Opinion ID: 182688
Heading Depth: 2
Heading Rank: 2

Heading: Separate Cause of Action Argument

Text: Dillon's second argument requires more analysis. Under New Hampshire law, two causes of action are the same for res judicata purposes when they arise from the same factual transaction. Sutliffe, 584 F.3d at 327. A second suit that contains additional factual allegations does not necessarily arise from a different factual transaction under New Hampshire law. Id. Claims arise from the same transaction if [n]o material fact is alleged in action No. 1 that was not alleged in action No. 2. Id. (alterations in original) (quoting Patterson v. Patterson, 306 F.3d 1156, 1159-60 (1st Cir.2002)). A plaintiff's desire to present new grounds or theories of a case in a subsequent action is not relevant to this transactional analysis. See id. As we noted in Sutliffe, the New Hampshire Supreme Court has repeatedly defined res judicata with reference to the Restatement (Second) of Judgments § 24. Id. at 327 n. 7. That Section states that a factual transaction connotes a natural grouping or common nucleus of operative facts. Restatement (Second) of Judgments § 24 cmt. b (1982). It states further that [a]mong the factors relevant to a determination whether the facts ... constitute a single claim are their relatedness in time, space, origin, or motivation, and whether, taken together, they form a convenient unit for trial purposes. Id. Under New Hampshire law, a factual transaction may include events that occur after the initiation of a lawsuit. See Sutliffe, 584 F.3d at 328 (citing cases). Dillon has not raised a material fact in this action that he did not allege in the prior action. In his state court complaint, Dillon alleged that the defendants engaged in a range of wrongful conduct culminating in their effort to foreclose upon his mortgage. That conduct included, Dillon alleged, improper accounting practices, wrongful assessment of fees, misapplication of payments, inaccurate mortgage statements, and harassing telephone calls. In his federal court complaint, Dillon accompanied these same allegations with the assertion that the defendants continued engaging in this improper behavior. Dillon alleges that SPS continued to harass him after the Superior Court initially granted his application for a temporary restraining order and continued to provide inaccurate statements, assess improper penalties, misapply payments, and improperly report the foreclosure to Dillon's credit report after the Superior Court issued a permanent injunction. Like the new factual allegations at issue in Sutliffe, the new factual allegations at issue here reflect a continuation of the wrongful conduct alleged in the state court action. Dillon raised most of these new factual allegations in his motion for contempt in the state court action. In that motion, Dillon alleged that the defendants provided inaccurate statements, assessed improper penalties, misapplied fees, and improperly reported the foreclosure to Dillon's credit report in violation of the court's permanent injunction. These claims arise from the same pattern of behavior Dillon challenged in his state court complaint. Dillon's contempt motion could have but did not mention the alleged harassment that occurred after the Superior Court granted his motion for a temporary restraining order. Nevertheless, that allegation also falls within the pattern of conduct Dillon alleged in his state court complaint. To his credit, Dillon acknowledged before the district court that he could have brought the claims in the present action in his state court action. He explained that he did not bring the additional claims because of strategic concerns and his shifting theory of the claims available to him in his case. He did not argue before the district court, or before this court, that any of the new factual allegations were materially different from those he had previously alleged. As the district court held, The surest indication that this case asserts the same `cause of action' as its state-law antecedent is Dillon's exclusive reliance on the Superior Court's findings and rulings on his claims there as sufficient proof of each of his claims here. Dillon, 2009 WL 242912, at . In an effort to avoid this conclusion, Dillon argues that under New Hampshire law, res judicata does not preclude a second action for damages when the first action sought injunctive relief. New Hampshire courts have rejected this argument, which is inconsistent with New Hampshire's well-established law on the second res judicata condition. See E. Marine Const. Corp. v. First S. Leasing, Ltd., 129 N.H. 270, 525 A.2d 709, 713-14 (1987) (holding that where an initial suit sounded in equity and a second suit sought legal relief, res judicata bars the second action when both suits derive from the same factual transaction). Dillon nonetheless invokes New Hampshire and federal cases that have allowed claims for damages in a second action after the plaintiff received injunctive relief in a first action involving different transactions. His citations to these cases are inapposite and ignore that under New Hampshire preclusion law, the analysis goes to the scope of the transaction at issue in the first action, not the forms of relief sought. The cases Dillon cites each involve different transactions and do not turn on the type of relief sought. See, e.g., Grossman v. Murray, 141 N.H. 265, 681 A.2d 90, 94 (1996) (holding that claims were not precluded because they arose after an initial bankruptcy proceeding and could not have been raised in that proceeding under bankruptcy rules). Dillon raises three additional arguments, all for the first time on appeal. Because these arguments were not raised before the district court, they are waived. See In re New Motor Vehicles Canadian Exp. Antitrust Litig., 533 F.3d 1, 6 (1st Cir. 2008). At any rate, each argument fails. First, Dillon argues that Sutliffe misapplied New Hampshire law in holding that a factual transaction may include conduct that postdates the complaint in the first action. He relies on two New Hampshire Supreme Court decisions, Schwartz v. State Department of Revenue Administration, 135 N.H. 470, 606 A.2d 806 (1992) and In re Alfred P., 126 N.H. 628, 495 A.2d 1264 (1985). These decisions each concern discrete acts that postdated a complaint; they do not establish a transactional barrier when a plaintiff files a complaint. See Schwartz, 606 A.2d at 809 (finding that each time an illegal tax is imposed, a new cause of action arises); In re Alfred P., 495 A.2d at 1265-66 (finding that an action for involuntary commitment was not precluded by res judicata because the second action involved different specific acts). Second, Dillon seeks to distinguish Sutliffe by arguing that unlike the plaintiffs in that case, he did not introduce the post-complaint evidence during the first action. As an initial matter, this claim misstates the facts in Sutliffe. We made clear that [a]lmost allbut not allof the post-complaint evidence in that case had been presented to the state court. See Sutliffe, 584 F.3d at 328-29. Even if Dillon had described the facts in Sutliffe correctly, his assertion would still be irrelevant. The issue here is whether Dillon raises a fact beyond the factual transaction that he pleaded in the state action, not whether he raises a fact beyond the particular instances identified in the state action. Third, Dillon argues that the factual allegations that postdate the state court's grant of permanent injunctive relief must give rise to a new cause of action. Dillon contends that a contrary rule would have required him to amend his complaint during the contempt proceeding and thereby transgress the limited scope of contempt under New Hampshire law. This argument misses the mark. The only factual allegations Dillon raises that postdate the state court's grant of permanent injunctive relief concern ongoing conduct in violation of that injunctive relief, matters which he raised in the New Hampshire courts. That Dillon then chose not to raise the new legal theories he now advances for additional relief does not help his cause. The pattern of factual allegations that yielded the permanent injunction is the same pattern that prompted a contempt motion alleging violations of that permanent injunction. See Restatement (Second) of Judgments § 24 cmt. b.