Bartlett v. Bartlett et al

Filing 83

MEMORANDUM AND ORDER, The Court GRANTS the defendants' motion for judgment on the pleadings, DISMISSES this case with prejudice, and DIRECTS the Clerk of Court to enter judgment accordingly. Signed by Judge J. Phil Gilbert on 3/8/2018. (jdh)

UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS
MARK BARTLETT,
Plaintiff,
v.

Case No. 3:17-cv-00037-JPG-SCW

JAMES BARTLETT, ANOOSH
MOTAMEDI, and MARK KEENAN,
Defendants.
MEMORANDUM & ORDER
J. PHIL GILBERT, DISTRICT JUDGE
The Racketeer Influenced and Corrupt Organizations Act makes it unlawful to participate
in the “conduct of [an] enterprise’s affairs through a pattern of racketeering activity . . . .” 18
U.S.C. § 1962(c). The plaintiff in this case alleges that his brother and a few co-conspirators
violated the Act by funneling resources away from the brothers’ joint cash-lending business. This
matter now comes before the Court on the defendants’ motion for judgment on the pleadings,
which argues that res judicata bars the complaint because the plaintiff already litigated this
dispute in New Mexico before splitting off his RICO claim and re-filing it here. (Doc. 71.)
Unfortunately for the plaintiff, “[t]hat is called ‘claim splitting,’ and is barred by the doctrine of
res judicata.” Carr v. Tillery, 591 F.3d 909, 913–14 (7th Cir. 2010). For the following reasons,
the Court GRANTS the defendants’ motion.
I.

BACKGROUND
Plaintiff Mark and defendant James (“Jim”) Bartlett are brothers. (Compl. ¶ 1, Doc. 1.)

As described more extensively in this Court’s order resolving the motion to dismiss, the two
jointly own nine cash lending stores. (See generally Doc. 66.) Mark manages five of them and
Jim manages four, with the two splitting the profits about 50/50. The central theme of this case is
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Mark’s allegation that Jim funneled resources away from Jim’s four stores into a new cashlending business. (Compl. ¶¶ 37–42, Doc. 1.) That way, Jim would no longer have to split any
profits with his brother. The scheme involved a number of corporations owned by Jim, his wife,
his son, and his business partner—Anoosh Motamedi. (Compl. ¶¶ 38–67, Doc. 1.) The last
defendant is Mark Keenan, an employee of Jim’s that apparently helped divert a number of
resources between the businesses. Mark brought his RICO claim against all five of these
individuals, but the Court dismissed Jim’s wife and son after the complaint failed to state a claim
against them. The Court allowed the RICO claims against Jim, Motamedi, and Keenan to
proceed under a theft of trade secrets theory.
This is not the first time, however, that Mark has told this tale. He has brought this same
series of facts before state courts in Florida and New Mexico. (Mot. for J. on the Pleadings 1,
Doc. 71.; Answer Ex. A, Doc. 70-1.) Jim also brought an action in New Mexico, and the New
Mexico courts consolidated the two cases into one. (Answer Ex. B, Doc. 70-2.) Mark agreed to
stay the Florida suit until the parties resolved the New Mexico dispute, which involved the two
brothers, Motamedi, and Dellano, LLC: the corporation that owned Jim’s new cash-lending
business.
The claims and counterclaims in the New Mexico case were numerous, including breach
of contract, breach of fiduciary duties, tortious interference with business expectancy, civil
conspiracy, and even a claim for injunctive relief to remove Jim as a managing member of the
stores. (Id.) But one of these claims stands out above the rest: Mark’s counterclaim under the
New Mexico Racketeering Act (N.M.S.A. § 30-42-1). (Id. at ¶¶ 51–62.) Curiously, that New
Mexico RICO claim was still pending when Mark filed the instant federal RICO claim in Illinois.

