ALLIANCE SHIPPERS, INC. v. BLUE LINE DISTRIBUTION, LTD.

Filing 22

LETTER OPINION. Signed by Judge William J. Martini on 7/22/10. (gh, )

-MF ALLIANCE SHIPPERS, INC. v. BLUE LINE DISTRIBUTION, LTD.

Doc. 22

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
M A R T I N LU T H E R KIN G JR . FED E R A L BLD G . & U . S . C O U R T H O U S E 5 0 W A L N U T STR E E T , P.O . BO X 419 N E W A R K , N J 07101-0419

[phone]

WILLIAM J. MARTINI JUDGE

L E T T E R OPINION

J u ly 22, 2010

R o n a ld Horowitz A tto rn e y At Law T in d a ll Professional Plaza 1 4 Tindall Road M id d le to w n , NJ 07748 (A tto r n e y for Plaintiff Alliance Shippers, Inc.) B e n ja m in S. Holzer F rie d m a n Kaplan Seiler & Adelman O n e Gateway Center 2 5 th Floor N e w a rk , NJ 07102 (A tto r n e y for Defendant Blue Line Distribution Ltd.)

RE:

A llia n c e Shippers, Inc. v. Blue Line Distribution, Ltd. C iv . No. 09-6243 (WJM)

D e a r Counsel: T h is matter comes before the Court on Defendant Blue Line Distribution, Ltd.'s (" B lu e Line's") motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). Plaintiff Alliance Shippers, Inc. ("Alliance") opposes this motion. There was no oral

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argument. Fed. R. Civ. P. 78. For the reasons stated below, Defendant's motion is GRANTED.

I.

BACKGROUND

P la in tif f Alliance, a New Jersey corporation and Defendant Blue Line, a Canadian c o rp o ra tio n , entered into a written agreement whereby Alliance would help Blue Line w ith its shipping needs. (Compl. ¶ 3, ECF No. 1.) Both sides were unsatisfied with the p e rf o rm a n c e of the other party, and on November 5, 2008, Blue Line filed suit against A llia n c e in the Canadian Court system for breach of contract ("the Ontario Action"). (Holzer Decl., Ex. A ¶ 5, 15, ECF No. 12.) Shortly thereafter, Alliance commenced a separate suit in New Jersey Superior C o u rt ("the State Court Action"), which named Blue Line as a defendant. (Id. at Ex. A ¶ 3 2 ,4 6 , Ex. C at Counts One-Five, ECF No. 12.) Blue Line moved to dismiss the State C o u rt Action on comity grounds.1 (Id. at Ex. E at 5.) Alliance opposed the motion, and p re s e n te d numerous arguments in support of its opposition. (See id. at Ex. E.) In its July 3 1 , 2009 recorded opinion, the New Jersey Superior Court found that: "the [Ontario and S ta te Court] actions are substantially similar as to parties, claims and issues. The claims a rise out of the contract between Blue Line and Alliance. [And t]he issue is the same in th e New Jersey case as in the Canadian case." (Id. at 10.) Accordingly, the Superior C o u rt dismissed the State Court Action on comity grounds in favor of the earlier filed O n ta rio Action. (Id. at Ex. D.) On October 12, 2009, Alliance moved for reconsideration o f the Superior Court's dismissal (Id. at Ex. F), which was denied on November 13, 2009, a f te r the Superior Court heard oral argument. (Id. at Ex. G.) O n December 12, 2009, one month after its motion for reconsideration was denied in Superior Court, Alliance filed the present suit in District Court. In the present suit, B lu e Line is the only named defendant, and Alliance asserts claims against Blue Line a risin g from the same contractual dispute that was the subject of the State Court Action. (Compl. at Count One ¶ 5, Count Four ¶ 2.) In short, the present complaint is f u n c tio n a lly identical to the State Court Action. In fact, there are several passages in the p re s e n t complaint which are verbatim copies of passages in the State Court Action's c o m p la in t. (See Def.'s Br. p. 7, ECF No. 12.)

Principles of international comity permit a court, in its discretion, to dismiss or stay a case in deference to a parallel foreign proceeding. Lexington Ins. Co. v. Forrest, 263 F.Supp.2d 986, 1002 (E.D.Pa. 2003). 2

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II.

