Court Opinion

ID: 1018396
Source: CourtListenerOpinion
Date Created: 2013-07-04 22:19:30.943012+00
Date Added: 2024-06-11T15:08:48.606255
License: Public Domain

UNPUBLISHED

                   UNITED STATES COURT OF APPEALS
                       FOR THE FOURTH CIRCUIT

                            No. 05-1378

CHRISTINE   WITTHOHN,    d/b/a   Green    Parrot
Enterprises,

                                              Plaintiff - Appellant,

          versus

FEDERAL INSURANCE COMPANY, a corporation;
CHUBB & SON, INCORPORATED, a corporation,

                                             Defendants - Appellees.

Appeal from the United States District Court for the Southern
District of West Virginia, at Charleston. John T. Copenhaver, Jr.,
District Judge. (CA-04-848)

Submitted:   December 16, 2005            Decided:   January 31, 2006

Before WILKINSON and MICHAEL, Circuit Judges, and HAMILTON, Senior
Circuit Judge.

Affirmed by unpublished per curiam opinion.

Jeffrey V. Mehalic, LAW OFFICES OF JEFFREY V. MEHALIC, Charleston,
West Virginia, for Appellant. Thomas V. Flaherty, Tammy R. Harvey,
FLAHERTY, SENSABAUGH & BONASSO, PLLC, Charleston, West Virginia,
for Appellees.

Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
PER CURIAM:

               Christine Witthohn appeals from the district court’s

order dismissing her complaint under Fed. R. Civ. P. 12(b)(6) on

the basis of res judicata.               On appeal, Witthohn contends that the

district court erred by considering documents not referred to in

the complaint without converting the motion to dismiss into a

motion for summary judgment.                 Witthohn also asserts that her

complaint is not barred by res judicata.                     We affirm.

               In 2002, Christine Witthohn filed suit against EZNET in

West Virginia state court, alleging that EZNET had breached certain

contractual         obligations     in    connection         with   the    creation    and

development of Witthohn’s website.                      In June 2003, the parties

reached    a       settlement.       Pursuant      to    the    settlement,      Witthohn

executed       a     “Settlement     Agreement      and        Release”    wherein     she

specifically released “any and all claims that were or could have

been asserted” against EZNET and its “insurers and adjusters.”

               Thereafter,       Witthohn     filed      a     motion     to   amend   her

complaint to assert claims against Appellees, EZNET’s insurers, for

violations of the West Virginia Unfair Trade Practices Act (“UTPA”)

related to their handling of Witthohn’s suit against EZNET.                            The

state court denied the motion, determining that any amendment of

the complaint would be a “fruitless act” because Witthohn had

released       any    claim   it    might    have       against     Appellees     in   the

settlement agreement.              Witthohn’s appeal was denied.

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            Witthohn then filed the instant action against Appellees

in West Virginia state court, again raising UTPA claims. Appellees

removed the case to federal court and filed a motion to dismiss

under Fed. R. Civ. P. 12(b)(6) on the grounds that Witthohn’s cause

of action was barred by res judicata and collateral estoppel.

Appellees attached the following to their motion:          the settlement

agreement, the state court’s orders denying leave to amend and

dismissing the action, the order of the West Virginia Supreme Court

denying the petition for appeal, and the transcript of the state

court motion hearing.      After considering these submissions, the

district court granted the motion to dismiss, finding that the

action was barred by res judicata.

            This court reviews a dismissal for failure to state a

claim de novo.   Mylan Labs, Inc. v. Matkari, 7 F.3d 1130, 1134 (4th

Cir. 1993).    Dismissal under Rule 12(b)(6) is inappropriate unless

it appears beyond doubt that the plaintiff cannot prove any set of

facts to support his or her allegations.         Revene v. Charles County

Comm’rs, 882 F.2d 870, 872 (4th Cir. 1989).          Ordinarily, a court

may not consider any documents that are outside of the complaint,

or   not   expressly   incorporated   therein,    unless   the   motion   is

converted into one for summary judgment.             Alternative Energy,

Inc. v. St. Paul Fire and Marine Ins. Co., 267 F.3d 30, 33 (1st

Cir. 2001).

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            However, there are exceptions to the rule that a court

may   not     consider   any    documents     outside   of    the    complaint.

