Opinion ID: 203562
Heading Depth: 1
Heading Rank: 3

Heading: analysis

Text: Massachusetts recognizes two distinct types of preclusion arising out of the maintenance of prior litigation: res judicata (claim preclusion) and collateral estoppel (issue preclusion). See Kobrin v. Bd. of Regist. in Med., 444 Mass. 837, 832 N.E.2d 628, 634 (Mass.2005). Both the parties and the district court have analyzed this case in terms of res judicata. We follow their lead. Res judicata makes a valid final judgment conclusive on the parties ... and prevents relitigation of all matters that were or could have been adjudicated in the action. Id. This doctrine is sometimes known as merger and bar, nomenclature that emphasizes the doctrine's role in guarding against claim-splitting. See Restatement (Second) of Judgments §§ 18, 19, 24 (1982). The operation of res judicata requires the presence of three elements: (1) the identity or privity of the parties to the present and prior actions, (2) identity of the cause of action, and (3) prior final judgment on the merits. Kobrin, 832 N.E.2d at 634; see McDonough v. City of Quincy, 452 F.3d 8, 16 (1st Cir.2006). Here, the parties are the same and the first action unarguably ended in a final judgment. That leaves the second element; Robinson's opening gambit is to suggest that the two actions it brought against Hartford fail to present the requisite identity of causes of action. We test that thesis. Massachusetts deems causes of action identical for claim preclusion purposes if they grow[] out of the same transaction, act, or agreement, and seek[] redress for the same wrong. Brunson v. Wall, 405 Mass. 446, 541 N.E.2d 338, 341 n. 9 (Mass. 1989) (quoting Mackintosh v. Chambers, 285 Mass. 594, 190 N.E. 38, 39 (Mass.1934)). Viewed against this backdrop, Robinson's premise is that because a violation of chapter 93A creates an action independent from the [insurance] contract, Schwartz v. Travelers Indem. Co., 50 Mass.App.Ct. 672, 740 N.E.2d 1039, 1043 (Mass.App.Ct.2001), an action based on chapter 93A addresses a separate wrong. Massachusetts law is inhospitable to this premise. Discrete theories of liability may constitute identical causes of action for claim preclusion purposes if they are based on the same nucleus of operative facts. See Fassas v. First Bank & Trust Co., 353 Mass. 628, 233 N.E.2d 924, 925 (Mass. 1968) (explaining that [t]he statement of a different form of liability is not a different cause of action, provided it grows out of the same transaction) (citation and internal quotation marks omitted); see also Isaac v. Schwartz, 706 F.2d 15, 17 (1st Cir.1983) (interpreting Massachusetts law to hold that new legal theories, embodied in different statutes and different common law doctrines, are still identical causes of action for claim preclusion purposes). A review of the complaints in Robinson I and Robinson II, respectively, confirms that both actions arise from the same transaction. In the formerthe declaratory actionRobinson complained that Hartford wrongfully denied coverage for its first-party insurance claim. In the latter the chapter 93A actionRobinson complained that the same denial of coverage, undertaken willfully and in bad faith, amounted to an unfair trade practice. It is thus apparent that both suits arose out of the same underlying transaction. Consequently, the stated causes of action are identical within the meaning of the res judicata doctrine. This conclusion means that the customary ingredients for the application of res judicata are present. Robinson concedes that, under those principles, a final judgment ordinarily bars litigation of unmade claims arising out of the same transaction. The question, however, is whether some special rule obtains here. Robinson proposes such a special rule. It asseverates that normal principles of claim preclusion will not operate when the original action was for declaratory relief. The linchpin of this asseveration is section 33 of the Restatement (Second) of Judgments, which states that [a] valid and final judgment in an action brought to declare rights or other legal relations of the parties is conclusive in a subsequent action between them as to the matters declared. Under this prescription, [a] plaintiff who wins a declaratory judgment may go on to seek further relief, even in an action on the same claim which prompted