DISCUSSION

B e f o re the Court now is Defendant Blue Line's motion to dismiss. By way of this m o tio n , Blue Line has properly raised the defense of res judicata.2 The Connelly Found. v . School Dist. Of Haverford Twp., 326 F.Supp. 241 (E.D. Pa. 1971) aff'd 461 F.2d 495 (3 d Cir. 1972). A. T h e Doctrine of Res Judicata

W h e n a prior case has been adjudicated in state court, federal courts must give full f a ith and credit to the state court's judgment. 28 U.S.C. § 1738; Balthazar v. Atlantic City M e d . Ctr., 279 F.Supp.2d 574, 584 (D.N.J. 2003). The doctrine of res judicata embodies th is principal and bars re-litigation of an issue that has already been determined on the m e rits by a court of competent jurisdiction. Balthazar at 585. In order for res judicata to a p p ly, there must [1] be a valid, final judgment on the merits in the prior action, [2] the s a m e parties in both actions, and [3] the claim in the second action must arise out of the s a m e transaction as the claim in the first action. United States v. 5 Unlabled Boxes, 572 F .3 d 169, 173 (3d Cir. 2009); EEOC v. United States Steel Corp., 921 F.2d 489, 493 (3d C ir. 1990). A llia n c e does not dispute that the State Court Action and the present suit involve th e same parties and arises out of the same contractual disagreement that was the subject o f the State Court Action. The only argument Alliance presents for why res judicata s h o u ld not bar this court from hearing the present action is that the Superior Court's d is m is s a l was without prejudice, and therefore, was not a valid final judgment on the m e rits . (Pl.'s Letter Br., ECF No. 19 (emphasis in original).) A llia n c e contends that because the State Court Action was dismissed on comity g ro u n d s , Alliance's substantive contractual claims were never decided, and accordingly, th is was not a final adjudication on the merits. Id. Alliance's contention is misplaced. A ju d g m e n t will be "on the merits" if a claim is decided after trial of the substantive issues u n d e rlyin g that claim. See, e.g. Keith v. Itoyama, No. 06-424, 2006 WL 3069481 at *14

There is often confusion as to the precise definitions of res judicata and collateral estoppel. To clarify, the term res judicata, when used narrowly refers to claim preclusion; the term collateral estoppel, on the other hand, customarily refers to issue preclusion. For the purposes of this Letter Opinion, the Court intends that use of the term res judicata be understood as encompassing both claim and issue preclusion, the preferred usage of that term in this Circuit. United States v. 5 Unlabled Boxes at 173-174. 3

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(D.N.J. Oct. 27, 2006) (citations omitted). Alliance's contract claims were never decided in the State Court Action because prior to adjudicating those claims, the parties litigated th e threshold issue of whether the doctrine of comity precluded the Superior Court from h e a rin g the case in light of the pre-existing Ontario Action. Ahead of the Superior C o u rt's recorded opinion dismissing the matter, both parties filed motion papers on the is su e of comity. Plaintiff then filed a motion for reconsideration, which the Superior C o u rt denied following oral argument and additional briefing. In short, Alliance had a f u ll and fair opportunity to litigate that issue in Superior Court. On these facts, the S u p e rio r Court considered the substantive issues of whether to apply the doctrine of c o m ity, and its dismissal was clearly on the merits. Accordingly, the Court must give f u ll faith and credit to the Superior Court's judgment. That Alliance is unsatisfied with th e result in the State Court Action does not entitle it to now bring the same matter to f e d e ra l court and hope for a better result. See, Montana v. United States, 440 U.S. 147, 1 5 3 -1 5 4 (1979). That the Superior Court's dismissal was without prejudice does not c h a n g e this Court's analysis. See, e.g. Kitches v. Wood, 917 F.Supp. 338, 341 (D.N.J. 1 9 9 6 ). III. C O N C L U S IO N

F o r the foregoing reasons, Defendant's motion to dismiss is GRANTED and P la in tif f s ' Complaint is dismissed in its entirety with prejudice. Dismissal with prejudice is warranted here because no set of amended pleadings would cure the preclusive effect o f the Superior Court's decision on the threshold issue of comity. See In re Burlington C o a t Factory Litig., 114 F.3d 1410, 1434 (3d Cir. 1997) (stating that amendment is d e e m e d "futile" where the complaint, as amended, would fail to state a claim upon which re lie f could be granted."). An Order accompanies this Letter Opinion.

/s/ William J. Martini WILLIAM J. MARTINI, U.S.D.J.

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