Specifically,     a   court    may   consider   official      public   records,

documents central to plaintiff’s claim, and documents sufficiently

referred to in the complaint so long as the authenticity of these

documents is not disputed. Alternative Energy, 267 F.3d at 33; see

also Phillips v. LCI Int’l, Inc., 190 F.3d 609, 618 (4th Cir. 1999)

(permitting consideration of extraneous material if such materials

are “integral to and explicitly relied on in the complaint”);

Gasner   v.    Dinwiddie,      162   F.R.D.   280,   282     (E.D.   Va.   1995)

(permitting district court to take judicial notice of public

documents, such as court records, even when the documents are

neither referenced by nor integral to plaintiff’s complaint).

            Witthohn marshalls no plausible argument that the state

court records should not have been reviewed on a motion to dismiss.

A district court may clearly take judicial notice of these public

records, and Witthohn does not dispute their authenticity.                  See

Blue Tree Hotels v. Starwood Hotels & Resorts, 369 F.3d 212, 217

(2d Cir. 2004) (stating that courts “may also look to public

records, including complaints filed in state court, in deciding a

motion to dismiss”).      Consideration of the settlement agreement is

a closer question, since it does not appear to have been filed in

the state court action and Witthohn does not explicitly mention it

                                      - 4 -
in her complaint.1   However, as discussed below, the fact that

Witthohn’s complaint is barred by res judicata is evident from

review of the state court documents, even without consideration of

the settlement agreement.    Thus, the issue of the propriety of the

review of the settlement agreement need not be resolved, and the

court’s consideration of the prior judicial record did not convert

Appellees’ motion to dismiss into a motion for summary judgment.

          A lawsuit is barred by res judicata when three elements

have been satisfied: (1) there was a prior final adjudication on

the merits; (2) the two actions involve either the same parties or

persons in privity with those parties, and (3) the cause of action

identified for resolution in the subsequent proceedings either is

identical to the cause of action in the first proceeding or is such

that it could have been resolved in the prior action, had it been

presented.   Slider v. State Farm Mut. Auto Ins. Co., 557 S.E.2d

883, 887 (W. Va. 2001).2    Witthohn does not dispute that the first

two elements are satisfied; however, she claims that her UTPA

claims raised in the present action are substantially different

     1
      In her complaint, Witthohn states that the state case was
settled but does not mention a written agreement.
     2
      The issue of whether Witthohn’s claim is barred by res
judicata is decided by application of West Virginia law.        See
Graves v. Associated Transport, Inc., 344 F.2d 894, 896 (4th Cir.
1965) (holding that, when case is presented in federal court solely
on the basis of diversity of citizenship, the rights and
obligations of the parties is governed by state law); Braxton v.
Matthews, 883 F. Supp. 1068 (S.D. W. Va. 1995) (applying West
Virginia law on res judicata).

                                - 5 -
than her claims against EZNET and could not have been brought in

that action.

          We conclude that Witthohn is focusing on the wrong issue.

The issue is not whether the evidence required to prove Witthohn’s

claims against EZNET is substantially different than that required

to prove her claims against the Appellees.       Instead, the question

is whether the current claim is substantially different from the

claim sought to be raised against Appellees in Witthohn’s motion to

amend in state court.   That question is easily resolved, because

Witthohn does not dispute that her current complaint and her motion

to amend raise the same cause of action.

          The denial of a motion to amend a complaint in one action

is a final judgment on the merits barring the same complaint in a

later action.   Professional Mgmt. Assocs. v. KPMG, 345 F.3d 1030,

1032 (8th Cir. 2003).   Thus, denial of leave to amend constitutes

res judicata on the merits of the claims which were the subject of

the proposed amended pleading.    Id.    This is so even when denial of

leave to amend was legally or factually erroneous. Conley v.

Spillers, 301 S.E.2d 216, 219 (W. Va. 1983).        The parties do not

dispute that the UTPA claim in the motion to amend is identical to

the UTPA claim raised in the present lawsuit.         Thus, the state

court’s denial of leave to amend on the basis of the settlement

agreement bars the filing of the same pleading in this lawsuit.

                                 - 6 -
Accordingly, the district court properly found the      present suit

barred by res judicata.

          Thus, we affirm the district court’s order.    We dispense

with oral argument because the facts and legal contentions are

adequately presented in the materials before the court and argument

would not aid the decisional process.

                                                            AFFIRMED

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