Court Opinion

ID: 3031421
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:45:57.611339+00
Date Added: 2024-06-11T12:08:58.010770
License: Public Domain

United States Court of Appeals
                          FOR THE EIGHTH CIRCUIT
                                   ___________

                                   No. 02-1259
                                   ___________

Duane Friez,                         *
                                     *
                  Appellant,         *
                                     * Appeal from the United States
       v.                            * District Court for the District
                                     * of North Dakota.
First American Bank & Trust of       *
Minot, kna Bremer Bank; William      *     [PUBLISHED]
Kolb; Duaine Espegard,               *
                                     *
                  Appellees.         *
                                ___________

                             Submitted: February 11, 2003

                                 Filed: April 2, 2003
                                  ___________

Before BOWMAN, FAGG, and MORRIS SHEPPARD ARNOLD, Circuit Judges.
                          ___________

PER CURIAM.

      In September 1999, Duane Friez sued his ERISA plan sponsors, First American
Bank & Trust of Minot (Bremer Bank) and Bremer Financial Services, Inc. (Bremer
Financial), in an attempt to receive ERISA benefits. The district court dismissed
Friez’s ERISA claim in June 2000, concluding oral statements made by William Kolb
(Bremer Bank Personnel Officer) and Duaine Espegard (Bremer Bank President) did
not amend the ERISA plan and thus extend benefits to Friez. Approximately four
months later, Friez brought a separate tort-based lawsuit against Bremer Bank, Kolb,
and Espegard in an attempt to receive the value of the ERISA benefits he had been
denied. The district court* dismissed Friez’s tort claims based on res judicata (claim
preclusion), and Friez appeals. We review the district court’s dismissal de novo.
Lundquist v. Rice Mem. Hosp., 238 F.3d 975, 976 (8th Cir. 2001) (per curiam)
(standard of review).

       Res judicata prevents the splitting of a single cause of action and the use of
several theories of recovery as the basis for separate lawsuits. Hartsel Springs Ranch
v. Bluegreen Corp., 296 F.3d 982, 986 (10th Cir. 2002). In North Dakota, res judicata,
also known as claim preclusion, prevents the relitigation of claims or issues that were
raised or could have been raised in an earlier action between the same parties or their
privies. Ohio Cas. Ins. Co. v. Clark, 583 N.W.2d 377, 383 (N.D. 1998); see also
Lundquist, 238 F.3d at 977.

       Friez first argues his tort claims are not barred because they raise a different
cause of action than his earlier ERISA claims. Even though Friez advances different
legal theories in the two cases, his cause of action is the same: Friez relies on a
common nucleus of operative fact (promises allegedly made by Kolb and Espegard
about ERISA benefits in their capacity as Bremer Bank’s officers and managers) and
seeks effectively the same relief (ERISA benefits) in both cases. Costner v. URS
Consultants, Inc., 153 F.3d 667, 674 (8th Cir. 1998). As we have stated, “[a] party
may not litigate a claim and then, upon an unsuccessful disposition, revive the same
cause of action with a new theory.” Roach v. Teamsters Local Union No. 688, 595
F.2d 446, 450 (8th Cir 1979).

     Friez also argues Kolb and Espegard are not in privity with Bremer Bank and
Bremer Financial, the defendants in his first lawsuit. Again, we disagree. Both

      *
       The Honorable Patrick A. Comny, United States District Judge for the District
of North Dakota.

                                         -2-
lawsuits revolve around Kolb and Espegard’s statements to Friez as officers and
managers of Bremer Bank. Although officers are generally treated as separate from
a corporation for purposes of preclusion, they may be in privity with a corporation if
they are named as defendants in their capacity as officers. United States v. Gurley,
43 F.3d 1188, 1197 (8th Cir. 1994). Because Kolb and Espegard are sued as officers
of Bremer Bank in Friez’s second lawsuit, they are in privity with Bremer Bank, a
defendant in Friez’s first action. Id.

       Finally, because we have decided this case based on res judicata, it is not
necessary for us to consider whether Friez’s tort claims are also preempted under
ERISA. Thus, for the reasons stated above, we affirm the judgment of the district
court.

MORRIS SHEPPARD ARNOLD, Circuit Judge, dissenting.

     I respectfully dissent from the conclusion that Mr. Friez's claims against
Messrs. Kolb and Espegard are barred by res judicata.

