Massey v. BOARD OF TRUSTEES OF OGDEN AREA

• Decision Date: 12 February 2004
• Docket Number: No. 20020999-CA.,20020999-CA.
• Citation: 2004 UT App 27,86 P.3d 120
• Parties: H.C. MASSEY, Plaintiff and Appellant, v. BOARD OF TRUSTEES OF the OGDEN AREA COMMUNITY ACTION COMMITTEE, INC., a non-profit organization, Defendant and Appellee.
• Court: Utah Court of Appeals

86 P.3d 120

2004 UT App 27

H.C. MASSEY, Plaintiff and Appellant, v.BOARD OF TRUSTEES OF the OGDEN AREA COMMUNITY ACTION COMMITTEE, INC., a non-profit organization, Defendant and Appellee.

No. 20020999-CA.

Court of Appeals of Utah.

February 12, 2004.

David J. Holdsworth, Sandy, for Appellant.

Janet Hugie Smith and Scott A. Hagen, Ray Quinney & Nebeker, Salt Lake City, for Appellee.

Before BILLINGS, P.J., BENCH, Associate P.J., and GREENWOOD, J.

OPINION

BILLINGS, Presiding Judge:

¶ 1H.C. Massey appeals the district court's order granting summary judgment to the Board of Trustees of the Ogden Area Community Action Committee, Inc.(the Board).We affirm.

BACKGROUND

¶ 2 Beginning in 1969, the Board employed Massey as executive director of the Ogden Area Community Action Committee, Inc.(the Committee), a Utah non-profit corporation providing assistance to low-income area residents.The Committee's bylaws provided that Massey could be terminated only "for cause."Massey served continually as executive director until November 25, 1997, when the Board voted to terminate his employment.Following his termination, Massey filed a civil action in the U.S. District Court for the District of Utah(the federal suit) alleging, inter alia, violations of 42 U.S.C. section 1983(1997).Massey argued that when the Board terminated his employment without notice and hearing, it deprived him of a property interest without constitutional due process.See42 U.S.C. § 1983(1997).

¶ 3 The Board ultimately filed a motion for summary judgment, contending Massey could not prevail on his section 1983 claim because the Board was not a state actor and was not engaged in state action when it terminated Massey.In January 2000, the federal court granted the Board's motion for summary judgment and dismissed Massey's federal suit with prejudice.Massey appealed to the U.S. Court of Appeals for the Tenth Circuit, which affirmed the lower court's grant of summary judgment for the Board.SeeMassey v. Board of Trs.,No. 00-4037, 2001 WL 120438, 2001 U.S.App. LEXIS 2171(10th Cir.Feb. 13, 2001)(unpublished opinion), cert. denied.

¶ 4 Thereafter, on November 21, 2001, Massey filed suit in Utah Second District Court(the state suit) for breach of contract and wrongful termination.The Board filed a motion for summary judgment arguing that the judgment rendered in the federal suit barred Massey's claims in state court on principles of res judicata.The district court agreed.The court granted the Board's motion for summary judgment and dismissed Massey's state suit with prejudice.Massey appeals.

ISSUE AND STANDARD OF REVIEW

¶ 5 Massey claims the district court erred in granting summary judgment to the Board on the basis of res judicata."`A trial court may properly grant summary judgment when "there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law."'"Snyder v. Murray City Corp.,2003 UT 13,-¶ 16, 73 P.3d 325(alteration in original)(quotingWebBank v. American Gen. Annuity Serv. Corp.,2002 UT 88, ¶ 10, 54 P.3d 1139(quotingUtah R. Civ. P. 56(c)))."`The propriety of a trial court's grant of summary judgment is a question of law.'"Id.(citation omitted)."`We thus review the trial court's legal conclusions for correctness, according them no deference.'"Id.(citation omitted).The "determination of whether res judicata bars an action presents a question of law[,]" which we review for correctness.Macris & Assocs. v. Neways, Inc.,2000 UT 93, ¶ 17, 16 P.3d 1214.

ANALYSIS

I.Choice of Law

¶ 6 As a preliminary matter, the Board asserts that because the first judgment against Massey was entered in federal court on an issue of federal law, "federal law must be applied in determining the preclusive effect of that judgment."Hence, the Board would have us apply the federal common law of res judicata instead of relying on Utah state common law.To support this proposition, the Board cites to United States Supreme Courtcase law, seeHeck v. Humphrey,512 U.S. 477, 488 n. 9, 114 S.Ct. 2364, 2373 n. 9, 129 L.Ed.2d 383(1994)("State courts are bound to apply federal rules in determining the preclusive effect of federal-court decisions on issues of federal law."), and case law from the Supreme Court of Kansas.SeeStanfield v. Osborne Indus., Inc.,263 Kan. 388, 949 P.2d 602, 608(1997)("[W]hile Kansas law does not appear to differ significantly from the federal law regarding the preclusion doctrines, the controlling authority in this case is federal law.").See alsoRestatement (Second) of Judgments§ 87(1982)("Federal law determines the effects under the rules of res judicata of a judgment of a federal court.").¹

¶ 7 In Utah, there is no case law clearly establishing the applicability of federal preclusion law to federal judgments in Utah state courts.²We conclude that the current majority and better-reasoned approach is to apply federal law.However, we emphasize that there will usually be no difference in outcome from applying Utah common law on res judicata.

