Opinion ID: 1316495
Heading Depth: 1
Heading Rank: 4

Heading: What Law Governs

Text: These specific contentions of the appellants concerning Rule 60(b) are summed up in the single issue of whether the circuit court properly ruled that the doctrines of res judicata and collateral estoppel preclude Joseph Nakash from continuing his action in the Circuit Court of Kanawha County. Because we are being asked to determine the effect of a New York order on a West Virginia proceeding, we must first decide what law to apply. We begin with the basic proposition that [u]nder Article IV, Section 1, of the Constitution of the United States, a valid judgment of a court of another state is entitled to full faith and credit in the courts of this State. Syllabus Point 1, State ex rel. Lynn v. Eddy, 152 W.Va. 345, 163 S.E.2d 472 (1968). Further, [b]y virtue of the full faith and credit clause of the Constitution of the United States, a judgment of a court of another state has the same force and effect in this State as it has in the state in which it was pronounced. Syllabus Point 3, Id. In order to ensure that another state's judgment is given the same force and effect it would have in that state, the general rule appears to be that [t]he validity and effect of a judgment must be determined by reference to the laws of the state where it was rendered. 50 C.J.S. § 969, p. 563. This Court utilized the general rule in Perkins v. Hall, 123 W.Va. 707, 17 S.E.2d 795 (1941), in determining that the force and effect of an Ohio judgment must be governed by the law of that state. It is also true that the law of the jurisdiction where the judgment was rendered may be determinative of the res judicata or collateral estoppel effect of a judgment. 50 C.J.S. § 969, p. 563. In Durfee v. Duke, 375 U.S. 106, 84 S.Ct. 242, 11 L.Ed.2d 186 (1963), the United States Supreme Court held that a Nebraska judgment on an action to quiet title was properly held by a federal district court to preclude the same action in Missouri. [15] The Court stated, The constitutional command of full faith and credit, as implemented by Congress, requires that judicial proceedings ... shall have the same full faith and credit in every court within the United States ... as they have by law or usage in the courts of such State ... from which they are taken. Full faith and credit thus generally requires every State to give to a judgment at least the res judicata effect which the judgment would be accorded in the State which rendered it. Durfee, 375 U.S. at 109, 84 S.Ct. at 244, 11 L.Ed.2d at 190 (footnote omitted and emphasis added). The Court further stated, [i]t is not questioned that the Nebraska courts would give full res judicata effect to the Nebraska judgment quieting title in the petitioners. Id. (Footnote omitted). This rule is also recognized by the Restatement (Second) of Conflict of Laws § 95 (Supp.1988), p. 93, which states, What issues are determined by a valid State judgment is determined, subject to constitutional limitations, by the local law of the State where the judgment was rendered. Further, Comment c of § 95 explains, If the judgment is for the defendant on the merits and if under the local law of the State where the judgment was rendered the effect of a valid and final judgment in favor of the defendant on the merits is to bar the claim, the plaintiff may no longer maintain an action on the claim in any State. Several states have adopted this approach. See Delaware, Bata v. Hill, 37 Del.Ch. 96, 106-107, 139 A.2d 159, 165 (Del.Ch.1958), modified on other grounds, Bata v. Bata, 39 Del.Ch. 258, 163 A.2d 493 (Del.Supr.1960), cert. denied, Bata v. Bata, 366 U.S. 964, 81 S.Ct. 1926, 6 L.Ed.2d 1255 (1961) (I therefore first consider whether under New York law the New York judgment in Bata v. Bata, above, is res judicata and thus a bar to a determination of this action on its merits [in Delaware].); New Jersey, Reliance Ins. v. Armstrong W. Ind., 259 N.J.Super. 538, 545-546, 614 A.2d 642, 645-646 (1992), modified on other grounds, 265 N.J.Super. 148, 625 A.2d 601 (1993), reversed on other grounds, 292 N.J.Super. 365, 678 A.2d 1152 (N.J.Super.A.D.1996) (party sought a preliminary ruling that a California decision respecting insurance coverage and insurance policy terminology is binding upon a New Jersey court. The New Jersey court stated that New Jersey recognizes that the collateral estoppel effect of a judgment is dependent upon the law of the state rendering it.... A stipulated judgment is the equivalent of a judgment after a contested trial for the purposes of res judicata or collateral estoppel. Citing California law ); Minnesota, McBroom v. Al-Chroma, Inc., 386 N.W.2d 369, 372 (Minn.App.1986) (This Court must apply Wisconsin law to determine whether the two actions now before this court are barred by the res judicata effect of the Wisconsin judgment.); Massachusetts, Wright Machine Corp. v. Seaman-Andwall Corp., 364 Mass. 683, 692, 307 N.E.2d 826, 832 (1974) (The full faith and credit clause