Opinion ID: 783388
Heading Depth: 2
Heading Rank: 3

Heading: Claims Dismissed as Claim-Precluded

Text: 65 As a preliminary matter, we decide that Noel's nine wiretapping and mobile home claims are not barred by the Rooker-Feldman doctrine. As with Noel's fiduciary duty claim, above, applying our general formulation of Rooker-Feldman is straightforward. When the district court dismissed these claims as claim-precluded, Sandra Hall and Noel had already litigated very similar claims to judgment in state court. In asserting his wiretapping and mobile home claims in federal district court, Noel thus sought to litigate claims that under Washington law possibly should have been asserted in that state court litigation. 66 Noel's suit in federal district court was not a forbidden de facto appeal of the earlier state court judgments. In bringing his federal district court suit, Noel sought to litigate claims that were related to claims that had already been litigated, but Noel neither asserted as a legal wrong an allegedly erroneous decision by the state court in the earlier state court litigation nor sought relief from the state court judgment. Rather, he asserted as legal wrongs allegedly illegal acts committed by a party against whom he had previously litigated, and sought to litigate related claims against that party. Therefore, Noel's ability to sue in federal court is limited by § 1738 and the state law of claim preclusion, not by Rooker-Feldman. 67 The claims Noel sought to litigate in federal district court were clearly related to claims that had gone to judgment in the earlier state court litigation. Indeed, because the federal and state court claims arose out of the same sequence of interrelated events, the issues in the federal and state court litigation were almost certainly inextricably intertwined in the ordinary language sense. But the issues were not inextricably intertwined in the sense of Rooker-Feldman. Because Noel has not brought a forbidden de facto appeal from any of the earlier state court judgments, the inextricably intertwined analysis of Feldman does not apply. The district court thus properly exercised subject matter jurisdiction to analyze the claims under state claim preclusion law as required by § 1738.
68 We now consider whether Noel's nine wiretapping and mobile home claims against the Halls were or should have been litigated in the earlier state proceedings, and are therefore claim-precluded in this court. Neither the parties nor the district court believed that the Rooker-Feldman doctrine was applicable to these claims. For the reasons explained in Parts II and III.A, we agree. We therefore consider whether the claims should have been dismissed as claim-precluded. 69 Under 28 U.S.C. § 1738, federal courts must give full faith and credit to judgments of state courts. Section 1738 does not allow federal courts to employ their own preclusion rules in determining the preclusive effect of state judgments. Rather, it ... commands a federal court to accept the rules chosen by the State from which the judgment is taken. Kremer v. Chem. Constr. Corp., 456 U.S. 461, 482, 102 S.Ct. 1883, 72 L.Ed.2d 262 (1982); accord Matsushita Elec. Indus. Co. v. Epstein, 516 U.S. 367, 373, 116 S.Ct. 873, 134 L.Ed.2d 6 (1996). Thus, we apply Washington law to determine the claim-preclusive effects of the earlier rounds of state-court litigation between Noel and the Halls. 70 The district court applied § 1738 to hold that Noel's wiretapping and mobile home claims were claim-precluded under state law as unasserted compulsory counterclaims. We agree in part and disagree in part with that conclusion. We hold that Noel's six wiretapping claims against Sandra Hall (claims 1, 2, 6, 8, 9, and 10) are claim-precluded as unasserted compulsory counterclaims. Noel should have asserted these claims as counterclaims in Sandra Hall's 1998 Clark County District Court suit, in which Sandra Hall accused Noel of wiretapping and privacy violations for tape recording her telephone conversations. We hold, however, that Noel's wiretapping claims against Brian Hall (claims 1, 2, 6, 8, 9, and 10) are not claim-precluded because Brian Hall was not a party to the 1998 Clark County District Court suit. We also hold that Noel's three mobile home claims against both Halls (claims 3, 4, and 5) were not compulsory counterclaims and are not claim-precluded under Washington law. The mobile home was the subject of the Halls' 1997 Clark County small claims suit, in which the Halls sought compensation for physical damage to the mobile home and for unauthorized use of the home. But Washington's compulsory counterclaim rule does not apply in small claims court, and no other aspect of Washington preclusion law bars Noel from bringing his claims now. We therefore reverse the district court's dismissal of the wiretapping claims against Brian Hall and the mobile home claims against both Halls.