the action for a declaratory judgment. Id. cmt. c. This further relief may include damages which had accrued at the time the declaratory relief was sought; it is irrelevant that the further relief could have been requested initially. Id. The serial Restatements are much-respected works. Nevertheless, the question is not one of doctrine in the abstract but, rather, whether the highest court of Massachusetts the Supreme Judicial Court (SJC)would follow the rule of the Second Restatement; that is, whether the SJC would hold that a valid and final judgment in an action brought to declare rights precludes the maintenance of a subsequent action between the same parties arising out of the same transaction and involving an issue that could have been, but was not, actually litigated in the former action. The district court concluded that we had answered this question in Pasterczyk v. Fair, 819 F.2d 12 (1st Cir.1987). The court read Pasterczyk for the proposition that, notwithstanding the declaratory nature of an original action, the usual rules of claim preclusion apply. See Robinson II, 533 F.Supp.2d at 221. We think that the district court read Pasterczyk too aggressively. In that case, the plaintiff had filed a Massachusetts state court action seeking recalculation of his sentence. 819 at 13. After obtaining a declaration that he was entitled to credit for time served in other states, the plaintiff won his release. Id. He then sued under 42 U.S.C. § 1983 for damages in consequence of his overlong incarceration. To escape a res judicata effect, he asserted that his first action was one for habeas corpus relief, in which he argued that he could not have advanced a claim for damages. See id. at 14; see also Restatement (Second) of Judgments § 26(1)(c) (providing for a competency exception to claim preclusion when a jurisdictional obstacle precludes plaintiff from raising an issue in the first action). We concluded that the plaintiff had mischaracterized the first action: it was an action for declaratory judgment, not one for habeas corpus. 819 F.2d at 15. Thus, the plaintiff's argument failed because the exception was inapplicable as Pasterczyk could have sought damages in the initial action. Id. No question was either asked or answered about the scope of claim preclusion following the adjudication of a declaratory action. It follows that Pasterczyk does not control here. We find equally inconclusive our decision in Mulrain v. Board of Selectmen of Town of Leicester, 944 F.2d 23 (1st Cir. 1991). At the end of the day, the panel in that case refused directly to consider claim preclusion in the declaratory judgment context. See id. at 25-26. The issue that Robinson advances on appeal is, therefore, an open issue in this circuit. [3] With that introduction, we turn to the decisions of the Massachusetts courts. Although the SJC has never explicitly adopted section 33 of the Second Restatement, we start with a rebuttable presumption that it would be inclined to follow that course. We embrace that presumption for two reasons. First, we have noted, over and over again, that Massachusetts courts apply res judicata in a thoroughly conventional way. See, e.g., Mulrain, 944 F.2d at 25; Capraro v. Tilcon Gammino, Inc., 751 F.2d 56, 58 (1st Cir.1985); Casagrande v. Agoritsas, 748 F.2d 47, 48 (1st Cir.1984); Isaac, 706 F.2d at 16. As a corollary of that proposition, we think it wholly appropriate to look, at least initially, to the Restatement as an accurate barometer of unarticulated Massachusetts law. See, e.g., Pasterczyk, 819 F.2d at 14 (Finding no Massachusetts case on point, we turn... to the Restatement.); Isaac, 706 F.2d at 16-17 (applying that principle). We see nothing in the situation at hand that would suggest the slightest reason for abandoning this course. Second, although no reported Massachusetts case explicitly adopts section 33 of the Second Restatement, at least four cases have cited approvingly to some incarnation of that section. Two of these are decisions of the SJC. The list follows. When defining the term binding in an unrelated statute, the SJC counted section 33's direct lineal ancestor, section 77 of the first Restatement of Judgments (1942), [4] as persuasive evidence. Meunier's Case, 319 Mass. 421, 66 N.E.2d 198, 201 (Mass.1946). In another case, the SJC looked to section 77 of the first Restatement