Opinion ID: 658239
Heading Depth: 3
Heading Rank: 4

Heading: Necessary to the Determination

Text: 24 Finally, GPA argues that collateral estoppel does not apply because a determination of the fraudulent transfer issue was not necessary to the supreme court decision. 25 For collateral estoppel to apply, a decision on the merits of the issue must have been necessary to the first judgment, in the sense that, without a decision on the issue, the court could not have rendered a judgment. Segal v. American Tele. & Tele. Co., 606 F.2d 842, 845 (9th Cir.1979) (per curiam); Restatement (Second) of Judgments Sec. 27 cmt. j (1980). 26 Here, the Nevada Supreme Court order did not specifically address GPA's fraudulent transfer claim. It held, however, that AMDECO had purchased all right, title, and interest in the disputed causes of action, [p]ursuant to the writs of execution. It also stated that GPA retained no interest in the actions, and as such, that the dismissal of the claims was proper. The appeal was then dismissed; any of GPA's remaining contentions were found to be lacking merit. 27 The district court found that the Nevada Supreme Court must have held impliedly that there was no fraudulent conveyance because, if the Court had determined there to be such a violation, AMDECO's purchase would not have been valid. Accordingly, [n]o transfer of right would have taken place if the conveyance had been found to be fraudulent. We agree with this assessment. Because the Supreme Court found that there had been a valid transfer of all right, title, and interest, and that GPA retained no interest, it must necessarily have decided that there was no fraudulent transfer. Otherwise, GPA would have retained some interest in the claims. 28 Furthermore, the state court's determination that all of GPA's other contentions were lacking merit should not be disregarded. Even if a decision on the merits could not be implied from the court's discussion, it can be implied from this language. A judgment that claims are without merit can be sufficient to raise issue preclusion if the outcome of the case--denial of all relief ...--necessarily constituted a rejection of the claims. American Iron and Steel Inst. v. EPA, 886 F.2d 390, 397 (D.C.Cir.1989), cert. denied, 497 U.S. 1003 (1990). See also Springfield Television Corp. v. FCC, 609 F.2d 1014, 1018-19 (1st Cir.1979). 29 The Nevada Supreme Court did not state that it was rejecting GPA's claims on procedural grounds, rather it rejected them as being without merit. We must give the appropriate meaning to this language. The Nevada Supreme Court could not have decided that GPA's fraudulent transfer claim was without merit without considering the substance of the issue. 30 Accordingly, we hold that the issue of a fraudulent transfer, including whether reasonably equivalent value was received, was actually litigated and necessarily decided before a court of competent jurisdiction, the Nevada Supreme Court. Nevada courts would give collateral estoppel effect to such a judgment, so federal courts must do likewise. The bankruptcy court was therefore collaterally estopped from deciding that question again. 31 For the same reasons, we affirm the district court holding that the bankruptcy court owed full faith and credit to the state court judgment, and erred by its failure to defer to it.