II.Res Judicata

¶ 8 Under Utah law, "[t]he doctrine of res judicata serves the important policy of preventing previously litigated issues from being relitigated."Salt Lake City v. Silver Fork Pipeline Corp.,913 P.2d 731, 733(Utah1995)."The doctrine of res judicata embraces two distinct branches: claim preclusion and issue preclusion."Macris & Assocs. v. Neways, Inc.,2000 UT 93, ¶ 19, 16 P.3d 1214.This appeal involves claim preclusion."Generally, `claim preclusion bars a party from prosecuting in a subsequent action a claim that has been fully litigated previously.'"Miller v. USAA Casualty Insur. Co.,2002 UT 6, ¶ 58, 44 P.3d 663(quotingCulbertson v. Board of County Comm'rs,2001 UT 108, ¶ 13, 44 P.3d 642).

¶ 9 The "[f]ederal law of claim preclusion... requires: (1) a judgment on the merits in the earlier action; (2) identity of the parties or their privies in both suits; and (3) identity of the cause of action in both suits."Yapp v. Excel Corp.,186 F.3d 1222, 1226(10th Cir.1999).Massey concedes the identity of the parties.

¶ 10 Massey, in his brief, however, claims that his state suit is not based on the same cause of action litigated in the federal suit because "the claims are different in fundamental theory."³Neither federal law nor Utah law supports this assertion.

¶ 11"The Tenth Circuit Court of Appeals in Petromanagement Corp. v. Acme-Thomas Joint Venture,835 F.2d 1329(10th Cir.1988) adopted the transactional approach, advocated by the Restatement (Second) of Judgments 24 (1982)," to determine the identity of claims.Clark v. Haas Group, Inc.,953 F.2d 1235, 1237-38(10th Cir.1992).The federal approach bars claims not brought in the former action when the claims arise from a "`transaction, or series of connected transactions.'"Id. at 1238(quotingRestatement (Second) of Judgments§ 24(1982)).What constitutes a "transaction" or "series of transactions" is determined by "`giving weight to such considerations as to whether the facts are related in time, space, origin, or motivation, whether they form a convenient trial unit, and whether their treatment as a unit conforms to the parties' expectations or business understanding or usage.'"Id.(quotingRestatement (Second) of Judgments§ 24(1982)).

¶ 12 In this case, the federal court specifically stated in its memorandum decision granting the Board summary judgment that Massey's section 1983 claim was based on allegations that he was wrongfully terminated from his employment.SeeMassey v. Board of Trs.,No. 00-4037, 2001 WL 120438, 2001 U.S.App. LEXIS 2171(10th Cir.Feb. 13, 2001).Both the federal suit and the state suit clearly were based on the same facts— the termination of Massey's employment by the Board.The claims Massey brought in the state suit and the federal suit are unquestionably part of the same transaction; they are related in time, space, origin, and motivation, and form a convenient trial unit that any defendant could expect to be brought in one suit.We find it impossible to conclude otherwise.Hence, under federal law, the identity-of-claims prong of claim preclusion is satisfied.⁴Because Massey's wrongful termination claim under state law stems from the same claim as the section 1983 claim, Massey "could and should have brought [his state claims] in the prior suit."American Estate Man. Corp. v. International Inv. & Dev. Corp.,1999 UT App 232, ¶ 12, 986 P.2d 765.

¶ 13 Finally, Massey contends that the federal court's grant of summary judgment was not "on the merits" because the state-actor prong of section 1983 is a "threshold issue."We disagree.

¶ 14 In Gomez v. Toledo,446 U.S. 635, 100 S.Ct. 1920, 64 L.Ed.2d 572(1980), the United States Supreme Court definitively stated:

By the plain terms of [section]1983, two... allegations are required in order to state a cause of action under that statute.First, the plaintiff must allege that some person has deprived him of a federal right.Second, he must allege that the person who has deprived him of that right acted under color of state or territorial law.

Id. at 640, 100 S.Ct. at 1923.Hence, section 1983 claims require the plaintiff to prove two elements, one of which is state action.The Gomez court clearly did not view the state-actor prong as a mere "threshold issue."

¶ 15 In the case at hand, the federal court granted the Board summary judgment and dismissed Massey's section 1983 claim with prejudice.The federal court held that Massey failed to establish state action, one of two required elements a plaintiff must show when alleging a section 1983 claim.Previous to this ruling, the federal court granted the Board's motion to dismiss Massey's claims that the Board was improperly constituted and that the Board improperly interfered with the Committee's elections.⁵Hence, the grant of summary judgment determined on the merits that Massey had...