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A few days later, he voluntarily dismissed the New Mexico racketeering claim, effectively
splitting his case between two jurisdictions.
The New Mexico case did not end well for Mark Bartlett. First, the court dismissed with
prejudice the claims against Jim. (Answer Ex. C, Doc. 70-3.) Next, after a bench trial, the court
found that there was no good faith basis for Mark to have sued Motamedi or Dellano, LLC at all.
(Answer Ex. D, Doc. 70-4.) The New Mexico court entered a scathing final judgment on the
matter, followed by sanctions against Mark due to his willful bad-faith conduct during the case.
(Id.; Answer Ex. F, Doc. 70-6.) In the final judgment order, the court found that “Mark
threatened Mark Keenan and Jim that they were going to jail, that [Jim’s wife and son] were
going to jail, and that Mark had more money than they did and he will keep coming after them
until they are broke” (Id. at ¶ 81); “Mark called himself 'ruthless’ when engaged in litigation and
stated that he would pursue this litigation ‘all the way at any cost’” (Id. at ¶ 92); “Mark joined
Motamedi and [the corporation] in this litigation without probable cause” (Id. at ¶ 91);
“Motamedi had to take a second mortgage on his home and liquidate his savings to pay for this
litigation” (Id. at ¶ 91); “Mark has used his superior economic position to harm Motamedi and
Dellano by suing them in New Mexico and in Illinois” (Id. at ¶ 95); “Mark engaged in wrongful
acts were malicious, reckless, willful, wanton and/or in bad faith” (Id. at ¶ 98); and more.
Even though the New Mexico court’s final judgment should have ended this dispute,
Mark Bartlett’s federal RICO claim here has continued to truck along. Now, that truck has hit a
major roadblock, as the defendants have moved the Court to enter a judgment on the pleadings
on the basis of res judicata.
II.

LEGAL STANDARDS
i.

Judgment on the Pleadings

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A motion for judgment on the pleadings under Federal Rule of Civil Procedure 12(c) is
governed by the same standards as a Rule 12(b)(6) motion to dismiss: the pleadings must
plausibly suggest that the plaintiff has a right to relief above a speculative level. Adams v. City of
Indianapolis, 742 F.3d 720, 727–28 (7th Cir. 2014) (citing Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570 (2007); Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). When ruling on this type of
motion, the Court considers the complaint, answer, and any written instruments attached to those
pleadings; accepts all well-pleaded allegations in the complaint as true; and draws all inferences
in favor of the plaintiff. See Pisciotta v. Old Nat’l Bancorp, 499 F.3d 629, 633 (7th Cir. 2007);
Forseth v. Village of Sussex, 199 F.3d 363, 368 (7th Cir. 2000). “Determining whether a
complaint states a plausible claim for relief will . . . be a context-specific task that requires the
reviewing court to draw on its judicial experience and common sense.” Iqbal, 556 U.S. at 679.
ii.

Res Judicata

Res judicata, also known as claim preclusion, prevents parties from repeatedly suing each
other over the same claim. The doctrine is governed by the Full Faith and Credit Act, which
commands that federal courts must give a state court judgment the same preclusive effect that the
underlying state court would give the judgment. 28 U.S.C. § 1738; Haber v. Biomet, Inc., 578
F.3d 553, 556 (7th Cir. 2009); Licari v. City of Chicago, 298 F.3d 664, 666 (7th Cir. 2002).
Federal law and New Mexico law are “consistent on the general standards” of claim preclusion.
Potter v. Pierce, 2015-NMSC-002, ¶ 10, 342 P.3d 54, 57. These standards include four elements:
“(1) there was a final judgment in an earlier action, (2) the earlier judgment was on the merits,
(3) the parties in the two suits are the same, and (4) the cause of action is the same in both suits.”
Id. (citing Kirby v. Guardian Life Ins. Co. of Am., 2010–NMSC–014, ¶ 61, 148 N.M. 106, 231
P.3d 87).

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III.

