Kale v. Combined Ins. Co. of America

• Decision Date: 05 December 1990
• Docket Number: No. 90-1697,90-1697
• Citation: 924 F.2d 1161
• Parties: Carl KALE, Plaintiff, Appellant, v. COMBINED INSURANCE COMPANY OF AMERICA, Defendant, Appellee. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 1161

924 F.2d 1161

59 USLW 2467

Carl KALE, Plaintiff, Appellant, v. COMBINED INSURANCE COMPANY OF AMERICA, Defendant, Appellee.

No. 90-1697.

United States Court of Appeals, First Circuit.

Heard Dec. 5, 1990.

Decided Jan. 25, 1991.

Rehearing and Rehearing En Banc

Denied Feb. 26, 1991.

Philip R. Olenick, Boston, Mass., with whom Paul L. Nevins, Wellesley, Mass., was on brief, for plaintiff, appellant.

Kenneth M. Bello, with whom Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., Boston, Mass., was on brief, for defendant, appellee.

Before BREYER, Chief Judge, COFFIN, Senior Circuit Judge, and SELYA, Circuit Judge.

SELYA, Circuit Judge.

This appeal presents an issue of first impression in this circuit. Believing, as we do, that a straightforward application of the hoary doctrine of res judicata is dispositive of the question raised, we affirm the district court's dismissal of plaintiff's civil action.

I. BACKGROUND

At all times material hereto, plaintiff-appellant Carl Kale has been a citizen and resident of Massachusetts. He was formerly employed by defendant-appellee Combined Insurance Company of America (Coinco), a "citizen" of Illinois. See 28 U.S.C. Sec. 1332(c) (specifying method of determining corporation's citizenship for purposes of diversity jurisdiction). In May 1983, after some two decades with Coinco and its predecessor in interest, appellant was cashiered.

Seeking vindication, Kale filed suit in the United States District Court for the District of Massachusetts. He pled federal question jurisdiction, 28 U.S.C. Sec. 1331, and alleged that his firing violated the Age Discrimination in Employment Act (ADEA), 29 U.S.C. Secs. 621-634. He adorned his ADEA complaint with pendent state-law claims for intentional infliction of emotional distress and breach of an implied covenant of good faith and fair dealing (predicated upon Coinco's alleged failure to abide by promises made in its personnel manual). The case was assigned to Judge Skinner. The state-law claim for intentional infliction of emotional distress was voluntarily discontinued at a relatively early date. Later on, Judge Skinner granted summary judgment, finding the federal statutory claim to be time-barred.

Inasmuch as Kale's complaint to all intents and purposes asserted only federal question jurisdiction, ¹ rejection of the ADEA count seemingly ended the federal court's interest in the matter; at any rate, Judge Skinner dismissed the appended state-law claim at that juncture, writing: "Since I have disposed of plaintiff's lone federal claim, I now dismiss without prejudice [the remaining] state cause of action over which there was only pendent jurisdiction." Appellant--who does not dispute that he knew at the time that diversity of citizenship existed--did not alert the court The waters did not remain placid for long. In May 1989, Kale filed a new suit in a Massachusetts state court, alleging a tsunami of state-law claims, e.g., breach of contract (based on the personnel manual), promissory estoppel, tortious breach of the implied good faith/fair dealing covenant. Diversity jurisdiction being apparent from the face of the record, Coinco removed the case to the federal district court. See 28 U.S.C. Secs. 1332(a), 1441. It then moved to dismiss the action based on the preclusive effect of Kale I. The district court (Tauro, U.S.D.J.) granted the motion, ruling that the failure to bring the state-law claims under diversity jurisdiction in Kale I barred the assertion of those claims in another, later proceeding. See Kale v. Combined Ins. Co., 736 F.Supp. 1183 (D.Mass.1990) (Kale II ). This appeal followed.

to, or make any effort to assert the presence of, diversity jurisdiction, 28 U.S.C. Sec. 1332(a). By the same token, he neither sought reconsideration of, nor appealed, the dismissal of his state-law claim. He did appeal the entry of summary judgment on the ADEA claim. He lost. See Kale v. Combined Ins. Co., 861 F.2d 746, 750-56 (1st Cir.1988). That ended the original action (which we will henceforth refer to as "Kale I "). ²

II. QUESTION PRESENTED

In framing the issue on appeal, we think it useful to begin by cataloguing what is not legitimately at issue.

1. There is no dispute that the plaintiff could have established diversity jurisdiction in Kale I, but failed properly to plead it. See Kale II, 736 F.Supp. at 1184 & n. 3. Indeed, the record does not indicate that Kale at any time alerted Judge Skinner to the existence--or even the possibility--of diversity jurisdiction.

2. Kale has never contended that his claims, or any of them, were so lacking in value as to fall below the "amount in controversy" requirement for diversity jurisdiction, see 28 U.S.C. Sec. 1332(a).

