Opinion ID: 521022
Heading Depth: 3
Heading Rank: 3

Heading: Dismissal of Amended Counterclaim and Third-Party Complaint

Text: 28 The district court dismissed these claims on the basis that Fujikawa was collaterally estopped from asserting them. It reasoned that Fujikawa already had litigated these claims in Civ. No. 85-1188 and that the issues were necessarily decided in favor of Kim and, in his capacity as their virtual representative, in favor of the third-party defendant trustees. 29
30 The district court held that Fujikawa's amended counterclaim against Kim, which alleged that Kim had approved the prohibited transaction and should similarly be liable for damages, was barred because that claim had already been litigated and necessarily decided in the counterclaim brought by Fujikawa in Civ. No. 85-1188, in which no relief had been granted against Kim. 31 Fujikawa argues that it remains speculative whether the trial court in 85-1188 necessarily decided the issue, citing to additional facts not pled in Civ. No. 85-1188 evidencing Kim's further approval of the outer island representative system. 6 32 The litigation of an issue presented and necessarily decided in a prior action between the same parties is foreclosed by the doctrine of issue preclusion. Allen v. McCurry, 449 U.S. 90, 94, 101 S.Ct. 411, 414, 66 L.Ed.2d 308 (1980); Deutsch v. Flannery, 823 F.2d 1361, 1364 (9th Cir.1987). Merely submitting additional allegations that are not sufficiently different from those contained in the previous complaint will not render the doctrine inapplicable. Deutsch, 823 F.2d at 1364. 33 In both the counterclaim in 85-1188 and the amended counterclaim in 87-0213 (the subject of this particular appeal), Fujikawa alleged that Kim was liable for violations of section 404(a)(1)(A) and (B), 29 U.S.C. Sec. 1104(a)(1)(A) and (B), for knowing of the prohibited practice, yet allowing it to continue. The allegations added to the amended counterclaim lack any substantive significance from that contained in the 85-1188 counterclaim. 7 Thus, the same issue was involved in each action. 34 Furthermore, the district court necessarily decided the issue when it explicitly stated: I find for Kim and PECA on the claims asserted against them. Opinion (Civ. No. 85-1188) at 3. 35 Accordingly, we hold that the doctrine of issue preclusion presents an entirely sufficient basis for dismissing Fujikawa's amended counterclaim. 36
37 Notwithstanding the doctrine of virtual representation and the collateral estoppel effect of a prior action, we affirm the district court's dismissal of the amended third-party complaint on a more fundamental basis. While the district court dismissed the initial third-party claim on the ground it sought the unavailable remedy of contribution and granted leave for Fujikawa to assert a [third-party] cause of action under some theory other than contribution, we find that Fujikawa has failed to do so and the court's generous leave to amend constituted a non sequitur of sorts. Fed.R.Civ.P. 14 states in pertinent part: 38 At any time after commencement of the action a defending party, as a third-party plaintiff, may cause a summons and complaint to be served upon a person not a party to the action who is or may be liable to the third-party plaintiff for all or part of the plaintiff's claim against the third-party plaintiff. 39 Fed.R.Civ.P. 14(a) (emphasis added). Thus, Fujikawa's third-party complaint is valid only if the other trustees [are] or may be liable to [Fujikawa] for all or part of [Kim's] claim against [Fujikawa]. 40 The purpose of this rule is to promote judicial efficiency by eliminating the necessity for the defendant to bring a separate action against a third party who may be derivatively liable to the defendant for all or part of the plaintiff's original claim. 6 C. Wright & A. Miller, Federal Practice and Procedure Sec. 1442, at 202-03 (1971). 41 Of particular importance is that while Rule 14 provides the procedural mechanism for the assertion of a claim for contribution or indemnity, there must also exist a substantive basis for the third-party defendant's liability. 3 J. Moore, Moore's Federal Practice p 14.03 and (2d ed. 1987). The substantive basis for Fujikawa's third-party complaint is a personal claim for contribution or indemnity under ERISA. 