as authority for the proposition that declaratory judgments have binding force and effect. Weingartner v. Town of N. Wales, 327 Mass. 731, 101 N.E.2d 132, 136 (Mass.1951). Interestingly, the Weingartner court cited a comment stating that [t]he effect of a declaratory judgment in subsequent controversies between the parties depends upon the scope of the declaration.... [A]s to matters not declared ... the parties are not so precluded. Restatement of Judgments § 77 cmt. b; see 101 N.E.2d at 132. We regard that statement as highly suggestive (if only by negative implication). Two opinions emanating from the state's intermediate appellate court also have exhibited a readiness to look to a corresponding provision contained in tentative drafts of the transitional Restatement. See Boyd v. Jamaica Plain Co-op. Bank, 7 Mass.App.Ct. 153, 386 N.E.2d 775, 779 (Mass.App.Ct.1979); Albano v. Jordan Marsh Co., 5 Mass.App.Ct. 277, 362 N.E.2d 219, 221 (Mass.App.Ct. 1977). While decisions of a state's intermediate appellate court are not binding on a federal court sitting in diversity, such opinions are entitled to some weight. [5] See West v. AT & T, 311 U.S. 223, 237, 61 S.Ct. 179, 85 L.Ed. 139 (1940); CPC Int'l, Inc. v. Northbrook Excess & Surplus Ins. Co., 962 F.2d 77, 91 (1st Cir.1992). In the aggregate, these Massachusetts cases strongly suggest that when faced with the question that is now before us, the SJC will adopt the articulation of claim preclusion principles limned in section 33 of the Second Restatement. In an effort to weaken the force of this reasoning, Hartford's able counsel marshals a number of other Massachusetts cases. In the end, this effort proves fruitless. Hartford's first proffer consists of cases holding that a final decree in a declaratory judgment action bars a subsequent action for declaratory relief arising out of the same transaction. [6] See, e.g., Fassas, 233 N.E.2d at 925; Sadler v. Indus. Trust Co., 327 Mass. 10, 97 N.E.2d 169, 170-71 (Mass.1951). That line of cases provides Hartford no succor. Sadler illustrates the point. That case involved two appeals to the SJC from orders dismissing similar declaratory judgment actions brought consecutively by a single plaintiff. See 97 N.E.2d at 170. The SJC held that the earlier declaratory judgment action was res judicata as to matters actually litigated in that action. Id. at 171. That ruling tracks the prescription of section 33. Hartford's next reference is to a pair of unpublished decisions. The first is Lin v. Cahaly, No. 307493, 2005 WL 1844619 (Mass.Land Ct. Aug.5, 2005), in which the court was confronted with an argument that claims for trespass and contract damages were precluded by an earlier suit to quiet title. The court dismissed the case for want of jurisdiction. Id. at . The judge, in dictum and without meaningful analysis, gratuitously rejected a declaratory judgment exception to the usual rules of claim preclusion. See id. at . The second case in this set, Gleed v. Donaldson, Lufkin & Jenrette, No. 93-12202, 1993 WL 543204, at  (D.Mass. Dec.20, 1993), is likewise bereft of any analysis. Neither decision has any precedential force. That ends our safari through Massachusetts case law. While not conclusive, the drift of these cases strengthens our initial intuition that the SJC would likely apply section 33 of the Second Restatement in this case. After all, Massachusetts courts generally follow the Restatement; those courts have cited earlier versions of this rule with approbation; and they have recognized that declaratory judgment actions evoke special claim preclusion principles. What remains, however, is to consult a broader spectrum of authorities. A canvass of the decisions in other jurisdictions is instructive. The vast majority of states that have addressed this problem unapologetically apply a special rule of claim preclusion, consistent with that of section 33 of the Second Restatement, in the declaratory judgment context. Many of these courts have cited explicitly to some edition of the Restatement. See, e.g., Jackinsky v. Jackinsky, 894 P.2d 650, 656 (Alaska 1995); Aerojet-Gen. Corp. v. Am. Excess Ins. Co., 117 Cal.Rptr.2d 427, 441-42 (Cal.Ct.App.2002); Eason v. Bd. of County Comm'rs, 961 P.2d 537, 540 (Colo. Ct.App.1997); Salvatore v. Ohio Cas. Ins. Co., No. CV990588345S, 2001 WL 823265, at  (Conn.Super.Ct. June 18, 2001); N. Shore Realty Corp. v. Gallaher, 99 So.2d 255, 257 (Fla.Dist.Ct.App. 1957); Bankers & Shippers Ins. Co. v. Electro Enters., Inc., 287 Md. 641, 415 A.2d 278, 285-86 (Md.1980); Ganaway v. Shelter Mut. Ins. Co., 795 S.W.2d 554, 562 (Mo.Ct.App.1990); Radkay v. Confalone, 133 N.H. 294, 575 A.2d 355, 357-58 (N.H.1990); Donnelly v. United Fruit Co., 75 N.J.Super. 