Opinion ID: 2670997
Heading Depth: 5
Heading Rank: 2

Heading: Applying the transactional approach

Text: The district court said the Plaintiffs’ Tri-State II claims were “directly connected to their claims in Tri-State I.” Aplt. App., Vol. I at 108. It explained the Plaintiffs in Tri-State II sought damages from the filing of false UCC amendments related to Loans 5483 and 5484, and they sought in Tri-State I the cancellation of all UCC filings associated with those same loans. “In other words, in Tri-State I, plaintiffs sought to cancel or terminate the same UCC amendments for which they now seek damages.” Id. at 109. Plaintiffs argue the claims in the two cases are different because no facts or legal issues about the amendments were developed or presented in Tri-State I. Moreover, they contend the facts were different because the Tri-State II claims involve alleged misrepresentations by FNBW when it filed the UCC amendments and no such allegations were made in Tri-State I. But, as the district court recognized, -9- the litigation in Tri-State I and Tri-State II “involve[d] the same series of factual transactions: the underlying loans, [FNBW’s] involvement as participating lender in the loans, Aleritas’s assignment of loan administration duties to [FNBW] and the scope of [FNBW’s] rights and interests in the loans.” Id. In Tri-State I, the Plaintiffs sought a declaration they had no obligations to FNBW under their loan agreements with Aleritas because the Pennsylvania court had rescinded those agreements. They sought to cancel any UCC amendments related to those loans. FNBW counterclaimed for breach of contract, arguing Aleritas had assigned all of its rights and duties under the loans to FNBW in September 2008 as part of the loan servicing assignment agreement. FNBW therefore asserted it had standing to enforce the terms of the loans against Plaintiffs. In Tri-State II, Plaintiffs argued FNBW lacked authority to amend the UCC filings to name FNBW as the secured party in place of Aleritas. A common question in both actions was the scope of FNBW’s interests in the loans. Tri-State I focused on whether the assignment of loan-servicing duties included all of Aleritas’ rights under the loans, thereby giving FNBW standing to enforce the loans. As the district court noted, “[i]ntrinsically related” to that issue was “whether [the scope of the assignment] included an assignment of Aleritas’s secured interests under the loans,” and “[t]he resolution of that issue is directly related to whether [FNBW] made false statements in the UCC filings.” Id. at 109-10. The court therefore concluded that “[o]n this record, . . . substantial overlap exists - 10 - between the facts in [Tri-State II] and the facts in Tri-State I such that they would form a convenient unit for trial purposes.” Id. at 110. We agree with the district court’s analysis and its determination under the transactional approach that Tri-State II and Tri-State I involved the same claim for res judicata purposes.