ANALYSIS
The presence of res judicata in this case has not just been an elephant in the room since

the motion to dismiss stage; it has been an ape in the room, thrashing and screeching in an
attempt to break free. Now, the ape is loose. As the defendants have noted in their motion, this
case presents a “hornbook example both of the proper purpose and the proper application of res
judicata.” (Mot. for J. on the Pleadings 12, Doc. 71.)
i.

Final Judgment in the Earlier Action on the Merits

The first two elements of res judicata—(1) a final judgment in an earlier action that was
(2) decided on the merits—are easily satisfied. Under New Mexico law, an order qualifies as a
final judgment if it “fully disposed of the rights of the parties, and otherwise disposed of the
matter to the fullest extent possible.” Turner v. First New Mexico Bank, 2015-NMCA-068, ¶ 7,
352 P.3d 661, 664 (internal citations omitted). The cause of action must also have been “fully
and fairly litigated” in accordance with the due process rights of the parties. Id. (citing Federated
Dep't Stores, Inc. v. Moitie, 452 U.S. 394, 399 n. 3 (1981) (holding that an order resolving a
12(b)(6) motion to dismiss qualifies as a final judgment on the merits)). In Turner, the New
Mexico court held that even a trial court order dismissing a complaint without prejudice may
qualify as a final judgment on the merits for res judicata purposes. 352 P.3d at 664.
The New Mexico orders in the Bartlett case are unequivocally final judgments on the
merits. For the purposes of this case, there are at least three orders that qualify: the two orders
dismissing Mark’s claims with prejudice, and the final judgment order which concluded the case
and entered judgment in favor of the remaining parties. (Answer Ex. C, Doc. 70-3; Answer Ex.
D, Doc. 70-4.) These orders were undoubtedly on the merits, as they fully adjudicated and

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disposed of claims in the case. The Court assumes that the New Mexico court fairly adjudicated
these claims in accordance with due process, considering neither party has raised that issue here.
In rebuttal, Mark argues that these elements are not satisfied because his voluntary
dismissal of his state RICO claim does not operate as a final judgment on the merits. (Doc. 78,
pp. 8–9.) He cites a 1978 New Mexico appellate case in his favor—Christman v. Holland, 1978NMCA-087, ¶ 7, 92 N.M. 151, 152, 584 P.2d 198, 199—but that case does not help him. In
Christman, the New Mexico court held that two co-defendants in a foreclosure action who did
not bring cross-claims against each other were not later barred by res judicata from brining
claims against each other in a separate action relating to the foreclosure. The court explained that
since the prior lawsuits were settled prior to any final judgment, the cases never “adjudicate[d]
any issue of fact.”
Christman is easily distinguished from this case, considering the New Mexico trial court
adjudicated numerous facts related to the business dispute between the Bartletts. This is plainly
apparent from the two orders dismissing the claims against Jim with prejudice and the final
judgment order stating 20 pages of findings of fact and conclusions of law. Mark cannot avoid
this simply by arguing he voluntarily dismissed one of his claims during those proceedings and
brought that claim in another jurisdiction. That is a textbook example of claim-splitting.
ii.

Identity of Parties

The next element of res judicata requires that the parties or their privies in the two suits
are the same. Potter, 342 P.3d at 57. Three of the four parties in this case were also parties in the
New Mexico litigation: plaintiff Mark and defendants Jim and Motamedi. The only remaining
party is defendant Mark Keenan—meaning Keenan must be in privity with one of the other
parties for res judicata to apply. The New Mexico Supreme Court has adopted the Tenth

