Elling v. Cai et al
MEMORANDUM OPINION AND ORDER by Magistrate Judge Jerry H. Ritter granting 33 Motion for Judgment on the Pleadings; finding as moot 44 Motion for Preliminary Injunction; finding as moot 51 Motion to Stay. (mlt)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO
CV 20-0306 JHR/JFR
HONG CAI, ROBERT BRUCE CARY, a/k/a
R. BRUCE CARY, a/k/a ROBERT CARY,
MESA BIOTECH, INC.,
MESA TECH INTERNATIONAL, INC.,
MEMORANDUM OPINION AND ORDER
This matter comes before the Court1 on Defendants’ Motion for Judgment on the Pleadings
[Doc. 33], filed July 9, 2020 and fully briefed on August 12, 2020. [Docs. 38, 41]. Also pending
is Plaintiff John Elling’s Motion for a Preliminary Injunction [Doc. 44], filed January 22, 2021,
and fully briefed on February 19, 2021 [Docs. 46, 48] and Defendants’ Motion to Stay Discovery
Pending Ruling on their Motion. [Doc. 51]. At issue for judgment on the pleadings is whether the
result of Elling’s earlier lawsuit [Memorandum Opinion and Order Granting Defendants’ Motion
for Summary Judgment, CV 19-0547 LF/SCY (“Elling I”), Doc. 61] and the doctrine of res judicata
preclude his claims in this lawsuit (“Elling II”). For the reasons that follow, the Court agrees with
Defendants that Elling’s claims are barred because both suits arise out of a common nucleus of
operative fact involving Defendants Cai and Cary’s alleged mishandling of company affairs from
2010 to the present. After analysis of the elements of res judicata, the Court grants Defendants’
Motion for Judgment on the Pleadings [Doc. 33] and will enter a separate Judgment dismissing
The parties consented to the undersigned United States Magistrate Judge conducting dispositive proceedings in
this matter and entering final judgment. [Docs. 9, 18, 19]; 28 U.S.C. § 636(c); Fed. R. Civ. P. 73(b).
Elling’s Amended Complaint with prejudice. There being no viable suit, Elling’s Motion for a
Preliminary Injunction [Doc. 44] and Defendants’ Motion to Stay [Doc. 51] are denied as moot.
This is the second lawsuit John Elling has initiated against Defendants Hong Cai and
Robert Cary, his former business partners and the majority shareholders of the entity now known
as Mesa Biotech, Inc., for alleged breaches of fiduciary duties and shareholder oppression resulting
from actions taken by Cai and Cary since the parties agreed Elling would resign from the
company’s board of directors. [Compare John Elling’s Verified Complaint for Breach of Fiduciary
Duty, Shareholder Oppression, and Breach of Contract (Elling I), Doc. 1-1 with John Elling’s
First Amended Complaint for Breach of Fiduciary Duty, Aiding and Abeting [sic] Breach of
Fiduciary Duty, & Shareholder Oppression, (Elling II), Doc. 3]. In Elling I, Plaintiff came to
believe that Cai and Cary had been self-dealing by granting themselves additional stock options in
2014 and 2018 allegedly in violation of a 2012 Equity Incentive Plan. [Doc. 3, pp. 3-4]. Elling did
not seek to amend his complaint in Elling I but instead filed a new case, Elling II, and sought
dismissal of the first case or its consolidation into the second to accomplish a de facto amendment
of his original pleadings notwithstanding the expiration of his deadline to amend in Elling I. [See
Memorandum Opinion and Order Denying Plaintiff’s Amended Motion for Voluntary Dismissal
by Order of Court or, Alternatively, to Consolidate, CV 19-0547 LF/SCY, Doc. 60].
Elling reasons that he had no duty to amend in Elling I because it addressed only his lack
of access to information about the company, while Elling II presents the “merits” of his claims.
[See generally Plaintiff John Elling’s Response in Opposition to Defendant’s Motion for Judgment
on the Pleadings, Doc. 38]. The Court in Elling I disagreed, finding that once Defendants had
completed discovery and moved for summary judgment, to negate that effort by dismissing Elling
I and forcing them to resume their defense in a new case would be prejudicial. [See CV 19-0547
LF/SCY, Doc. 60, p. 5]. The Court in Elling I resolved the case when it simultaneously denied
dismissal or consolidation and granted summary judgment against Elling. [CV 19-0547 LF/SCY,
Docs. 60 & 61].
