Opinion ID: 11909
Heading Depth: 2
Heading Rank: 4

Heading: The “Actually Litigated” Standard

Text: As we noted above, and as this court previously observed in Carpenter, the relitigation exception to the Anti-Injunction Act provides another, entirely independent mechanism which defendants (and the federal courts) may use to protect prior federal court judgments.63 In Carpenter we reasoned that, as the relitigation exception to the Anti-Injunction Act had “already realigned federal-state relations in favor of the federal courts,” Moitie’s use of the res judicata branch of the artful pleading exception signified nothing more than that “any potential impact on federalism from removal was not significant.”64 Thus two lessons are to be gleaned from Carpenter: (1) Issues of federalism are not 62 In D-1 Enterprises, we found that the lender liability claims that debtor sought to assert in the later action were not “direct defenses” that the debtor could or should have litigated in response to the creditor’s earlier motion for relief from stay. Id. at 39. Furthermore, D-1 Enterprises also distinguished Southmark in which preclusion was appropriate in the context of a “court-ordered public cash auction.” Id. 63 See supra Part B, and 44 F.3d at 370. 64 Id. 25 implicated in this context; and (2) the relitigation exception to the Anti-Injunction Act —— a route that parallels (but is not identical to) removal via the res judicata iteration of the artful pleading exception —— is not the exclusive path available for squelching precluded sequential state court litigation of claims previously litigated in federal court. Nevertheless, in reliance on the above-quoted limited discussion of how the Anti-Injunction Act co-exists with the federal res judicata interpretation of Moitie, the Mirannes imaginatively contend that the court in Carpenter implicitly incorporated the specific restraints of the relitigation exception into its res judicata artful pleading exception based on Moitie. In particular, they contend that removal under Carpenter is somehow limited by the anti-injunction holding in Chick Kam Choo v. Exxon Corp.65 The Mirannes argue that Chick Kam Choo stands for the proposition that injunctions may be issued under the relitigation exception to §2283 only with respect to issues that were “actually litigated” in the prior proceeding —— that is, only in circumstances in which issue —— but not claim —— preclusion would apply in a successive proceeding; and that such a limitation must per force restrict the artful pleading exception to issue preclusion. This stretch by the Mirannes, in attempting to incorporate an “actually litigated” restriction into Carpenter, is fatally flawed, however. First, we note that nowhere in Carpenter did we even mention, 65 486 U.S. 140, 106 S.Ct. 1684, 100 L.Ed.2d 127 (1988). 26 much less impose, an “actually litigated” standard for removal under the res judicata branch of the artful pleading exception; neither did we so much as refer to Chick Kam Choo, much less cite it as authority. Second, we are aware of no other court that, when applying the federal res judicata manifestation of the artful pleading exception following Sullivan, has seen fit to apply —— or even mention —— this standard. But even if we assume, solely for the sake of argument, that an “actually litigated” requirement was imported through Carpenter, we would still find that removal is proper under the circumstances of this case. In Chick Kam Choo, the Supreme Court, relying on Atlantic Coast Line R. Co. v. Locomotive Engineers,66 stressed that: an essential prerequisite for applying the relitigation exception is that the claims or issues which the federal injunction insulates from litigation in state proceedings actually have been decided by the federal court. Moreover, Atlantic Coast Line illustrates that this prerequisite is strict and narrow. The court assessed the precise state of the record and what the earlier federal order actually said; it did not permit the District Court to render a post hoc judgment as to what the order was intended to say.67 For the bankruptcy court in the instant case to authorize and approve the sale of the leasehold estate free and clear of essentially all liens and encumbrances, that court necessarily had to decide whether the Mirannes’ inferior second mortgage could survive as an encumbrance against the leasehold estate after that estate was sold at public auction by the THILP trustee’s 66 398 U.S. 281, 286-287, 90 S.Ct. 1739, 26 L.Ed. 234 (1970). 67 Chick Kam Choo, 486 U.S. at 148 (emphasis in original). 27 foreclosure on the superior first mortgage. Indeed, the bankruptcy court’s order authorizing sale of the leasehold estate “actually said,” inter alia, that (1) Edmond G. Miranne, Jr. appeared on his and his father’s behalf, (2) all creditors were given notice and an opportunity to object and be heard, and (3) the sale of the leasehold estate would be free and clear of “all . . . liens, mortgages and encumbrances,” including, specifically, the Mirannes’ second mortgage. Given Chick Kam Choo’s admonition to focus on “what the earlier federal order actually said,” not what “the order intended to say” (albeit likely the same thing in this case), it is indisputable that in the 1986 bankruptcy court proceedings the continuing validity of the Mirannes’ inferior mortgage was “actually litigated and decided.”68