Court Opinion

ID: 9750349
Source: CourtListenerOpinion
Date Created: 2023-08-28 14:52:08.400117+00
Date Added: 2024-06-11T09:07:50.048249
License: Public Domain

The opinion of the Court was delivered by
GARIBALDI, J.
This case presents the question of whether a dismissal in federal court that focuses on a defendant’s lack of capacity to be sued constitutes an adjudication on the merits of the claim, thereby barring under principles of res judicata a subsequent suit between the same parties, asserting the same claims, based on the same facts in state court. Indeed, the complaint plaintiff filed in the subsequent state action was virtually identical to the complaint plaintiff filed in the prior federal action.
*501I
Plaintiff, Jose Velasquez, a New York resident, was employed as a machine operator at Certech, Inc., in Westwood, New Jersey. On November 6, 1984, Velasquez lost most of his right hand while he was operating a molding machine that recycled unexpectedly while his hand was inside, allegedly as a result of defective controls.
Defendant Leyden Hydraulics, Inc. (“Leyden”), an Illinois corporation, manufactured the machine. Leyden had been dissolved under Illinois law on October 25, 1984, just thirteen days before the accident. In liquidation, Leyden’s assets were distributed to defendant Vera Franz, the wife of Leyden’s principal shareholder. Franz was an Illinois resident.
Velasquez commenced suit in the United States District Court for the District of New Jersey on June 20,1986, against Leyden and against Franz, individually and as trustee of Leyden. Velasquez alleged, among other claims, that the machine manufactured by Leyden was defective and that Franz, as recipient of the corporate assets, was derivatively liable for any claims. He premised the action on diversity jurisdiction, pursuant to 28 U.S.C. § 1332. He also sued Cridge, Inc., the manufacturer of the machine die, and New Jersey Manufacturers Insurance Company, for having negligently inspected the machine. Those claims are not at issue.
Leyden moved to dismiss plaintiff’s complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) for “failure to state a claim upon which relief can be granted.” Specifically, the corporation argued it lacked the capacity to be sued. Leyden maintained that the Illinois Business Corporations Act of 1983, Chapter 32, paragraph 12.80, which bars claims against a corporation accruing subsequent to corporate dissolution, governed plaintiff’s suit. Franz joined Leyden’s motion to dismiss, asserting that because the corporation could not lawfully be sued, she, as a former shareholder, also lacked the capacity to be sued.
*502On March 23, 1987, the federal district court dismissed Leyden and Franz from the action. Acknowledging the parties’ disagreement on the law that governed their dispute, the court requested that the parties brief the issue, which they did.
In its opinion, the federal district court recognized that
in considering a Rule 12(b)(6) motion to dismiss, I must accept as true the factual allegations of the complaint and I may only dismiss the complaint if it “appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Conley v. Gibson, 355 U.S. 41, 45-46 [78 S.Ct. 99, 101-102, 2 L.Ed.2d 80] (1957); Cruz v. Beto, 405 U.S. 319 [92 S.Ct 1079, 31 L.Ed2d 263] (1972).
With this standard in mind, I turn to the relevant allegations of the complaint.
After the court set forth the relevant facts, it turned to a discussion of which law governed Leyden’s capacity to be sued. Relying primarily on Federal Rule of Civil Procedure 17(b), which instructs that “[t]he capacity of a corporation to sue and be sued shall be determined by the law under which it is organized,” and recognizing that Leyden was an Illinois corporation, the federal district court found that Illinois law governed Leyden’s capacity to be sued. The federal district court then analyzed the Illinois Business Corporations Act of 1983, supra, paragraph 12.80, and concluded that
[c]onsistent with its plain language, the [Illinois statute], this section and its predecessor section have been uniformly interpreted to permit the survival of, for the specified period, those causes of action which accrued prior to the dissolution of the corporation. For example, in Blankenship v. Demmler Mfg. Co., 89 Ill.App.3d 569 [44 Ill.Dec. 787], 411 N.E.2d 1153 (1st Dist.1980), the plaintiff in a personal injury action appealed the trial court’s dismissal of defendant Demmler Mfg. and its former president.