Defendants now ask that Elling be precluded from prosecuting this case. [See generally
Docs. 30, 41]. Having compared the pleadings in both cases through the lens of res judicata, the
Court concludes that the claims in Elling II are precluded because the parties are the same and
there was a final judgment on the merits of the claims Elling raised in Elling I, which themselves
arose from the same operative factual transactions at issue here and which Elling should have
known would be precluded under clearly established law. Noting that he became aware of the basis
of the new claims before the end of discovery in Elling I yet he failed to ask that Court to find
good cause to allow him to amend his pleadings, I reject Elling’s argument that he was denied a
full and fair opportunity to raise and litigate these claims.
A motion for judgment on the pleadings provides a mechanism by which the court may
dispose of a case or a claim as a matter of law. Lexon Insurance Company v. Cooperative
Educational Services, 2021 WL 1145160, at *1 (D.N.M. Mar. 25, 2021) (citing Fed. R. Civ. P.
12(c)); Selman v. Delta Airlines, 2008 WL 6022017, at *7 (D.N.M. Aug. 13, 2008) (“A Rule 12(c)
motion is designed to provide a means of disposing of cases when the material facts are not in
dispute between the parties.”). While the Court must generally refer only to the pleadings when
analyzing whether a case is subject to dismissal under Rule 12(c), it may take judicial notice of its
own files and records, as well as facts that are matters of public record. Grynberg v. Koch Gateway
Pipeline Co., 390 F.3d 1276, 1279 n.1 (10th Cir. 2004).
Because the Court resolves this case on res judicata grounds, it describes the allegations in
Elling I, describes and compares those in Elling II, and concludes with application of the law of
claim preclusion to the facts as alleged.
A. Elling I
Elling filed suit in New Mexico state court on May 7, 2019 against Mesa Biotech, Inc.,
Mesa Tech International, Inc., Hong Cai, and Robert Cary. [CV 19-0547 LF/SCY, Doc. 1-1].
Elling alleged that he was a founder, initial shareholder, and former director, president and chief
executive of Mesa Tech International, Inc. [CV 19-0547 LF/SCY, Doc. 1-1, p. 1]. Cai and Cary
were co-founders and initial shareholders as well. [Id.]. Elling resigned from the company through
an Agreement for Termination of Employment by Mutual Consent and Stock Redemption (“the
Agreement”), retaining 3,952 shares of common stock or approximately 8.9% of the company
based on the issued and outstanding stock. [Id., pp. 2-3]. He claims that after the Agreement was
signed in 2010, he “received scant information about” the company apart from “perfunctory
notices of annual meetings[.]” [Id., p. 5].
Elling says that in August 2018 the company notified him that “it had twice amended its
certificate of incorporation to increase its total number of shares, amended its bylaws, adopted a
new equity incentive plan, increased its numbers of directors, and entered into unspecified
indemnification agreements with all of its directors.” [Doc. 1-1, p. 5]. The notice also indicated
that the company had merged or reorganized into Mesa Biotech, Inc., and relocated to California.
[Id.]. Elling states that he received no prior notice any proposed merger or amendments and no
opportunity to vote or dissent. [Id., pp. 5-6]. He wrote to Defendants in October 2018 and January
2019 “to address his concerns with the purported merger, amendments to the company’s articles
of incorporation and bylaws, relocation, and changes to its stock plan[,]” but received no
substantive response. [Id., p. 6]. Elling also sought to inspect the company’s books and records but
was denied access. [Id.]. Elling brought three claims: Count I for Breach of Fiduciary Duty, Count
II for Shareholder Oppression, and Count III for Breach of Contract and the Covenant of Good
Faith and Fair Dealing. [Id., pp. 6-7]. Elling demanded compensatory, punitive, and statutory
damages, fees and costs, and pre- and post-judgment interest. [Id., p. 8].
Defendants removed the case to federal court on June 13, 2019, citing diversity
jurisdiction. [CV 19-0547 LF/SCY, Doc. 1]. A scheduling order was entered on August 6, 2019,
that set deadlines for amendments to pleadings (August 26, 2019), discovery (February 7, 2020),
and dispositive motions (March 9, 2020). [CV 19-0547 LF/SCY, Doc. 17]. Elling unsuccessfully
attempted to remand the case to state court. [See CV 19-0547 LF/SCY, Doc. 30 (Order denying
Motion to Remand)]. The parties litigated a confidentiality order, agreed to extend the expert
disclosure deadline, and attempted settlement before the assigned referral U.S. Magistrate Judge.
