Kougasian v. Tmsl, Inc.

• Decision Date: 26 February 2004
• Docket Number: No. 02-56781.,02-56781.
• Citation: 359 F.3d 1136
• Parties: Dawn KOUGASIAN; William James Kougasian, by his guardian ad litem, Dawn Kougasian, Plaintiffs-Appellants, v. TMSL, INC., a corporation; Howard More; K & K Insurance Group, Inc., a corporation, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1136

359 F.3d 1136

Dawn KOUGASIAN; William James Kougasian, by his guardian ad litem, Dawn Kougasian, Plaintiffs-Appellants, v. TMSL, INC., a corporation; Howard More; K & K Insurance Group, Inc., a corporation, Defendants-Appellees.

No. 02-56781.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted December 5, 2003 — Pasadena, California.

Filed February 26, 2004.

John W. Powell, Irvine, California, for the appellants.

Philip D. Weiss and Donald Ornelas, Jr., Agajanian, McFall, Weiss, Tetreault & Crist, Los Angeles, California; James G. Boedecker, Mill Valley, California, for the appellees.

Appeal from the United States District Court for the Central District of California, Florence Marie Cooper, District Judge, Presiding. D.C. No. CV-02-05243-FMC.

Before Harry PREGERSON, Robert E. COWEN,^* and William A. FLETCHER, Circuit Judges.

Opinion by Judge William A. Fletcher.

OPINION

WILLIAM A. FLETCHER, Circuit Judge.

This is the fourth in a series of suits arising out of a skiing accident in which appellant's husband, James Kougasian, was killed. The district court dismissed the suit for want of subject matter jurisdiction based on the Rooker-Feldman doctrine.

We conclude that Rooker-Feldman does not deprive the district court of subject matter jurisdiction. We therefore reverse and remand for further proceedings. On remand, the district court may determine, inter alia, whether the suit should be dismissed under California preclusion law pursuant to 28 U.S.C. § 1738.

I. Background

On December 21, 1997, James Kougasian was skiing on a groomed ski run at Ski Sunrise, a ski area operated by defendant TMSL, Inc. ("TMSL"). Ski Sunrise is located on United States Forest Service land in Los Angeles County, California, and is operated by TMSL under a special use permit issued by the United States Department of Agriculture. Mr. Kougasian fell after going over a jump created by a road crossing the ski run. He hit his head on a rock on the run and suffered severe head injuries from which he died a day later.

A. Earlier Suits

Before filing the present suit, appellant Dawn Kougasian ("Kougasian") filed three earlier suits, two in California state court and one in federal district court. We describe them in turn.

1. The First State Court Suit: Kougasian I

Kougasian filed her first suit in March 1998 in the Superior Court of Los Angeles County, on her own behalf and as guardian ad litem for her son William. TMSL was the sole defendant. Kougasian alleged causes of action for wrongful death, intentional and negligent infliction of emotional distress, and spoliation of evidence.

Kougasian alleged that TMSL had constructed the ski run in such a manner that the jump caused by the crossing road was not visible to skiers, and that skiers often fell just after the jump. She alleged that TMSL acted negligently and recklessly either in placing the rock or in failing to remove it. She also alleged that TMSL attempted to cover up the nature of the accident by moving both the rock and her injured husband; by falsely reporting to the local sheriff's department that her husband had skied off the trail; and by attempting to hide the identity of witnesses and to dissuade witnesses from testifying truthfully.

The California Superior Court granted TMSL's motion for summary judgment on all counts on June 18, 1999. The Court of Appeal affirmed on December 20, 2000, and the Supreme Court denied review on March 21, 2001.

2. The Second State Court Suit: Kougasian II

In December 1998, Kougasian filed a second suit in the Superior Court of Orange County, which was subsequently transferred to Los Angeles County. She brought this suit both on her own behalf and as a survival action as successor in interest of her deceased husband. The defendants were TMSL and its insurer K & K Insurance Group ("K & K"). In her second amended complaint, filed August 1, 2001, Kougasian pled causes of action for premises liability, and for intentional and negligent infliction of emotional distress. She alleged essentially the same facts as in Kougasian I, and added allegations of conspiracy between TMSL and K & K to obstruct justice and to deny constitutional rights. In the added allegations, she claimed, inter alia, that the defendants had filed a false declaration in Kougasian I, and that the court had based its judgment on this declaration. She alleged that the defendants prevented her from challenging the declaration by presenting it to the court at the last minute and by refusing to provide the declarant's telephone number or address.

