Schwartz v. US, Civ. No. Y-90-602.

• Decision Date: 30 August 1990
• Docket Number: Civ. No. Y-90-602.
• Parties: Irving T. SCHWARTZ v. UNITED STATES of America,
• Court: U.S. District Court — District of Maryland

745 F. Supp. 1132

Irving T. SCHWARTZ v. UNITED STATES of America,

Civ. No. Y-90-602.

United States District Court, D. Maryland.

August 30, 1990.

Ransom J. Davis, Baltimore, Md., for plaintiff.

Breckinridge L. Willcox, U.S. Atty. for the State of Md., and Jefferson M. Gray, Asst. U.S. Atty., Baltimore, Md., for defendant.

MEMORANDUM

JOSEPH H. YOUNG, Senior District Judge.

On February 23, 1990, Plaintiff, Irving T. Schwartz, filed a Complaint for Declaratory Judgment. Plaintiff seeks a declaration that the Order of Forfeiture entered pursuant to a final judgment in the criminal prosecution United States v. Mandel, et al., was void ab initio, and, on the basis of that determination and again in reference to the criminal case, Plaintiff seeks a declaration that the United States lacks the statutory authority to retain a void RICO forfeiture but instead holds the stock in trust for the rightful owner, Irving Schwartz. Defendant has filed a Motion to Dismiss Plaintiff's Complaint, Or In The Alternative, Motion for Summary Judgment on the ground that Plaintiff's complaint is barred by the doctrine of res judicata.

Although filed as a complaint, Plaintiff's Complaint For Declaratory Judgment is another creative attempt to influence this Court to vacate the Order of Forfeiture, March 24, 1984. The Court finds that Plaintiff's complaint is barred by res judicata and is, therefore, dismissed.

The pertinent facts are fully detailed in the Memoranda attached to the January 25, 1990 and March 27, 1990 Orders. Briefly, Plaintiff and Defendant entered into a settlement agreement whereby Plaintiff forfeited his claim to a property interest in 240,765 shares of stock. The parties entered into this settlement subsequent to the RICO convictions of a third party, Irvin Kovens, and other defendants in the case, United States v. Mandel, Criminal No. Y-75-0822. As a result of the Supreme Court's interpretation of the RICO statute, 18 U.S.C. § 1961 et seq., however, the convictions and forfeitures of each of the Mandel defendants became void ab initio. United States v. Mandel, 672 F.Supp. 864 (D.Md.1987), aff'd 862 F.2d 1067 (4th Cir. 1988).

In his prior two motions, Plaintiff sought to vacate the Order of March 26, 1984, which gave effect to the agreement between the two parties. This Court denied both motions in Orders issued on January 25, 1990 and March 27, 1990, finding that Plaintiff did not base his decision to enter into the settlement upon the judgment of conviction and forfeiture in United States v. Mandel, supra, since voided. On April 16, 1990, Plaintiff noted an appeal.

"Under the doctrine of res judicata, a judgment on the merits in a prior suit bars a second suit involving the same parties or their privies based on the same cause of action." Parklane Hosiery Co. v. Shore, 439 U.S. 322, 327 n. 5, 99 S.Ct. 645, 649 n. 5, 58 L.Ed.2d 552 (1979). See 1B J. Moore, J. Lucas & T. Currier, Moore's Federal Practice 0.4051 (1988) ("... in respect to the effect of a valid, final judgment, that such a judgment, when rendered on the merits, is an absolute bar to a subsequent action between the same parties or those in privity with them, upon the same claim or demand ..."). "The judgment puts an end to the cause of action, which cannot again be brought into litigation between the parties upon any ground whatever, absent fraud or some other factor invalidating the judgment." Comm'r v. Sunnen, 333 U.S. 591, 597, 68 S.Ct. 715, 719, 92 L.Ed. 898 (1948) (emphasis supplied). Therefore, dismissal of a complaint, on res judicata grounds, requires: 1) that a court of competent jurisdiction entered a valid final judgment on the merits in the earlier suit; 2) that the later suit alleges the same cause of action as the earlier suit; and, 3) that the parties to the later suit are the same as or in privity with those in the earlier suit¹. See Federated Dep't Stores v. Moitie, 452 U.S. 394, 398, 101 S.Ct. 2424, 2427, 69 L.Ed.2d 103 (1981). Because Plaintiff misconstrues the doctrine of res judicata, this Court will clarify the elements and how they bear on Plaintiff's present Complaint for Declaratory Judgment.