[See CV 19-0547 LF/SCY, Docs. 25, 32, 36, 41]. Defendants then filed a timely Motion for
Summary Judgment on March 9, 2020, asking for dismissal of Elling’s claims with prejudice. [CV
19-0547 LF/SCY, Doc. 43]. Elling filed a response on March 25, 2020, and Defendants replied on
April 8, 2020. [CV 19-0547 LF/SCY, Doc. 49].
Meanwhile, Elling commenced Elling II in this Court on April 3, 2020, amending that
complaint as a matter of right on April 7, 2020. [Docs. 1 & 3]. He then moved in Elling I to dismiss
that case or consolidate both. [CV 19-0547 LF/SCY, Docs. 53, 54]. Presiding Magistrate Judge
Laura Fashing ruled on summary judgment as well as dismissal or consolidation on the same day.
She denied Elling’s motion, reasoning that dismissal or consolidation after discovery expired and
a dispositive motion was fully briefed would be unfairly prejudicial to Defendants. [See generally
CV 19-0547 LF/SCY, Doc. 60]. She granted Defendants’ motion, finding that Elling failed to
prove injury from any breach of fiduciary duties. [See generally CV 19-0547 LF/SCY, Doc. 61,
pp. 8-12]. Judge Fashing entered final judgment accordingly. [CV 19-0547 LF/SCY, Doc. 62; see
Fed. R. Civ. P. 58]. Elling unsuccessfully sought to set aside the final judgment. [See CV 19-0547
LF/SCY, Docs. 66, 69, 70, 71].
B. Elling II
Elling’s Amended Complaint in this case alleges that he, Cai, and Cary were founders and
initial shareholders of Mesa Tech, International. [See Doc. 3, pp. 1-2]. Elling recites his service as
a director and the president and chief executive officer for the company. [Id.]. As in the first case,
Elling states that he and Mesa Tech entered into an agreement for termination of his employment
and redemption of his stock on October 11, 2010, leaving him owning 3,952 shares of common
stock. [Id., p. 3]. Elling then alleges that on July 31, 2012, Cai and Cary amended the Mesa Tech
articles of incorporation to authorize ten million shares of stock and to split each outstanding share
into one hundred new shares, Elling then owning 395,200 shares and Cai and Cary each owning
2,000,000 shares. [Id.]. In January of 2014, controlling 77.6% of Mesa Tech, Cai and Cary “gave
themselves” options for an additional two million shares each. [Id.]. Elling alleges that the award
of options was not approved by the board, did not benefit Mesa Tech and violated the equity
incentive plan that was in place at the time, the stated purpose of which was “for retention of
employees and others serving the Company.” [Id., p. 4].
Elling goes on to allege that in 2015 Cai and Cary, as the only remaining directors and
shareholders2 and without shareholder notification or vote, merged MTI into Mesa Biotech, Inc.
Elling’s characterization of Cai and Cary as “the only remaining … shareholders”, [Doc. 3, p. 2, para. 6], is
inconsistent with his claim of continuing ownership of company stock, [Compare, e.g., Doc. 3, p. 2, para. 8], as
well as his claims that thereafter Defendants acted to the detriment of other shareholders including Elling.
[Doc. 3, pp. 2, 4]. In March of 2018, under a new equity incentive plan, Cai and Cary “gave
themselves” another two million stock options each, which immediately vested. [Id., p. 5]. In
April of 2018, Cai and Cary surrendered some of their 2014 options, each retaining 275,865
“shares” which are listed by Mesa Biotech as “uncertificated securities issued in connection with
Mesa Tech International’s formation in 2009.” [Id.].
Elling alleges that the 2014 issuance of options to Cai and Cary reduced the cash value and
voting power of Elling’s stock in MTI. [Doc. 3, pp. 4, 7]. Elling also alleges that the 2015 merger
violated statutory requirements of shareholder notice and approval, and that the 2018 adoption of
a new equity incentive plan and award of additional options was improper, did not benefit the
corporation and was contrary to the plan. [Id., p. 5]. He also says that the official description of
the 2014 share options is incorrect. [Id.].