383, 183 A.2d 415, 419 (N.J.Super.Ct.App.Div.1962); Principal Mut. Life Ins. Co. v. Straus, 116 N.M. 412, 863 P.2d 447, 451 (N.M.1993); State ex rel. Shemo v. Mayfield Heights, 95 Ohio St.3d 59, 765 N.E.2d 345, 355 (Ohio 2002); Carver v. Heikkila, 465 N.W.2d 183, 186 (S.D.1991); Martin v. Martin, Martin & Richards, Inc., 989 S.W.2d 357, 359 (Tex.1998). Several states have used similar reasoning and adopted essentially the same rule, but without mentioning the Restatement. See, e.g., Cooke v. Gaidry, 309 Ky. 727, 218 S.W.2d 960, 962 (Ky.1949); Warwick v. Pearl River Valley Water Supply Dist., 271 So.2d 94, 96 (Miss.1972); In re Cox, 97 N.C.App. 312, 388 S.E.2d 199, 201 (N.C.Ct.App. 1990); Okla. Alcoholic Bev. Control Bd. v. Cent. Liquor Co., 421 P.2d 244, 247 (Okla. 1966); Robison v. Asbill, 328 S.C. 450, 492 S.E.2d 400, 401 (S.C.Ct.App.1997); Klaus v. Vander Heyden, 106 Wis.2d 353, 316 N.W.2d 664, 672 (Wis.1982). In addition, a number of federal courts, applying state law, have adopted the Restatement's approach. See, e.g., Stericycle, Inc. v. City of Delavan, 120 F.3d 657, 659 (7th Cir.1997) (applying Wisconsin law); Harborside Refrig. Servs., Inc. v. Vogel, 959 F.2d 368, 373 (2d Cir.1992) (explaining that both federal and New York law recognize the declaratory judgment exception articulated in the Restatement); Cimasi v. City of Fenton, 838 F.2d 298, 299 (8th Cir.1988) (applying Missouri law); Buckeye Cmty. Hope Found. v. City of Cuyahoga Falls, 970 F.Supp. 1289, 1303 (N.D.Ohio 1997) (applying Ohio law); Umhey v. County of Orange, 957 F.Supp. 525, 528 (S.D.N.Y. 1997) (applying New York law). Last but not leasta myriad of federal courts have opined that federal common law embraces the rule. See, e.g., Empire Fire & Marine Ins. Co. v. J. Transp., Inc., 880 F.2d 1291, 1296 (11th Cir.1989); Smith v. City of Chicago, 820 F.2d 916, 919 (7th Cir.1987); Kaspar Wire Works, Inc. v. Leco Eng'g & Mach., Inc., 575 F.2d 530, 536-37 (5th Cir.1978); Lube 495, Inc. v. Jiffy Lube, 813 F.Supp. 100, 111-12 (D.Mass.1993); Horn & Hardart Co. v. Nat'l R.R. Pass. Corp., 659 F.Supp. 1258, 1265 (D.D.C.1987); In re Wash. Pub. Power Supply Sys. Sec. Litig., 623 F.Supp. 1466, 1473 (W.D.Wash.1985); Solomon v. Emanuelson, 586 F.Supp. 280, 283 (D.Conn.1984). Some courts have ruled to the contrary but they are relatively few in number. See, e.g., Boyer v. Mealins, 83 Ariz. 30, 315 P.2d 878, 880 (Ariz.1957); Hurst v. Rice, 278 Ark. 94, 643 S.W.2d 563, 564 (Ark.1982); Downen v. Country Mut. Ins. Co., 181 Ill.App.3d 716, 130 Ill.Dec. 378, 537 N.E.2d 445, 447 (Ill.App.Ct.1989); Hofmann v. Auto Club Ins. Ass'n, 211 Mich.App. 55, 535 N.W.2d 529, 548 (Mich. Ct.App.1955); State v. Joseph, 636 N.W.2d 322, 327 (Minn.2001). Hartford's attempt to pad this list is unavailing: the other cases that it musters are off-point. Some stand for the uncontroversial proposition, wholly consistent with section 33, that claim preclusion applies to matters actually litigated and decided in the original declaratory judgment action. See, e.g., Fournier v. Ill. Cas. Co., 391 N.W.2d 258, 260-61 (Iowa 1986). Others are cases that do not address whether the declaratory judgment context makes a difference. See, e.g., Smith v. Barfield, 157 Ga.App. 231, 276 S.E.2d 899, 900 (Ga.Ct.App.1981). We also have examined the leading treatises. In general, they subscribe to the view that declaratory judgments should be accorded less preclusive effect than other final judgments. The preeminent authority is the Second Restatement itself (which, of course, articulates the very rule on which Robinson's appeal hinges). Other texts march to the same beat. See David L. Shapiro, Civil Procedure: Preclusion in Civil Actions 63 (2001) ([I]ssues not litigated in the declaratory actionperhaps because they were not foreseeable or because the plaintiff was seeking only a limited clarification of his rights and dutiesshould not be foreclosed in a later coercive action arising out of the same controversy.); see also Rosemary Gregor et al., American Jurisprudence 2d Declaratory Judgments § 248 (2d ed.2003) (similar); James Wm. Moore, Moore's Federal Practice § 131.24[3] (3d ed.2008) (noting that public policy goals are furthered when a plaintiff who has sought solely declarative relief is allowed to seek additional coercive relief based on the same claim); Charles A. Wright & Mary K. Kane, Law of Federal Courts 723-24 (6th ed.2002) (similar). But cf. 18A Charles A. Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and Procedure § 4446 (2d ed.2002) (noting that traditional doctrine has refused to apply claim preclusion to an action for declaratory relief alone, yet criticizing that practice). Hartford's response consists mainly of citation to law review articles and notes, most of ancient vintage, that lament the difficulties inherent in the Restatement approach. See, e.g., Note, Declaratory Judgment and Matured Causes of Action, 53 Colum. L.Rev. 1130, 1132-33 (1953); Developments in the Law: Declaratory Judgments 1941-1949, 62 Harv. L.Rev. 787, 843 (1949); Developments in the Law: Res Judicata, 65 Harv. L.Rev. 818, 881-82 (1952); Recent Decisions, 52 Mich. L.Rev. 139, 143 (1953). [7] The short answer to these musty lamentations is that the American Law Institute subsequently rejected them and reaffirmed the special rule of claim preclusion for declaratory judgments. See Restatement (Second) of Judgments § 33. This brings us to policy rationales that may bear upon the question. The upshot of that consideration is a mixed bag. On the one hand, claim preclusion is a widely recognized means of husbanding judicial resources. See Heacock v. Heacock, 402 Mass. 21, 520 N.E.2d 151, 153 (Mass.1988) (observing that claim preclusion is based on the idea that the party to be precluded has had the incentive and opportunity to litigate the matter fully in the first lawsuit). On the other hand, judicial resources also are conserved by the availability of a declaratory judgment mechanism; the prompt and efficient use of that mechanism enables courts to clarify the legal relationships of parties before they have been disturbed thereby tending towards avoidance of full-blown litigation. Harborside, 959 F.2d at 373. It would frustrate this latter policy were parties required to bring, as part of a declaratory judgment action, all conceivable claims and counterclaims on pain of preclusion. The Second Restatement has weighed these competing policy rationales and concluded sensibly, in our viewthat, on balance, public policy is furthered rather than retarded by the ready availability of a no-strings-attached declaratory remedy that is simpler, faster, and less nuclear than a suit for coercive relief. Restatement (Second) of Judgments § 33 cmt. c. Relatedly, we note that the provision of Massachusetts law that authorizes declaratory judgments specifically anticipates the possibility of further proceedings. See Mass. Gen. Laws ch. 231A, § 5 (allowing [f]urther relief based on a declaratory judgment whenever necessary or proper). This provision sets in place a structure for declaratory judgments that is at odds with the rigid deployment of conventional principles of claim preclusion. Cf. Restatement (Second) of Judgments § 26(1)(d) (delineating an exception to the normal rules of claim preclusion for cases in which a statutory scheme permits a splitting of the claim). To this point, all roads lead to Rome. The district court, however, expressed concern that Robinson may have engaged in strategic litigation by intentionally splitting its claims between the original declaratory action and the later damages action. See Robinson II, 533 F.Supp.2d at 221. But every lawyeror, at least every competent lawyerfactors strategic considerations into decisions affecting his or her handling of litigation. Moreover, the type of claim-splitting that worried the district court is precisely what the Restatement rule contemplates. The antidote, if one is needed, should be administered in the first action, in which the judge can refuse to entertain the declaratory judgment petition absent joinder of coercive claims. [8] See Restatement (Second) of Judgments § 33 cmt. c; cf. El Día, Inc. v. Hernández Colón, 963 F.2d 488, 493 (1st Cir.1992) (holding that declaratory relief is a matter of discretion). Here, the trial justice in the first action saw no need to impose such a qualification.