St. Paul Mercury Ins v. Williamson, 97-31143

Citation224 F.3d 425
Decision Date17 August 2000
Docket NumberNo. 97-31143,N,No. 98-31243,97-31143,98-31243
Parties(5th Cir. 2000) ST. PAUL MERCURY INSURANCE CO., Plaintiff-Counter Defendant-Appellee, v. ROBERT T. WILLIAMSON; SONYA WILLIAMSON; ARLONE BELAIRE, Defendants-Counter Claimant-Appellants, v. RICHARD VALE; HAYNES BEST WESTERN OF ALEXANDRIA, INC.; H. L. HAYNES; MRS. H. L. HAYNES; BEST WESTERN INTERNATIONAL, INC.; AMERICAN GENERAL FIRE AND CASUALTY CO.; MARYLAND CASUALTY CO., Counter Defendants-Appellees. ROBERT T. WILLIAMSON; SONYA WILLIAMSON; ARLONE BELAIRE, Plaintiffs-Appellants, v. RICHARD VALE; ET AL., Defendants, RICHARD VALE; HAYNES BEST WESTERN OF ALEXANDRIA; BEST WESTERN INTERNATIONAL, INC.; H. L. HAYNES; H. L. HAYNES; AMERICAN GENERAL FIRE AND CASUALTY; MARYLAND CASUALTY CO.; ST. PAUL MERCURY INSURANCE COMPANY; H.L. & H. HOLDING CO.; Defendants-Appellees. ST. PAUL MERCURY INSURANCE COMPANY, Plaintiff-Appellant, v. ROBERT T. WILLIAMSON; ET AL., Defendants, ROBERT T. WILLIAMSON; ARLONE BELAIRE; SONYA J. WILLIAMSON, Defendants-Appellees. ROBERT T. WILLIAMSON; SONYA WILLIAMSON; ARLONE BELAIRE, Plaintiffs-Appellees, v. RICHARD VALE; ET AL., Defendants, ST. PAUL MERCURY INSURANCE COMPANY, Defendant-Appellant. ST. PAUL MERCURY INSURANCE CO.; HAYNES BEST WESTERN OF ALEXANDRIA, INC.; BEST WESTERN INTERNATIONAL, INC.; H. L.HAYNES; H. L. HAYNES, Mrs.; H & L HOLDING CO.; AMERICAN GENERAL INSURANCE CO.; RICHARD S. VALE; MARYLAND CASUALTY CO., Plaintiffs-Appellees, v. SONYA WILLIAMSON, Individually and on behalf of her minor children, ROBERT T. WILLIAMSON, Individually and on behalf of his minor children; LAWRENCE J. SMITH, Defendants-Appellants. o. 98-30001 and
CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)

Appeals from the United States District Court for the Western District of Louisiana

Before JONES, DeMOSS and DENNIS, Circuit Judges.

DeMOSS, Circuit Judge:

In these three consolidated appeals, we confront a convoluted set of facts and issues arising from the unfortunate litigiousness of the parties involved. Despite hopes that the cycle of litigation would end here today, we must conclude that the district court erred in various aspects of its rulings and that resolution of these cases must await another time.

I. BACKGROUND

In March of 1990, Sonya Williamson ("Sonya") individually and Robert Williamson ("Robert"), on behalf of their children, filed suit in state court against various individuals and entities including St. Paul Mercury Insurance Company ("St. Paul") (collectively the "insurance parties") for injuries suffered by Sonya at the Haynes Best Western of Alexandria. On September 26, 1994, the jury in this state case returned two findings: (1) Sonya had sustained injuries at the motel on July 21, 1989; and (2) the insurance parties had proved by a preponderance of the evidence that the incident of July 21, 1989, was a result of a staged accident or fraud. Judgment was entered in favor of the insurance parties. On January 29, 1997, the Louisiana Fourth Circuit Court of Appeal affirmed the jury's verdict. See Williamson v. Haynes Best Western, 688 So. 2d 1201 (La. Ct. App. 1997). The Louisiana Supreme Court denied the Williamsons' applications for writs on June 20, 1997. See Williamson v. Haynes Best Western, 695 So. 2d 1355 (La. 1997).

On November 4, 1993, during the pendency of the state trial, St. Paul filed suit in federal court against Robert, Arlone Belaire,1 and Seahorse Farms (collectively with Sonya and with or without Seahorse Farms as the "Williamsons"), alleging violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1961-68, and state law claims for fraud and conspiracy. St. Paul later amended the complaint on December 12, 1994, to include Sonya as a defendant. The complaint essentially alleged that the Williamsons have a lengthy history of making fraudulent insurance claims and that they staged the electrocution that supposedly injured Sonya at the motel.

