Court Opinion

ID: 3041380
Source: CourtListenerOpinion
Date Created: 2015-10-13 23:05:51.274476+00
Date Added: 2024-06-11T11:41:03.604488
License: Public Domain

United States Court of Appeals
                          FOR THE EIGHTH CIRCUIT
                                   ___________

                                   No. 06-1687
                                   ___________

Robert L. Myer,                         *
                                        *
             Appellant,                 *
                                        * Appeal from the United States
      v.                                * District Court for the
                                        * Western District of Missouri.
Americo Life, Inc.,                     *
                                        *
             Appellee.                  *
                                   ___________

                             Submitted: September 29, 2006
                                Filed: November 15, 2006
                                 ___________

Before RILEY and COLLOTON, Circuit Judges, and KYLE,1 District Judge.
                           ___________

KYLE, District Judge.

       Robert L. Myer appeals the dismissal by the district court2 of his petition to
vacate an arbitration award. The district court concluded that it should abstain from
exercising jurisdiction over Myer’s petition under Colorado River Water Conservation
District v. United States, 424 U.S. 800 (1976). We affirm, although not on abstention
grounds.

      1
       The Honorable Richard H. Kyle, United States District Judge for the District
of Minnesota, sitting by designation.
      2
         The Honorable Dean Whipple, United States District Judge for the Western
District of Missouri.
I.     BACKGROUND
       In 1998, Myer agreed to sell several companies he owned to Appellee Americo
Life, Inc. (“Americo”). As part of that sale, Myer and Americo entered into a
Consulting Agreement, pursuant to which Americo agreed to make periodic payments
to Myer in return for consulting services. The Consulting Agreement contained an
arbitration clause requiring the parties to arbitrate any disputes arising thereunder in
Dallas, Texas.

       In January 2004, Americo commenced an arbitration proceeding against Myer,
alleging that he had breached certain non-competition and non-solicitation clauses in
the Consulting Agreement. An arbitration hearing was held in Texas in March and
April 2005; in June 2005, the arbitration panel ruled in Americo’s favor and awarded
it over $1.4 million in damages and injunctive relief.

       On August 10, 2005, Myer filed a petition in the district court seeking to vacate
the arbitration award. The following day, Americo filed a petition in Texas state court
seeking to confirm the award.3 Americo then moved to dismiss the federal action; it
argued that the district court should abstain from exercising jurisdiction over Myer’s
petition under Colorado River.4

      After considering the factors set forth in Colorado River and Moses H. Cone
Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 16 (1983), the district
court concluded that abstention in favor of the Texas action was appropriate.

      3
        There is some dispute as to the exact date Myer filed his petition, but the date
is not germane to the Court’s resolution of Myer’s appeal.
      4
        In Colorado River, the Supreme Court held that, in certain circumstances, a
federal court may dismiss a properly filed federal action in favor of a parallel state-
court action. 424 U.S. at 817-18.

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Accordingly, by Order dated November 8, 2005, the district court granted Americo’s
motion to dismiss. Myer then moved the district court for reconsideration or, in the
alternative, for a “new trial,” but the district court denied Myer’s motion on February
28, 2006. This appeal followed.

       During the course of the federal litigation, meanwhile, the parties proceeded
with the Texas state-court litigation. On April 12, 2006, the Texas state court issued
a final judgment confirming the arbitration award.5 On May 12, 2006, Myer filed a
motion seeking a “new trial” in the state-court action. The Texas state court did not
act on Myer’s motion, and it was denied “by operation of law” on July 26, 2006.6 The
Texas state court enjoyed plenary power to modify its judgment for an additional 30
days, see Tex. R. Civ. P. 329b(e), but it did not do so.

