Lucas v. Evans

• Decision Date: 28 May 2020
• Docket Number: 1:18-cv-02791-NLH-AMD
• Parties: ANDREW LUCAS, Plaintiff, v. S. LAVON EVANS, JR. and S. LAVON EVANS, JR. OPERATING COMPANY, Defendants.
• Court: U.S. District Court — District of New Jersey

ANDREW LUCAS, Plaintiff, v. S. LAVON EVANS, JR. and S. LAVON EVANS,JR. OPERATING COMPANY, Defendants.

1:18-cv-02791-NLH-AMD

UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY

May 28, 2020

OPINION

APPEARANCES:

ANDREW LUCAS

24 IRON ORE ROAD

MANALAPAN, NJ 07726

Plaintiff appearing pro se

PAUL CHRISTIAN JENSEN, JR.

FOLKMAN LAW OFFICES PC

1949 BERLIN ROAD

SUITE 100

CHERRY HILL, NJ 08003

On behalf of Defendants

HILLMAN, District Judge

Plaintiff, Andrew Lucas, appearing pro se,¹ claims that he purchased oil and gas interests in Alabama and Texas pursuant tothe misrepresentations by Defendants, S. Lavon Evans, Jr. and S. Lavon Evans, Jr. Operating Company, that "the purchase proceeds were to be used for drilling and completion work," when Defendants actually used the proceeds for their own legal fees. Plaintiff claims that on January 27, 2010 he entered into a settlement agreement with Defendants, but after two payments, they failed to make the remaining payments under the agreement.² Plaintiff claims that Defendants' actions constitute violations of the federal securities laws, which Plaintiff contend provide a five-year statute of limitations. Plaintiff seeks $1,143,948.06, plus interest and penalties.³

Defendants have moved to dismiss Plaintiff's complaint on res judicata grounds.⁴ On January 15, 2016, Plaintiff filed a breach of contract action against Defendants in the Southern District of Mississippi arising from the same claim that Defendants breached their January 27, 2010 settlement agreement after they made two payments. See Lucas v. S. Lavon Evans, Jr., et al., Civil Action 2:16-10-KS-MTP (S.D. Miss.). The district court dismissed Plaintiff's complaint because his breach of contract claim was barred by Mississippi's three-year statute of limitations. (Docket No. 13-3 at 13-17.) The Court of Appeals for the Fifth Circuit affirmed. (Docket No. 13-3 at 19-25.)

The Fifth Circuit summarized Plaintiff's claim and the procedural history:

On January 27, 2010, Lucas and Evans executed a settlement agreement which resolved certain "claims, issues, and disputes relating to or arising from [theparties'] various business ventures." The agreement imposed a number of obligations on both parties; at issue in this case is Evans's promise to pay Lucas $556,500 plus interest. The agreement called for Evans to pay monthly installments, starting at $10,000 per month and rising to $20,000 per month, "until the unpaid principal, interest, and all loan charges have been paid in full." If Evans had paid all his installments in a timely manner, the last installment would have come due in November 2012. The agreement also called for Evans to execute a promissory note and deliver it to Lucas along with the agreement.

Evans failed to execute a promissory note. According to Lucas, Evans did make three $10,000 payments to Lucas in February, March, and April 2010. Evans has no record of those payments but states that he made a partial payment of $5,000 in February 2012. It is undisputed that Evans made no additional payments thereafter. Lucas contacted Evans as early as April 19, 2010, to complain about missed payments and to threaten legal action.

Lucas sued Evans for breach of contract on January 15, 2016. Evans moved for summary judgment, arguing that Lucas's claim was barred by Mississippi's three-year statute of limitations applicable to breach of contract actions. See Miss. Code § 15-1-49. In response, Lucas argued that Evans was continuing to breach the settlement agreement by not making payments. The district court granted Evans's motion for summary judgment and dismissed Lucas's claim. This appeal followed.

(Docket No. 13-3 at 22-23.)

The Fifth Circuit then explained why it affirmed the district court's decision:

The parties agree that Mississippi law controls. . . . Lucas brought suit in January 2016; thus, for this action not to be time-barred, the statute of limitations must have accrued no later than January 2013.

It is undisputed that if Evans had timely paid all monthly installments, his last installment would have come due in November 2012. It is also undisputed that Lucas was aware of Evans's failure to make monthly installments asthey came due. To escape these facts, Lucas argues that Evans has continued to breach the settlement agreement by not making monthly payments and points to a section of the settlement agreement that obligates Evans to make payments "until the unpaid principal, interest, and all loan charges have been paid in full." As the district court held, applying the continuing breach doctrine based on this section of the settlement agreement would effectively waive the statute of limitations, which Mississippi law expressly prohibits. Moreover, Lucas's continuing breach argument contradicts the Mississippi Supreme Court's holding in Freeman which defined the accrual date for unpaid installments as the date "when [each installment] falls due." Accordingly, the district court did not err in holding that Lucas's breach of contract claim is time-barred.

