Davenport v. Djourabchi

81,7('67$7(6',675,&7&2857 )257+(',675,&72)&2/80%,$

BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 

678$570,//6'$9(13257et al.  

3ODLQWLIIV   

Y  &LYLO$FWLRQ1R $%-   %$%$.'-285$%&+,et al.   'HIHQGDQWV 

BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 

0(025$1'8023,1,21  3ODLQWLII6WXDUW0LOOV'DYHQSRUWLVWKHRSHUDWRUDQGVROHRZQHURI%LJ%HDU&DIp//&D UHVWDXUDQW RQ WKH ORZHU OHYHO RI WKH PXOWLVWRU\ URZKRXVH ZKHUH KH DQG KLV IDPLO\ OLYH  $P &RPSO>'NW @ˆˆ± 'HIHQGDQWV%DEDN'MRXUDEFKLDQG0RQLFD:HOWDUHKXVEDQGDQG ZLIHDQGWKH\ZHUH'DYHQSRUW¶VQHLJKERUVId.¶ 2Q6HSWHPEHUGHIHQGDQWVORDQHG 'DYHQSRUW  DQG LQ WXUQ KH H[HFXWHG D3URPLVVRU\ 1RWH IRU %XVLQHVV DQG &RPPHUFLDO 3XUSRVHV ³1RWH´ LQIDYRURIGHIHQGDQWVId.ˆ ([WR$P&RPSO>'NW @ ³1RWH´ 

7KLVFDVHDULVHVRXWRIGHIHQGDQWV¶HIIRUWVWRFROOHFWRQWKHGHEWDQGWKHEDQNUXSWF\SURFHHGLQJV WKDWIROORZHG  2Q2FWREHU'DYHQSRUWILOHGIRU&KDSWHUEDQNUXSWF\SURWHFWLRQLQWKH86 %DQNUXSWF\&RXUWIRUWKH'LVWULFWRI&ROXPELDWRSUHYHQWDWKUHDWHQHGIRUHFORVXUHRQKLVSURSHUW\ E\GHIHQGDQWV$P&RPSOˆˆ±'HIHQGDQWVILOHGDSURRIRIFODLPZLWKWKHEDQNUXSWF\ FRXUW DOOHJLQJ WKDW 'DYHQSRUW RZHG WKHP  XQGHU WKH 1RWH  Id. ˆ  'DYHQSRUW REMHFWHGFODLPLQJWKDWKHRZHGRQO\Id.ˆ7KHEDQNUXSWF\FRXUWKHOGDWULDOWR   ,Q'HFHPEHUSODLQWLII'DYHQSRUWILOHGDFRPSODLQWLQWKLV&RXUWDJDLQVWGHIHQGDQWV DQGKHDPHQGHGWKHFRPSODLQWDVRIULJKWRQ)HEUXDU\DGGLQJ%LJ%HDU&DIpDVDVHFRQG SODLQWLIISee &RPSO>'NW@ $P&RPSO GHWHUPLQHWKHDPRXQWGXHXQGHUWKH1RWHDQGRQ-XO\LWUXOHGWKDW'DYHQSRUWZDVQRW LQGHIDXOWDQGWKDWKHRZHGId.ˆˆ± ([ WR$P&RPSO>'NW  @ ³%DQNU 0HP´ ([WR$P&RPSO>'NW @ ³%DQNU2UGHU´   'DYHQSRUWDQGWKH&DIpILOHGDFRPSODLQWLQWKLV&RXUWDULVLQJRXWRIGHIHQGDQWV¶HIIRUWVWR HQIRUFHWKH1RWHSee $P&RPSO3ODLQWLIIVKDYHEURXJKWDVHULHVRIFRPPRQODZDQGVWDWXWRU\ FODLPVDQGGHIHQGDQWVKDYHPRYHGWRGLVPLVVWKHFRPSODLQWLQLWVHQWLUHW\SXUVXDQWWR)HGHUDO 5XOHRI&LYLO3URFHGXUH E  'HIV¶0RWWR'LVPLVV$P&RPSO>'NW@ ³'HIV¶0RW´ 

7KH\DUJXHWKDWDOOVHYHQFRXQWVDUHEDUUHGE\WKHGRFWULQHRIres judicataDQGDOWHUQDWLYHO\WKDW WKH\ DUH OHJDOO\ GHIHFWLYH DQG IDFWXDOO\ XQVXSSRUWHG  'HIV¶ 3  $ LQ 6XSS RI 'HIV¶ 0RW >'NW@ ³'HIV¶0HP´ DW± %HFDXVHSODLQWLIIVFRXOGKDYHEURXJKWWKHLUFODLPVLQWKHSULRUEDQNUXSWF\SURFHHGLQJWKH &RXUWFRQFOXGHVWKDWDOOVHYHQRISODLQWLIIV¶FRXQWVDUHEDUUHGE\res judicata7KHUHIRUHWKH&RXUW ZLOO JUDQW WKH PRWLRQ WR GLVPLVV  7KLV RSLQLRQ VKRXOG QRW EH LQWHUSUHWHG LQ DQ\ ZD\ DV DQ HQGRUVHPHQWRIGHIHQGDQWV¶WDFWLFVKRZHYHU %$&.*5281'

3ODLQWLII'DYHQSRUWILOHGWKLVODZVXLWRQ'HFHPEHU&RPSO>'NW@DQGILOHG DQDPHQGHGFRPSODLQWRQ)HEUXDU\ZKLFKDGGHG%LJ%HDU&DIpDVDVHFRQGSODLQWLII $P&RPSO7KHDPHQGHGFRPSODLQWDOOHJHVWKHIROORZLQJIDFWVZKLFKWKH&RXUWPXVWDFFHSWDV WUXHIRUWKHSXUSRVHRIUHVROYLQJWKHSHQGLQJPRWLRQWRGLVPLVV

2Q6HSWHPEHUGHIHQGDQWVORDQHG'DYHQSRUWDQGKHH[HFXWHGD1RWHLQ WKHLU IDYRU IRU  ZLWK LQWHUHVW ZKLFK KDG D PDWXULW\ GDWH RI 6HSWHPEHU    $P

  3ODLQWLIIVRSSRVHGWKHPRWLRQRQ0DUFK3OV¶3 $LQ2SSWR'HIV¶ 0RW >'NW@ ³3OV¶2SS´ DQGGHIHQGDQWVILOHGDUHSO\RQ$SULO'HIV¶5HSO\3 $LQ )XUWKHU6XSSRI'HIV¶0RW>'NW@ ³'HIV¶5HSO\´    &RPSO ˆ   1RWH  7KH ORDQ ZDV VHFXUHG E\ 'DYHQSRUW¶V SURSHUW\ DW  VW 6WUHHW 1: :DVKLQJWRQ'&WKHORFDWLRQRI%LJ%HDU&DIp$P&RPSOˆˆ see 1RWH ([WR$P &RPSO>'NW @ ³'HHGRI7UXVW´ $OWKRXJKWKH1RWHZDVPDGHWR'DYHQSRUWLQGLYLGXDOO\

