Court Opinion

ID: 9474881
Source: CourtListenerOpinion
Date Created: 2023-08-05 05:11:39.577139+00
Date Added: 2024-06-11T17:44:23.572229
License: Public Domain

FAGG, Circuit Judge,
dissenting.
In 1970, the Arkansas Oil and Gas Commission authorized Phillips Petroleum to establish a secondary oil recovery project. As an express condition of that authorization, Phillips was forbidden from operating the recovery project in a manner that would damage or endanger the production of nearby oil fields.
In 1979, the Richardson group (containing the identical parties involved in the present action) instituted proceedings against Phillips before the Oil and Gas Commission. Asserting that the operation of the Phillips’ recovery project had endangered and damaged the productivity of their oil wells, the Richardson group sought injunctive relief against Phillips.
In response to the Richardson group’s complaint, the Oil and Gas Commission gave public notice of the complaint and conducted a public hearing. At that hearing, both parties were represented by counsel. Additionally, both parties made opening and closing statements, introduced evidence, and called witnesses who were subject to direct and cross-examination. Central to the entire proceeding before the Commission was the issue of whether the interests of the Richardson group had been damaged sufficiently to warrant injunctive relief against Phillips Petroleum.
After considering all evidence presented, the Oil and Gas Commission denied the relief requested by the Richardson group. In reaching that result, the Commission expressly found the Richardson group had failed to establish that its oil interests had been damaged by Phillips Petroleum. In fact, the Commission found that the Richardson group had even failed to show that its oil interests had been endangered by the conduct of Phillips Petroleum.
As was its right under Arkansas law, the Richardson group sought judicial review of the Oil and Gas Commission’s decision in Arkansas state court. However, before receiving any determination by that court, the Richardson group instituted the present action in January of 1981.
In December of 1982, the Arkansas state court affirmed the action taken by the Commission. Significantly, in its decision affirming the Commission’s ruling, the state court recognized the Commission’s express finding that the interests of the Richardson group had not been damaged by Phillips Petroleum. The state court found further that this finding was supported by substantial evidence.
Obviously, Phillips Petroleum, in whose favor judgment was entered, did not appeal the decision of the Arkansas state court. The Richardson group, although having incentive to do so, also failed to appeal the state court’s decision.
In August of 1984, Phillips Petroleum, on the basis of the 1979 Oil and Gas Commission ruling as affirmed by the Arkansas state court, filed a motion for summary judgment. That motion was based on theories of claim preclusion (res judicata) and issue preclusion (collateral estoppel). The district court properly recognized (as had the state court) that the Richardson group’s right to bring a damage claim was not affected by the Commission’s refusal to award injunctive relief. Thus, the district court found that the Richardson group’s damage claim was not barred by claim preclusion.
However, the district court also recognized that the Commission’s denial of the Richardson group’s injunctive claim was *648based in part on an express finding that the Richardson group had not been damaged by the actions of Phillips Petroleum. Without question, the issue of damages was at the very heart of the proceedings before the Commission. Given the adjudicatory nature of the prior administrative proceedings, at which the Richardson group had the opportunity to litigate fully the damage issue, and given further that the Commission’s express finding of no damage had been specifically affirmed on judicial review, the district court held that under Arkansas law the Richardson group was collaterally estopped from relitigating in the present action the same damage issue already adjudicated.
The district court then gave the Richardson group the opportunity to assert issues not barred by its ruling. In response, the Richardson group did not assert that the damage issue in the present case was somehow distinguishable from the damage issue adjudicated in the prior administrative proceeding (i.e. involving a different burden of proof or different evidence). The Richardson group also failed to assert that actions of Phillips Petroleum occurring after the Commission’s ruling created some new and distinct claim for damages. Rather, the Richardson group admitted that no issue existed beyond that barred by the district court’s ruling. By so doing, the Richardson group effectively conceded that the damage issue expressly resolved by the Oil and Gas Commission was identical to the damage issue presented in its federal action.
Under Arkansas law, collateral estoppel will bar the relitigation of an issue if the party asserting its applicability demonstrates that the issue in question was distinctly raised and directly determined in an earlier adjudicatory proceeding. JeToCo Corp. v. Hailey Sales Co., 268 Ark. 340, 596 S.W.2d 703, 706 (1980); see also Smith v. Roane, 284 Ark. 568, 683 S.W.2d 935, 936 (1985). That doctrine is equally applicable when the prior proceeding involved an administrative body acting in its quasi-judicial function. Rainbolt v. Everett, 6 Ark.App. 204, 639 S.W.2d 532, 534 (1982) (citing United States v. Utah Construction & Mining Co., 384 U.S. 394, 86 S.Ct. 1545, 16 L.Ed.2d 642 (1966)). Such deference to an administrative body is particularly warranted when an issue expressly decided by the administrative body has been specifically upheld on judicial review. See Bockman v. Arkansas State Medical Board, 229 Ark. 143, 313 S.W.2d 826, 829 (1958).
Here, the record clearly demonstrates that the Richardson group in the proceeding before the Oil and Gas Commission raised and fully litigated the issue of damages. Further, during that proceeding the group had the incentive and the opportunity to present evidence of any and all damage to its oil interests.
After considering the evidence presented at the adjudicatory hearing, the Commission denied injunctive relief to the Richardson group. That denial, however, was not based on a finding that while damaged the Richardson group’s interests were not so irreparably harmed as to warrant injunc-tive relief. Rather, the Commission’s denial was based on the specific finding that the Richardson group had not been damaged or even endangered by the Phillips’ operation. The Commission’s express finding of no damage was affirmed by an Arkansas state court.
I agree with the district court that these determinations are binding on the Richardson group. The Oil and Gas Commission’s finding of no damage not only supports and was central to its decision but also fatally undermines the Richardson group’s identical assertion of damage in the present action. Because the Richardson group has received and has taken advantage of a full and fair opportunity to litigate the damage issue, I conclude the district court’s dismissal of the Richardson group’s complaint on the basis of collateral estoppel should be affirmed.