Jeffrey M. Brown Associates, Inc. v. CRK Contracting of Suffolk, Inc., Civil Action No. 99-5487 (E.D. Pa. 6/14/2000)
| Decision Date | 14 June 2000 |
| Docket Number | Civil Action No. 99-5487. |
| Parties | JEFFREY M. BROWN ASSOCIATES, INC., Plaintiff, v. CRK CONTRACTING OF SUFFOLK, INC., Defendant. |
| Court | U.S. District Court — Eastern District of Pennsylvania |
AUSTIN HOGAN, WHITE AND WILLIAMS, PHILA, PA, GERALD ZISHOLTZ, STUART S. ZISHOLTZ, MINEOLA, NY.
Before the court are plaintiffs motion for partial summary judgment on defendant's counterclaims and defendant's motion for sanctions and for partial summary judgment.
Plaintiff Jeffrey M. Brown Associates, Inc. (JMB) provides construction management services. In 1994 and 1995, JMB entered into three contracts with three different owners to construct Caldor department stores. These three projects have come to be known as the Flatbush Project, the Glen Oaks Project, and the Jericho Project. JMB, in turn, entered into three subcontracts with the defendant, CRK Contracting of Suffolk, Inc. (CRK).
These prosaic beginnings led to a Dickensian series of lawsuits. The first suit, known as the Hartford Action, began in 1996 in New York state court, when CRK sued Hartford Insurance Company, JMB's payment bond surety, seeking to recover $505,335 for electrical work it had allegedly performed on the Flatbush Project but for which it had allegedly not been paid. JMB was not a party to this action. On July 3, 1997, the jury found that CRK was not entitled to recover any monies under the terms of the subcontract with JMB, and a defense verdict was entered in favor of Hartford. This decision was affirmed on appeal.
A second lawsuit, known as the Forest City Action, commenced in September 1997, also in a New York state court. In this action, CRK sued, inter alia, JMB; Forest City, the owner of the Flatbush Project; the law firm and an attorney that represented JMB; Jeffrey Brown, JMB's principal; and Robert Beyea, a JMB employee. This litigation stemmed from a settlement by which JMB and Forest City ended their own lawsuit. The settlement established a trust fund to pay licensees and future lienors. CRK again asserted various claims pertaining to the Flatbush Project, alleging that it was a beneficiary of the settlement and entitled to payment under its terms. On April 12, 1998, the state court granted summary judgment in favor of the defendants based on res judicata and collateral estoppel. This decision was also affirmed on appeal.
A third group of lawsuits have also been dismissed. In June 1996, JMB sued CRK in this district alleging deficient performance on the Flatbush Project. Meanwhile, CRK had already filed two lawsuits pertaining to the Glen Oaks and Jericho Projects in the New York state courts.1 At the time these three actions were pending, the Forest City and Hartford Actions were on appeal. CRK and JMB entered into an agreement entitled the Settlement and Standstill Agreement (Standstill Agreement), see Def. Ex. G, that provided in part that the pending actions would be dismissed without prejudice. If CRK did not prevail on appeal on either the Hartford or Forest City Action, JMB was to commence suit against CRK in this court, and CRK was to allege its counterclaims. CRK did not, in fact, prevail, and JMB brought this lawsuit as a plaintiff.
JMB's complaint contains three counts seeking breach of contract damages for the Flatbush, Glen Oaks, and Jericho Projects. CRK's first six counterclaims seek payment for each of the same projects, and the final two counterclaims make claims for the Flatbush Project based on the JMB-Forest City settlement.
Plaintiffs motion for partial summary judgment argues that res judicata and/or collateral estoppel principles bar CRK's first, second, seventh, and eighth counterclaims pertaining to the Flatbush Project. Defendant's motion seeks to strike the complaint under Federal Rules of Civil Procedure 11 and 37 as a sanction for alleged violations of this court's orders and for alleged efforts to mislead the court; it also requests partial summary regarding monies owed for the Jericho Project.
The Full Faith and Credit statute, 28 U.S.C. § 1738, requires that this court give a "prior state judgment the same effect as would the adjudicating state." Gregory v. Chehi, 843 F.2d 111, 116 (3d Cir. 1988). As the Hartford and Forest City Actions were decided by New York state courts applying New York state law, this court will look to New York's res judicata and collateral estoppel law.