Elling denominated three claims in Elling II: Count I for breaches of fiduciary duty, Count
II for aiding and abetting the same, and Count III for shareholder oppression. [Doc. 3, pp. 6-7]. He
again demands compensatory and punitive damages, pre- and post-judgment interest, and costs
and attorney fees, plus rescission of the options and cancellation of the shares issued to Cai and
Cary. [Id., p. 8].
On May 18, 2020, Defendants moved to stay this case pending the summary judgment
ruling in Elling I, noting their expectation that a quick bench trial would resolve the case if
summary judgment was denied. [See Doc. 12, p. 1]. On June 17, 2020, Defendant’s filed notice
that Magistrate Judge Fashing in Elling I granted summary judgment against all claims and
dismissed Elling’s complaint with prejudice. [Doc. 20]. Consequently, I found moot Defendants’
motion for a stay. [Doc. 22]. Defendants moved for judgment on the pleadings on July 9, 2020,
asserting the preclusive effect of Elling I. [See Docs. 20, 33]. Briefing was complete on August
21, 2020. [Doc. 42].
Elling filed Plaintiff’s Emergency Petition for Preliminary Injunction & Request for Oral
Argument on January 22, 2021. [Doc. 44]. Briefing was complete on February 22, 2021. [Doc. 49].
Defendants also filed a Motion to Stay pending the Court’s decision on the pleadings, which has
not been fully briefed. [Doc. 51].
“Within the res judicata framework, this court applies federal law to determine the effect
of a previous federal judgment, even if that judgment was issued in a case based on diversity
jurisdiction.” Hartsel Springs Ranch of Colorado, Inc. v. Bluegreen Corp., 296 F.3d 982, 986 (10th
Cir. 2002). However, federal law and New Mexico law are consistent on the general standards
governing claim preclusion or res judicata. Potter v. Pierce, 2015-NMSC-002, ¶ 10, 342 P.3d 54,
57 (citing Deflon v. Sawyers, 2006–NMSC–025, ¶ 2, 139 N.M. 637, 137 P.3d 577); see, e.g., Lenox
MacLaren Surgical Corp. v. Medtronic, Inc., 847 F.3d 1221, 1239 (10th Cir. 2017). “Res judicata
is a judicially created doctrine designed to promote efficiency and finality by giving a litigant only
one full and fair opportunity to litigate a claim and by precluding any later claim that could have,
and should have, been brought as part of the earlier proceeding.” Potter, 2015-NMSC-002, ¶ 1;
Lenox, 847 F.3d at 1239 (“The principle underlying the rule of claim preclusion is that a party who
once has had a chance to litigate a claim before an appropriate tribunal usually ought not have
another chance to do so.”); Pielhau v. State Farm Mut. Auto. Ins. Co., 2013-NMCA-112, ¶ 8, 314
P.3d 698, 700 (Res judicata “applies equally to bar all claims arising out of the same transaction,
regardless of whether they were raised at the earlier opportunity, as long as they could have been
raised.”); Apodaca v. AAA Gas Co., 2003-NMCA-085, ¶ 82, 134 N.M. 77, 102, 73 P.3d 215, 240
(“[R]es judicata applies not only where a claim was actually litigated in the first action but also
where it could have been litigated.”). The doctrine “is designed to relieve parties of the cost and
vexation of multiple lawsuits, conserve judicial resources, prevent inconsistent decisions, and
encourage reliance on adjudication. Potter, 2015-NMSC-002, ¶ 10 (quoting Computer One, Inc.
v. Grisham & Lawless, P.A., 2008-NMSC-038, ¶ 31, 144 N.M. 424, 188 P.3d 1175 (alterations
A party asserting res judicata must establish: (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 or
in privity; and, (4) the cause of action is the same in both suits. Potter, 2015-NMSC-002, ¶ 10
(citing Kirby v. Guardian Life Ins. Co. of Am., 2010-NMSC-014, ¶ 61, 148 N.M. 106, 124, 231
P.3d 87, 105). The first three elements are not in dispute in this case; both suits are brought by
Elling against Cai, and Cary and the company, and Magistrate Judge Fashing entered Final
Judgment on the merits in Elling I on June 17, 2020, later denying Elling’s Motion to Set Aside
the Judgment on the basis that his claims might be precluded here. [CV 19-0547 LF/SCY, Docs.
