Opinion ID: 2377309
Heading Depth: 1
Heading Rank: 3

Heading: laufer's counterclaims

Text: With his answer Laufer filed two counterclaims against Westminster, one for fraud and one for breach of fiduciary duty. When these were dismissed, he filed two amended counterclaims which were essentially the same as the originals, the only significant change being a new allegation that Laufer was personally damaged by reason of the judgment of $173,062.99 fraudulently obtained against him in the London Court, together with the tremendous cost of litigation. . . . In both the original and the amended versions, Laufer stated that Westminster had made a number of fraudulent representations concerning IMC's business experience and reputation. Laufer alleged that he had relied on these representations, heeded Westminster's advice, and entered into a series of agreements with IMC. As a result, he said, he had suffered losses in excess of two million dollars because he had pledged Dragon Bay, in which he had invested more than two million dollars of his own funds, as security for those debts incurred by FSI. [13] The trial court dismissed both sets of counterclaims, essentially on the ground that Laufer lacked standing to assert them because he had suffered no injury; the corporate entities, FSI and SSI, were the real parties in interest. On appeal Laufer challenges the dismissal of both the original and the amended counterclaims.
We agree in part with the trial court that Laufer lacks the requisite standing. Laufer maintains that he has standing to bring the counterclaims because he has suffered a personal injury, in that Westminster's fraud caused him to enter into the February 1983 contract with IMC, which bound him personally as a guarantor of the debts and obligations of FSI and SSI. [14] Moreover, he claims that he stands to lose not only the broker's fee for which he was held liable to Westminster in the English suit, but also Dragon Bay itself, and perhaps millions of dollars more, to IMC. He alleges that as guarantor he will be obligated to pay money in the future, which amounts to a present injury sufficient to confer standing. In support of these claims, he relies upon his own supplemental affidavit to show that he has expended various sums and incurred other risks because he has been sued both in the District of Columbia and in Jamaica. [15] Standing to assert a claim or counterclaim, when challenged, requires a showing of actual or threatened injury redressable by the court. Valley Forge Christian College v. Americans United for Separation of Church and State, Inc., 454 U.S. 464, 472, 102 S.Ct. 752, 758-59, 70 L.Ed.2d 700 (1982) (citing cases); see also Sierra Club v. Morton, 405 U.S. 727, 732, 92 S.Ct. 1361, 1364-65, 31 L.Ed.2d 636 (1972); Baker v. Carr, 369 U.S. 186, 204, 82 S.Ct. 691, 703, 7 L.Ed.2d 663 (1962) (a personal stake in the outcome of the controversy). In this case, however, Laufer has not alleged any injuries as the guarantor of the loan that are real, perceptible, concrete, specific and immediate, but only those that are conjectural, hypothetical or speculative. Lee v. District of Columbia Board of Appeals & Review, 423 A.2d 210, 217 (D.C.1980) (citations omitted). Standing cannot be based on the assertion that someday he may have to pay money to someone as a guarantor. See United States v. Palmer, supra note 14; cf. Debevoise v. Back, 359 A.2d 279, 280 (D.C.1976) (no taxpayer standing when plaintiff merely suggested that her tax bills might be reduced if she were granted relief). Laufer must demonstrate that unless relief from assertedly illegal actions [is] forthcoming, [his] immediate and personal interests [will] be harmed; he may not rely on little more than the remote possibility, unsubstantiated by allegations of fact, that eventually he may have to make good on his guarantee. Warth v. Seldin, 422 U.S. 490, 507, 95 S.Ct. 2197, 2209, 45 L.Ed.2d 343 (1975); see also Burleson v. United Title & Escrow Co., 484 A.2d 535, 537 (D.C.1983) (standing requires that the suing party be injured in fact by the conduct of the other party); Consumer Federation of America v. Upjohn Co., 346 A.2d 725, 728 (D.C.1975) (standing requires individualized proof of both the fact and the extent of injury). On the present record we hold that Laufer cannot assert standing based on his status as a guarantor. The one respect in which the amended counterclaims differed from the originals was in the addition of an allegation that Laufer was personally damaged by . . . the tremendous cost of litigation, which presumably includes the $40,000plus in attorney's fees and the $30,000plus in travel expenses to which his supplemental affidavit refers. We need not decide whether this allegation was sufficient to confer standing, however, because there is a more fundamental reason why his counterclaims are totally barred. To that reason we now turn.
