C.B. Marchant Co., Inc. v. Eastern Foods, Inc.
| Decision Date | 01 March 1985 |
| Docket Number | No. 84-1180,84-1180 |
| Citation | 756 F.2d 317 |
| Parties | C.B. MARCHANT COMPANY, INC., Appellant, v. EASTERN FOODS, INC., Appellee. |
| Court | U.S. Court of Appeals — Fourth Circuit |
Charles E. Carpenter, Jr., Columbia, S.C. (F. Barron Grier, III, Frederick A. Crawford, Richardson, Plowden, Grier & Howser, Columbia, S.C., on brief), for appellant.
Edward M. Woodward, Jr., Columbia, S.C. (Woodward, Unger & Herndon, Columbia, S.C., on brief), for appellee.
Before HALL, PHILLIPS and SPROUSE, Circuit Judges.
This is an appeal from the district court's denial of summary judgment for C.B. Marchant Company, Inc. in its action against Eastern Foods, Inc. on a debt owed by B & B Produce Processors, Inc. Marchant claimed, among other things, that B & B had merged with Eastern and, consequently, that Eastern was liable to Marchant on the debt. In the district court, Marchant moved for summary judgment on the ground of collateral estoppel, contending that this court previously decided that there had been a de facto merger between Eastern and B & B. R.C. McEntire & Co. v. Eastern Foods, Inc., 702 F.2d 471 (4th Cir.1983). The district court denied the motion for summary judgment, but certified its order for appeal to this court under 28 U.S.C. Sec. 1292(b). We affirm and remand to the district court.
Marchant is a South Carolina corporation that sells produce. Over a period of time it supplied produce to B & B, extending it considerable credit. Through various agreements with B & B, Eastern took over the operations of that company, and in July 1983 Marchant brought an action against Eastern for the debt owed it by B & B in the amount of $186,283.35. The sole basis of liability alleged by Marchant was that Eastern and B & B had merged and that Eastern thus was responsible for all of B & B's obligations. Because Marchant moved for summary judgment, the factual issues relating to the alleged merger were not tried in the district court.
This court, in McEntire, decided an appeal involving facts analogous to those underlying the instant controversy. McEntire was a food processor who likewise extended credit in selling produce to B & B and later brought an action against Eastern to recover the debt that B & B had accumulated. However, in McEntire there existed an independent agreement providing that Eastern would satisfy the debt owed by B & B if McEntire would withdraw an informal complaint that it had filed against B & B with the United States Department of Agriculture. Accordingly, the issue of Eastern's liability was presented to the jury on both de facto merger and breach of contract theories. The jury returned a general verdict granting judgment to McEntire but did not indicate upon which ground the verdict was based.
In view of this, it cannot be said that all the elements necessary to invoke the doctrine of offensive collateral estoppel exist.
In Parklane Hosiery Co. v. Shore, 439 U.S. 322, 99 S.Ct. 645, 58 L.Ed.2d 552 (1979), the Supreme Court identified certain considerations to be examined by the district court in deciding whether the offensive use of non-mutual collateral estoppel is justified: (1) whether the plaintiff in the second action could have joined in the first suit; (2) whether the party against whom collateral estoppel is asserted vigorously prosecuted the first action; (3) whether the judgment relied upon as the basis for the estoppel is inconsistent with one or more previous judgments; and (4) whether the second action affords the defendant procedural opportunities unavailable in the first action that could readily cause a different result. 439 U.S. at 330-32, 99 S.Ct. at 651-52. The offensive use of collateral estoppel has also been approved by the South Carolina Court of Appeals in Beall v. Doe, 281 S.C. 363, 315 S.E.2d 186 (S.C.App.1984). 1 Both cases further recognize that the preclusive effect of the prior judgment extends only to issues actually litigated and necessary...
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