71
72 Under Washington law, when a court lacks jurisdiction over the subject matter of a counterclaim, it cannot hear and determine the issues raised in the claim. Thus, the failure to assert a counterclaim under such circumstances does not act as a bar to a subsequent action in a proper forum. See Centennial Flouring Mills Co. v. Schneider, 16 Wash.2d 159, 132 P.2d 995, 998 (1943); 3A Lewis H. Orland & Karl B. Teglund, Washington Practice 303 (4th ed.1992). Noel argues that his wiretapping claims were not compulsory counterclaims because the damages he sought exceeded the Clark County District Court's statutory limit, and therefore it lacked jurisdiction to hear his claims. We disagree. 73 Noel's current wiretapping claims far exceed the $35,000 jurisdictional limit of the Clark County District Court. 8 However, the Washington Rules for Courts of Limited Jurisdiction (CRLJ) provide a remedy for this problem. CRLJ 14A provides: 74 When a defendant, third party defendant, or cross-claimant in good faith asserts a claim in an amount in excess of the jurisdiction of the district court or seeks a remedy beyond the jurisdiction of the district court, the district court shall order the entire case removed to superior court. 75 CRLJ 14A(b); see 4B Karl B. Teglund, Washington Practice 317 (6th ed.2002) (noting that CRLJ 14A was enacted to avoid splitting causes of action). Because Washington procedural rules would have required the district court to remove the case to superior court, we find no merit in Noel's jurisdictional argument. See J & J Drilling, Inc. v. Miller, 78 Wash.App. 683, 898 P.2d 364, 367 (1995). 76 Noel also argues that the Clark County District Court lacked jurisdiction to consider his federal wiretapping claims. Again, we find no merit in his argument. Noel claims that only a court of competent jurisdiction may hear cases arising under the federal wiretapping statute, and that a state court is not such a court. The provision he cites, 18 U.S.C. § 2518(1), concerns which judges may authorize wiretap orders; it has nothing to do with civil suits. The provision authorizing civil actions, 18 U.S.C. § 2520, includes no jurisdictional restriction. See Allen v. McCurry, 449 U.S. 90, 103-05, 101 S.Ct. 411, 66 L.Ed.2d 308 (1980) (holding that a state-court judgment on a question of federal law is entitled to preclusive effect in federal court). Because Noel's jurisdictional argument fails, we move on to consider the application of Washington's compulsory counterclaim rule. 77
78 Washington's compulsory counterclaim rule, Civil Rule (CR) 13(a), provides: 79 Compulsory Counterclaims: A pleading shall state as a counterclaim any claim which at the time of serving the pleading the pleader has against any opposing party, if it arises out of the transaction or occurrence that is the subject matter of the opposing party's claim and does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction. But the pleader need not state the claim if (1) at the time the action was commenced the claim was the subject of another pending action.... 80 CR 13(a); CRLJ 13(a). 9 If a party does not assert a compulsory counterclaim, that party is barred from asserting that claim as an independent claim or as a counterclaim in any other action. Krikava v. Webber, 43 Wash.App. 217, 716 P.2d 916, 918 (1986). The Washington Supreme Court has adopted [a] liberal and broad construction of Rule 13(a) to avoid a multiplicity of suits. Schoeman v. N.Y. Life Ins. Co., 106 Wash.2d 855, 726 P.2d 1, 5 (1986). 81 Under Washington's Rule 13(a), the criteria for a compulsory counterclaim are that the claim must arise from the same transaction or occurrence, must not require parties over whom the court may not assert jurisdiction, must not be the subject of a pending action, and must lie against an opposing party. We address each of these requirements separately. 82
83 Washington has adopted a logical relationship test to determine whether a claim and counterclaim arise from the same transaction or occurrence: 84 [C]ourts should give the phrase `transaction or occurrence that is the subject matter' of the suit a broad realistic interpretation in the interest of avoiding a multiplicity of suits.... [A]ny claim that is logically related to another claim that is being sued on is properly the basis for a compulsory counterclaim. 85 Id. at 6 (quoting Rosenthal v. Fowler, 12 F.R.D. 388, 391 (S.D.N.Y.1952)) (first alteration in original). All nine of Noel's claims dismissed by the district court on summary judgment arose from events surrounding the same horse, same mobile home, and same tape recordings as those in the state-court suits. 86 Noel's wiretapping claims all relate to the tape-recorded conversations found in the mobile home. These recordings were the subject of Sandra Hall's 1998 suit against Noel in Clark County District Court. In that suit, Sandra Hall claimed that Noel had intercepted private communications, listened to them without her consent, and used embarrassing information to humiliate her. Noel now claims that in May 1997 the Halls entered the mobile home and stole the tapes, disclosed the contents of the tapes to discredit him, and attempted to use the tapes to extort and blackmail him and to interfere with his business. We conclude that the two sets of claims are logically related within the meaning of Washington law. See id. at 6. 87