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Circuit’s flexible interpretation of whether two parties are in privity: it requires, “at a minimum,
a substantial identity between the issues in controversy and showing that the parties in the two
actions are really and substantially in interest the same.” Deflon v. Sawyers, 2006-NMSC-025, ¶
4, 139 N.M. 637, 640, 137 P.3d 577, 580, as corrected (June 29, 2006) (quoting St. Louis Baptist
Temple, Inc. v. FDIC, 605 F.2d 1169, 1174 (10th Cir. 1979)).
Here, Keenan is in privity with Jim and Motamedi because they are all co-conspirators.
Res judicata disputes predicated on co-conspirators are not common, and this Court cannot find
any New Mexico, 10th Circuit, or 7th Circuit cases specifically analyzing whether coconspirators are in privity with each other for this purpose. Moreover, neither party here has
cited to any such case, even though the defendants assert in their motion that co-conspirators
satisfy the “identity of parties” element. (Mot. for J. on the Pleadings 10, Doc. 71.) But since
New Mexico state courts have consistently held that “federal law and New Mexico law are not
divergent on claim preclusion doctrine,” it is instructive to look at how other federal courts have
resolved this issue. Deflon, 137 P.3d at 580.
In 2010, the First Circuit stated that co-conspirators are in privity with each other for res
judicata purposes. Airframe Sys., Inc. v. Raytheon Co., 601 F.3d 9, 17 (1st Cir. 2010). In
Airframe Systems, there was a dispute as to whether res judicata barred plaintiff Airframe from
bringing a copyright infringement claim against defense contractor Raytheon for the use and/or
possession of Airframe’s software source code. One of the central issues in the case was whether
Raytheon was in privity with L–3 Communications Corporation—a later owner of the source
code whom Airframe had already sued. Though the case did not involve a conspiracy, the First
Circuit panel (which included The Hon. David H. Souter, sitting by designation after his
retirement from the Supreme Court) unanimously stated:

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Whether a “close and significant relationship” exists between an
original defendant and a defendant only named in a later suit varies
with the facts. For instance, “where some alleged conspirators
are sued in the first (unsuccessful) action and the remainder in
a second suit based on the same allegations,” or where “a
government is sued first (unsuccessfully) and officers in their
personal capacities sued afterwards on the same theory,” courts
have held the later defendants could raise claim preclusion as a
defense.
Id. (emphasis added) (citing Negrón–Fuentes v. UPS Supply Chain Solutions, 532 F.3d 1, 8 (1st
Cir.2008)). In, Negrón–Fuentes, the First Circuit cited to a Third Circuit case: Gambocz v.
Yelencsics, 468 F.2d 837, 842 (3d Cir. 1972). Gambocz dealt with a fact pattern almost identical
to the instant case between the Bartletts. In Gambocz, the Third Circuit held:
We previously determined that the essential allegations of the
second complaint parallel those of the first. Moreover, what was
averred in the original action was a conspiracy participated in by
named individuals, and the sole material change in the later suit
was the addition of certain defendants, some of whom had been
named in the original complaint as participating in the conspiracy
but had not been named as parties defendant at that time. We
conclude that the relationship of the additional parties to the
second complaint was so close to parties to the first that the second
complaint was merely a repetition of the first cause of action.
Id.
The United States District Court for the District Columbia has explicitly adopted the
Gambocz approach. RSM Prod. Corp. v. Freshfields Bruckhaus Deringer U.S. LLP, 800 F. Supp.
2d 182 (D.D.C. 2011). In RSM Prod. Corp., the court was faced with an alleged conspiracy
involving the nation of Grenada, a petroleum company, and the law firm Freshfields Bruckhaus
Deringer U.S. LLP (“Freshfields”). Id. at 185–87. The pitfall of the plaintiff’s case there was that
it was their third time bringing it. The plaintiff attempted to circumvent res judicata by arguing
that Freshfields was not named as a defendant in the prior suits. Id. at 193. Their complaint,
however, alleged that the defendants in those prior suits were “Conspirators Who Are Not
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Named As Defendants” in the D.C. suit against Freshfields. Id. Accordingly, the D.C. court
rejected the plaintiff’s argument, holding that “[m]embers of a conspiracy are deemed under the
law to be in privity with each other.” Id. at 193. The D.C. court cited both the First Circuit’s
statement in Airframe Sys. and the Third Circuit’s holding in Gambocz in formulating their
decision. Id. at 193–94.
There is one recent case which declined to adopt the Gambocz theory: New York Pizzeria,
Inc. v. Syal, 53 F. Supp. 3d 962 (S.D. Tex. 2014). The facts of that case, however, are readily
distinguished from this case. In New York Pizzeria, the court was faced with claims that were
previously adjudicated, but the court noted that the plaintiff had technically not filed their lawsuit
twice. Id. at 970. Rather, the pizza company previously adjudicated their claims as counterclaims
to a suit in a forum that they did not choose. Id. Although this Court has strong doubts as to the
merits of the New York Pizzeria analysis, it is nevertheless distinguishable from this case
considering Mark Bartlett voluntarily brought lawsuits against Jim Bartlett in both New Mexico
and Florida, and his New Mexico claims functionally operated as counterclaims when the New
Mexico court consolidated the two pending New Mexico cases by Mark and Jim into one.
This Court adopts the Third Circuit’s holding in Gambocz and the D.C. Court’s holding
in RSM Prod. Corp: co-conspirators can be in privity with each other for res judicata purposes.
This holding is consistent with the jurisprudence underlying the Restatement (Second) of
Judgments, which is aimed to prevent parties from suing each other again and again and again
for the same cause of action. If a party brings a lawsuit against a few co-conspirators and loses,
there is no reason why he should be able to re-litigate that dispute against the winners simply by
tossing another party into the ring. Should the New England Patriots be entitled to a rematch of
their Super Bowl loss against the Philadelphia Eagles purely on the grounds that an injured

