Court Opinion

ID: 9488126
Source: CourtListenerOpinion
Date Created: 2023-08-05 12:37:01.814326+00
Date Added: 2024-06-11T17:52:42.520334
License: Public Domain

JACOBS, Circuit Judge,
dissenting:
I respectfully dissent. The prior negligence action in admiralty, brought in rem against a substituted bond, resulted in a judgment exceeding the bond. The question *373presented to us now is: what use if any can the plaintiff make of that partially-unsatisfied judgment? The majority concludes that the excess judgment can be collected in 'person-am in this subsequent action against the bareboat charterer, that the plaintiff may invoke collateral estoppel to establish liability and damages, and that this collateral estop-pel can be predicated in part upon a stipulation that manifests no intent that it shall be binding for any other purpose. I arrive at polar opposite conclusions: that the circumstances relied upon by the majority to justify collateral estoppel in fact support the conclusion that the in rem judgment is res judicata precluding any further lawsuit against the bond, the ship for which the bond was substituted, or the privies of the ship, including Empresa; and that a stipulation that does not expressly provide for collateral use has none.
A. Res Judicata.
1. Second Circuit Precedent. In Burns Bros. v. The Central R.R. of N.J., 202 F.2d 910 (2d Cir.1953) (Hand, J.), a barge owner sued the owner of a “carfloat” in personam for collision damages. After losing this in personam action, the barge owner then brought suit against the “carfloat” in rem. This Court held that the claims asserted in rem and in personam were the same cause of action and that, under the doctrine of res judicata, the final judgment in the first suit precluded the bringing of the second:
This court has ... twice decided that a decree in rem is a bar to a suit in person-am, and we cannot see why the rule should not work both ways. Moreover, we should have so held, had there been no precedents.
Id. at 913 (footnote omitted) (citing Bailey v. Sundberg, 49 F. 583 (2d Cir.), cert. denied, 145 U.S. 628, 12 S.Ct. 239, 36 L.Ed. 855 (1892); Sullivan v. Nitrate Producers’ S.S. Co., 262 F. 371 (2d Cir.1919)).
Appellees argue that Bums (as well as Bailey and Sullivan) are distinguishable because in each ease the plaintiff brought the second action to re-litigate issues decided against it in the first. Res judicata, which encourages judicial efficiency, of course bars such claims; but it also bars a plaintiff from using successive actions to seek damages arising out of a single incident from parties in privity with one another. The point is illustrated, with facts analogous to this appeal, in The B & B No. 10 N.Y. Scow Corp. v. Olsen, 121 F.2d 704 (2d Cir.1941). In that case, a tugboat collided with three barges. The owner of the three barges prevailed in an action in rem against the tugboat for damages sustained by two of the three barges, and then brought a second suit, in personam against the tugboat owner, for damages to the third barge. On appeal, “[t]he sole question” presented was “the effect of the previous judgment, which libelant relies on as conclusively showing fault against the respondents, but not as barring further recovery.” Id. at 704. The Court held that, under the doctrine of res judicata, the judgment in the in rem action barred the subsequent action in personam. Id. at 705.
The Restatement of Judgments 2d confirms that the same result should be reached in this appeal:
[Wjhere the two kinds of jurisdiction are available to a plaintiff but he fails to take advantage of them both, to allow him to bring successive nonpersonal and personal actions runs counter to the policy of res judicata. The justification has been often advanced that the two actions are pursuing different claims because one is against a person and the other against a thing. But both are affecting the interests of the same persons.
Restatement (Second) of Judgments § 30 cmt. b (1982).
2. Empresa’s Role. In general, the doctrine of res judicata operates to preclude later litigation if an earlier decision was (1) a final judgment on the merits, (2) by a court of competent jurisdiction, (3) in a case involving the same parties or their privies (4) involving the same cause of action, In re Teltronics Serv., Inc., 762 F.2d 185, 190 (2d Cir.1985) (citations omitted), where the remedy sought in the second action was available at the time of the first action. See Burns Bros., 202 F.2d at 913. I agree with the majority that step three of this inquiry hinges on “whether a party ‘controlled] or sub*374stantially participate^] in the control of the presentation on behalf of a party’ to the prior action.” Ante at 367. I disagree with the majority’s conclusion that this standard has not been met, and that Empresa is not in privity with the vessel it chartered because Empresa had a purely “representative capacity” in the first litigation. Ante at 368. In support of this proposition, the majority cites one ease, Hurt v. Pullman Inc., 764 F.2d 1443, 1448 (11th Cir.1985), and the Restatement (Second) of Judgments § 39 cmt. e (1982). But Hurt stands for no more than that “for a party to be bound by or take advantage of a prior suit that party or its privity must not only have been present in both suits, but it has to appear in the same capacity in both suits.” Id. (emphasis added). Such a rule is necessary, Hurt notes, because a “party’s representational responsibilities might”, as in the case of a fiduciary relationship, “have precluded him as a matter of substantive law from asserting such individual interests in the first action.” Id. This logic does not apply to the present case. Empresa’s interests in both the first and second suit were identical: it wished to prevent Central Hudson from recovering for damages to the pipeline.