DQGQRWWRWKH&DIpGHIHQGDQWVDQG'DYHQSRUWXQGHUVWRRGWKDW'DYHQSRUWZRXOGXVHWKHORDQWR SD\ RII SHUVRQDO REOLJDWLRQV ZKLFK ZRXOG HQDEOH KLP WR LQYHVW PRUH LQ WKH EXVLQHVV  $P &RPSOˆˆ±

8QGHUWKHWHUPVRIWKH1RWH'DYHQSRUWFRXOGQRWEHJLQWRSD\WKHSULQFLSDOHDUO\XQOHVV KHSDLGLWDOODWRQFH$P&RPSOˆ see 1RWH+HFRXOGDQGGLGSD\LQWHUHVWHDUO\WKRXJK $P&RPSOˆˆ ± see1RWH)RU\HDUV'DYHQSRUWEHOLHYHGKHZDVSD\LQJPRQH\WKDWKH RZHGRQWKH1RWHEXWKHZDVDFWXDOO\SD\LQJDKHDGRIVFKHGXOHWKHUHE\FUHDWLQJDFUHGLWZLWK GHIHQGDQWVWRZDUGVIXWXUHREOLJDWLRQV$P&RPSOˆˆ ±

3XUVXDQWWRWKHWHUPVRIWKH1RWH'DYHQSRUWZRXOGEHLQGHIDXOWLIKHIDLOHGWRPDNHD SD\PHQWDQGWKDWIDLOXUHFRQWLQXHGIRUIRXUGD\V$P&RPSOˆ see 1RWH,IKHZDVLQGHIDXOW GHIHQGDQWV FRXOG IRUHFORVH RQ KLV SURSHUW\  $P &RPSO ˆ   see 1RWH  ,Q -DQXDU\  GHIHQGDQWVLQIRUPHG'DYHQSRUWWKDWKHZDVLQGHIDXOWRQWKH1RWHEHFDXVHKHKDGIDOOHQEHKLQG WKHSD\PHQWVRQKLVILUVWPRUWJDJHRQWKHSURSHUW\DQGWKDWWKH\ZHUHDFFHOHUDWLQJWKH1RWHDQG UHTXLULQJKLPWRSD\WKHIXOOSULQFLSDOE\6HSWHPEHU$P&RPSOˆˆ±7KHVHWHUPV ZHUHQRWLQFOXGHGLQWKH1RWHDQG'DYHQSRUWZDVLQIDFWQRWLQGHIDXOWId.ˆˆ 'HIHQGDQWV WKUHDWHQHGWRIRUHFORVHRQ'DYHQSRUW¶VSURSHUW\LIKHGLGQRWPDNHDIXOO³OXPSVXP´SD\PHQW Id. ˆ7KH\WROG'DYHQSRUWUHSHDWHGO\WKDWKHZDVUHTXLUHGWRPDNHDGGLWLRQDOSD\PHQWVHDFK PRQWK DQG WKH\ GHPDQGHG WKDW KH SURYLGH WKHP ZLWK ILQDQFLDO LQIRUPDWLRQ DERXW WKH &DIp Id. ˆˆ± see ([WR$P&RPSO>'NW @ ³(PDLOV´ 'DYHQSRUWFRPSOLHGZLWKPRVW

  RIWKHVHUHTXHVWVSee $P&RPSOˆ. 'HIHQGDQWVFRQWLQXHGWRPDNHGHPDQGVWKRXJKDQG WKH\SHUVLVWHGLQWKHLUIDOVHDFFXVDWLRQWKDW'DYHQSRUWZDVLQGHIDXOWId.ˆˆ± see (PDLOV 'DYHQSRUWILOHGIRU&KDSWHUEDQNUXSWF\SURWHFWLRQLQWKH86%DQNUXSWF\&RXUWIRUWKH 'LVWULFWRI&ROXPELDRQ6HSWHPEHU ZKLFKSUHYHQWHGGHIHQGDQWVIURPIRUHFORVLQJRQKLV SURSHUW\$P&RPSOˆˆ±7KHEDQNUXSWF\FRXUWDSSURYHG'DYHQSRUW¶VEDQNUXSWF\SODQ DQG KH FRQWLQXHG PDNLQJ HDUO\ PRQWKO\ SD\PHQWV WR GHIHQGDQWV  Id. ˆˆ ±  'XULQJ 'DYHQSRUW¶VILUVWEDQNUXSWF\SURFHHGLQJGHIHQGDQWVILOHGWZRSURRIVRIFODLPRQHRQ2FWREHU   DQGWKHRWKHURQ6HSWHPEHUERWKDVVHUWLQJWKDW'DYHQSRUWRZHGRQO\XQGHU WKH1RWHId.ˆˆ see ([WR$P&RPSO>'NW @ ([WR$P&RPSO>'NW @ 2Q1RYHPEHUGHIHQGDQWVWROG'DYHQSRUWKHKDGEHHQLQGHIDXOWVLQFH1RYHPEHU $P&RPSOˆ,WZDVDWWKLVSRLQWWKDW'DYHQSRUWREWDLQHGOHJDOFRXQVHODQGUHDOL]HGKHKDG EHHQRYHUSD\LQJGHIHQGDQWVId.ˆ

2Q 0DUFK   'DYHQSRUW ILOHG D 'HEWRU¶V &RUUHFWHG $SSOLFDWLRQ LQ KLV ILUVW EDQNUXSWF\ FDVH DOOHJLQJ WKDW GHIHQGDQWV YLRODWHG WKH EDQNUXSWF\ FRXUW¶V RUGHUV ZKHQ WKH\ GHPDQGHG H[WUD PRQWKO\ SD\PHQWV  $P &RPSO ˆ   'HIHQGDQWV FRQWHVWHG WKLV DOOHJDWLRQ FODLPLQJWKDW'DYHQSRUWKDGEHHQLQGHIDXOWVLQFHWKHH[HFXWLRQRIWKH1RWHId.ˆˆ± 7KH EDQNUXSWF\FRXUWGHQLHG'DYHQSRUWUHOLHIDQGGLGQRWGHFLGHKRZPXFKKHRZHGXQGHUWKH1RWH  GHIHQGDQWVWRRNWKHSRVLWLRQWKDWKHRZHGId.ˆˆ± see ([WR$P&RPSO >'NW @ 'HIHQGDQWVDWWHPSWHGWRIRUHFORVHRQWKHSURSHUW\LQ6HSWHPEHU$P&RPSOˆ   see ([WR$P&RPSO>'NW @2Q2FWREHU'DYHQSRUWILOHGKLVVHFRQG&KDSWHU EDQNUXSWF\SHWLWLRQWRVWD\WKHDWWHPSWHGIRUHFORVXUHVDOH$P&RPSOˆˆ±'XULQJWKH VHFRQG EDQNUXSWF\ FDVH GHIHQGDQWV ILOHG D SURRI RI FODLP DOOHJLQJ WKDW 'DYHQSRUW RZHG