II.    DISCUSSION
       Americo argues that Myer’s appeal is now moot because the Texas state court
has confirmed the arbitration award and that decision is res judicata of the underlying
issues in this case. This appeal is not moot, however, because Myer indicated at oral
argument that he would appeal the Texas state court’s decision. The current
controversy therefore “remains live.” Exxon Mobil Corp. v. Saudi Basic Indus. Corp.,
544 U.S. 280, 291 n.7 (2005) (appeal not moot despite fact that state courts had fully

      5
        The Texas state court’s judgment was not part of the record below. Americo
has filed a motion requesting that we take judicial notice of the judgment. Judicial
notice is appropriate in these circumstances, see Stutzka v. McCarville, 420 F.3d 757,
760 n.2 (8th Cir. 2005) (taking judicial notice of default judgment issued in separate
Bankruptcy Court action and noting that this Court “may take judicial notice of
judicial opinions and public records”), and Americo’s motion is therefore granted.
      6
        Texas Rule of Civil Procedure 329b(c) provides, in pertinent part, that “[i]n
the event [a] motion for new trial . . . is not determined by written order signed within
seventy-five days after the judgment was signed, it shall be considered overruled by
operation of law on expiration of that period.”

                                          -3-
resolved same claims as those presented in federal lawsuit, because losing party
indicated that it would appeal the state Supreme Court’s decision to the United States
Supreme Court).

        Nevertheless, it is clear that res judicata now presents an insurmountable hurdle
for Myer’s claims. The Texas state court has issued a final judgment confirming the
arbitration award, and that action involved the same parties and the same issues as the
instant case. Notably, Myer specifically asked the Texas state court to vacate the
arbitration award, and the court expressly denied that motion when rendering its final
judgment. Accordingly, res judicata now bars Myer from litigating those same issues
in federal court (or elsewhere). See, e.g., Amstadt v. United States Brass Corp., 919
S.W.2d 644, 652 (Tex. 1996) (elements of res judicata are (1) prior final judgment on
the merits by court of competent jurisdiction, (2) identity of parties, and (3) second
action based on same claims as first action or claims that could have been raised in
first action).7

       Myer initially had argued that the Texas state court’s judgment was not “final”
for res judicata purposes because he had filed a motion for a new trial in that action.
His motion has now been denied by operation of law, however, meaning that the
Texas state court’s judgment is “final” for claim-preclusion purposes. See Scurlock
Oil Co. v. Smithwick, 724 S.W.2d 1, 6 (Tex. 1986); Maffitt v. Weycer, Kaplan,
Pulaski & Zuber, P.C., No. 01-97-01031-CV, 1999 WL 695580, at *5 (unpublished)
(Tex. App. Sept. 9, 1999) (“for res judicata purposes, a judgment becomes final when
the trial court that signed the judgment loses plenary power over [it]”) (citing
Scurlock). Moreover, the fact that Myer may appeal the judgment (if he has not

      7
         Texas law determines the preclusive effect of the Texas state court’s
judgment. Canady v. Allstate Ins. Co., 282 F.3d 1005, 1014 (8th Cir. 2002) (“the res
judicata effect of the first forum’s judgment is governed by the first forum’s law, not
by the law of the second forum”) (internal quotation marks omitted) (citation omitted).

                                          -4-
already done so) does not affect the judgment’s finality under Texas law. Scurlock,
721 S.W.2d at 6.

       In an attempt to evade Scurlock’s reach, Myer cites the Restatement (Second)
of Judgments § 28, which was quoted favorably by the Scurlock court. Section 28
states, in pertinent part:

      Although an issue is actually litigated and determined by a valid and
      final judgment and the determination is essential to the judgment,
      relitigation of the issue in a subsequent action between the parties is not
      precluded in the following circumstances:

      ...

      (3) a new determination of the issue is warranted by differences in the
      quality or extensiveness of the procedures followed in the two courts or
      by factors relating to the allocation of jurisdiction between them.

Myer argues that this exclusion applies here because the district court is better able to
apply Missouri law than the Texas state court.8 This argument is unavailing, for two
reasons.