In affirming the dismissals, the Illinois Appellate Court found that the legislative intent in passing Paragraph 12.80 predecessor was to abrogate the common law doctrine that provided that once a corporation was dissolved, the corporation could neither sue or be sued and all pending proceedings abated.
[89 Ill.App.3d at 573, 44 Ill.Dec. at 790, 411 N.E.2d at 1156.]
The federal district court then analyzed other Illinois cases that had construed the Illinois corporate law. Based on its analysis of Illinois statutory and case law, the federal district court concluded that claims cannot accrue against an Illinois *503corporation subsequent to its dissolution and dismissed the case against Leyden.
The federal district court also dismissed the complaint against Franz. It explicitly declined to decide plaintiffs contention that Illinois courts would impose liability on former shareholders under a trust-fund doctrine. That doctrine renders shareholders who receive distributed assets of the corporation liable as “trustees” for claims of the corporation’s creditors. See Blankenship v. Demmler Mfg. Co., supra, 89 Ill.App.3d at 572, 44 Ill.Dec. at 789, 411 N.E.2d at 1155. Instead, the federal district court relied on the reasoning of the Blankenship court that if the Illinois survival statute barred an action against a corporation for late accrual of the cause of action, the trust-fund doctrine could not reasonably be found to hold an individual shareholder liable. Id. at 573-74, 44 Ill.Dec. at 790-91, 411 N.E.2d at 1156-57. The court found that “even assuming arguendo that the doctrine does apply, Franz may still not be held liable, because such liability would be inconsistent with Illinois law providing for the end of a corporate existence.” See id. at 572, 44 Ill.Dec. at 790, 411 N.E.2d at 1156. The federal district court quoted the Blankenship court’s analysis that to allow a plaintiff to recover on such a theory “would mean that the corporation could never completely dissolve but would live on indefinitely through its shareholders.” Ibid.
The federal district court did not reach Franz’s remaining argument that plaintiff could not properly pierce the corporate veil to hold Franz liable. Apart from the question of whether adequate factual justification existed to disregard the corporate form, the court found that the Illinois corporate dissolution statute precluded plaintiff’s claim because the cause of action had arisen after Leyden’s dissolution. Consequently, the federal district court granted the motion of defendants Leyden and Franz for dismissal of the claims against them.
Velasquez did not appeal the federal district court decision. Instead, four days later, on March 27,1987, he filed a complaint *504virtually identical to his federal complaint in the New Jersey Superior Court, Law Division. That complaint differed only by a modification of the ad damnum clause and the caption style required for state court filings. Defendants Leyden and Franz moved to dismiss the complaint, raising the same “capacity to be sued” arguments that they had raised in federal court. In addition, they argued that the doctrine of res judicata barred the complaint.
The New Jersey trial court dismissed the complaint against Leyden and Franz not on the basis of res judicata but because it construed New Jersey law to dictate that the law of the incorporating state governs the question of a corporation’s capacity to be sued, relying on Harris-Woodbury Lumber Co. v. Coffin, 179 F. 257 (C.C.N.C.1910) aff'd, 187 F. 1005 (C.C.A.N.C.1911). Following the federal district court’s analysis, the trial court then concluded that Illinois law barred suit against the dissolved corporation and its former shareholder. Plaintiff therefore sought and was granted leave to appeal to the Appellate Division.
The Appellate Division affirmed the trial court’s dismissals but based its decision on principles of res judicata rather than on the trial court’s rationale. After examining federal rules on res judicata it found that the federal judgment was an “adjudication on the merits” that barred relitigation of the claims in state court. In accordance with Federal Rule of Civil Procedure 41(b), the Appellate Division found that a dismissal pursuant to a motion under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim on which relief could be granted constitutes an adjudication on the merits. The Appellate Division disagreed with plaintiff’s contention that the dismissal for failure to state a claim in this case resembled a dismissal for lack of jurisdiction. Because it concluded that the case in state court was barred by res judicata, the Appellate Division did not reach the issues of choice of law or former-shareholder liability.
