C & C Products, Inc. v. Fidelity & Deposit Co. of Maryland

• Decision Date: 21 May 1975
• Docket Number: No. 74-4022,74-4022
• Citation: 512 F.2d 1375
• Parties: C & C PRODUCTS, INC., Plaintiff-Appellee, v. FIDELITY AND DEPOSIT CO. OF MARYLAND, Defendant and Third-Party Plaintiff-Appellant, PREMIER INDUSTRIAL CORP., Third-Party Defendant-Appellant. Summary Calendar. *
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1375

512 F.2d 1375

C & C PRODUCTS, INC., Plaintiff-Appellee, v. FIDELITY AND DEPOSIT CO. OF MARYLAND, Defendant and Third-Party Plaintiff-Appellant, PREMIER INDUSTRIAL CORP., Third-Party Defendant-Appellant.

No. 74-4022

Summary Calendar. ^*

United States Court of Appeals, Fifth Circuit.

May 21, 1975.

Robert E. Moorer, Birmingham, Ala., for Fidelity & Deposit Co. of Md W. Eugene Rutledge, Birmingham, Ala., for Premier Ind. Corp.

Drayton Nabers, Jr., W. Stancil Starnes, Birmingham, Ala., for plaintiff-appellee.

Appeal from the United States District Court for the Northern District of Alabama.

Before WISDOM, BELL and CLARK, Circuit Judges.

PER CURIAM:

C & C Products, Inc. (C & C) initiated this diversity action against Fidelity and Deposit Co. (Fidelity), surety on two injunction bonds posted by C & C's competitor, Premier Industrial Corp. (Premier), to recover damages ¹ allegedly incurred because of the wrongful suing out of an injunction by Premier. This present federal action follows multiple Alabama state court litigation pursued by Premier to enjoin C & C and its district sales manager, Roy A. Marlow, from pirating Premier sales agents who had signed employment contracts containing anticompetition clauses.

Initially Premier obtained injunctive relief from an Alabama district court. Appeal by C & C and Marlow resulted in dissolution of the injunction by the Alabama Supreme Court. That court cast Premier's cause of action in contract and held that Premier was not entitled to relief for breach of the noncompetition clauses in the agents' contracts since Premier had failed to qualify to do business in Alabama as required by state law. C & C Products, Inc. v. Premier Industrial Corp., 290 Ala. 179, 275 So.2d 124 (1972). On remand, Premier amended its complaint in an attempt to assert a tort claim and to more specifically allege that it was engaged solely in interstate commerce and, therefore, not subject to Alabama corporate qualification requirements. The Alabama district court dismissed. On Premier's ensuing appeal, the Alabama Supreme Court held that the tort versus contract nature of the alleged wrong had been settled by its earlier decision, and that even if Premier was engaged in interstate rather than intrastate commerce, the agents' contracts were not enforceable since the agents occupied independent contractor status under Alabama law. ² Premier Industrial Corp. v. Marlow, 292 Ala. 407, 295 So.2d 396, cert. denied, 419 U.S. 1033, 95 S.Ct. 515, 42 L.Ed.2d 308 (1974).

When C & C brought the instant federal court action, Fidelity immediately filed a third-party complaint against Premier to recoup any loss to Fidelity occasioned by Premier's wrongful suing out of the injunction. Apparently undaunted by its state court rebuffs, Premier renewed its assault against C & C by filing a cross-complaint based upon the same grounds asserted in the two state court actions, but this time couched in terms of a conspiracy to induce Premier sales agents to breach their contracts. On grounds of res judicata, the federal district court granted summary judgment for C & C on Premier's claim, citing the two Alabama Supreme Court cases, and against Fidelity on the issue of its liability on the injunction bonds. The lone remaining issue, amount of damages, was tried to a jury which awarded C & C 16,326.06 dollars. We affirm each of these actions.

Premier's appeal principally pursues a two-pronged attack upon the district court's res judicata holding. First, Premier contends that the present action is in tort rather than contract, and, therefore, not a relitigation of the contract complaints sued upon in state court. Our consideration of this point is controlled by the United States Supreme Court's holding in Angel v. Bullington, 330 U.S. 183, 67 S.Ct. 657, 91 L.Ed. 832 (1947), that: "an adjudication bars future litigation between the same parties not only as to all issues actually raised and decided but also as to those which could have been raised." Id. at 186, 67 S.Ct. at 659. Angel compels affirmance of the district court's reasoning that: "(a)ny consideration of the present claim asserted by Premier would amount to a relitigation of matters considered by, or which could have been considered by the Alabama state courts," and as such is barred by the doctrine of res judicata.

Second, Premier asserts that the state court decisions do not bar the present claim since they involved jurisdictional findings only. To the contrary, the Alabama Supreme Court's decision in C & C Products, Inc. v. Premier Industrial Corp., 290 Ala. 179, 275 So.2d 124 (1972), that since Premier failed to qualify to do business the contracts at issue between it and its sales agents were null and void under Alabama law (Ala.Code Ann. Tit. 51, § 345 (1961)), was squarely a decision on the merits.

Premier also asserts that the district court erred in refusing to admit evidence or permit discussion concerning C & C's violation of the injunction as a defense to its motion for summary judgment against Fidelity on the issue of liability. Here Premier suggests that we employ equity's "clean...