       First, there is no reason for this Court to conclude that the Texas state court is
any less able to apply Missouri law than the district court. Indeed, Texas courts often
are called upon to apply Missouri law, e.g., In re B.C., 52 S.W.3d 926 (Tex. App.
2001), as well as the laws of other states, e.g., Greenberg Traurig of N.Y., P.C. v.
Moody, 161 S.W.3d 56 (Tex. App. 2004) (New York law), and foreign countries, e.g.,
Bridas Corp. v. Unocal Corp., 16 S.W.3d 893 (Tex. App. 2000) (law of Turkmenistan
and Afghanistan). Moreover, Myer has nowhere argued that Missouri law is complex
or differs in any material respect from Texas law. As the Texas Court of Appeals has

      8
          The Consulting Agreement contains a Missouri choice-of-law clause.

                                          -5-
stated with respect to the application of Louisiana law, Missouri law is not “so
daunting that a Texas court would be unable to correctly apply it.” BDO Seidman,
LLP v. Bracewell & Patterson, LLP, No. 05-02-00636-CV, 2003 WL 124829, at *5
(Tex. App. Jan. 16, 2003).

       Second, the exception in Section 28(3) of the Restatement is inapposite,
because it is intended for situations in which a court of limited or questionable
jurisdiction issues a judgment that the victor later attempts to use to preclude
relitigation. An illustration is given by the exception’s comments:

      [A] determination in a state court action on a patent license agreement
      upholding the defense that the patent was invalid for want of invention
      would not be held binding in a subsequent federal court action for patent
      infringement if the Congressional grant of exclusive jurisdiction in
      patent infringement cases to the federal district courts is construed to
      require otherwise. The question in [such a] case would be resolved in
      light of the legislative purpose in vesting exclusive jurisdiction in a
      particular court.

Restatement (Second) of Judgments § 28 cmt. e (1982). Earlier on, the comment
provides an example making clear that a judgment issued by a state court should be
given preclusive effect in federal court absent any jurisdictional uncertainty:

      [I]n a state court action on a patent license agreement, a determination
      may be made that the agreement terminated on a particular date; such a
      determination would be conclusive in a subsequent federal court action
      between the same parties for patent infringement. See 28 U.S.C. § 1738.

Id.9 Here, there is no question that the Texas state court had jurisdiction to confirm

      9
       28 U.S.C. § 1738, the Full Faith and Credit statute, provides in pertinent part:
“Such Acts, records and judicial proceedings or copies thereof, so authenticated, shall
have the same full faith and credit in every court within the United States and its

                                         -6-
the arbitration award. See Moses H. Cone, 460 U.S. at 25 (“the federal courts’
jurisdiction to enforce the Arbitration Act is concurrent with that of the state courts”);
In re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 739 (Tex. 2005) (same).10 Hence,
the exception in Section 28(3) of the Restatement is inapplicable.11

       Finally, Myer argues that the district court’s judgment must be reversed
because, were the Texas state-court’s judgment to be reversed on appeal, he would
then be unable to seek review of the arbitration award in federal court due to the
Federal Arbitration Act’s 90-day statute of limitations. This Court will not reverse on
the basis of a speculative future possibility. Moreover, even if the Texas state court’s
judgment were reversed, Myer would then be able to argue in state court that the
arbitration award should be vacated. We therefore perceive no prejudice to Myer if
the statute of limitations precluded him from seeking relief in federal court should the
Texas state court’s judgment be reversed. Indeed, the Texas state court in that
instance would be required to apply the Federal Arbitration Act, just as the district
court would be required to do if we were to reverse the decision at issue here.

Territories and Possessions as they have by law or usage in the courts of such State,
Territory, or Possession from which they are taken.”
      10
         Contrary to Myer’s argument in his Reply Brief, this is not an in rem action
concerning his right to certain stock under the terms of the Consulting Agreement, but
rather is an in personam action against Americo seeking to vacate the arbitration
award.
      11
         Myer also cites Section 28(4) of the Restatement. That exception applies
when the party invoking res judicata had a lower burden of persuasion in the earlier
proceeding than in the later proceeding. Here, the standards to be applied by the
district court and by the Texas state court are the same, because the Federal
Arbitration Act governs review of the arbitration award.

                                           -7-
III.   CONCLUSION
       The Texas state court has now fully and finally resolved the same issues Myer
pressed before the district court. Res judicata, therefore, bars the district court’s
consideration of Myer’s claims, which renders it unnecessary to reach the issues Myer
has raised on appeal. Accordingly, we affirm the judgment of the district court.
                       ______________________________

                                         -8-