   XQGHU WKH 1RWH  Id.ˆ  'DYHQSRUW REMHFWHG DQG DUJXHG WKDW KH RZHG RQO\ Id.ˆ7KHEDQNUXSWF\FRXUWKHOGDWULDOWRGHWHUPLQHWKHDPRXQWGXHXQGHUWKH 1RWH,WFRQFOXGHGWKDW'DYHQSRUWRZHGGXHWRDFUHGLWLQKLVIDYRUWKDWKHKDGQHYHU EHHQLQGHIDXOWDQGWKDWGHIHQGDQWV¶UHSUHVHQWDWLRQVUHJDUGLQJKRZPXFK'DYHQSRUWRZHGKLV NQRZOHGJHDQGWKHFODLPHGDJUHHPHQWVEHWZHHQWKHSDUWLHVFRQWUDU\WRWKHWHUPVRIWKH1RWHZHUH QRWFUHGLEOHId.ˆ see %DQNU0HP %DQNU2UGHU

7KHFRPSODLQWDOOHJHVWKDWWKURXJKRXWWKHSDUWLHV¶LQWHUDFWLRQVGHIHQGDQWVKDYHKDUDVVHG 'DYHQSRUW DQG WKDW SODLQWLIIV KDYH VXIIHUHG DV D UHVXOW RI GHIHQGDQWV¶ PLVUHSUHVHQWDWLRQV DQG DFWLRQVUHJDUGLQJWKH1RWHSee $P&RPSOˆˆ±±± &RXQW ,DOOHJHVZURQJIXOIRUHFORVXUHRQ'DYHQSRUW¶VSURSHUW\$P&RPSOˆˆ±3ODLQWLIIVDOOHJH WKDWGHIHQGDQWVLQLWLDWHGIRUHFORVXUHZKHQWKH\NQHZRUVKRXOGKDYHNQRZQWKDW'DYHQSRUWZDV QRWLQGHIDXOWId. &RXQWV,,DQG9,,DOOHJHWKDWGHIHQGDQWVEUHDFKHGWKHLUFRQWUDFWZLWK'DYHQSRUW DQG%LJ%HDU&DIpE\LQVWLWXWLQJIRUHFORVXUHSURFHHGLQJVZKHQ'DYHQSRUWZDVQRWLQGHIDXOWRQ WKH1RWHDQGWKDWWKH\EUHDFKHGWKHGXW\RIJRRGIDLWKDQGIDLUGHDOLQJId.ˆˆ± ±  &RXQW,,,DOOHJHVWKDWGHIHQGDQWVYLRODWHG'&&RGH†et seq.E\GLVSDUDJLQJSODLQWLIIV¶ EXVLQHVVWKURXJKIDOVHRUPLVOHDGLQJUHSUHVHQWDWLRQVRIPDWHULDOIDFWVId.ˆˆ±3ODLQWLIIV DOOHJH LQ WKLV &RXUW WKDW GHIHQGDQWV KDUDVVHG 'DYHQSRUW DW ZRUN GLVUXSWHG %LJ %HDU &DIp¶V RSHUDWLRQV PDGH EDVHOHVV DQG DQRQ\PRXV FRPSODLQWV WR WKH KHDOWK GHSDUWPHQW VSUHDG UXPRUV DERXWWKH&DIpDQGIDOVHO\OLVWHGWKHSURSHUW\IRUVDOHId.ˆ&RXQW,9DOOHJHVWKDWGHIHQGDQWV HQJDJHGLQXQODZIXOWUDGHSUDFWLFHVLQYLRODWLRQRI'&&RGH† Id.ˆˆ±&RXQWV 9DQG9,DOOHJHWKDWGHIHQGDQWVWRUWLRXVO\LQWHUIHUHGZLWKSODLQWLIIV¶EXVLQHVVDQGFDXVHGSODLQWLIIV ILQDQFLDOKDUGVKLSE\LQVWLWXWLQJZURQJIXOIRUHFORVXUHSURFHHGLQJVDQGFRQGXFWLQJLQSHUVRQVLW LQVDW%LJ%HDU&DIpId.ˆˆ±

  67$1'$5'2)5(9,(: ³7RVXUYLYHD>5XOH E  @PRWLRQWRGLVPLVVDFRPSODLQWPXVWFRQWDLQVXIILFLHQWIDFWXDO

PDWWHUDFFHSWHGDVWUXHWRVWDWHDFODLPWRUHOLHIWKDWLVSODXVLEOHRQLWVIDFH´Ashcroft v. Iqbal 86   LQWHUQDOTXRWDWLRQPDUNVRPLWWHG accord Bell Atl. Corp. v. Twombly 86  ,QUXOLQJXSRQDPRWLRQWRGLVPLVVIRUIDLOXUHWRVWDWHDFODLPDFRXUW PD\RUGLQDULO\FRQVLGHURQO\³WKHIDFWVDOOHJHGLQWKHFRPSODLQWGRFXPHQWVDWWDFKHGDVH[KLELWV RULQFRUSRUDWHGE\UHIHUHQFHLQWKHFRPSODLQWDQGPDWWHUVDERXWZKLFKWKH&RXUWPD\WDNHMXGLFLDO QRWLFH´Gustave-Schmidt v. Chao)6XSSG   ''&  FLWDWLRQVRPLWWHG  $1$/<6,6 'HIHQGDQWVKDYHPRYHGWRGLVPLVVDOOVHYHQFRXQWVLQWKHDPHQGHGFRPSODLQWXQGHUWKH GRFWULQHRIres judicata'HIV¶0HPDW7KHGRFWULQHEDUVSDUWLHV³IURPUHOLWLJDWLQJLVVXHV WKDW ZHUH RU FRXOG KDYH EHHQ UDLVHG´LQDSUHYLRXVDFWLRQAllen v. McCurry   86      FLWLQJ Cromwell v. Cty. of Sac  86      8QGHU WKLV SULQFLSOH ³D

VXEVHTXHQWODZVXLWZLOOEHEDUUHGLIWKHUHKDVEHHQSULRUOLWLJDWLRQ  LQYROYLQJWKHVDPHFODLPV

RUFDXVHRIDFWLRQ  EHWZHHQWKHVDPHSDUWLHVRUWKHLUSULYLHVDQG  WKHUHKDVEHHQDILQDOYDOLG

MXGJPHQWRQWKHPHULWV  E\DFRXUWRIFRPSHWHQWMXULVGLFWLRQ´Smalls v. United States )G  '&&LU  FLWDWLRQVRPLWWHG 7KHVHWUDGLWLRQDOUXOHVRIres judicata³DSSO\

WRWKHGHFLVLRQVRIEDQNUXSWF\FRXUWV´Katchen v. Landy86   FLWLQJChicot

Cty. Drainage Dist. v. Baxter State Bank86±   6LQFHDOOIRXUHOHPHQWV

RIres judicataKDYHEHHQPHWLQWKLVFDVHSODLQWLIIVDUHEDUUHGIURPEULQJLQJWKHLUFODLPVLQWKH SUHVHQWDFWLRQ

  , 3ODLQWLIIV¶FODLPVFRQVWLWXWHWKHVDPHFODLPVRUFDXVHRIDFWLRQ ³:KHWKHUWZRFDVHVLPSOLFDWHWKHVDPHFDXVHRIDFWLRQWXUQVRQZKHWKHUWKH\VKDUHWKH VDPHµQXFOHXVRIIDFWV¶´Drake v. FAA )G  '&&LU TXRWLQJPage v. United