"A final judgment on the merits of an action precludes the parties or their privies from relitigating issues that were or could have been raised in that action." Allen v. McCurry, 449 U.S. 90, 94, 101 S.Ct. 411, 414, 66 L.Ed.2d 308 (1980); Cromwell v. County of Sac, 94 U.S. 351, 352, 24 L.Ed. 195 (1877). "A `judgment on the merits', as that phrase is used in conventional statement of the res judicata doctrine, is not necessarily a judgment based upon a trial of contested facts." 1B Moore's, supra, 0.4091.-2. Defendant maintains, and this Court agrees, that Plaintiff's declaratory action seeks the same relief sought in Plaintiff's Motion To Vacate Judgment and For Return of Forfeited Property filed October 10, 1989 in Irving T. Schwartz v. United States of America, Civil Action No. Y-81-350 and in Plaintiff's Amended Motion To Vacate Judgment and For Return of Forfeited Property filed by Plaintiff in the same action on February 21, 1990. This Court denied relief in Orders issued on January 25, 1990 and March 27, 1990. It is to these Orders that res judicata extends.²

Plaintiff argues that res judicata does not attach to these Orders since such Orders³ are not "judgments", nor are they "judgments on the merits". Plaintiff's Supplemental Brief (Pl.Supp.Br.) at 2-3.

Plaintiff contends that a "decision" and a "judgment" are two separate entities under the doctrine of res judicata. Pl.Supp.Br. at 2. Apparently, Plaintiff is of the belief that the orders issued denying Schwartz relief are "decisions" not "judgments" and accordingly, cannot be given res judicata effect. These two terms are commonly used interchangeably. Black's Law Dictionary 755 (5th ed. 1979). As Defendant notes, Fed.R.Civ.P. 54(a) defines "judgment" as it is used in "these rules, to include a decree and any order from which an appeal lies." Compare Dilly v. S.S. Kresge, 606 F.2d 62, 63 (4th Cir.1979) ("a final decision generally is one which ends the litigation on the merits and leaves nothing for the court to do but execute the judgment") with U.S. v. McWhirter, 376 F.2d 102, 104 (5th Cir.1967) ("`final judgment' is defined as one which terminates the action and leaves nothing to be done but the ministerial functions necessary to execute the judgment").

Plaintiff's argument that these Orders are not "judgments on the merits" is equally without merit. For the purpose of res judicata, a decision is "on the merits" if it is based "on the legal rights as distinguished from mere matters of practice, procedure, jurisdiction, or form." Fairmont Aluminum Co. v. Commissioner, 222 F.2d 622, 625 (4th Cir.), cert. denied, 350 U.S. 838, 76 S.Ct. 76, 100 L.Ed. 748 (1955); See also Clegg v. U.S., 112 F.2d 886, 887 (10th Cir.1940) ("`Merits' has been defined as `the real or substantial grounds of action or defense as distinguished from matters of practice, procedure, jurisdiction, or form.'"); See also Harper Plastics, Inc. v. Amoco Chemicals Corp., 657 F.2d 939, 943 (7th Cir.1981). As Defendant accurately states, this Court's denial of Plaintiff's motions to vacate, were on substantive, rather than technical or procedural grounds. Therefore, these Orders were "on the merits" satisfying the first element of res judicata.

Dismissing the complaint, under the res judicata doctrine, requires the claims to be identical. Parklane, supra. If "a single core of operative facts" forms the basis of both suits, then the present complaint must be dismissed. See Smith v. City of Chicago, 820 F.2d 916, 918 (7th Cir.1987). The settlement between the parties embodied in the Order of this Court dated March 26, 1984 and the subsequent granting of the writ of error coram nobis setting aside the convictions of the Mandel defendants as being void ab initio is the factual basis for both the motions to vacate and the present Complaint for Declaratory Judgment. Although Plaintiff continues to seek victory by changing the caption of each of his actions, "a mere change in legal theory does not create a new cause of action". 18 Wright, Miller & Cooper, Federal Practice and Procedure: Jurisdiction, 4407 at 63 (1981). See Smith, supra at 918; Cannon v. Loyola Univ., 784 F.2d 777, 780 (7th Cir.), cert. denied 479 U.S. 1033, 107 S.Ct. 880, 93 L.Ed.2d 834 (1987).

In Plaintiff's Motion to Vacate Judgment and For Return of Forfeited Property at 14-15, Irving T. Schwartz v. U.S. (No. Y-81-350), Plaintiff sought, inter alia, 1) to have the Court declare the agreement entered into on February 2, 1984 null and void, Plaintiff's Motion at 14, and 2) a court order awarding the full amount of the SMAA stock, previously declared forfeited to the United States, restored to Plaintiff as rightful owner or, alternatively, to award Plaintiff the full monetary value of the stock. Plaintiff's Motion at 15. In his Amended Motion to Vacate Judgment and Motion for Reconsideration in the same action, Plaintiff sought to have the Order of March 26, 1984 declared void under Rule 60(b)(4), arguing that the RICO forfeiture based upon a void conviction is void. Id. at 12-14.

By his present Complaint for Declaratory Judgment, it is obvious that Plaintiff is determined to be victor without considering judicial procedure. Here, Plaintiff seeks the same resolution, that the Order of Forfeiture in United States v. Mandel, et al. was void ab initio, and, on the basis of that determination and again in reference to the criminal case, Plaintiff seeks a declaration that the United States lacks the statutory authority to retain a void RICO forfeiture but instead holds the stock in trust for the rightful owner, Irving Schwartz. The common cause of action between the prior two motions and this suit is clear, the desire to seek relief from the March 24, 1984 Order.

Although Plaintiff readily admits that "the underlying subject of both...