3. It is beyond peradventure that the dismissal of a claim as time-barred constitutes a judgment on the merits, entitled to preclusive effect. See, e.g., Rose v. Town of Harwich, 778 F.2d 77, 80 (1st Cir.1985) (listing cases that illustrate trend towards giving claim-preclusive effect to dismissals based on statutes of limitations), cert. denied, 476 U.S. 1159, 106 S.Ct. 2278, 90 L.Ed.2d 720 (1986); Cemer v. Marathon Oil Co., 583 F.2d 830, 832 (6th Cir.1978) (per curiam); cf. Fed.R.Civ.P. 41(b). Thus, the disposition of the ADEA claim in Kale I comprised a suitable springboard for the deployment of res judicata.

4. The parties agree that, given the contours of the Kale I record, Judge Skinner had every right to dismiss the state-law claim without prejudice once the federal cause of action was resolved on the merits. See United Mine Workers v. Gibbs, 383 U.S. 715, 726, 86 S.Ct. 1130, 1139, 16 L.Ed.2d 218 (1966). In any event, Kale did not appeal from the dismissal order.

5. It is also uncontested that the implied contract claim in Kale II was pleaded and dismissed in Kale I. While the parties do dispute whether the other state-law claims pleaded in Kale II were "brought" in Kale I, we need not enter that debate. The judgment in Kale I was rendered by a federal court acting under its federal question jurisdiction. Hence, the availability of a res judicata defense in this case depends on the federal-law standard. See, e.g., Cemer, 583 F.2d at 832. Once there has been an adjudication on the merits, federal law stipulates that all claims which are "part of the same cause of action" are extinguished, whether or not actually asserted in the original action. See Nilsen v. City of Moss Point, 701 F.2d 556, 562 (5th Cir.1983) (en banc); see also Lovely v. Laliberte, 498 F.2d 1261, 1263 (1st Cir.), cert. denied, 419 U.S. 1038, 95 S.Ct. 526, 42 L.Ed.2d 316 (1974); cf. Fiumara v. Fireman's Fund Ins. Cos., 746 F.2d 87, 91 (1st Cir.1984) (same; New Hampshire law); Isaac v. Schwartz, 706 F.2d 15, 16 (1st Cir.1983) (same; Massachusetts 6. Whatever the relationship between the state-law claims asserted, variously, in the two complaints, it is beyond cavil that, at the very least, the claims pleaded in Kale II could all have been joined in Kale's original complaint. See Fed.R.Civ.P. 8(e)(2) (a plaintiff may set forth multiple statements of claim in a single complaint); Fed.R.Civ.P. 18(a) (a party may join in a single action "as many claims ... as the party has against an opposing party").

law). In other words, the doctrine of res judicata, in its federal formulation, insists that the decision in Kale I must preclude in a subsequent suit (1) all claims which were actually brought in Kale I and (2) all related claims, i.e., all claims arising out of the same cause of action.

Having tapered the lens of inquiry, it can be seen that this appeal, stripped to bare essentials, presents the following question: when a state-law claim, originally brought pendent to a federal claim, is dismissed without prejudice for want of subject matter jurisdiction following rejection of the joined federal claim on the merits, under circumstances where the plaintiff could have asserted an alternative jurisdictional basis but did not, and the plaintiff thereafter brings a new suit against the same defendant which includes the pendent state-law claim as well as other state-law claims which could have been pleaded in the initial suit; quaere: are the state-law claims in the second suit precluded by the original adjudication? Put another way, should the judgment in Kale I be accorded preclusive effect with respect to the claims asserted in Kale II, inasmuch as those claims could have been prosecuted in Kale I had the plaintiff elected to plead an available alternative basis for jurisdiction? ³

III. ANSWERING THE QUESTION

We answer the question presented in the affirmative, holding that when a plaintiff pleads a claim in federal court, he must, to avoid the onus of claim-splitting, bring all related state claims in the same lawsuit so long as any suitable basis for subject matter jurisdiction exists. We reach this conclusion without special deference to the decision below. The case was decided on a motion to dismiss brought under Civil Rule 12(b)(6) and appellate courts ordinarily review such rulings de novo. See Gonzalez-Bernal v. United States, 907 F.2d 246, 248 (1st Cir.1990); see also Correa-Martinez v. Arrillaga-Belendez, 903 F.2d 49, 52 (1st Cir.1990) ("[i]n the Rule 12(b)(6) milieu, an appellate court operates under the same constraints that bind the district court"). ⁴

A.

We start our analysis with some abecedarian truths. Under a federal-law standard, the essential elements of claim preclusion are (1) a final judgment on the merits in an earlier action; (2) an identity of the cause of action in both the earlier and later suits; and (3) an identity of parties or privies in the two suits. See In re Air Crash at Dallas/Fort Worth Airport, 861 F.2d 814, 816 (5th Cir.1988); United States v. Athlone Indus., Inc., 746 F.2d 977, 983 (3d Cir.1984); Lee v. City of Peoria, 685 F.2d 196, 199 (7th Cir.1982). Two elements are unarguably in evidence here. First, there was a final judgment in Kale I,...