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Eagles player missed the Super Bowl, and is now healthy enough to play? Such an argument
defies reason. Claim preclusion “is a judicial creation ultimately intended to serve the interests of
justice.” Armijo v. City of Española, 2016-NMCA-086, ¶ 13, 382 P.3d 957, 961 (internal citation
omitted), and the Court would not be serving justice by allowing Mark Bartlett to re-litigate a
dispute that another court of competent jurisdiction already resolved and sanctioned him for.
Mark contests this interpretation. He asserts that the New Mexico court could not have
asserted personal jurisdiction over Keenan because Keenan is a resident of Illinois, so it is unfair
for the Court to have expected him to sue Keenan there. This is entirely unconvincing, especially
considering that Motamedi is also a resident of Illinois according to the complaint (Compl. ¶ 14),
yet Mark found a way to join Motamedi in the New Mexico litigation.
Turning to the record, the complaint makes it perfectly clear that Jim and Keenan were
co-conspirators in this dispute. First, the complaint starts by bluntly describing Keenan and Jim
as “co-conspirators.” (Compl. ¶ 16.) It then instructs that Jim “directed” Keenan—an employee
of the jointly-owned stores—to assist Motamedi with the management of Jim’s new stores.
(Compl. ¶ 80.) Next, the complaint states that Jim “directed” Keenan and Motamedi to tell
employees of Jim’s new store that it was a sister store of the jointly-owned stores. (Compl. ¶ 83.)
Jim also allegedly “directed” Keenan to dramatically decrease the number of loans made by the
joint stores. (Compl. ¶ 100.) Next, the complaint claims that Jim and Keenan “directed”
employees of the jointly-owned stores to refer customers to Jim’s new store. (Compl. ¶ 100.)
Finally, Jim and Keenan “further directed” employees of the jointly-owned stores to start
displaying business cards of Jim’s new store. (Compl. ¶ 103.) Since the two are co-conspirators,
there is an identity of parties here for res judicata purposes.
iii.