The illustration offered by the Restatement section cited by the majority is similarly inapplicable. Comment e to § 39 of the Restatement notes that “a trustee who takes control of litigation involving another in order to protect the trust is not on that account bound in a subsequent action in which he appears in his individual capacity.” The analogy does not work: a trustee represents a trust by virtue of a fiduciary duty to do so; a bareboat charterer represents the vessel by virtue of a direct financial stake amounting to privity.
The majority is inconsistent in its view of Empresa’s role. In considering Central Hudson’s collateral estoppel claim, one of the elements of which is whether Empresa had a “full and fair opportunity” to litigate all the issues decided in the in rem trial, the majority observes: “Given its control of and participation in the litigation Empresa cannot seriously contend that it had no ‘full and fair opportunity’ to litigate all issues decided in the in rem trial.” Ante at 368-369. How is it that Empresa controlled and participated in the litigation for purposes of collateral estoppel but not for purposes of res judica-ta?
In resisting res judicata, Central Hudson does not seriously challenge the presence of the four requirements outlined by Teltronics. Rather, Central Hudson claims that res judi-cata is not applicable in this case because the in personam action could not have been brought against Empresa at the time the in rem action was brought against the Lunamar II. See Bums Bros., 202 F.2d at 913. According to Central Hudson, it could not determine that Empresa was the bareboat charterer of the Lunamar II until just before the in rem trial began, and Empresa prevented Central Hudson from finding that out by stonewalling discovery aimed at identifying the bareboat charterer of the Lunamar II. The Joint Appendix, however, contains ample evidence that Central Hudson knew that Empresa might be liable for the damage caused by the Lunamar II as early as 1988. For example, in an interrogatory answer dated August 26, 1988, Central Hudson stated its belief that either Seiiiki or Empresa owned the Lunamar II at the time of the January 1988 accident. See JA 134-35. Much of the ship’s correspondence and documentation, produced by counsel for the vessel, is on Empresa’s stationery. See JA 141-57. Finally, as depicted in a photograph taken by a Central Hudson employee two days after the accident that gave rise to this suit, the ship’s funnel is emblazoned with the Empresa standard.1 JA at 414.
This factual dispute bears on the res judi-cata requirement that the new defendant was available for suit at the time and place of the initial proceeding. Ultimately, however, I don’t think that this factual dispute is dispos-itive, because it is undisputed that conclusive evidence of the bareboat charter was presented to Central Hudson by Empresa when *375Empresa filed its claim of ownership a month prior to trial. JA at 77 (“Come now ... EMPRESA NAVIERA SANTA S.A., a business entity which was at the time of the filing of the complaint herein and still is owner Pro Hac Vice of the defendant LUNAMAR II ...”). Central Hudson could have moved to join Empresa even at that late date. See Parklane Hosiery Co. v. Shore, 439 U.S. 322, 331 (1979) (“The general rule should be that in cases where a plaintiff could easily have joined in the earlier action or where ... the application of offensive collateral estoppel would be unfair to a defendant, a trial judge should not allow the use of offensive collateral estoppel.”). Empresa was “available” at the time of the first suit for purposes of res judicata. If — as Central Hudson claims (and the majority accepts) when arguing in favor of collateral estoppel — the issues in the successive suits were the same, joinder of Empresa a month before trial would have been feasible and would have caused no prejudice or delay.
B. Collateral Estoppel.
The majority concludes that the finding of liability against the res collaterally estops Empresa from re-litigating liability in this subsequent action. The liability finding against the res, however, appears to rest in part upon a stipulation entered into during the in rem trial. I believe that the stipulation cannot have collateral estoppel effect in the subsequent lawsuit. “As a general rule ... an issue is not ‘actually litigated’ for purposes of collateral estoppel unless the parties to the stipulation manifest an intent to be bound in a subsequent action.” Red Lake Band v. United States, 607 F.2d 930, 934, 221 Ct.Cl. 325 (1979); see also Otherson v. Department of Justice, 711 F.2d 267, 274 (D.C.Cir.1983); Sekaquaptewa v. MacDonald, 575 F.2d 239, 247 (9th Cir.1978); Anderson, Clayton & Co. v. United States, 562 F.2d 972, 992 (5th Cir.1977), cert. denied, 436 U.S. 944, 98 S.Ct. 2845, 56 L.Ed.2d 785 (1978). The stipulation at issue manifests no such intent. The majority opinion acknowledges the general rule, ante at 369 n. 4, but employs a rule-swallowing exception: “Because a finding of negligence on the part of the Vessel’s crew and officers was essential to the district court’s determination of liability, we find that the parties intended the stipulation to be binding.” Ante at 369 n. 4. Were this the rule, a stipulation would be binding unless the parties manifest an intent to the contrary — an inversion of well-settled law. See Red Lake Band, 607 F.2d at 934 (“an intention to be ... bound [in future litigations] should not be readily inferred”).

. Empresa’s standard, which appears on the stationery and the funnel, consists of a flag with dark triangles along the hoist and fly, pointing inward toward a light center. Letters in the middle of each triangle and the light center spell out Empresa Naviera Santa: "ENS”.