Opinion ID: 524344
Heading Depth: 2
Heading Rank: 1

Heading: Preclusion Claim

Text: 76 PDM contends that the court's ruling in PDM I deprived the court of jurisdiction in PDM II to limit PDM's collection to WNP-4/5 funds. That argument lacks merit. 77 This court has held that a federal court sitting in diversity must apply the res judicata law of the state in which it sits. Costantini v. Trans World Airlines, 681 F.2d 1199, 1201 (9th Cir.), cert. denied, 459 U.S. 1087, 103 S.Ct. 570, 74 L.Ed.2d 932 (1982); see St. Paul Fire & Marine Ins. Co. v. Weiner, 606 F.2d 864, 868 (9th Cir.1979) (applying that rule where the prior action was in federal court). Washington law dictates what preclusive effect we give the prior judgment in PDM I. 78 PDM argues that WPPSS's defenses relating to limitations on its collection efforts merged into the judgment entered on its second counterclaim in PDM I. It relies primarily on Caine & Weiner v. Barker, 42 Wash.App. 835, 713 P.2d 1133, 1134 (1986), which states that generally when a valid final judgment for the payment of money is rendered, the original claim is extinguished, and a new cause of action on the judgment is substituted for it. PDM, however, fails to acknowledge that the collection issue did not merge into the judgment because the parties did not and could not litigate that issue. 8 79 The court in PDM I expressly reserved ruling several times on the collection issue. 9 When a court reserves a question for further adjudication, a judgment does not bar subsequent determination of that question. Curtiss v. Crooks, 190 Wash. 43, 66 P.2d 1140, 1144 (1937); State v. Drake, 16 Wash.App. 559, 558 P.2d 828, 831 (1976); see Restatement (Second) of Judgments, Sec. 26(1)(b) (1982) (stating that no merger occurs to extinguish a claim when [t]he court in the first action has expressly reserved the plaintiff's right to maintain the second action). The court's decision in PDM II addressed only this reserved issue. We find no preclusion.