*505We granted plaintiffs motion for leave to appeal from an interlocutory order of the Appellate Division affirming the dismissal of his complaint against Leyden and Franz, 122 N.J. 343, 585 A.2d 357 (1990), and now affirm the Appellate Division judgment.
II
We begin by reviewing well-established principles of res judicata, which squarely answer plaintiff’s claims.
The term “res judicata” refers broadly to the common-law doctrine barring relitigation of claims or issues that have already been adjudicated. Cf. In re Coruzzi, 95 N.J. 557, 568, 472 A.2d 546, appeal dismissed, 469 U.S. 802, 105 S.Ct. 56, 83 L.Ed.2d 8 (1984) (doctrine of collateral estoppel not mandated by constitution or statute). In essence, the doctrine of res judicata provides that a cause of action between parties that has been finally determined on the merits by a tribunal having jurisdiction cannot be relitigated by those parties or their privies in a new proceeding. Roberts v. Goldner, 79 N.J. 82, 85, 397 A.2d 1090 (1979).
The rationale underlying res judicata recognizes that fairness to the defendant and sound judicial administration require a definite end to litigation. Restatement (Second) of Judgments, § 19 comment a (1982). See generally 1B J. Moore, J. Lucas, & J. Currier, Moore’s Federal Practice ¶ 0.405 (2d Ed.1988) (discussing principles underlying res judicata). The doctrine evolved in response to the specific policy concerns of providing finality and repose for the litigating parties; avoiding the burdens of relitigation for the parties and the court, ibid.; and maintaining judicial integrity by minimizing the possibility of inconsistent decisions regarding the same matter. Id. at n. 30.
*506For a judicial decision to be accorded res judicata effect, it must be a valid and final adjudication on the merits of the claim. Restatement (Second) of Judgments, supra, § 27.
When an issue of fact or law is actually litigated and determined by a valid and final judgment, and the determination is essential to the judgment, the determination is conclusive in a subsequent action between the parties, whether on the same or a different claim.

[Ibid.]

Accord Federated Dep’t Stores, Inc. v. Moitie, 452 U.S. 394, 101 S.Ct. 2424, 69 L.Ed.2d 103 (1981); Reed v. Allen, 286 U.S. 191, 52 S.Ct. 532, 76 L.Ed. 1054 (1931); Roberts v. Goldner, supra, 79 N.J. at 85, 397 A.2d 1090; Washington Township v. Gould, 39 N.J. 527, 533, 189 A.2d 697 (1963); see also Restatement (Second) of Judgments, supra, § 19 comment a (only judgment rendered “on the merits” will bar another action on same claim).
Typically, the merits of a claim are adjudicated following a full trial of the substantive issues. Restatement (Second) of Judgments, supra, § 19; see Central R.R. v. Neeld, 26 N.J. 172, 177, 139 A.2d 110 (doctrine of res judicata “ordinarily does not come into play where the parties have not had an adjudication on the ultimate merits”), cert. denied, 357 U.S. 928, 78 S.Ct. 1373, 2 L.Ed.2d 1371 (1958). For example, a valid and final personal judgment for defendant does not bar another action by plaintiff on the same claim if the judgment is a dismissal for lack of jurisdiction, improper venue or non-joinder or misjoinder of parties. Restatement (Second) of Judgments, supra, § 20(l)(a).
Increasingly, however, statutes, rules and court decisions operate to bar retrial of judgments that do not pass directly on the substance of a claim. Ibid. Under the principles of res judicata claims that are actually litigated and determined before trial also are barred from being relitigated. See id. at § 27 comment d:
d. When an issue is actually litigated. When an issue is properly raised, by the pleadings or otherwise, and is submitted for determination, and is determined, the issue is actually litigated within the meaning of this Section. An *507issue may be submitted and determined on a motion to dismiss for failure to state a claim, a motion for judgment on the pleadings, a motion for summary judgment ... a motion for directed verdict, or their equivalents, as well as on a judgment entered on a verdict.
