Paul Preston, et al v. Mariner Health Care Management

Filing

Paul Preston, et al v. Mariner Health Care Management

Doc. 0

Case: 10-30108

Document: 00511187132

Page: 1

Date Filed: 07/28/2010

IN THE UNITED STATES COURT OF APPEALS United States Court of Appeals FOR THE FIFTH CIRCUIT Fifth Circuit FILED
July 28, 2010 N o . 10-30108 S u m m a r y Calendar Lyle W. Cayce Clerk

P A U L G. PRESTON; PRESTON LAW FIRM, L.L.C., P la in t if f s ­ A p p e lle e s , v. M A R I N E R HEALTH CARE MANAGEMENT COMPANY, doing business as M a r in e r Health Care, D e fe n d a n t ­ A p p e lla n t .

A p p e a l from the United States District Court fo r the Eastern District of Louisiana U S D C No. 2:09-CV-7005

Before GARZA, CLEMENT, and OWEN, Circuit Judges. P E R CURIAM:* M a r in e r Health Care Management Company (Mariner) appeals the d is t r ic t court's grant of summary judgment in favor of Paul Preston and Preston L a w Firm, L.L.C. (jointly, Preston). Mariner argues that the district court erred w h e n it found that Mariner's claims were barred by the doctrine of res judicata. We affirm.

Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4.

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Dockets.Justia.com

Case: 10-30108

Document: 00511187132

Page: 2

Date Filed: 07/28/2010

No. 10-30108 I T h is suit arises from a dispute between Mariner and Preston over legal fe e s owed to Preston. Preston incurred fees of $1,944,600.92 for legal services r e n d e r e d to Mariner. After Preston became concerned about the late payment o f the fees, the parties entered into negotiations over the fees. Mariner claims t h a t these negotiations culminated in an agreement to reduce the fees by $ 4 4 4 ,6 0 0 .9 2 , while Preston claims that the discount was intended to be t e m p o r a r y . In the ensuing months, Mariner paid $1.5 million to Preston but fa ile d to pay the remaining balance. Eventually, Preston filed suit against M a r in e r for the unpaid portion of the fees. Mariner argued that Preston had a g r e e d to accept $1.5 million as satisfaction of the entire debt. The district court in that suit found that the fee reduction was "a temporary reduction at best" and t h a t there was "no mutual understanding . . . between the parties that the [a g r e e m e n t ] was in full and final satisfaction, compromise, or settlement of the a m o u n t owed." $ 4 4 4 ,6 0 0 .9 2 . After the district court's final judgment in that case, Mariner sent Preston a letter notifying it of Mariner's intention to file a lawsuit asserting claims of fr a u d , breach of fiduciary duty, and legal malpractice with regard to the fee n e g o t ia t io n s . Mariner asserted that Preston fraudulently did not inform it that L o u is ia n a law requires compromises to be reduced to writing. In response, Preston filed this suit, requesting a declaratory judgment that t h e fraud, breach of fiduciary duty, and legal malpractice claims raised by M a r in e r were barred by res judicata. The district court granted Preston's motion fo r summary judgment, and Mariner now appeals. Therefore, the district court found in favor of Preston for

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Case: 10-30108

Document: 00511187132

Page: 3

Date Filed: 07/28/2010

No. 10-30108 II W e review a district court's grant of a motion for summary judgment de n o v o , applying the same standard as the district court.1 We view the evidence i n the light most favorable to the non-moving party and avoid credibility d e t e r m in a t io n s and weighing of the evidence.2 Summary judgment is

a p p r o p r ia te when there are no genuine issues of material fact and the moving p a r ty is entitled to judgment as a matter of law.3 An issue of material fact is g e n u in e if a reasonable jury could return a verdict for the non-moving party.4 III U n d e r the doctrine of res judicata, "a final judgment on the merits of an a c t io n precludes the parties or their privies from relitigating issues that were or c o u ld have been raised in that action."5 Res judicata "insures the finality of ju d g m e n t s and thereby conserves judicial resources and protects litigants from m u lt ip le lawsuits."6 Res judicata bars a claim if four elements are met: "(1) the p a r tie s must be identical in the two actions; (2) the prior judgment must have b e e n rendered by a court of competent jurisdiction; (3) there must be a final ju d g m e n t on the merits; and (4) the same claim or cause of action must be

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Threadgill v. Prudential Sec. Grp., Inc., 145 F.3d 286, 292 (5th Cir. 1998). Sandstad v. CB Richard Ellis, Inc., 309 F.3d 893, 896 (5th Cir. 2002). Brumfield v. Hollins, 551 F.3d 322, 326 (5th Cir. 2008). Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Allen v. McCurry, 449 U.S. 90, 94 (1980). United States v. Shanbaum, 10 F.3d 305, 310 (5th Cir. 1994).

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Case: 10-30108

Document: 00511187132

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Date Filed: 07/28/2010

No. 10-30108 in v o lv e d in both cases."7 In order to determine whether two complaints involve t h e same cause of action, a court must apply the "transactional test." 8 The t r a n s a c t io n a l test is satisfied if the two actions are based on the "same nucleus o f operative facts."9 If the four elements of res judicata are met, a party is p r o h i b it e d "from raising any claim or defense in the later action that was or c o u ld have been raised in support of or in opposition to the cause of action a s s e r t e d in the prior action." 1 0 O n appeal, Mariner argues that the district court erred when it found that M a r in e r 's claims for fraud, breach of fiduciary duty, and legal malpractice were b a r r e d by the doctrine of res judicata. Mariner asserts that these claims were n o t before the district court in the original action because Mariner did not d is c o v e r the basis of these claims until the trial testimony of a former Preston p a r tn e r . According to Mariner, this testimony revealed that Preston engaged in a "complex scheme" to defraud Mariner by failing to inform Mariner rep re s e n t a t iv e s that unwritten compromises are unenforceable under Louisiana la w . Because there was no opportunity for Mariner to present these claims in t h e original suit, Mariner argues that res judicata does not apply to the claims h ere. Mariner's arguments are unconvincing. Regardless of whether Preston in fo r m e d Mariner about the formalities of compromise under Louisiana law,

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In re Ark-La-Tex Timber Co., 482 F.3d 319, 330 (5th Cir. 2007). Agrilectric Power Partners, Ltd. v. Gen. Elec. Co., 20 F.3d 663, 665 (5th Cir. 1994). Id. Shanbaum, 10 F.3d at 310.

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Case: 10-30108

Document: 00511187132

Page: 5

Date Filed: 07/28/2010

No. 10-30108 M a r in e r 's claims are premised on the fact that both parties agreed to a reduction in fees. The district court in the original suit expressly found that no such a g r e e m e n t occurred. As the district court in that case stated, there was "no m u t u a l understanding . . . between the parties that the [agreement] was in full a n d final satisfaction, compromise, or settlement of the amount owed." Therefore, the writing requirement was irrelevant because the parties did not a g r e e to a fee reduction. The claims here, then, are based on the "same nucleus o f operative facts,"1 1 and thus res judicata bars Mariner from asserting those c la im s . M a r in e r also argues that the district court in the original action did not e n te r a final judgment on the merits for Mariner's claims for fraud, breach of fid u c ia r y duty, and legal malpractice since such claims were not before the court. This argument confuses the third and fourth prongs of the res judicata test and is more properly classified as an argument with regard to the fourth e le m e n t -- w h e t h e r the same claim or cause of action was involved in both cases. The district court's judgment in the original action was clearly a final judgment o n the merits.

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F o r the foregoing reasons, we AFFIRM.

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Agrilectric Power Partners, 20 F.3d at 665.

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