Under the doctrine of res judicata, a prior judgment on the merits raises an absolute bar to the relitigation of the same cause of action between the original parties or those in privity with them. Goldkind v. Snider Brothers, Inc., 467 A.2d 468, 473 (D.C.1983) (citations omitted). This doctrine bars relitigation of not only those matters actually litigated but also those which might have been litigated in the first proceeding. Id. at 473 n. 10 (citations omitted; emphasis in original); see Federated Department Stores, Inc. v. Moitie, 452 U.S. 394, 398, 101 S.Ct. 2424, 2427-28, 69 L.Ed.2d 103 (1981). Laufer alleged in his counterclaims that he was induced by Westminster's fraudulent representations to enter into the contract with IMC, and that he therefore suffered damages. If these allegations were true, they would have constituted a defense to Westminster's original claim on the brokerage contract, which was the basis of the English litigation. We hold, therefore, that because the issue of Westminster's alleged fraud was one which might have been litigated in the original action before the High Court of Justice, the English judgment raises an absolute bar to Laufer's counterclaims based on the same alleged fraud. Cromwell v. County of Sac, 94 U.S. (4 Otto) 351, 352-353, 24 L.Ed. 195 (1876). [16] To allow the defenses that Laufer now seeks to raise in the guise of counterclaims would impermissibly undercut the validity of the [English] judgment . . . and permit him to relitigate the case de novo.  Bank of Montreal v. Kough, 612 F.2d 467, 473 (9th Cir.1980). [17] Laufer asserts that res judicata does not bar his counterclaims because he was not aware of any direct proof of the existence of the fraud by Westminster until late April or early May 1985, after the English judgment had been entered. Thus, he argues, he had no claim against Westminster which could have been litigated in England. His own affidavit refutes this assertion. Laufer's affidavit of June 29, 1985, states that in the early summer of 1983 he learned that Prince Alfonso Hohenlohe had sold seventy-five percent of his interest in the Marbella Club at Marbella, Spain, to an Arab group. Then, beginning in 1984, it began to appear that IMC was hopelessly inept at managing Dragon Bay; the requisite financial statement being untimely supplied, and then in such incomplete form as to be virtually worthless, the hotel having less than a fifteen percent (15%) occupancy, there being no comprehensive marketing plan, and the level of service being substandard. [Emphasis added.] The affidavit goes on to say that in the late Fall of 1984 Laufer began to realize that he had been grossly misled by . . . IMC (having received a copy of a partial financial statement of IMC revealing it had no assets, owned no hotels and was managing but one Marbella Club, namely at Sharjah, which was losing money). . . . Finally, and most significantly, the affidavit says that [u]pon information and belief, at all relevant times subsequent to the execution of the original agreements between [IMC and Laufer] i.e., since March 30, 1983, at the latestWestminster continued to mislead and/or failed to inform [Laufer] as to the true status of [IMC], and instead pursued a course of conduct which it still follows, of acting in concert with IMC to portray the latter as a substantial experienced manager of luxury resort hotels. The next paragraph states, again upon information and belief, that since October 1984 [Westminster] has been acting in concert with IMC to force the premature private foreclosure sale of Dragon Bay desired by IMC, and in connection therewith, upon information and belief, has taken the following overt acts, which are then set forth in the next several paragraphs. Those alleged overt acts included: (a) That although [Westminster] appeared satisfied with the Agreement dated July 21, 1983, and [Westminster's] construction thereof, providing namely for incremental payments of the agreed upon debt from the sales of villas at Dragon Bay, and indeed, accepting of such payments, [Westminster], without any advance notice or demand to [Laufer], filed a suit in the Queen's Bench Division, High Court of Justice, London, England, in October 1983, claiming the entire balance. This suit was timed to coincide with intense negotiations between [Laufer] and IMC then occurring in Washington, D.C., thereby inhibiting [Laufer's] ability to devote any substantial attention to said suit.       (d) That upon information and behalf [Westminster] and IMC coordinated the filing of [Westminster's] London law suit to increase the leverage against [Laufer], the quid pro quo to [Westminster] being that IMC would assist [Westminster] in obtaining payment of its claim.       Thus the affidavit shows that by the fall of 1984 at the latest (and perhaps as early as the spring of 1983) Laufer had knowledge of IMC's shortcomings, of Westminster's awareness of them, and of Westminster's alleged collusion with IMC against him. This was sufficient to put him on notice of the supposed fraud by Westminster, so that he should have raised that fraud as a defense to Westminster's action on the contract in the High Court of Justice in London. The judgment of that court in April 1985 now stands as a bar to any assertion of fraud in the instant litigation in the form of a counterclaim, under well settled principles of res judicata. Affirmed.