A judgment of involuntary dismissal or a dismissal with prejudice constitutes an adjudication on the merits “as fully and completely as if the order had been entered after trial.” Gambocz v. Yelencsics, 468 F.2d 837 (3d Cir.1972) (citing Lawlor v. National Screen Serv. Corp., 349 U.S. 322, 327, 75 S.Ct. 865, 868, 99 L.Ed. 1122, 1127 (1955) (dismissal of complaint with prejudice bars subsequent suit on same issue, where operative facts of subsequent suit were identical)).
The federal dismissal at issue here occurred pursuant to a motion under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim on which relief can be granted. Ordinarily, a federal court dismissal that directly determines a right in issue estops relitigation of the same issue in subsequent proceedings between the parties regardless of its form or nature. Washington Township v. Gould, supra, 39 N.J. at 533, 189 A.2d 697 (citations omitted). However, plaintiff contends that because the federal dismissal rested on a determination that defendants lacked the capacity to be sued, the ruling did not reach the merits of the case and should not be accorded preclusive effect under the doctrine of res judicata. He urges that the dismissal is like a dismissal for improper venue or lack of diversity, which does not reach the ultimate merits of the controversy or bring res judicata into play. We disagree.
Under both federal and New Jersey law the district court judgment was an adjudication on the merits. Federal Rule of Civil Procedure 41(b) provides in pertinent part:
Unless the court in its order for [involuntary] dismissal otherwise specifies, a dismissal ... other than a dismissal for lack of jurisdiction, for improper venue, or for failure to join a party under Rule 19, operates as an adjudication on the merits.
Thus, under the federal rules, a motion to dismiss for failure to state a claim is an adjudication on the merits for res judicata purposes, unless the judge specifies that it is “without preju*508dice.” The Supreme Court has held that a Federal Rule of Civil Procedure 12(b)(6) dismissal that occurs before trial for failure to state a claim constitutes a “judgment on the merits.” Federated Dep’t. Stores v. Moitie, supra, 452 U.S. at 399 n. 3, 101 S.Ct. at 2428 n. 3, 69 L.Ed.2d at 109 n. 3; see also Bell v. Hood, 327 U.S. 678, 682, 66 S.Ct. 773, 776, 90 L.Ed. 939, 943 (1946) (“for it is well settled that the failure to state a proper cause of action calls for a judgment on the merits”). See generally 1B J. Moore, Federal Practice ¶ 0.409[1.-2] (2d ed. 1988) (dismissal in federal court pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim on which relief may be granted bars subsequent action on either federal- or state-law theories).
The State rule relating to the finality of dismissals substantially parallels Federal Rule of Civil Procedure 41(b), further supporting our conclusion that the federal court dismissal was on the merits. Rule 4:37-2(d) provides that
[u]nless the order otherwise specifies, a[n] [involuntary] dismissal ... other than a dismissal for lack of jurisdiction, operates as an adjudication on the merits.
In the tentative draft of the rules by the New Jersey Supreme Court in 1948, the Court commented that the rule “is in the main Federal Civil Rule 41(b) as amended.” New Jersey Supreme Court, Tentative Draft of the Rules Governing the Courts of New Jersey 180 (1948). Not surprisingly, therefore, a dismissal under Rule 4:6-2(e), New Jersey’s analogue to Federal Rule of Civil Procedure 12(b)(6), has also operated as an adjudication on the merits for res judicata purposes. See, e.g., Printing-Mart-Morristown, Inc. v. Rosenthal, 650 F.Supp. 1444, 1448 n. 7 (D.N.J.1987), aff'd, 856 F.2d 184 (3d Cir.1988); Advance Piece Dye Works v. Travelers Indem. Co., 64 N.J.Super. 405, 166 A.2d 173 (App.Div.1969); cf. Blazer Corp. v. New Jersey Sports and Exposition Auth., 199 N.J.Super. 107, 488 A.2d 1025 (App.Div.1985) (federal court dismissal for failure to state cause of action constituted dismissal on the merits).
