Court Opinion

ID: 151720
Source: CourtListenerOpinion
Date Created: 2010-07-28 17:22:17+00
Date Added: 2024-06-11T17:24:25.406011
License: Public Domain

Case: 10-30108     Document: 00511187132          Page: 1    Date Filed: 07/28/2010

            IN THE UNITED STATES COURT OF APPEALS
                     FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                     Fifth Circuit

                                                  FILED
                                                                            July 28, 2010

                                     No. 10-30108                           Lyle W. Cayce
                                   Summary Calendar                              Clerk

PAUL G. PRESTON; PRESTON LAW FIRM, L.L.C.,

                                                   Plaintiffs–Appellees,
v.

MARINER HEALTH CARE MANAGEMENT COMPANY, doing business as
Mariner Health Care,

                                                   Defendant–Appellant.

                    Appeal from the United States District Court
                       for the Eastern District of Louisiana
                              USDC No. 2:09-CV-7005

Before GARZA, CLEMENT, and OWEN, Circuit Judges.
PER CURIAM:*
        Mariner Health Care Management Company (Mariner) appeals the
district court’s grant of summary judgment in favor of Paul Preston and Preston
Law Firm, L.L.C. (jointly, Preston). Mariner argues that the district court erred
when it found that Mariner’s claims were barred by the doctrine of res judicata.
We affirm.

        *
         Pursuant to 5TH CIR . R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .
R. 47.5.4.
   Case: 10-30108     Document: 00511187132     Page: 2    Date Filed: 07/28/2010

                                  No. 10-30108

                                         I
      This suit arises from a dispute between Mariner and Preston over legal
fees owed to Preston. Preston incurred fees of $1,944,600.92 for legal services
rendered to Mariner. After Preston became concerned about the late payment
of the fees, the parties entered into negotiations over the fees. Mariner claims
that these negotiations culminated in an agreement to reduce the fees by
$444,600.92, while Preston claims that the discount was intended to be
temporary. In the ensuing months, Mariner paid $1.5 million to Preston but
failed to pay the remaining balance. Eventually, Preston filed suit against
Mariner for the unpaid portion of the fees. Mariner argued that Preston had
agreed to accept $1.5 million as satisfaction of the entire debt. The district court
in that suit found that the fee reduction was “a temporary reduction at best” and
that there was “no mutual understanding . . . between the parties that the
[agreement] was in full and final satisfaction, compromise, or settlement of the
amount owed.”       Therefore, the district court found in favor of Preston for
$444,600.92.
      After the district court’s final judgment in that case, Mariner sent Preston
a letter notifying it of Mariner’s intention to file a lawsuit asserting claims of
fraud, breach of fiduciary duty, and legal malpractice with regard to the fee
negotiations. Mariner asserted that Preston fraudulently did not inform it that
Louisiana law requires compromises to be reduced to writing.
      In response, Preston filed this suit, requesting a declaratory judgment that
the fraud, breach of fiduciary duty, and legal malpractice claims raised by
Mariner were barred by res judicata. The district court granted Preston’s motion
for summary judgment, and Mariner now appeals.

                                         2
   Case: 10-30108        Document: 00511187132          Page: 3      Date Filed: 07/28/2010

                                        No. 10-30108

                                               II
      We review a district court’s grant of a motion for summary judgment de
novo, applying the same standard as the district court.1 We view the evidence
in the light most favorable to the non-moving party and avoid credibility
determinations and weighing of the evidence.2                     Summary judgment is
appropriate when there are no genuine issues of material fact and the moving
party is entitled to judgment as a matter of law.3 An issue of material fact is
genuine if a reasonable jury could return a verdict for the non-moving party.4
                                              III
      Under the doctrine of res judicata, “a final judgment on the merits of an
action precludes the parties or their privies from relitigating issues that were or
could have been raised in that action.”5 Res judicata “insures the finality of
judgments and thereby conserves judicial resources and protects litigants from
multiple lawsuits.”6 Res judicata bars a claim if four elements are met: “(1) the
parties must be identical in the two actions; (2) the prior judgment must have
been rendered by a court of competent jurisdiction; (3) there must be a final
judgment on the merits; and (4) the same claim or cause of action must be

      1
          Threadgill v. Prudential Sec. Grp., Inc., 145 F.3d 286, 292 (5th Cir. 1998).
      2
          Sandstad v. CB Richard Ellis, Inc., 309 F.3d 893, 896 (5th Cir. 2002).
      3
          Brumfield v. Hollins, 551 F.3d 322, 326 (5th Cir. 2008).
      4
          Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
      5
          Allen v. McCurry, 449 U.S. 90, 94 (1980).
      6
          United States v. Shanbaum, 10 F.3d 305, 310 (5th Cir. 1994).

                                               3
   Case: 10-30108          Document: 00511187132          Page: 4     Date Filed: 07/28/2010

                                          No. 10-30108

involved in both cases.”7 In order to determine whether two complaints involve
the same cause of action, a court must apply the “transactional test.” 8 The
transactional test is satisfied if the two actions are based on the “same nucleus
of operative facts.”9 If the four elements of res judicata are met, a party is
prohibited “from raising any claim or defense in the later action that was or
could have been raised in support of or in opposition to the cause of action
asserted in the prior action.” 10
        On appeal, Mariner argues that the district court erred when it found that
Mariner’s claims for fraud, breach of fiduciary duty, and legal malpractice were
barred by the doctrine of res judicata. Mariner asserts that these claims were
not before the district court in the original action because Mariner did not
discover the basis of these claims until the trial testimony of a former Preston
partner. According to Mariner, this testimony revealed that Preston engaged in
a “complex scheme” to defraud Mariner by failing to inform Mariner
representatives that unwritten compromises are unenforceable under Louisiana
law. Because there was no opportunity for Mariner to present these claims in
the original suit, Mariner argues that res judicata does not apply to the claims
here.
        Mariner’s arguments are unconvincing. Regardless of whether Preston
informed Mariner about the formalities of compromise under Louisiana law,

        7
            In re Ark-La-Tex Timber Co., 482 F.3d 319, 330 (5th Cir. 2007).
        8
            Agrilectric Power Partners, Ltd. v. Gen. Elec. Co., 20 F.3d 663, 665 (5th Cir. 1994).
        9
            Id.
        10
             Shanbaum, 10 F.3d at 310.

                                                  4
   Case: 10-30108        Document: 00511187132           Page: 5   Date Filed: 07/28/2010

                                           No. 10-30108

Mariner’s claims are premised on the fact that both parties agreed to a reduction
in fees. The district court in the original suit expressly found that no such
agreement occurred. As the district court in that case stated, there was “no
mutual understanding . . . between the parties that the [agreement] was in full
and final satisfaction, compromise, or settlement of the amount owed.”
Therefore, the writing requirement was irrelevant because the parties did not
agree to a fee reduction. The claims here, then, are based on the “same nucleus
of operative facts,”11 and thus res judicata bars Mariner from asserting those
claims.
      Mariner also argues that the district court in the original action did not
enter a final judgment on the merits for Mariner’s claims for fraud, breach of
fiduciary duty, and legal malpractice since such claims were not before the court.
This argument confuses the third and fourth prongs of the res judicata test and
is more properly classified as an argument with regard to the fourth
element—whether the same claim or cause of action was involved in both cases.
The district court’s judgment in the original action was clearly a final judgment
on the merits.

                                       *        *         *
      For the foregoing reasons, we AFFIRM.

      11
           Agrilectric Power Partners, 20 F.3d at 665.

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