(Docket No. 13-3 at 24-25, internal citations omitted.)

Defendants argue that Plaintiff's instant complaint raises the same claims and issues as his Mississippi action, and it is therefore barred under res judicata principles. This Court agrees.

The doctrine of res judicata consists of two distinct concepts - issue preclusion and claim preclusion. Migra v. Warren City Sch. Dist. Bd. of Educ., 465 U.S. 75, 77 n.1 (1984); U.S. v. 5 Unlabeled Boxes, 572 F.3d 169, 174 (3d Cir. 2009) (quoting Venuto v. Witco Corp., 117 F.3d 754, 758 n.5 (3d Cir. 1997)) ("Collateral estoppel customarily refers to issue preclusion, while res judicata, when used narrowly, refers to claim preclusion. This court has previously noted that 'the preferred usage' of the term res judicata 'encompasses both claim and issue preclusion.'"). Res judicata is "not a merematter of technical practice or procedure but a rule of fundamental and substantial justice. Equal Employment Opportunity Comm'n v. U.S. Steel Corp., 921 F.2d 489, 492 (3d Cir. 1990). It is "central to the purpose for which civil courts have been established, the conclusive resolution of disputes," and seeks to avoid the expense and vexation of multiple lawsuits, while conserving judicial resources and fostering reliance on judicial action by minimizing the possibility of inconsistent decisions. Id. (quoting Montana v. United States, 440 U.S. 147, 153-54 (1979)).

Issue preclusion prevents re-litigation of issues that were necessarily decided in a previous case. Burlington N. R.R. v. Hyundai Merch. Marine Co., 63 F.3d 1227, 1232 (3d Cir. 1995). There are four elements for issue preclusion to apply: (1) the issue in the prior proceeding must be identical to the current issue; (2) the issue must have been actually litigated; (3) the issue must have been determined by a final, valid judgment; and (4) the issue must have been essential to the judgment. Id. (citing In re Graham, 973 F.2d 1089, 1097 (3d Cir. 1992)). Complete identity of parties in the two suits is not required for the application of issue preclusion. Id.

Claim preclusion prevents parties from re-litigating claims that have been fully litigated or claims that could have beenlitigated in a prior action. In re Mullarkey, 536 F.3d 215, 225 (3d Cir. 2008) (citing Post v. Hartford Ins. Co., 501 F.3d 154, 169 (3d Cir. 2007)). Claim preclusion applies where three elements are met: (1) there has been a final judgment on the merits; (2) the parties are identical to the parties in the prior action or are in privity with the identical parties; and (3) the subsequent case is based on the same cause of action as the prior case. Churchill v. Star Enterprises, 183 F.3d 184, 194 (3d Cir. 1999); see also Bradley v. Pittsburgh Bd. of Educ., 913 F.2d 1064, 1070 (3d Cir. 1990) (emphasizing that claim preclusion prohibits reexamination not only of matters actually decided in prior case, but also those that parties might have, but did not, assert in that action).

While issue preclusion was intended to be a more-narrow application of res judicata, "[t]he differences between claim preclusion and issue preclusion in many cases may be more fiction than fact." Purter v. Heckler, 771 F.2d 682, 690 n.5 (3d Cir. 1985); cf. McNasby v. Crown Cork and Seal Co., Inc., 888 F.2d 270, 276 (3d Cir. 1989) ("This case provides a good example of the difference between claim and issue preclusion. Were we to uphold the district court's application of claim preclusion, we would affirm the dismissal of the plaintiffs' suit. On the other hand, the application of issue preclusion inthe instant case would benefit the plaintiffs because many issues were determined in their favor by the [Pennsylvania Human Rights Commission]."). Here, under either issue preclusion or claim preclusion, Plaintiff's complaint must be dismissed. The Court, however, will focus on how claim preclusion bars Plaintiff's claims.

As a primary matter, it is evident that Plaintiff is attempting to circumvent the Fifth Circuit's determination that his claims against Defendants arising from the January 27, 2010 settlement agreement are barred by Mississippi's three-year statute of limitations by contending that Defendants' actions constitute federal securities fraud, rather than common law breach of contract, and a five-year statute of limitations applies to his current action, which he claims was filed within the five-year window. Plaintiff's tactic is unavailing.

The repackaging of a claim under a different legal theory does not prevent the application of res judicata. "[N]ew legal theories do not make the second case different for purposes of claim preclusion." Haefner v. North Cornwall Tp., 40 F. App'x 656, 657-58 (3d Cir. 2002) (finding that the district court properly applied the doctrine of claim preclusion where the assertions in the plaintiff's second civil complaint involved the same operative facts and the same parties, or their privies,as in his prior...