*509The record does not show, and plaintiff does not claim, that the federal judgment rendered on the Federal Rule of Civil Procedure 12(b)(6) motion provided that it was not on the merits or that it was without prejudice. The words “without prejudice” generally indicate that “there has been no adjudication on the merits of the claim, and that a subsequent complaint alleging the same cause of action will not be barred simply by reason of its prior dismissal.” Mason v. Nabisco Brands, Inc., 233 N.J.Super. 263, 267, 558 A.2d 851 (App.Div.1989). Without such limiting language, however, a federal judgment operates as an adjudication on the merits under Federal Rule of Civil Procedure 41(b) even though it arose under Federal Rule of Civil Procedure 12(b)(6). See Cemer v. Marathon Oil Co., 583 F.2d 830, 832 (6th Cir.1978) (judgment operates as adjudication on merits under Federal Rule of Civil Procedure 41(b) even where dismissal is pursuant to Federal Rule of Civil Procedure 12(b)(6)).
Moreover, the federal district court dismissal was not a dismissal for lack of jurisdiction, for improper venue, or for failure to join a party, which are grounds specifically exempted from substantive finality under Federal Rule of Civil Procedure 41(b). In Bell v. Hood, supra, 327 U.S. at 682, 66 S.Ct. at 776, 90 L.Ed. at 943, the Court distinguished between a dismissal based on lack of jurisdiction and a dismissal based on a failure to state a cause of action:
Whether the complaint states a cause of action on which relief could be granted is a question of law and just as issues of fact it must be decided after and not before the court has assumed jurisdiction over the controversy. If the court does later exercise its jurisdiction to determine that the allegations in the complaint do not state a ground for relief, then dismissal of the case would be on the merits, not for want of jurisdiction.
[citations omitted].
Under Bell, the federal district court ruling constituted an adjudication on the merits. The court (1) assumed jurisdiction of the matter; (2) determined as a matter of law, under Federal Rule of Civil Procedure 17(b), that the law of Leyden’s state of incorporation applied; and (3) decided that under Illinois corpo*510rate law, defendants lacked the capacity to be sued. That Bell-type analysis discloses that “the allegations of the complaint [did] not state a ground for relief.” Ibid.
One of the critical elements plaintiff as well as our dissenting brethren fail to recognize is that the federal district court’s dismissal occurred pursuant to Federal Rule Civil Procedure 12(b)(6) and not pursuant to Federal Rule of Civil Procedure 17(b). Even if we were to accept the argument that the dismissal should be evaluated based on Federal Rule of Civil Procedure 17(b) rather than Federal Rules of Civil Procedure 12(b)(6) and 41(b), we disagree with the contention that Federal Rule of Civil Procedure 17(b) is merely a procedural rule and consequently undeserving of the res judicata effect accorded to substantive rules.
The choice-of-law question regarding a corporation’s capacity to be sued has been answered by reference to the laws of the state of incorporation since long before the rule’s incorporation into the federal rules of civil procedure. Restatement (Second) of Conflicts of Law § 299(1) (1971) indicates that local law of the state of incorporation determines whether a corporation’s existence has been terminated or suspended. In Pendleton v. Russell, 144 U.S. 640, 12 S.Ct. 743, 36 L.Ed. 574 (1891), relied on by the Appellate Division to term the federal district court’s decision an adjudication on the merits, the Supreme Court affirmed as invalid a judgment recovered in Tennessee against a company dissolved under a New York decree. The Pendleton court emphasized in its judgment that the company in question had no legal existence at the time the claim arose. “[F]or, the corporation having expired, the suit itself had abated. It ceased to be a pending suit.” Id. at 645, 12 S.Ct. at 745, 36 L.Ed. at 576. That the Supreme Court turned to the law of the company’s state of incorporation to determine the company’s existence suggests that that choice of law principle is more than a mere procedural rule, as plaintiff would have us believe. Notably, the Court also stated that “[i]t is well settled that the judgments and decrees of a Circuit Court of the United States *511[having jurisdiction] are to be accorded the same effect as would be accorded to the judgments and decrees of a state tribunal of equal authority.” Ibid.