8 42 Accordingly, Fujikawa's third-party claim necessarily fails since ERISA, the governing substantive law, does not recognize a right of contribution. Thus, the third-party complaint does not contain a legally cognizable third-party claim under Rule 14(a), and the district court's dismissal of the complaint is affirmed. IV APPEAL NO. 87-2922 A. FACTS AND PROCEEDINGS 43 After judgment was rendered in Civ. No. 85-1188 (Appeal Nos. 87-1801/87-1931), Kim moved for an award of attorneys' fees in the amount of $106,875.50, pursuant to 29 U.S.C. Sec. 1132(g)(1). The district court considered the relevant criteria in Hummell v. S.E. Rykoff & Co., 634 F.2d 446 (9th Cir.1980), and concluded that Kim was entitled to reasonable attorneys' fees. The court then performed a lodestar calculation and examined whether any of the factors in Kerr v. Screen Extras Guild, Inc., 526 F.2d 67, 70 (9th Cir.1975), cert. denied, 425 U.S. 951, 96 S.Ct. 1726, 48 L.Ed.2d 195 (1976), required adjustment of the lodestar amount. In an opinion and order filed October 21, 1987, the court awarded Kim $101,238.75 in attorneys' fees representing 1039.50 hours of work. The fees order was subsequently amended to expressly exclude the outer island representatives from liability for Kim's attorneys' fees. 44 On appeal, Fujikawa does not dispute Kim's entitlement to attorneys' fees or that the rates applied were reasonable. He does, however, contend the district court erred in determining that 1039.50 hours represented a reasonable amount of time expended on the case by Kim's attorneys. Specifically, he argues (1) time spent on a motion for summary judgment duplicated time spent on pretrial preparation, trial and posttrial briefing; and (2) because Kim was represented by more than one attorney, it is highly probable that the hours claimed represented duplicative efforts. B. DISCUSSION 45 The determination of the amount of a fee award is reviewed for abuse of discretion. Chalmers v. City of Los Angeles, 796 F.2d 1205, 1210 (9th Cir.1986), amended, 808 F.2d 1373 (9th Cir.1987). 46 In Chalmers, we discussed the proper procedure for computing the amount of an attorney fee award, stating: 47 The initial determination of reasonable attorney's fees is calculated by multiplying the number of hours reasonably expended ... by a reasonable hourly rate.... In determining reasonable hours, counsel bears the burden of submitting detailed time records justifying the hours claimed to have been expended.... 48 ... Next, the district court must determine a reasonable hourly rate considering the experience, skill, and reputation of the attorney requesting fees.... What remains important is that the district court articulate with sufficient clarity the manner in which it makes its determination of a reasonable hourly rate and the number of hours which should reasonably be compensated. 49 796 F.2d at 1210-11 (citations omitted). 50 Here, the district court devoted much of its opinion to determining whether the time expended by Kim's attorneys was reasonable. After setting forth the parties' respective arguments, Judge Panner specifically found that (1) the hours spent on the summary judgment motion were reasonable; (2) plaintiff spent a reasonable amount of time on pretrial preparation and on the trial; and (3) [g]iven the complexity of the facts and the law, the hours spent on posttrial briefs were reasonable. 51 Because [t]he district court had 'the benefit of the adversary process' and was able to develop 'a sense of the extent to which the claim for services was reasonable,'  Keith v. Volpe, 833 F.2d 850, 859 (9th Cir.1987),  'the district court [was] in the best position to determine in the first instance the number of hours reasonably expended.'  Id. (quoting Chalmers, 796 F.2d at 1211). With this deference in mind, we find no abuse of the district court's discretion and the award of attorneys' fees is affirmed. 9 V ATTORNEYS' FEES ON APPEAL 52 Kim seeks attorneys' fees on appeal as provided for by 29 U.S.C. Sec. 1132(g)(1), which permits courts, at their discretion, to award reasonable attorneys' fees. 10 The factors to be considered in exercising discretion to award fees include: 1) the degree of the opposing party's culpability or bad faith; 2) the ability of the opposing party to satisfy an award of fees; 3) whether an award of fees against the opposing party would deter others from acting under similar circumstances; 4) whether the party requesting fees sought to benefit all participants and beneficiaries of an ERISA plan or to resolve a significant legal question regarding ERISA; and 5) the relative merits of the parties' positions. Hummell, 634 F.2d at 453. 53 After due consideration of the foregoing factors, we decline to award fees in these consolidated cases. VI