88 Noel asserts that his wiretapping claims are not unasserted compulsory counterclaims under Rule 13(a) because they involve three additional parties—Gabrielle Lennartz, Michelle Merchant, and Herb Weisser—over whom the Washington courts could not have acquired jurisdiction. Noel alleges that Lennartz, Merchant, and Weisser conspired with the Halls to use the tape-recorded conversations removed from the mobile home against him in various ways. Noel argues that he could not have asserted counterclaims against these three defendants in the Clark County District Court suit concerning the wiretapping violations because that court could not have asserted personal jurisdiction over them. 89 Even if we assume that Washington courts could not have acquired personal jurisdiction over these three defendants, for Noel's argument to be valid, they would have had to have been so important to Noel's counterclaims that they would have been not merely necessary but indispensable parties under Washington's Rule 19, thus requiring the dismissal of the counterclaims in their absence. See CRLJ 19(a); Harvey v. Bd. of County Comm'rs, 90 Wash.2d 473, 584 P.2d 391, 392 (1978). Noel has made no showing that these three defendants would have been indispensable parties to any otherwise compulsory counterclaims in Washington State courts. 90 Moreover, we do not agree with Noel's assertion that Washington State courts would not have been able to acquire personal jurisdiction over Lennartz, Merchant, and Weisser. Under Washington law, the following factors must coincide for there to be personal jurisdiction over a nonresident defendant: (1) The nonresident defendant ... must purposefully do some act or consummate some transaction in the forum state; (2) the cause of action must arise from, or be connected with, such act or transaction; and (3) the assumption of jurisdiction ... must not offend traditional notions of fair play and substantial justice. Shute v. Carnival Cruise Lines, 113 Wash.2d 763, 783 P.2d 78, 80 (1989) (internal quotation marks omitted); see Wash. Rev.Code § 4.28.185. Noel accuses Lennartz, Merchant, and Weisser of conspiring to use the tapes removed from the mobile home to injure him and his business. Based on these actions, Washington courts could have asserted personal jurisdiction over them under Washington law. These actions also satisfy the minimum contacts requirement of the federal Due Process Clause. See Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945). 91
92 Washington's Rule 13(a) excuses a defendant from asserting an otherwise compulsory counterclaim if at the time the action was commenced the claim was the subject of another pending action. Noel argues that his wiretapping claims are not barred as unasserted compulsory counterclaims because on January 29, 1998, when Sandra Hall filed her complaint against Noel in Clark County District Court for privacy and wiretap violations, Noel had pending in superior court in Skamania County a claim relating to the tape-recorded conversations under the federal wiretapping statute, 18 U.S.C. §§ 2511-2520. On May 28, 1998, however, four months after Hall filed her complaint in the Clark County District Court, the Skamania court, following Hall's unopposed motion for voluntary dismissal, dismissed both Hall and Noel's wiretapping claims. The court explained that another action was pending in Clark County District Court and Clark County would be a forum more convenient to the parties. 93 When the Skamania court dismissed the wiretapping claims, Noel had already filed his answer in Clark County District Court two months earlier, on March 27, 1998. In his answer, Noel had raised as a defense the fact that the action was already pending in Skamania County. Although Noel argued in his answer that the Skamania County action had priority, he did not oppose the motion to dismiss the wiretapping claims from the Skamania County lawsuit. Noel then elected not to amend his pleadings in the Clark County action to assert his wiretapping claims as counterclaims in that suit. Under Washington Rule 15(a), leave to amend a pleading shall be freely given when justice so requires. CRLJ 15(a); see also Wilson v. Horsley, 137 Wash.2d 500, 974 P.2d 316, 319 (1999) (discussing liberal amendment policy under the identically worded CR 15(a)). Although Noel would have had to seek permission from the Clark County District Court to amend his pleading to assert his wiretapping claims, we can see no bar in Washington law to such an amendment. 94 We have found no Washington authority interpreting the pending claim exception to Rule 13(a). The purpose of the exception, however, is to prevent Party A from forcing Party B, who has a pending claim against Party A in another forum, into a forum of Party A's choosing. See Union Paving Co. v. Downer Corp., 276 F.2d 468, 470 (9th Cir.1960) (interpreting the analogous federal Rule 13(a)). Here, the Skamania County Superior Court dismissed the pending claims specifically to allow the parties to litigate all the wiretapping claims in the Clark County District Court. Noel neither opposed the motion to dismiss, nor argues to us that he could not have asserted his wiretapping claims in the Clark County suit after they were dismissed from the Skamania County suit. We therefore conclude that Noel's failure to amend his pleadings in the Clark County suit does not now allow him to escape the characterization of his unasserted claims in that court as compulsory. 95
96 Rule 13(a) makes compulsory only counterclaims against an opposing party in the lawsuit. Noel's wiretapping claims are logically related to and thus should have been brought as counterclaims in Sandra Hall's Clark County wiretapping and privacy suit. Therefore, Noel should have brought his wiretapping claims against Sandra Hall in the Clark County suit, and they are now precluded as unasserted compulsory counterclaims. 97 Brian Hall, however, was not a plaintiff— and thus not an opposing party—in Sandra Hall's Clark County suit. Therefore, Noel's wiretapping claims against him were not compulsory counterclaims in that suit. The Washington courts have adopted a strict reading of Rule 13(a)'s requirement that a pleader must bring compulsory counterclaims against any opposing party. In Nancy's Product, Inc. v. Fred Meyer, Inc., 61 Wash.App. 645, 811 P.2d 250 (1991), the Washington appeals court held: 98 To interpret the term opposing party in the context of the court rules so as to include a nonparty with an adverse interest is a non sequitur. We hold that an opposing party for purposes of CR 13(a) is one who asserts a claim against the prospective counterclaimant in the first instance. 99 Id. at 253. 100 Thus, even though Noel's present claims were compulsory counterclaims in the earlier suit as to Sandra, they were not as to Brian. We therefore reverse the district court's grant of summary judgment for Brian Hall with respect to Noel's wiretapping claims (Claim 1, 2, 6, 8, 9, and 10).