States   )G   '& &LU     ³>,@W LV WKH IDFWV VXUURXQGLQJ WKH WUDQVDFWLRQ RU

RFFXUUHQFH ZKLFK RSHUDWH WR FRQVWLWXWH WKH FDXVH RI DFWLRQ QRW WKH OHJDO WKHRU\ XSRQ ZKLFK D OLWLJDQWUHOLHV´Page )GDWTXRWLQJExpert Elec., Inc. v. Levine)G G &LU     7KH '& &LUFXLW KDV ³HPEUDFHG WKH 5HVWDWHPHQW 6HFRQG  RI -XGJPHQWV¶

SUDJPDWLF WUDQVDFWLRQDO DSSURDFK WR GHWHUPLQLQJ ZKDW FRQVWLWXWHV D FDXVH RI DFWLRQ´ DQG KDV H[SODLQHGWKDWWKH5HVWDWHPHQWJLYHV³ZHLJKWWRVXFKFRQVLGHUDWLRQVDVZKHWKHUWKHIDFWVDUHUHODWHG LQWLPHVSDFHRULJLQRUPRWLYDWLRQ´U.S. Indus., Inc. v. Blake Constr. Co.)G  '&&LU  TXRWLQJ5HVWDWHPHQW 6HFRQG RI-XGJPHQWV†     7KHGHWHUPLQDWLRQ

RIZKHWKHUWZRFDVHVLQYROYHWKHVDPHFDXVHRIDFWLRQUHTXLUHVFRQVLGHUDWLRQRIQRWRQO\FODLPV WKDWZHUHDFWXDOO\UDLVHGLQSULRUOLWLJDWLRQEXWDOVRPDWWHUVWKDW³FRXOGKDYHEHHQUDLVHGLQWKDW DFWLRQ´Allen 86DWFLWLQJCromwell 86DW +HUHDOORISODLQWLIIV¶FODLPVDULVHIURPWKHVDPHQXFOHXVRIIDFWVLQYROYHGLQ'DYHQSRUW¶V &KDSWHU  SURFHHGLQJ DQG WKH SURRI RI FODLP GHFLGHG E\ WKH EDQNUXSWF\ FRXUW  See $P &RPSOˆˆ±  %DQNU0HP%RWKGLVSXWHVLQYROYHWKHLQWHUSUHWDWLRQDQGHQIRUFHPHQWRIWKH 1RWH'DYHQSRUW¶VSD\PHQWVXQGHUWKH1RWHDQGGHIHQGDQWV¶DWWHPSWVWRIRUHFORVHRQWKHSURSHUW\ See$P&RPSOˆˆ±  %DQNU0HP

3ODLQWLIIVDUJXHWKDWWKHLUQHZFODLPVGRQRWPHHWWKHWUDQVDFWLRQDOWHVWEHFDXVHWKHIDFWV VXUURXQGLQJWKHSUHVHQWFODLPV³LQYROYHDVXEVWDQWLDOO\PRUHH[SDQVLYHWLPHVSDFHRULJLQDQG PRWLYHWKDQWKHOLPLWHGIDFWVUHVROYHGE\WKH%DQNUXSWF\&RXUW´3OV¶2SSDW%XWLWGRHV QRWPDWWHUZKDWIDFWXDOTXHVWLRQVWKHSUHYLRXVFRXUWDFWXDOO\UHVROYHGSee Drake )GDW

  7KHGLVSRVLWLYHLVVXHLVZKHWKHUWKHQHZFODLPVDULVHRXWRIWKHVDPHVHWRIIDFWVDQGZKHWKHUWKH SODLQWLIIcould KDYHUDLVHGWKHPLQWKHSUHYLRXVSURFHHGLQJId.+HUHWKHUHDUHQRQHZIDFWVJLYLQJ ULVH WR QHZ SRVVLEOH FODLPV DQG SODLQWLIIV DUH ³VLPSO\ UDLVLQJ D QHZ OHJDO WKHRU\´ ZKLFK LV ³SUHFLVHO\ZKDWLVEDUUHGE\UHVMXGLFDWD´Apotex, Inc. v. FDA )G± '&&LU  

3ODLQWLIIV DOVR DUJXH WKDW ZKHQres judicata LV DSSOLHG LQ WKH EDQNUXSWF\ FRQWH[W FRXUWV FRQVLGHU ZKHWKHU D VXEVHTXHQW LQGHSHQGHQW MXGJPHQW ZRXOG ³LPSDLU GHVWUR\ FKDOOHQJH RU LQYDOLGDWHWKHHQIRUFHDELOLW\RUHIIHFWLYHQHVV´RIWKHEDQNUXSWF\GHFLVLRQZKHQGHWHUPLQLQJLIWKH DFWLRQLQYROYHVWKHVDPHFODLPVRUFDXVHVRIDFWLRQDVWKHEDQNUXSWF\SURFHHGLQJ3O¶V2SSDW TXRWLQJIn re Residential Capital, LLC%5 %DQNU6'1< $QGFRXUWV

KDYHUHOLHGXSRQWKDWWKHRU\WREDUVXEVHTXHQWFODLPV%XWSODLQWLIIVPDLQWDLQWKDWWKHQHZFODLPV VKRXOGEHDOORZHGWRJRIRUZDUGEHFDXVHWKH³ULJKWVRULQWHUHVWVHVWDEOLVKHGLQWKHSULRUMXGJPHQW ZRXOG>not@EHGHVWUR\HGRULPSDLUHGE\SURVHFXWLRQ´RIWKLVDFWLRQ3OV¶2SSDW±FLWLQJ Siegel v. Fed. Home Loan Mortg. Corp.  )G    WK &LU    HPSKDVLV DGGHG 

  See, e.g. Capitol Hill Grp. v. Pillsbury, Winthrop, Shaw, Pittman, LLC )G  '&&LU  DSSO\LQJWKH³LPSDLUPHQW´IDFWRUWRFRXQWHUFODLPVDVVHUWHGLQWKHEDQNUXSWF\ FRQWH[WDQGEDUULQJVXEVHTXHQWPDOSUDFWLFHFODLPVDJDLQVWDQDWWRUQH\DIWHUWKHEDQNUXSWF\FRXUW KDG SUHYLRXVO\ DZDUGHG DWWRUQH\V¶ IHHV DQG FRPPHQWHG RQ WKH DGHTXDF\ RI WKH DWWRUQH\¶V UHSUHVHQWDWLRQ Robertson v. Cartinhour)6XSSG ''&  SUHFOXGLQJFODLP

XQGHU res judicata VLQFH ³LW ZRXOG HVVHQWLDOO\ QXOOLI\ WKH MXU\¶V ILQGLQJV´ LQ WKH SUHYLRXV EDQNUXSWF\OLWLJDWLRQ Marbury Law Grp., PLLC v. Carl )6XSSG ''& 

QRWLQJWKDWWKH³QXOOLILFDWLRQH[FHSWLRQ´LV³QDUURZ´DQG³SURYLGHVWKDWDSDUW\will EHSUHFOXGHG IURPEULQJLQJDIXWXUHVXLWRQDFODLPWKDWFRXOGKDYHEHHQDVVHUWHGLQDSULRUDFWLRQ´  HPSKDVLV