We agree with the Appellate Division that a dismissal for failure to state a claim on which relief may be granted is distinct from a jurisdictional ruling and represents a decision on the merits of the claim. The federal district court acknowledged that it could only dismiss the complaint “if it appears beyond doubt that plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” In reaching its conclusion the court reviewed the briefs of the parties, heard argument and rendered an opinion based on the court’s examination of the federal and state law. A dismissal for lack of capacity to be sued differs in no respect from any other dismissal for failure to state a claim such that it should not be deemed an adjudication on the merits for res judicata purposes.
Ill
Although plaintiff could have appealed the federal district court’s judgment, he did not. Even where a decision is wrong, as plaintiff contends the federal district court decision is, it is well settled that “a judgement, not set aside on appeal or otherwise, is equally effective as an estoppel upon the points decided.” Reed v. Allen, supra, 286 U.S. at 201, 52 S.Ct. at 534, 76 L.Ed. at 1058.
Direct appeal exists to correct erroneous judgments. Subsequent state suits cannot displace the proper resort to federal appellate practice. Federated Dep’t. Stores v. Moitie, supra, 452 U.S. at 398-99, 101 S.Ct. at 2427-28, 69 L.Ed.2d at 109. The Supreme Court noted in Federated Department Stores that,
[a]s this Court explained in Baltimore S.S. Co. v. Phillips, 274 U.S. 316, 325, 47 S.Ct. 600, 604, 71 L.Ed. 1069, 1074 (1927), an "erroneous conclusion” reached by the court in the first suit does not deprive the defendants in the second action “of their right to rely upon the plea of res judicata [sic]____ A judgment *512merely voidable because based upon an erroneous view of the law is not open to collateral attack, but can be corrected only by a direct appeal and not by bringing another action upon the same [cause of action].”
[Id. at 398, 101 S.Ct. at 2428, 69 L.Ed.2d at 109; accord Towers v. Brown, 732 F.2d 345 (3d Cir.1984).]
See Restatement (Second) of Judgments, supra, § 71, comment f (“[Rjelief on the basis of mistake is not a substitute for an appeal.”).
Whether the mistake of law is made at the beginning or end of the original court’s analysis is irrelevant. “A judgment will be recognized and enforced in other states even though an error of fact or of law was made in the proceedings before judgment, except [where a court lacks competence to render such judgment].” Restatement (Second) of Conflicts of Laws, supra, § 106 (emphasis added). Correcting flawed reasoning is the subject of direct appeals, and collateral attacks which “undercut the decisional process” are prohibited. Restatement (Second) of Judgments, supra, § 71, comment e. Mistakes subject to correction on collateral attack “do[] not include errors by the court in reaching decision, for example in misinterpreting the legal rule that should be applied in determining liability or damages.” Ibid.
If the federal court misinterpreted which choice of law rule to use, as plaintiff and the dissent allege, correcting that mistake is not a job for a state court but must be addressed to the third circuit. The dissent fails to address that critical element of the instant case. Instead, the dissent invites us on a long journey winding past principles of res judicata and through an alternative choice of law analysis. Plaintiff lost his lawsuit in federal district court. The third circuit of the federal judiciary is the appropriate and established forum of appeal for such suits. Longstanding principles favoring comity and finality prevent us from endorsing the dissent’s position that ignores the well-established course of direct appeal to the federal court of appeals. We would not approve a federal court’s decision to ignore a judgment of our trial court. We will not embrace the opposite course here.