requires us to look to Delaware law to determine how that State would treat the summary judgment its court granted to Seaman in terms of the doctrine of res judicata, so that we may give the Delaware judgment the same force and effect as it would be given there.); New York, Peros v. Cia De Nav Mar Netumar, 75 Misc.2d 913, 914, 349 N.Y.S.2d 926, 927 (1973) (It is the general rule that the res judicata effect of a judgment is to be determined by the law of the state in which the judgment is rendered. This also applies to the Federal jurisdiction (citations omitted).); Florida, Andujar v. National Property and Cas. Underwriters, 659 So.2d 1214, 1216 (Fla.App.1995) (We agree with defendant to the extent that federal claim preclusion law governs, rather than Florida's. Whenever res judicata is asserted, the court in the second forum is bound to give the former judgment the same preclusive effect that the rendering court would give it. Indeed that general principle is so well established as to need no further elucidation.); Oklahoma, Smith v. Shelter Mut. Ins. Co., 867 P.2d 1260, 1265 (Okl.1994) (The local law of the state where the judgment is rendered determines the issues decided and whether a judgment is on the merits (footnote omitted).); and Kansas, Johnson Bros. Wholesale Liquor Co. v. Clemmons, 233 Kan. 405, 661 P.2d 1242 (1983), cert. denied, 464 U.S. 936, 104 S.Ct. 345, 78 L.Ed.2d 311 (1983) (Validity and finality of foreign judgments are to be tested where the judgment was rendered). See also, Illinois, Bulfin v. Eli Lilly & Co., 244 Ill.App.3d 785, 614 N.E.2d 403, 185 Ill.Dec. 269 (1993), appeal denied, 152 Ill.2d 555, 622 N.E.2d 1201, 190 Ill.Dec. 884 (1993); Michigan, Jones v. State Farm Mut. Auto. Ins. Co., 202 Mich.App. 393, 509 N.W.2d 829 (1993), modified on other grounds, Patterson v. Kleiman, 447 Mich. 429, 526 N.W.2d 879 (1994); Arizona, Ibach v. Ibach, 123 Ariz. 507, 600 P.2d 1370 (1979); and North Carolina, American Inst. of Marketing Systems, Inc. v. Willard Realty Co., Inc. of Raleigh, 277 N.C. 230, 176 S.E.2d 775 (1970). It appears, however, that this Court has never expressly adopted the rule discussed above. In State ex rel. Lynn v. Eddy, supra . the Court stated that judgments of other states have the same force and effect in this State as in the states in which they were pronounced, nevertheless the Court proceeded to determine the res judicata effect of a Pennsylvania judgment by using this State's law on res judicata. In Litten v. Peer, 156 W.Va. 791, 197 S.E.2d 322 (1973), on the other hand, an action filed in federal district court was dismissed against the plaintiff for want of prosecution pursuant to Federal Rule of Civil Procedure 41(b). The plaintiff subsequently instituted his action in the Circuit Court of Pendleton County. On appeal, the issue before this Court was whether the disposition of the plaintiff's case in federal court was res judicata so as to bar the Pendleton County action. This Court based its analysis on the maxim that the effect of a judgment as res judicata is `substantive' and other jurisdictions must regard it as being as broad and conclusive as it would be in the jurisdiction in which it was rendered. Litten, 156 W.Va. at 796, 197 S.E.2d at 326 (citation omitted). Applying this rule, the Court looked to the language of Rule 41(b) and federal case law in determining whether the dismissal judgment was final for res judicata purposes. These cases provide guidance on the issue currently before us. In addition, whether New York law or West Virginia law is utilized determines the result in this case. The circuit court ruled that the Kanawha County action was rendered res judicata by the October 17, 1995 order of the New York court at a time when the October 17, 1995 order was being appealed or the time limits fixed for perfecting an appeal had not expired. Consequently, it appears that the order would not have been final for res judicata and collateral estoppel purposes under West Virginia law. Although this Court has never expressly held that a judgment pending appeal is not final for res judicata and collateral estoppel purposes, it intimated as much in Flanagan v. Gregory & Poole, Inc., 136 W.Va. 554, 67 S.E.2d 865 (1951). In Flanagan, a defendant asserted that the plaintiffs were estopped from bringing an action where the plaintiffs had recovered in a first action which was still pending on a writ of error. The Court noted that if the first action was pending on a writ of error, the judgment in the first action has no finality and would not estop plaintiffs. Flanagan, 136 W.Va. at 565, 67 S.E.2d at 873. As will be discussed infra, the New York law on this issue is different. Because of this difference, we are compelled to apply New York law in deciding the preclusive effect, if any, of the New York order. As noted above, the full faith and credit clause generally requires the courts of this State to give the New York judgment at least the res judicata effect which it would be accorded by New York courts.