Opinion ID: 3049624
Heading Depth: 2
Heading Rank: 4

Heading: Giles Chevrolet Case

Text: In the Giles Chevrolet case, the district court granted summary judgment to GMAC based on claim preclusion. Apply- 2 For the reasons stated in footnote 1, supra, we express no opinion on whether GMAC’s actions following the discovery that the vehicles were out of trust gave rise to fiduciary or confidential relationship duties in GMAC. 9594 GILES v. GMAC ing Nevada law, the district court held that the claims in the Yerington Ford case and the Giles Chevrolet case were identical; that there was a final judgment in the Yerington Ford case; and that there was either identity or privity of parties in the two cases. Appellants in the Giles Chevrolet case appeal the grant of summary judgment based on claim preclusion with respect to their contract claims. Although Appellants do not appeal the district court’s preclusion decision with respect to their tort claims, they note that, if we reverse the district court’s decision in the Yerington Ford case on any of the tort claims, the district court’s decision on those claims cannot have preclusive effect in the Giles Chevrolet case. They thus ask that if we reverse the decision in the Yerington Ford case with respect to any of the tort claims in that case, we also reverse the decision in the Giles Chevrolet case with respect to the parallel tort claims. For the reasons that follow, we reverse the district court’s grant of summary judgment against Appellants on their contract claims in the Giles Chevrolet case based on claim preclusion. We also reverse the district court’s decision on Appellants’ tort claims that are based on fraud and conversion. We agree with the district court that in this diversity case where only substantive state law is at issue we apply the preclusion law that the Nevada courts would apply. Semtek Int’l Inc. v. Lockheed Martin Corp., 531 U.S. 497, 508-09 (2001). On at least one occasion, the Nevada Supreme Court has applied federal law to determine the preclusive effect of a prior federal court judgment. See Clark v. Columbia/HCA Info. Servs., 25 P.3d 215, 224 (Nev. 2001) (en banc). But in that case the federal court decision had been based on federal rather than state law. When a prior federal court decision has been based on state law, Nevada courts have applied Nevada preclusion law. See LaForge v. State, 997 P.2d 130, 133-34 (Nev. 2000); Alitalia-Linee Aeree Italiane-S.p.A. v. Second Jud. Dist. Ct., 556 P.2d 544, 545 (Nev. 1976) (per curiam). GILES v. GMAC 9595 We therefore apply Nevada preclusion law to determine the effect, if any, to be given the judgment of the federal district court in the Yerington Ford case. [13] Under Nevada law, “[g]enerally, the doctrine of res judicata precludes parties or those in privity with them from relitigating a cause of action or an issue which has been finally determined by a court of competent jurisdiction.” Univ. of Nev. v. Tarkanian, 879 P.2d 1180, 1191 (Nev. 1994) (per curiam). “The modern view is that claim preclusion embraces all grounds of recovery that were asserted in a suit, as well as those that could have been asserted . . . .” Id. at 1192. In order for claim preclusion to apply under Nevada law, the two claims must be based on the same “cause of action.” Executive Mgmt., Ltd. v. Ticor Title Ins. Co., 963 P.2d 465, 473 (Nev. 1998) (per curiam) (internal quotation marks and citation omitted); accord Round Hill Gen. Improvement Dist. v. B-Neva, Inc., 606 P.2d 176, 178 (Nev. 1980); In re Estate of Firsching, 578 P.2d 321, 322 (Nev. 1978) (per curiam); see also Holcombe v. Hosmer, 477 F.3d 1094, 1097-98 (9th Cir. 2007). We address only the question whether the contract claims dismissed in the Yerington Ford case were the same “cause of action” as the contract claims in the Giles Chevrolet case. We do not reach the question whether there was a final judgment on the contract claims in the Yerington Ford case that was entitled to preclusive effect; nor do we reach the question whether there was privity among all the parties in the two cases. The Nevada Supreme Court has explained the “same cause of action” test: “The true test of identity of ‘causes of action,’ as that term is used in connection with the plea of former adjudication, is the identity of the facts essential to their maintenance . . . . The authorities agree that when the same evidence supports both the present and the former cause of action, the two causes of 9596 GILES v. GMAC action are identical . . . .” Thus, if appellant’s claim is based upon evidence of new and independent delinquencies, there can be no such identity. Round Hill, 606 P.2d at 178 (quoting Silverman v. Silverman, 283 P. 593, 598 (Nev. 1930) (Coleman, J., concurring)). Identity of claims under Nevada law has also been described as “one right” and “one wrong”: “The test of a cause of action for res judicata purposes is the identity of facts essential to maintain the two suits; if the facts show only one right of the plaintiff and one wrong by the defendant involving that right there is only one cause of action.” Firsching, 578 P.2d at 322 (quoting Bissell v. Coll. Dev. Co., 517 P.2d 185, 187 (Nev. 1973)). [14] Giles Chevrolet’s contract claims are not barred by claim preclusion under Nevada’s “cause of action” test. Giles Chevrolet’s and Yerington Ford’s contracts do not involve the same “rights.” Giles Chevrolet’s contract claims depend on Giles Chevrolet’s rights under its 1992 contract with GMAC, not Yerington Ford’s rights under its own separate, and later, contract with GMAC. These contracts are nearly identical, but they establish different rights — rights belonging to Giles Chevrolet in one case, and rights belonging to Yerington Ford in the other. Similarly, the claimed violations of the contracts do not involve the same “wrongs.” The alleged breaches of one contract harmed Giles Chevrolet in violation of Giles Chevrolet’s contract; the alleged breaches of the other contract harmed Yerington Ford in violation of its contract. Cf. Zalk-Josephs Co. v. Wells Cargo, Inc., 400 P.2d 621, 622-23 (Nev. 1965) (applying claim preclusion where claims arose from “the same guaranty provision” of “the same and identical state contract” between Wells Cargo and the state). [15] Because the “cause of action” prong of Nevada preclusion law is not satisfied, the summary judgment on the contract claims in the Yerington Ford case cannot have preclusive effect on the contract claims in the Giles Chevrolet case. We GILES v. GMAC 9597 therefore reverse the district court’s grant of summary judgment on the contract claims in the Giles Chevrolet case. We also reverse the grant of summary judgment to GMAC on Appellants’ fraud and conversion claims. Because we have reversed the district court’s judgment on the fraud and conversion claims in the Yerington Ford case, that judgment cannot serve as the basis for preclusion-based dismissal of the parallel claims in the Giles Chevrolet case. See Fitzharris v. Phillips, 333 P.2d 721, 724 (Nev. 1958); Cal. Dep’t of Soc. Servs. v. Thompson, 321 F.3d 835, 847 (9th Cir. 2003).