LQRULJLQDO see also Corbett v. MacDonald Moving Servs., Inc.)G±   G&LU    REVHUYLQJWKDWWKH³LPSDLUPHQW´IDFWRULV³DQDVSHFWIRUWKHWHVWIRULGHQWLW\RIWKHFDXVHV RI DFWLRQ´ EXW XOWLPDWHO\ FRQFOXGLQJ WKDW WKH FDXVHV RI DFWLRQ ZHUH WKH VDPH EHFDXVH WKH\ ³LQYROYH>G@WKHVDPHWUDQVDFWLRQ´VRWKHFODLPVZHUHEDUUHG    +RZHYHUSODLQWLIIVKDYHQRWSRLQWHGWRDQ\DXWKRULW\WKDWKROGVWKDWDQDEVHQFHRILPSDLUPHQWLV UHOHYDQWWRWKHres judicata DQDO\VLV %HFDXVHDOORIWKHIDFWVLQWKHFRPSODLQWDULVHRXWRIWKHVDPHORDQWUDQVDFWLRQWKDWVHUYHG DVWKHEDVLVIRUWKHEDQNUXSWF\SURFHHGLQJWKH&RXUWFRQFOXGHVWKDWWKHFODLPVFRQVWLWXWHWKHVDPH FDXVHRIDFWLRQIRUSXUSRVHVRIres judicata ,, 3ODLQWLIIV¶FODLPVDUHEHWZHHQWKHVDPHSDUWLHVRUWKHLUSULYLHV 7KH GRFWULQH RI res judicata DSSOLHV RQO\ LI WKH SULRU MXGJPHQW ZDV EHWZHHQ ³WKH VDPH SDUWLHVRUWKHLUSULYLHV´Drake )GDWTXRWLQJParklane Hosiery Co. v. Shore 86 Q   +HUHWKHSULRUEDQNUXSWF\SURFHHGLQJZDVEHWZHHQGHIHQGDQWVDQGSODLQWLII 'DYHQSRUWRQO\EXWVLQFH%LJ%HDU&DIpLVLQSULYLW\ZLWK'DYHQSRUWIRUres judicata SXUSRVHV WKLVHOHPHQWRIres judicata LVPHW ³7KH WHUP µSULYLW\¶ LV DQ HOXVLYH FRQFHSW ZLWKRXW DQ\ SUHFLVH GHILQLWLRQ RI JHQHUDO DSSOLFDELOLW\,WLVVXIILFLHQWWKDWWKHZRUGGHVLJQDWHVDSHUVRQVRLGHQWLILHGLQLQWHUHVWZLWKD

  3ODLQWLIIVSRLQWWREvans v. First Mount Vernon, ILA)6XSSG ''& 

WRVXSSRUWWKHLUDVVHUWLRQWKDWWKHFXUUHQWFODLPVGRQRWFRQVWLWXWHWKHVDPHFDXVHRIDFWLRQEHFDXVH WKH\ GR QRW LPSDLU WKH EDQNUXSWF\ FRXUW¶V MXGJPHQW  3OV¶ 2SS DW   %XW WKH FDVH LV GLVWLQJXLVKDEOH DQG LW ZDV QRW GHFLGHG RQ WKDW EDVLV  ,Q Evans WKH SODLQWLII FRQVHQWHG WR KHU &KDSWHUFRQILUPDWLRQLQEDQNUXSWF\FRXUWDQGGLGQRWREMHFWWRDQ\FODLPV)6XSSGDW ±7KHFRXUWKHOGWKDWFODLPVDULVLQJRXWRIWKHFRQILUPDWLRQZHUHQRWEDUUHGE\res judicata EHFDXVH³LVVXHVWKDWPXVWEHUHVROYHGWKURXJKDGYHUVDU\SURFHHGLQJVDUHQRWSDUWRIWKH&KDSWHU FRQILUPDWLRQSURFHVVDQGXQOHVVWKH\DUHDFWXDOO\OLWLJDWHG&KDSWHUSODQFRQILUPDWLRQVZLOO QRWKDYHSUHFOXVLYHHIIHFWDVWRWKRVHLVVXHV´Id.DW+HUHSODLQWLIIVGLGFKDOOHQJHGHIHQGDQWV¶ SURRIRIFODLPLQWKHEDQNUXSWF\SURFHHGLQJVDQGWKRVHLVVXHVZHUHDFWXDOO\OLWLJDWHGSee%DQNU 0HPDW)XUWKHUEvans QHYHUPHQWLRQVWKH³LPSDLUPHQW´IDFWRUEXWUDWKHUUHOLHVRQWKHJHQHUDO res judicataIDFWRUVLQFRPLQJWRLWVGHFLVLRQ7KHFRXUWIRXQGWKDWWKHSODLQWLII¶VFODLPVZHUHQRW EDUUHG EHFDXVH ³WKH\ KD>G@ QRW EHHQ VXEMHFW WR D ILQDO MXGJPHQW RQ WKH PHULWV´  Id. DW  3ODLQWLIIV DOVR FLWH Gaudin v. Saxon Mortgage Services, Inc.  )6XSS G  1' &DO   IRU WKH VDPH SURSRVLWLRQ  3OV¶ 2SS DW    +RZHYHU Gaudin QHYHU GLVFXVVHV WKH LPSDLUPHQWWKHRU\See Gaudin)6XSSGDW7KH&RXUWKHOGWKDWres judicata GLGQRW EDUWKHSODLQWLII¶VVXEVHTXHQWDFWLRQEHFDXVH³LW>GLG@QRWLPSOLFDWHDQ\RIWKHPDWWHUVWKDWZHUH UDLVHGE\>WKHSODLQWLII¶V@SURRIRIFODLPLQWKHEDQNUXSWF\SURFHHGLQJ´Id.    SDUW\WRIRUPHUOLWLJDWLRQWKDWKHUHSUHVHQWVSUHFLVHO\WKHVDPHOHJDOULJKWLQUHVSHFWWRWKHVXEMHFW PDWWHULQYROYHG´Jefferson Sch. of Soc. Sci. v. Subversive Activities Control Bd.)G '& &LU     :KHQ WZR SDUWLHV DUH LQ SULYLW\ WKHLU UHODWLRQVKLS ³LV VXFK WKDW D MXGJPHQW LQYROYLQJRQHRIWKHPPD\MXVWO\EHFRQFOXVLYHXSRQWKHRWKHU>@´HYHQWKRXJKWKHRWKHUZDVQRW DSDUW\WRWKHMXGJPHQWGill & Duffus Servs., Inc. v. A. M. Nural Islam)G '& &LU   ³>1@RQSDUW\ SUHFOXVLRQ PD\ EH MXVWLILHG EDVHG RQ D YDULHW\ RI SUHH[LVWLQJ µVXEVWDQWLYH OHJDOUHODWLRQVKLS>V@¶EHWZHHQWKHSHUVRQWREHERXQGDQGDSDUW\WRWKHMXGJPHQW´DVZHOODVZKHQ DSDUW\ZDV³µDGHTXDWHO\UHSUHVHQWHGE\VRPHRQHZLWKWKHVDPHLQWHUHVWVZKR>ZD@VDSDUW\¶WRWKH VXLW´Taylor v. Sturgell86    FLWDWLRQVRPLWWHG seeRemy Enter. Grp., LLC v. Davis)6XSSG± ''&  ILQGLQJ//&ZDVLQSULY\ZLWKLWVVROHPHPEHU