On September 25, 1996, the Williamsons counterclaimed and simultaneously initiated an action in the same federal district court, which was ultimately consolidated with St. Paul's suit. They asserted various RICO and state law claims against the insurance parties. In general, their counterclaims alleged that the fraud defense asserted by the insurance parties in Sonya's state court personal injury trial, and which ultimately formed the basis for recovery in St. Paul's federal suit, was itself fraudulent.

On October 22, 1997, the district court granted summary judgment in favor of St. Paul and the other counter-defendants on the Williamsons' counterclaims. See St. Paul Mercury Ins. Co. v. Williamson, 986 F. Supp. 409 (W.D. La. 1997). It further dismissed St. Paul's RICO claims against the Williamsons on October 30, 1997.

Subsequent to the district court's dismissal of St. Paul's RICO claims, St. Paul orally dismissed Robert, Arlone, and Seahorse Farms from the lawsuit at the final pretrial conference, held on October 31, 1997. With those dismissals, the only remaining matters were St. Paul's state law claims for fraud and conspiracy against Sonya. At the pretrial conference, the district court appeared to conclude that the state court jury finding of fraud was res judicata as to St. Paul's state law fraud claim.2 It induced Sonya's counsel to admit that with the dismissal of the other Williamson litigants, there existed the requirements for res judicata under Louisiana law.

Sonya's counsel, however, contended that the fraud and conspiracy claims had prescribed. He was given the opportunity to file a motion for summary judgment on that issue, which he did on November 5, 1997. St. Paul responded to that motion on November 7, 1997, six days prior to trial. That response for the first time specifically mentioned a malicious prosecution claim. Sonya filed a reply to the response on the same day.

On November 11, 1997, the district court denied Sonya's motion for summary judgment based on prescription. But instead of addressing whether the fraud and conspiracy claims had prescribed, the district court's order focused on whether St. Paul's complaint provided Sonya with notice of the operative facts underlying a malicious prosecution claim. While acknowledging that St. Paul did not expressly allege the legal theory of malicious prosecution, the district court found that St. Paul's complaint gave adequate notice of that claim for purposes of Rule 8 of the Federal Rules of Civil Procedure.

Thereafter, on November 13, 1997, the district court ruled that the trial would proceed solely on the issue of damages. Sonya objected and asked for a continuance, which was denied. The jury returned a damages award against Sonya in the amount of $411,166.56.

While the federal suit was proceeding before the district court, Sonya and her children, through their father Robert, filed a petition in state court in November 1995, to nullify the prior state court judgment finding that Sonya's injuries were the result of a staged accident or fraud pursuant to Louisiana Code of Civil Procedure article 2004.3 The petition alleged ill practices by the insurance parties in concealing the defects on the motel's premises and in presenting false testimony from motel employees regarding the condition and alteration of the electrical fixtures. The nullification case sat dormant during the pendency of the federal suit initiated by St. Paul. But in March of 1998, Sonya and the children filed a third supplemental and amending petition in state court, reviving the nullification suit.

On September 9, 1998, St. Paul and the other insurance parties filed a complaint in federal court to enjoin the nullification action. They argued that Sonya and the children's nullification petition was an attempt to relitigate the prior federal court judgment dismissing the Williamsons' counterclaims. Among the counterclaims had been allegations concerning the condition of the electrical fixtures and the insurance parties' representations of the motel's premises. A hearing was held on the injunction on October 5, 1998. On October 16, 1998, the district court preliminarily enjoined Sonya, Robert, their children, and their attorney Lawrence J. Smith, from pursuing the nullification action in state court, pending the resolution of the appeal of the federal case.

II. DISCUSSION

In these consolidated appeals, the various parties raise an assortment of issues. In appeal No. 97-31143, the Williamson litigants challenge the district court's apparent directed verdict/summary judgment order concluding that the state court jury finding of fraud was res judicata as to the liability portion of St. Paul's malicious prosecution claim, its decision to strike all of Sonya's defenses to that malicious prosecution claim, the sufficiency of the evidence to support the jury's damages verdict, certain evidentiary rulings by the district court, and its summary judgment order dismissing their counterclaims. In appeal No. 98-30001, St. Paul contests the district court's summary judgment order dismissing its RICO claims against the Williamsons. And in appeal No. 98-31243, Sonya, Robert, their children, and their attorney Smith assert that the district court erred in enjoining the nullification suit pending in Louisiana state court. We review each of these appeals in turn.

A. Appeal No. 97-31143

In this appeal, one of Sonya's major contentions is that the district court improperly determined that the state court jury's finding of a staged accident or fraud was res judicata as to the liability portion of St. Paul's malicious prosecution claim. She offers both a procedural and a substantive reason for reversing the district court's ruling. Procedurally, she notes that the district court allowed St. Paul to proceed on the...

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