       The burden is on the defendants to establish that principles of res judicata bar
the action against them. See Howard v. Green, 555 F.2d 178, 181 (8th Cir. 1977);
Fed. R. Civ. P. 8(c). Here the res judicata effect of the first judgment, which was
entered in federal court and based on federal law, is governed by federal law. See
Canady v. Allstate Ins. Co., 282 F.3d 1005, 1014 (8th Cir. 2002). In federal court, a
plaintiff is not required to sue all defendants in one action, see Headley v. Bacon, 828
F.2d 1272, 1275 (8th Cir. 1987); and generally, a claim is precluded under res
judicata principles if the first suit resulted in a final judgment on the merits and was
based on proper jurisdiction, and both suits involve the same parties or those in
privity with them and are based upon "the same nucleus of operative fact," see Kolb
v. Scherer Bros. Financial Services Co., 6 F.3d 542, 544 (8th Cir. 1993).

                                          -3-
       In addressing the matter of res judicata, the district court first concluded that
the present action arose out of the same nucleus of operative facts as the first one, and
that the second action against the bank was therefore barred. I have no difficulty with
this conclusion. See Baker by Thomas v. General Motors Corp., 522 U.S. 222, 237-
38 (1998).

       The district court further ruled that although Mr. Kolb and Mr. Espegard were
not sued in the previous action, the action against them was nevertheless barred
because they were in privity with the bank. The district court cited United States v.
Gurley, 43 F.3d 1188, 1195 (8th Cir. 1995), cert. denied, 516 U.S. 817 (1995), for the
familiar proposition that "directors, officers, and shareholders may be in privity with
a corporation and thereby assert a res judicata defense if they are named as defendants
solely in their capacity as directors, officers and shareholders" (internal quotations
omitted). The court found that res judicata applied because Mr. Kolb is the bank's
personnel officer and Mr. Espegard is the bank's president, and Mr. Friez's "claims
against them are brought against them in their capacity as directors and officers."

       The court in this case correctly observes that both lawsuits "revolve around
Kolb and Espegard's statements to Friez as officers and managers of Bremer Bank,"
and then agrees with the district court that Mr. Kolb and Mr. Espegard "are sued as
officers" and are therefore in privity with the bank. But the relevant papers in this
case do not indicate that Mr. Kolb and Mr. Espegard were in fact sued as officers of
the bank. For one thing, the caption to the complaint says nothing about the capacity
in which the defendants were sued. The complaint itself does recite the fact that
Mr. Kolb was the personnel manager of the bank and that Mr. Espegard was its
president, and it refers to them as the bank's "officers and managers," but there is
nothing in it to indicate that the action was brought against them solely as officers or
managers. I therefore believe that the district court erred in concluding that Mr. Kolb
and Mr. Espegard were sued solely "in their capacity as directors and officers."

                                          -4-
       Moore's Federal Practice §131.40[3][a] (3d ed. 2001) observes that "in the
context of the preclusion doctrines, the concept of privity is an amorphous concept
that is difficult to define. It does not serve well as a touchstone for determining
whether a particular relationship with a party to litigation will result in preclusion.
Rather, it describes those relationships that the courts have already determined will
qualify for preclusion." The Supreme Court has said that the "orthodox categories of
privies" include " 'those who control an action although not parties to it ...; those
whose interests are represented by a party to the action ...; successors in interest,' "
Lawlor v. National Screen Service Corp. 349 U.S. 322, 329 & n. 19 (1955) (quoting
Restatement of Judgments § 83 cmt. a), but noted more recently that the "term 'privity'
is now used to describe various relationships between litigants that would not have
come within the traditional definition of that term," Richards v. Jefferson County,
Ala., 517 U.S. 793, 798 (1996) (citing generally to Restatement (Second) of
Judgments, ch. 4 (1980)). But however broadly one might define the concept, I have
discovered no case that would allow for a conclusion that privity exists in the
circumstances present here.

        It is true that the mere relationship of employer and employee sometimes gives
rise to a preclusive effect being given to a prior judgment in favor of one or the other.
See Restatement (Second) of Judgments § 51; see also 18A Charles Alan Wright,
Arthur R. Miller & Edward H. Cooper, Federal Practice and Procedure § 4463, at
689-691 (2002). But this principle is not available here because the prior judgment
was in an ERISA case where the matter of vicarious liability in tort was entirely
irrelevant.

      For the foregoing reasons, I respectfully dissent.

                                          -5-
A true copy.

      Attest:

               CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.

                              -6-