IRUSXUSRVHVRIFODLPSUHFOXVLRQ Ying Qing Lu v. Lezell  )6XSSG ''& 

FRQFOXGLQJWKDWWKHSDUWLHVZHUHLQSULYLW\EHFDXVHWKHUHZDVQR³PHDQLQJIXOGLVWLQFWLRQEHWZHHQ >SODLQWLII@WKHLQGLYLGXDODQGKLVFRPSDQ\´  'DYHQSRUWWKHSDUW\WRWKHSULRUEDQNUXSWF\SURFHHGLQJsee%DQNU0HPDW³PDLQWDLQV DRZQHUVKLSLQWHUHVW´LQ%LJ%HDU&DIp$P&RPSOˆ,QOLJKWRIWKLVVXEVWDQWLYHOHJDO UHODWLRQVKLS'DYHQSRUWFDQEHVDLGWRKDYHUHSUHVHQWHGWKH&DIp¶VLQWHUHVWVLQWKHSULRUEDQNUXSWF\ SURFHHGLQJVRDVWRSUHFOXGHWKH&DIpIURPUHDVVHUWLQJFODLPVWKDWZHUHRUFRXOGKDYHEHHQPDGH LQWKHSULRUFDVH,QGHHGWKHRZQHUVKLSRIWKH&DIpDQGGHIHQGDQWV¶HIIRUWVWRIRUHFORVHRQWKH SURSHUW\ZHUHWKHGULYLQJIDFWRUEHKLQGWKHHQWLUHEDQNUXSWF\SURFHHGLQJ

  7KH&RXUWQRWHGWKDW³>T@XDOLI\LQJUHODWLRQVKLSVLQFOXGHbut are not limited toSUHFHGLQJ DQGVXFFHHGLQJRZQHUVRISURSHUW\EDLOHHDQGEDLORU>@DVVLJQHHDQGDVVLJQRU´DQG³VXLWVEURXJKW E\WUXVWHHVJXDUGLDQVDQGRWKHUILGXFLDULHV´Taylor86DW  HPSKDVLVDGGHG    3ODLQWLIIV PDLQWDLQ WKDW %LJ %HDU &DIp FDQQRW EH IRXQG WR EH LQ SULYLW\ ZLWK 'DYHQSRUW EHFDXVH³%LJ%HDUKDGQRLQWHUHVWZKDWVRHYHULQWKH>EDQNUXSWF\@PDWWHU´3OV¶2SSDW%XW SODLQWLIIV¶DPHQGHGFRPSODLQWDOOHJHVWKDWWKH&DIpZDV³XVHGWRVHFXUHWKH1RWH´WKH1RWHZDV LQWHQGHGWR³UHGXFHWKHILQDQFLDOSUHVVXUHRQ'DYHQSRUWDQGDOORZKLPWRLQYHVWPRUHUHVRXUFHV LQWR%LJ%HDU´WKHEDQNUXSWF\SURFHHGLQJZDVLQVWLWXWHGWRIRUHVWDOOIRUHFORVXUHRQWKH&DIpDQG WKDWGXULQJWKHEDQNUXSWF\SURFHHGLQJGHIHQGDQWVGHPDQGHG³ILQDQFLDOLQIRUPDWLRQRQ%LJ%HDU FODLPLQJWKDWWKH\ZHUHHQWLWOHGWRWKHLQIRUPDWLRQWRHQVXUHWKHLUµLQYHVWPHQW¶ZDVVDIH´$P &RPSOˆˆ±±±*LYHQWKRVHIDFWVDQG'DYHQSRUW¶VVROHRZQHUVKLSRIWKH EXVLQHVVWKH&RXUWILQGVSODLQWLIIVWREHLQSULYLW\IRUres judicataSXUSRVHV ,,, 7KHSULRUEDQNUXSWF\SURFHHGLQJZDVDILQDOYDOLGMXGJPHQWRQWKHPHULWV $MXGJPHQWRQWKHPHULWVLVRQHWKDWUXOHVRQWKHVXEVWDQWLYHJURXQGVRIWKHFODLPQRWRQ GHIHFWVRIIRUPRUSURFHGXUHSee United States v. Kearney)G '&&LU  

3ODLQWLIIVGRQRWGLVSXWHWKDWWKHEDQNUXSWF\SURFHHGLQJZDVDILQDOYDOLGMXGJPHQWRQWKHPHULWV 3OV¶ 2SS DW ± ³'HIHQGDQWV DUJXH    DQG >S@ODLQWLIIV GR QRW GLVSXWH WKDW WKH EDQNUXSWF\ FRXUW>¶V@UXOLQJFRQVWLWXWHVDµILQDOYDOLGMXGJPHQW¶RQWKHSUHFLVHDPRXQW'DYHQSRUWRZHG XQGHUWKHQRWH´ 7KHUHIRUHWKLVHOHPHQWRIres judicata LVVDWLVILHG ,9 7KHEDQNUXSWF\FRXUWLVDFRXUWRIFRPSHWHQWMXULVGLFWLRQ 7KH6XSUHPH&RXUWKDVGHVFULEHGD³FRXUWRIFRPSHWHQWMXULVGLFWLRQ´DV³DFRXUWZLWKDQ H[LVWLQJVRXUFHRIVXEMHFWPDWWHUMXULVGLFWLRQ´Lightfoot v. Cendant Mortg. Corp.6&W   FLWLQJEx parte Phenix Ins. Co.86  +HUHWKHEDQNUXSWF\FRXUWKDG

MXULVGLFWLRQRYHUGHIHQGDQWV¶SURRIRIFODLPDJDLQVW'DYHQSRUWsee 86&† E  DQG

SODLQWLIIVGRQRWDUJXHWKDWWKHEDQNUXSWF\FRXUWZDVQRWDFRXUWRIFRPSHWHQWMXULVGLFWLRQUHJDUGLQJ WKLVPDWWHU5DWKHUWKH\DUJXHWKDWWKHFODLPVWKH\QRZEULQJEHIRUHWKLV&RXUWDUHFODLPVRYHU

  ZKLFKWKHEDQNUXSWF\FRXUWODFNHGMXULVGLFWLRQXQGHUStern v. Marshall86  3OV¶

2SSDW±  %DQNUXSWF\ FRXUWV KDYH MXULVGLFWLRQ WR ³KHDU DQG HQWHU ILQDO MXGJPHQWV LQ µDOO FRUH SURFHHGLQJV XQGHU WLWOH ¶´  Stern  86 DW  TXRWLQJ  86&† E    ³>&@RUH

SURFHHGLQJVDUHWKRVHWKDWDULVHLQDEDQNUXSWF\FDVHRUXQGHU7LWOH´Id.DW7KH\³LQFOXGH EXWDUHQRWOLPLWHGWR´VL[WHHQGLIIHUHQWW\SHVRIPDWWHUVVXFKDVWKH³DOORZDQFHRUGLVDOORZDQFH RIFODLPVDJDLQVWWKHHVWDWH´DVZHOODV³FRXQWHUFODLPVE\WKHHVWDWHDJDLQVWSHUVRQVILOLQJFODLPV DJDLQVWWKHHVWDWH´86&† E  :LWKUHVSHFWWRQRQFRUHFODLPVZKLFKDUH³RWKHUZLVH