*513Plaintiff himself chose to commence the action in a federal forum. To authorize plaintiffs nearly identical application to state court following an unfavorable federal decision would be an endorsement of forum sampling, which this Court and the federal courts disdain. See, e.g., England v. Louisiana State Bd. of Medical Examiners, 375 U.S. 411, 419, 84 S.Ct. 461, 466, 11 L.Ed.2d 440, 447 (1964) (“[i]f a party freely and without reservation submits his federal claims for decision by the state courts, litigates them there, and has them decided there, ... he has elected to forego his right to return to the district court”). As Judge Gibbons commented in his concurring opinion in Schum v. Bailey, 578 F.2d 493, 505 (3d Cir.1978), “[ajpplying federal law promotes uniformity and prevents forum-shopping. If the results were otherwise, we would witness the ludicrous spectacle of litigants scurrying around in search of the state that provides the best avenue of attack on the federal judgement.”
IV
In conclusion, we emphasize that the claims, the parties and the facts were identical in both the federal and state matters. We also note that the doctrine of res judicata arose to respond to cases much like the one before us and that it “serves vital public interests beyond any individual judge’s ad hoc determination of the equities in a particular case.” Federated Dep’t Stores v. Moitie, supra, 452 U.S. at 401, 101 S.Ct. at 2429, 69 L.Ed.2d at 110; cf. Heiser v. Woodruff, 327 U.S. 726, 733, 66 S.Ct. 853, 856, 90 L.Ed. 970 (1946) (there is “no principle of law or equity which sanctions the rejection by a federal court of the salutary principle of res judicata ”).
Only in extraordinary circumstances has the Court departed from strict deference to res judicata principles. Such circumstances exist where the issue is purely one of law that affects a substantial public interest, and the decision would “frustrate totally the essential purpose of a statute” and result in ineq*514uitable administration of the law if not reconsidered. Plainfield v. Public Serv. Elec. & Gas Co., 82 N.J. 245, 258-59, 412 A.2d 759 (1980). Those narrow criteria permitting an exception to the application of res judicata were set forth in a context in which this Court held, despite res judicata, that a court in 1980 might readdress the interpretation of a 1898 contract that had been previously adjudicated in 1916 by the Court of Errors and Appeals. No such extraordinary circumstances are present in this case. Because we find that plaintiffs claim is barred by res judicata, we do not reach his contention that New Jersey choice of law precepts in tort cases should have been applied instead of Illinois corporate law.
The United States Supreme Court, in the early part of this century, compellingly captured the importance of the doctrine of res judicata. See Reed v. Allen, supra, 286 U.S. at 198-99, 52 S.Ct. at 533-34, 76 L.Ed. at 1054.
The predicament in which respondent finds himself is of his own making____ [W]e cannot be expected, for his sole relief, to upset the general and well established doctrine of res judicata, conceived in the light of the maxim that the interest of the state requires that there be an end to litigation — a maxim which comports with common sense as well as public policy. And the mischief which would follow the establishment of precedent for so disregarding this salutary doctrine against prolonging strife would be greater than the benefit which would result from relieving some case of individual hardship. [Ibid.]
Allowing Velasquez to refile in state court the very claim that was carefully considered and dismissed in federal court would undermine public policies favoring stability, limitation on the duration of litigation of a claim, and conservation of judicial resources. Recognizing the value of those policies, this Court will not signal permission to plaintiffs who lose in federal court without a full trial that they may try again in state court on the theory that state legislative and judicial policies would result in a decision in their favor. See Federated Dep’t Stores v. Moitie, supra, 452 U.S. 394, 101 S.Ct. 2424, 69 L.Ed.2d 103 (plaintiffs state court claim under antitrust law barred by a prior federal court judgment that dismissed complaint on essentially the same grounds).
*515Because we find that plaintiffs complaint was adjudicated in federal court on the merits, we will not ignore well-founded principles of res judicata and permit an essentially identical complaint to be heard by our state courts. We therefore affirm the judgment of the Appellate Division.