101 The district court also dismissed Noel's mobile home claims as unasserted compulsory counterclaims under Washington Rule 13(a). Rule 13(a), however, does not apply in Washington small claims court. Washington Civil Rule for Courts of Limited Jurisdiction 81(a) provides that Washington's Civil Rules do not apply in small claims court. CRLJ 81(a) (These rules do not apply to proceedings in small claims court.); cf. Last Chance Riding Stable, Inc. v. Stephens, 66 Wash.App. 710, 832 P.2d 1353 (1992) (holding that CRLJ 81(a) prevents CRLJ 73(b), governing the timing of appeals, from applying in small claims court). Therefore, Noel's mobile home claims cannot be precluded as unasserted compulsory counterclaims by the operation of Washington Rule 13(a) in the Halls' small claims suit. 10 102 Independent of Rule 13(a), judgments from small claims court may still preclude later claims under judge-made Washington preclusion doctrine. See State Farm Mut. Auto. Ins. Co. v. Avery, 114 Wash.App. 299, 57 P.3d 300, 305 (2002) (The small claims court's limited jurisdiction does not preclude [a party] from asserting issue preclusion as a defense.). In this case, however, we conclude that Washington law does not preclude Noel's present mobile home claims. 103 Under Washington law, claim preclusion operates with respect to both claims that were litigated and claims that should have been litigated in a prior action. Meder v. CCME Corp., 7 Wash.App. 801, 502 P.2d 1252, 1254 (1972); Restatement (Second) of Judgments § 22(2) (1982) (stating that the failure to bring a counterclaim will preclude a later action on that claim either if the jurisdiction has a rule so saying or if a successful prosecution of the later action would impinge upon the earlier judgment). But a party is not claim-precluded from bringing a claim which could not have been ... litigated during [a] prior action. Meder, 502 P.2d at 1254. If a counterclaim cannot properly be pleaded in a suit because the amount of the counterclaim is beyond the jurisdiction of the state court, a judgment in that suit will not preclude a defendant from bringing a separate action. See Centennial Flouring Mills Co. v. Schneider, 16 Wash.2d 159, 132 P.2d 995, 998 (1943); 3A Lewis H. Orland & Karl B. Teglund, Washington Practice 303 (4th ed.1992). 104 Noel currently seeks damages for his mobile home claims far in excess of the $2500 jurisdictional limit of the small claims court where the Halls' earlier mobile home-related suits were filed. 11 The Halls argue that Washington law provides a method for Noel to have asserted his counterclaims exceeding the jurisdictional limit of the small claims court simultaneously in superior court (which has no monetary jurisdictional limit), and that because Noel failed to take advantage of this channel his mobile home claims are claim-precluded. 12 Wash. Rev.Code § 12.40.027 provides: 105 [C]ounterclaims ... by a defendant ... in excess of the jurisdiction of small claims court may be maintained simultaneously in superior court as a separate action brought by such defendant.... Such a superior court action does not affect the jurisdiction of the small claims court to hear the original small claims case. The decision of the small claims court shall have no preclusive effect on the superior court action brought pursuant to this section. 106 According to the Washington Court of Appeals, § 12.40.027 protects small claims plaintiffs by preventing the defendant from exploiting the limited jurisdiction of the court and forcing removal of the action to superior court simply by filing a counterclaim in excess of the jurisdictional amount. Avery, 57 P.3d at 304. Instead, defendants may proceed simultaneously in superior court without fear that a judgment rendered by the (presumably faster-moving) small claims court will have preclusive effect on their superior court action. Id. Section 12.40.027 is permissive, and we do not read it as an analog to a compulsory counterclaim rule. Noel's failure to bring a simultaneous superior court action asserting his mobile home claims thus does not preclude him from raising them now. 107 We therefore reverse the district court's dismissal of Noel's mobile home claims (claims 3, 4, and 5) against the Halls.