine the pleadings and the evidence in the prior action. And if the rendering court made no express findings on issues raised by the pleadings or the evidence, the court may infer that in the prior action a determination appropriate to the judgment rendered was made as to each issue that was so raised and the determination of which was necessary to support the judgment. 17 1B J. Moore, J. Lucas & T. Currier, Moore's Federal Practice p 0.443, at 3913 (1984) (footnotes omitted). 18 Quoting Davis & Cox v. Summa Corp., 751 F.2d 1507, 1518-19 (9th Cir.1985), Gilldorn argues that since the Texas decision could have been rationally grounded upon an issue other than that which [Commerce] seeks to foreclose from consideration, collateral estoppel does not preclude relitigation of the asserted issue. This argument might have been persuasive if the Texas court had granted the dismissal motion without explanation, as each ground would have been sufficient to sustain the dismissal independently of the other grounds, and it would have been impossible to tell which issues were actually decided and were necessary to the decision. 1B J. Moore, supra, p 0.443, at 3915. See 18 C. Wright, supra, Sec. 4421, at 204-05 (comparing the approach of the first Restatement of Judgments, which extends preclusion to each independent finding, with the approach of the second Restatement, which denies preclusion to any independent alternative bases). Because the Texas judge denied Gilldorn's motion, however, and refused to dismiss Commerce's suit, he necessarily considered each ground and found all four meritless. 19 As each issue was actually and necessarily litigated and decided, collateral estoppel applies and prevents relitigation of all four issues, including the compulsory counterclaim issue. Cf. Insurance Co. of North America v. Norton, 716 F.2d 1112, 1115 (7th Cir.1983) (finding as to alignment of party was unnecessary to court's denial of removal of a state case and therefore party not collaterally estopped from relitigating issue). The Illinois district court therefore erred in refusing to give collateral estoppel effect to the Texas decision.