UHODWHGWRDFDVHXQGHUWLWOH´EDQNUXSWF\FRXUWVKDYHVWDWXWRU\DXWKRULW\WRKHDUWKHSURFHHGLQJV DQG³VXEPLWSURSRVHGILQGLQJVRIIDFWDQGFRQFOXVLRQVRIODZWRWKHGLVWULFWFRXUW´† F  

7KHGLVWULFWFRXUWPXVWWKHQUHYLHZWKHSURSRVHGILQGLQJVDQGFRQFOXVLRQVde novoDQGHQWHUDQ\ ILQDOMXGJPHQWId. 7KHRQHVWDWXWRU\H[FHSWLRQWRWKLVJHQHUDOUXOHLVLIDOOSDUWLHVFRQVHQWWKH EDQNUXSWF\MXGJHPD\³KHDUDQGGHWHUPLQHDQG>@HQWHUDSSURSULDWHRUGHUVDQGMXGJPHQWV´DVLI WKHSURFHHGLQJZHUHFRUH† F   ,QStern v. MarshallWKH6XSUHPH&RXUWGHWHUPLQHGWKDWVRPHFODLPVODEHOHGE\&RQJUHVV DV³FRUH´PD\QRWEHDGMXGLFDWHGE\DEDQNUXSWF\FRXUWLQWKHPDQQHUGHVFULEHGE\VWDWXWHSee Stern  86 DW   see also  86& †  E   ,W KHOG WKDW DOWKRXJK FRXQWHUFODLPV DUH

JHQHUDOO\ODEHOHGDV³FRUH´SURFHHGLQJVEDQNUXSWF\MXGJHVGRQRWKDYHWKHFRQVWLWXWLRQDODXWKRULW\ XQGHU$UWLFOH,,,WRHQWHUILQDOMXGJPHQWVRQFHUWDLQFRXQWHUFODLPVVXFKDVWKRVHDULVLQJXQGHU VWDWHFRPPRQODZSee Stern86DW Exec. Benefits Ins. Agency v. Arkison6&W   7KHVHFODLPVDUHQRZUHIHUUHGWRDVStern FODLPVSee Stern 86DW  Exec. Benefits Ins. Agency  6 &W DW    GHVFULELQJ D Stern FODLP DV ³D FODLP

  GHVLJQDWHGIRUILQDODGMXGLFDWLRQLQWKHEDQNUXSWF\FRXUWDVDVWDWXWRU\PDWWHUEXWSURKLELWHGIURP SURFHHGLQJLQWKDWZD\DVDFRQVWLWXWLRQDOPDWWHU´  ,QExecutive Benefits Insurance Agency v. ArkisonWKH6XSUHPH&RXUWIXUWKHUFODULILHGWKDW ³ZKHQDEDQNUXSWF\FRXUWLVSUHVHQWHGZLWK>DStern@FODLPWKHSURSHUFRXUVHLVWRLVVXHSURSRVHG ILQGLQJVRIIDFWDQGFRQFOXVLRQVRIODZ´MXVWOLNHWKHEDQNUXSWF\FRXUWZRXOGGRLIWKHFODLPZDV QRQFRUH  Exec. Benefits6&W DW VWDWLQJWKDWWKHEDQNUXSWF\VWDWXWH SHUPLWV Stern FODLPV WR SURFHHG DV QRQFRUH SURFHHGLQJV  see Stern  86 DW  H[SODLQLQJ WKDW

UHPRYDO RI FHUWDLQ VWDWH ODZ FRXQWHUFODLPV IURP FRUH EDQNUXSWF\ MXULVGLFWLRQ GRHV QRW ³PHDQLQJIXOO\FKDQJH>@WKHGLYLVLRQRIODERULQWKHFXUUHQWVWDWXWH´IRUEDQNUXSWF\FRXUWV 7KH

6XSUHPH&RXUWZHQWRQHVWHSIXUWKHULQWellness International NetworkLtd. v. SharifKROGLQJ WKDWSDUWLHVPD\FRQVHQWWRWKHILQDODGMXGLFDWLRQRIStern FODLPVE\DEDQNUXSWF\FRXUWMXVWDV WKH\PD\GRZLWKUHJDUGWRQRQFRUHFODLPV6&W  ±   ³>:@HFRQFOXGH

WKDWDOORZLQJEDQNUXSWF\OLWLJDQWVWRZDLYHWKHULJKWWR$UWLFOH,,,DGMXGLFDWLRQRIStern FODLPVGRHV QRWXVXUSWKHFRQVWLWXWLRQDOSUHURJDWLYHVRI$UWLFOH,,,FRXUWV´ 

7KH'&&LUFXLWKDVQRWUXOHGRQZKHWKHUres judicataDSSOLHVWRQRQFRUHFODLPVLIWKH SDUWLHVGLGQRWUDLVHWKRVHFODLPVLQDSULRUEDQNUXSWF\SURFHHGLQJ%XWDOPRVWHYHU\&LUFXLWWKDW KDVDGGUHVVHGWKLVLVVXHKDVKHOGWKDWres judicataDSSOLHVWRFODLPVWKDWFRXOGKDYHEHHQEURXJKW LQWKHEDQNUXSWF\SURFHHGLQJUHJDUGOHVVRIZKHWKHUWKRVHFODLPVZRXOGKDYHEHHQFRUHRUQRQ FRUHSee, e.g. In re Int’l Nutronics )G   ± WK&LU   KROGLQJWKDWQRQFRUH

FODLPVQRWUDLVHGLQEDQNUXSWF\SURFHHGLQJZHUHEDUUHGE\res judicataEHFDXVHWKH\FRXOGKDYH EHHQDVVHUWHGZKLFKLVHQRXJKIRUres judicataSXUSRVHVHYHQLIWKHEDQNUXSWF\FRXUWFRXOGQRW KDYHUHQGHUHGDILQDOGHFLVLRQ Plotner v. AT&T Corp.)G WK&LU 

VDPH CoreStates Bank, N.A. v. Huls Am., Inc.)G  G&LU  VDPH Sanders

  Confectionery Prod., Inc. v. Heller Fin., Inc. )G WK&LU   VDPH Sure-Snap

Corp. v. State St. Bank & Tr. Co. )G ± G&LU   VDPH 7KHVHGHFLVLRQV

ILQGLQJ res judicata DSSOLFDEOH WR QRQFRUH EDQNUXSWF\ SURFHHGLQJV UHVW RQ WKH WKHRU\ WKDW WKH EDQNUXSWF\ FRXUW FRXOG KDYH UHQGHUHG D ILQDO MXGJPHQW RQ WKH QRQFRUH FODLPV LI WKH SDUWLHV FRQVHQWHGDQGWKDWHYHQZLWKRXWWKHSDUWLHV¶FRQVHQWWKHEDQNUXSWF\FRXUWFRXOGKDYHKHDUGWKH QRQFRUHFODLPVDQGGHYHORSHGSURSRVHGILQGLQJVRIIDFWDQGFRQFOXVLRQVRIODZDQGWKRVHFODLPV ZRXOGKDYHWKHQEHHQGHFLGHGE\WKHGLVWULFWFRXUWSee, e.g. In re Int’l Nutronics)GDW   see also 86&† F  ±  7KXVWKHZHLJKWRIH[LVWLQJDXWKRULW\LVLQIDYRURIDSSO\LQJ res judicata WRDQ\QRQFRUHFODLPWKDWFRXOGKDYHEHHQEURXJKWLQWKHEDQNUXSWF\SURFHHGLQJDQG WKH&RXUWZLOODSSO\WKDWUHDVRQLQJKHUH