Same Cause of Action

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The fourth and final element of res judicata is “the cause of action is the same in both
suits.” Potter, 342 P.3d at 54. New Mexico uses the common “transactional test”—outlined in
the Restatement (Second) of Judgments §§ 24–25 (1982)—when evaluating this element. Id.
Under this test, two causes of action are the same when they arise out of a “common nucleus of
operative facts.” Id. (citing Anaya v. City of Albuquerque, 1996–NMCA–092, ¶ 8, 122 N.M. 326,
924 P.2d 735). The Court considers three factors when measuring the common nucleus: (1) how
the facts are related in “time, space, or origin”; (2) whether the facts form a convenient trial unit;
and (3) whether treating the facts as one unit conforms to the parties' “expectations or business
understanding or usage.” Id.
There is a common nucleus here. Mark argues that the New Mexico court only resolved
factual issues related to the diversion of customers and funds, while the instant case deals with a
theft of trade secrets claim predicated on the theft of customer lists, office forms, and borrowing
and lending protocols. (Doc. 78, pp. 11–12.) But this is a distinction without a difference. In the
final judgment order, the New Mexico court explicitly stated that “Mark has not been damaged
or suffered any injury because of any action by Dellano [the corporation] and/or Motamedi.”
(Answer Ex. D, ¶ 65, Doc. 70-4.) The court also found that neither Dellano, LLC or Motamedi
caused the jointly-owned stores to “transfer” or “divert” current customers to the new stores. (Id.
at ¶¶ 55–56.) Most importantly, the court held that “Mark [and the jointly-owned stores] have not
been damaged or suffered any injury because of the referral of customers between [the jointly
owned] and Dellano stores.” (Id. at ¶ 63.) If the New Mexico court conclusively held that Mark
has not suffered any injury from the referral of customers between the stores, then Mark cannot
recast his theory as a “theft” of customer lists because a court has already held that the supposed
theft did not result in any injury. Moreover, the New Mexico court stated that “Mark [and the

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jointly-owned stores] have not been damaged or suffered any injury due the sharing of business
expenses between [the jointly-owned stores] and Dellano stores” (Id. at ¶ 64), and surely
resources such as office forms fall within the general umbrella of “business expenses”. All of the
facts between these two cases are clearly related in “time, space, or origin.”
To end the fight, the defendants have delivered a final knock-out punch to Mark. Not
only are the facts in this case nearly identical to the facts in the New Mexico litigation, but Mark
Bartlett brought a state-law RICO claim in that case before he voluntarily dismissed it and split
his claims. (Answer Ex. B, ¶¶ 51–62, Doc. 70-2.) His New Mexico RICO claim was predicated
on the “illegal transfers of assets” between the stores (Id. at ¶ 60)—a claim suspiciously similar
to the claim in this case. This demonstrates that the facts form a convenient trial unit, considering
they actually did form a trial unit at one point. New Mexico courts have repeatedly held that res
judicata bars claims that a “plaintiff could and should have brought . . . in the former
proceeding.” Potter, 342 P.3d 54; see, e.g., Armijo 382 P.3d 960–61; Brooks Trucking Co. v.
Bull Rogers, Inc., 2006–NMCA–025, ¶ 10, 128 P.3d 1076, 1082; Mascarenas v. City of
Albuquerque, 2012–NMCA–031, ¶¶ 27–28, 274 P.3d 781. Mark Bartlett cannot avoid this by
splitting his claim between jurisdictions, then crying out that dismissal of one of the branches
does not conform to his “expectations.” (Doc. 78, p. 13.) “That is called ‘claim splitting,’ and is
barred by the doctrine of res judicata.” Carr v. Tillery, 591 F.3d 909, 913–14 (7th Cir. 2010).
CONCLUSION
For the foregoing reasons, the Court GRANTS the defendants’ motion for judgment on
the pleadings, DISMISSES this case with prejudice, and DIRECTS the Clerk of Court to enter
judgment accordingly.
IT IS SO ORDERED.

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DATED: MARCH 8, 2018
s/ J. Phil Gilbert
J. PHIL GILBERT
DISTRICT JUDGE

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