Opinion ID: 1583910
Heading Depth: 1
Heading Rank: 3

Heading: The Treasurer's Appeal: Judgment for A-1 on 1997 Taxes.

Text: The district court granted summary judgment for A-1 on the 1997 taxes based on issue preclusion. The court determined the statute-of-limitations issue had already been litigated and decided (in favor of A-1) by the district court in Fennelly I, and the Treasurer was precluded from relitigating it again in this action. Because the court in Fennelly I decided the five-year statute of limitations applies to the Treasurer, and the Treasurer filed Fennelly II more than five years after the claim for 1997 taxes accrued, it entered summary judgment for A-1 on this claim. On appeal in Fennelly I, we held the statute of limitations did not apply to the Treasurer. Thus, we have before us a judgment based on a judgment subsequently reversed. This situation is covered by section 16 of the Restatement (Second) of Judgments. That section provides: A judgment based on an earlier judgment is not nullified automatically by reason of the setting aside, or reversal on appeal, or other nullification of that earlier judgment; but the later judgment may be set aside, in appropriate proceedings, with provision for any suitable restitution of benefits received under it. Restatement (Second) of Judgments § 16, at 145 (1982). A comment to the section states when an appeal from the second judgment is pending when the first judgment is reversed, [t]he court should then normally set aside the later judgment. Id. § 16 cmt. c, at 147. Therefore, we reverse the summary judgment for A-1 on the 1997 taxes.