The Superior Court in Kougasian II stayed proceedings while Kougasian I was pending on appeal. After the Court of Appeal affirmed the judgment in Kougasian I, the Superior Court sustained a demurrer by TMSL based on res judicata and collateral estoppel in an order filed on October 11, 2001. It also sustained a demurrer by K & K, but that document is not in the record. The Court of Appeal affirmed as to both defendants on April 28, 2003. The Court of Appeal held that Kougasian's emotional distress claims against TMSL in Kougasian II were barred by res judicata under California's "primary right" doctrine. It further held that Kougasian's survival claims against TMSL, and all claims against K & K, were barred by collateral estoppel.

3. The Federal District Court Suit: Kougasian III

While Kougasian II was still pending in Superior Court, Kougasian filed a third suit, this time against the United States, in federal district court under the Federal Tort Claims Act. The parties stipulated to a voluntary dismissal without prejudice under Federal Rule of Civil Procedure 41(a)(1) on February 21, 2002.

B. The Present Suit

Kougasian filed the present diversity suit in federal district court in July 2002. Kougasian sues on her own behalf and as guardian ad litem for her son. Before filing this suit, Kougasian and her son had left California and had become citizens of Virginia, thereby establishing diversity. The defendants are TSML, Howard More (the sole shareholder of TSML), and K & K.

Kougasian alleges seven causes of action. In one of the causes of action, she seeks to set aside the state court judgments in Kougasian I and II, alleging that the defendants obtained those judgments through extrinsic fraud on the court. The allegations supporting her cause of action for extrinsic fraud also support two other causes of action in which she seeks damages for fraud and abuse of process. Kougasian particularly emphasizes the allegedly false declaration submitted in Kougasian I, upon which she partially relied in her complaint in Kougasian II. Kougasian alleged none of these three causes of action in her complaints in Kougasian I and II. In her remaining four causes of action, Kougasian seeks damages based on wrongful death, premises liability, and intentional and negligent infliction of emotional distress. Kougasian alleged these same four causes of action in Kougasian I and/or II.

Kougasian does not seek to set aside the judgments of the California courts in Kougasian I and II based on alleged legal errors by those courts. Rather, she seeks to set aside these judgments based on the alleged extrinsic fraud by defendants that produced those judgments. Nor does Kougasian seek damages based on any alleged legal error by the state courts. Rather, she seeks damages based on the alleged wrongful behavior of the defendants.

The district court dismissed Kougasian's complaint for want of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1) pursuant to the Rooker-Feldman doctrine. The court noted that the plaintiffs made "almost identical allegations of fraud and abuse of process as those found in the [second amended complaint] in Kougasian II." The district court therefore concluded that Kougasian was in effect attempting to appeal the judgment of the state court, which is forbidden by Rooker-Feldman. We review de novo a district court's dismissal under Rooker-Feldman. Noel v. Hall, 341 F.3d 1148, 1154 (9th Cir.2003).

II. The Rooker-Feldman Doctrine

The Rooker-Feldman doctrine has evolved from the two Supreme Court cases from which its name is derived. See Rooker v. Fidelity Trust Co., 263 U.S. 413, 44 S.Ct. 149, 68 L.Ed. 362 (1923); District of Columbia Court of Appeals v. Feldman, 460 U.S. 462, 103 S.Ct. 1303, 75 L.Ed.2d 206 (1983). Rooker-Feldman prohibits a federal district court from exercising subject matter jurisdiction over a suit that is a de facto appeal from a state court judgment. Bianchi v. Rylaarsdam, 334 F.3d 895, 898 (9th Cir.2003). In part, this prohibition arises through a negative inference from 28 U.S.C. § 1257, which grants jurisdiction to review a state court judgment in the United States Supreme Court. In re Gruntz, 202 F.3d 1074, 1078 (9th Cir.2000) (en banc). That is, while § 1257 explicitly authorizes the United States Supreme Court to hear an appeal from a state court judgment, it impliedly prohibits the lower federal courts from doing so. If a plaintiff brings a de facto appeal from a state court judgment, Rooker-Feldman requires that the district court dismiss the suit for lack of subject matter jurisdiction. Id. Determining what constitutes a forbidden de facto appeal, however, has sometimes proven difficult for the lower courts. See Noel, 341 F.3d at 1161-62 (collecting cases).

In Noel v. Hall, decided after the district court's decision in this case, we attempted to give guidance to the district courts in the application of Rooker-Feldman. We provided the following general formulation of the doctrine:

If a federal plaintiff asserts as a legal wrong an allegedly erroneous decision by a state court, and seeks relief from a state court judgment based on that decision, Rooker-Feldman bars subject matter jurisdiction in federal district court. If, on the other hand, a federal plaintiff asserts as a legal wrong an allegedly illegal act or omission by an adverse party, Roo...