Under New York's transactional approach, res judicata, or claim preclusion, bars the litigation of a later claim finally decided on the merits arising out of the same facts as an earlier action, even if the later claim is based on different legal theories or seeks different relief. See Burgos v. Hopkins, 14 F.3d 787, 790 (2d Cir. 1994); Vega v. University of N.Y., 67 F. Supp.2d 324, 333 (S.D.N.Y. 1999); see also Jacobsen v. Fireman's Fund Ins. Co., 111 F.3d 261, 265 (2d Cir. 1997) (). Res judicata will not bar a later action if the first forum "did not have the power to award the full measure of relief sought in the later litigation" or if the party was prevented, whether by statute or otherwise, from advancing a particular legal theory. Burgos, 14 F.3d at 790 (citations omitted). However, if the party could have advanced a particular claim but did not do so, res judicata will apply. See id.; Parker v. Corbisiero, 825 F. Supp. 49, 54 (S.D.N.Y. 1993); see also Ferris v. Cuevas, 118 F.3d 122, 126 (2d Cir. 1997) (). Put another way, res judicata will bar later claims based on the same "factual grouping" if: "(1) the claims could have been raised in the initial forum, and (2) the initial forum had the power to award the full measure of relief sought in the later litigation." Parker, 825 F. Supp. at 54 (citations omitted); see also Jacobsen, 111 F.3d at 265 ( same).
Collateral estoppel, or issue preclusion, "precludes a party from relitigating in a subsequent action or proceeding an issue clearly raised in a prior action or proceeding and decided against that party or those in privity, whether or not the tribunals or causes of action are the same." Burgos, 14 F.3d at 792 (citations omitted). That is, two requirements must be met for the bar of collateral estoppel to apply: "(1) [t]here must be an identity of issue which has necessarily been decided in the prior action and is decisive of the present action, and (2) there must have been a full and fair opportunity to contest the decision now said to be controlling." Id. (citations, punctuation omitted); see also Parker, 825 F. Supp. at 56 ().3 In contrast to res judicata, collateral estoppel may apply regardless of the types of relief sought and available in the first action, so long as there was a "full opportunity to litigate identical issues." Burgos, 14 F.3d at 792.
As noted, there were two previous lawsuits in which CRK asserted claims against JMB based on the Flatbush Project. In the Hartford Action, CRK sued Hartford, JMB's surety, based on CRK's subcontract with JMB to perform electrical work for the Flatbush Project. See Hartford Compl. ¶ 4 (Pl. Ex. A). CRK contended that JMB had improperly failed to pay for work performed pursuant to the subcontract, see id. ¶¶ 5-6, and sought judgment against Hartford based on its issuance of a payment bond for that project. See id. ¶¶ 7-8. CRK presented numerous exhibits regarding monies paid and owed in that project see Record on Appeal iv-xv (Def. Ex. B), and testimony addressed whether or not JMB owed CRK for work performed. See e.g., Robert Kohlmeyer4 Test., Tr. at 108-15 (Def. Ex. B) (direct testimony regarding amounts owed and paid to CRK by JMB).
The jury charge clearly explained that the jury should find for the plaintiff CRK and against Hartford if it found that JMB owed CRK money for the Flatbush Project: "As the sole and exclusive judges of the facts, you will decide whether, and if so, to what extent monies are due and owing to the plaintiff, CRK, from the defendant Hartford as respects the plaintiffs subcontract agreement with Jeffrey M. Brown Associates." Jury Charge, Tr. at 1802 (Def. Ex. B). The court continued:
The parties substantially agree that in 1994 and 1995 a construction project took place for a Caldor store on Flatbush Avenue in Brooklyn where . . . Forest City was the owner and where JMB was the general construction contractor, and that CRK was the electrical subcontractor hired by JMB for the project. . . . A defendant, Hartford Life Insurance Company, in issuing a payment bond covering the project, stands in the shoes of JMB, and is responsible for payments to the plaintiff to the same extent, if at all, that JMB would be responsible therefore.
Now in this lawsuit the plaintiff, CRK, seeks to recover the sum of $505,335 which it claims is the balance due it for work, labor and services, and for materials supplied by it, in connection with the construction project under its subcontractors agreement with . . . JMB.
On the other hand, the defendant, Hartford, contends that there's no money due and owing to CRK by virtue of payments already made to it by JMB, as well as certain offsets or back charges that JMB claims it is entitled to, and that the plaintiff has failed to sustain its burden of proof that it is entitled to recover from defendant.
Id. at 1810-11; see also id. at 1822 (...
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