1RFRXUWKDV\HWDGGUHVVHGZKHWKHUWKHORJLFEHKLQGWKHVHFDVHVZRXOGDOVRDSSO\WRStern FODLPV+RZHYHUWKH6XSUHPH&RXUWLWVHOIKDVVDLGWKDWLWVGHFLVLRQLQSternGLGQRWFKDQJHWKH GLYLVLRQRIODERUIRUEDQNUXSWF\FRXUWVStern86DWDQGLWKDVFODULILHGWKDWStern FODLPV DUHWREHWUHDWHGDVQRQFRUHFODLPVSee Exec. Benefits6&WDW6RDEVHQWH[SOLFLW

  7ZRFLUFXLWVKDYHKHOGWKDWres judicataGRHVQRWDSSO\LIWKHFODLPVZRXOGKDYHEHHQQRQ FRUHSURFHHGLQJVSee Barnett v. Stern  )G  ± WK&LU   H[SODLQLQJWKDWQRQ

FRUHFODLPQRWUDLVHGLQEDQNUXSWF\SURFHHGLQJZDVQRWEDUUHGE\res judicataEHFDXVHres judicata FDQRQO\EDUSUHYLRXVO\XQDVVHUWHGFRUHFODLPV Howell Hydrocarbons, Inc. v. Adams )G   WK&LU   VDPH 7KHVHFDVHVKRZHYHUGR³QRWWDNHDFFRXQWRIWKHIDFWWKDWDQRQ FRUHFODLPFDQEHDVVHUWHGLQEDQNUXSWF\FRXUWHYHQWKRXJKILQDOGHFLVLRQZLOOWDNHSODFHLQGLVWULFW FRXUW´  In re Int’l Nutronics  )G DW   0RUHRYHU ERWK &LUFXLWV KDYH VXEVHTXHQWO\ TXHVWLRQHGWKHVHSUHYLRXVKROGLQJVSee Matrix IV, Inc. v. Am. Nat’l Bank & Tr. Co. )G  ± WK&LU  VWDWLQJWKDWVLQFHBarnettWKH6HYHQWK&LUFXLW³KDVFRQWLQXHGWRDSSO\ res judicata LQ WKH EDQNUXSWF\ FRQWH[W ZLWKRXW UHIHUHQFH WR WKH FRUHQRQFRUH GLVWLQFWLRQ´ EXW UHIXVLQJWRRYHUWXUQWKHFDVHEHFDXVHLWFRXOGGHFLGHWKHFXUUHQWFDVHRQQDUURZHUJURXQGV In re

Baudoin )GQ WK&LU   VWDWLQJLQDIRRWQRWHWKDWWKH&LUFXLWLVQRWVXUH

WKDW ³EDQNUXSWF\ MXULVGLFWLRQ PXVW DOZD\V EH FRUH LQ RUGHU WR EH µFRPSHWHQW¶ IRU res judicata SXUSRVHV´    GLUHFWLRQIURPWKH&LUFXLWWRWKHFRQWUDU\LWDSSHDUVDSSURSULDWHWRDSSO\WKHUXOHWKDWZRXOGDSSO\ WRRWKHUQRQFRUHFODLPV +HUHDOWKRXJKWKHEDQNUXSWF\FRXUWFRXOGQRWKDYHLVVXHGDILQDOMXGJPHQWRQSODLQWLIIV¶ QRQFRUHRUStern FODLPVZLWKRXWWKHSDUWLHV¶FRQVHQWsee Wellness Int’l6&WDW ± SODLQWLIIVFRXOGKDYHEURXJKWWKHLUFXUUHQWFODLPVLQWKHEDQNUXSWF\SURFHHGLQJ Stern86 DW7KHEDQNUXSWF\FRXUWZRXOGKDYHWKHQLVVXHGDILQDOMXGJPHQWLIWKHSDUWLHVKDGFRQVHQWHG RULWZRXOGKDYHVXEPLWWHGSURSRVHGILQGLQJVRIIDFWDQGFRQFOXVLRQVRIODZWRWKHGLVWULFWFRXUW DQGWKHGLVWULFWFRXUWZRXOGKDYHUHQGHUHGDILQDOMXGJPHQWDVSDUWRIWKDWSURFHHGLQJSee id.DW  Exec. Benefits6&WDW 86&† F  ±  7KHEDQNUXSWF\

FRXUWZDVWKHUHIRUHDFRXUWRIFRPSHWHQWMXULVGLFWLRQDVWRDOORISODLQWLIIV¶FODLPVDQGWKLVODVW HOHPHQWRIres judicata LVVDWLVILHG      

  7KH&RXUWGRHVQRWQHHGWRGHFLGHZKHWKHUSODLQWLIIV¶SUHVHQWFODLPVZRXOGKDYHEHHQFRUH RUQRQFRUHSURFHHGLQJVEHFDXVHLWLVXOWLPDWHO\LUUHOHYDQWWRWKHDSSOLFDWLRQRIres judicata See Plotner)GDW H[SODLQLQJWKDWWKHFRXUWGLGQRWKDYHWRGHFLGHZKHWKHUFODLPVZHUH FRUHRUQRQFRUHEHFDXVH³WKDWGHWHUPLQDWLRQKDVQRHIIHFWRQWKHGLVSRVLWLYHLVVXHRIUHVMXGLFDWD´  +RZHYHULWGRHVDSSHDUWKDWSODLQWLIIV¶FODLPVZRXOGEHFDWHJRUL]HGDVHLWKHUQRQFRUHFODLPVRU Stern FODLPVSee Stern86DW± ILQGLQJDFRXQWHUFODLPIRUWRUWLRXVLQWHUIHUHQFHZDV QRWD³FRUH´FODLPDQGEHFDPHDStern FODLP Van Dorn Retail Mgmt., Inc. v. Sovran Bank/DC

Nat’l, Inc.1R   :/DW Q ''&2FW    ³,WKDVKRZHYHUEHHQ

JHQHUDOO\HVWDEOLVKHGWKDWFODLPVRIEUHDFKRIFRQWUDFWDQGFRQYHUVLRQDUHFRQVLGHUHGµQRQFRUH¶ SURFHHGLQJVDQGWKXVUHPRYHGIURPWKHEDQNUXSWF\FRXUW¶VMXULVGLFWLRQ´    &21&/86,21  7KH&RXUWILQGVWKDWSODLQWLIIV¶FRPSODLQWLVEDUUHGE\WKHGRFWULQHRIres judicataVRLWZLOO JUDQWGHIHQGDQWV¶PRWLRQWRGLVPLVVXQGHU5XOH E  $VHSDUDWHRUGHUZLOOLVVXH    $0<%(50$1-$&.621

8QLWHG6WDWHV'LVWULFW-XGJH  '$7( 1RYHPEHU