62, 71]; see Pielhau, 2013-NMCA-112, ¶ 10 (“A dismissal with prejudice is an adjudication on
the merits for purposes of res judicata.”). Thus, the dispositive question is whether Plaintiff’s cause
of action is the same in both suits.
“Both the Tenth Circuit and New Mexico have adopted the transactional approach in
analyzing the single-cause-of-action element of res judicata.” Potter, 2015-NMSC-002, ¶ 11
(citing Petromanagement Corp. v. Acme-Thomas Joint Venture, 835 F.2d 1329, 1335-36 (10th Cir.
1988); Three Rivers Land Co. v. Maddoux, 1982-NMSC-111, ¶ 27, 98 N.M. 690, 652 P.2d 240,
overruled on other grounds by Universal Life Church v. Coxon, 1986-NMSC-086, ¶ 9, 105 N.M.
57, 728 P.2d 467). Under the transactional approach, all issues arising out of a “common nucleus
of operative facts” - or the same transaction or series of transactions - are part of the same cause
of action. Potter, 2015-NMSC-002, ¶ 11 (citation omitted); Hatch v. Boulder Town Council, 471
F.3d 1142, 1151 (10th Cir. 2006). The Court’s focus is on the underlying facts rather than the legal
theories relied on in the first action. Pielhau, 2013-NMCA-112, ¶ 14. “The facts comprising the
common nucleus should be identified pragmatically, considering (1) how they are related in time,
space, or origin, (2) whether, taken together, they form a convenient trial unit, and (3) whether
their ‘treatment as a single unit conforms to the parties’ expectations or business understanding or
Finally, “[e]ven if two actions are the same under the transactional test and all other
elements are met, res judicata does not bar a subsequent action unless the plaintiff could and should
have brought the claim in the former proceeding.” Potter, 2015-NMSC-002, ¶ 15 (citation
omitted). Thus, the party must have a “full and fair” opportunity to litigate the claims under
consideration in the prior proceeding. Id. Under certain circumstances, the filing of a new claim
arising from the same transaction at issue in a prior action may be allowed because the plaintiff
did not know the full dimensions of the claim at the time of the first action, “[b]ut claim preclusion
applies to all claims arising from the same underlying transaction even where the new claims are
based on newly discovered evidence, unless the evidence was either fraudulently concealed or it
could not have been discovered with due diligence.’” Lenox, 847 F.3d at 1244. Denial of leave to
amend or add claims to a first lawsuit, for example where the motion to amend is untimely, does
not negate an otherwise valid defense of res judicata. Apodaca, 2003-NMCA-085, ¶ 83.
Do Elling’s claims in Elling II - that Defendants breached their fiduciary duties and diluted
his stock by self-dealing in 2014 and 2018 - arise out of a common nucleus of operative fact with
those raised in Elling I - that Defendants breached their duties to notify Elling and solicit his vote
in connection with management decisions from 2010 to the present - thus establishing the fourth
element of res judicata?
Even if so, should the Court find a lack of full and fair opportunity to litigate and thus deny
claim preclusion because Elling learned of Defendants’ self-dealing after the deadline to amend
his Elling I complaint without court approval had passed or, on the other hand, is Elling precluded
from litigating Elling II because he ignored his opportunity to show good cause and obtain leave
of court to amend the Elling I complaint and instead filed Elling II, and then failed to persuade the
Elling I judge to dismiss or to consolidate with Elling II?
As noted, because the first three elements of res judicata are not reasonably disputed, the
Court’s focus is on whether Elling’s claims in Elling I are based on the same transaction or series
of transactions as those here in Elling II. Having considered the two operative complaints, the
Court finds that the same transactions or series of transactions were involved in both suits and so
concludes that res judicata must be applied to bar this suit. Moreover, Elling had a full and fair
opportunity to amend his claims in Elling I after he learned the details of Cai and Cary’s alleged
self-dealing. His failure to do so, or to appeal Magistrate Judge Fashing’s denial of dismissal or
consolidation, were consciously made decisions which leave him no relief here.
The claims in Elling I and Elling II are related in time, space, and origin, all relating to Cai
and Cary’s purported breach of fiduciary duties to Elling, involving the same time period, and
arising from the same core actions (or failures to act) after Elling resigned. See Pielhau, 2013NMCA-112, ¶ 15 (“The two suits address the same conduct by the same insurance agent, and all
of the relevant conduct occurred within the same time period.”). By failing to keep Elling apprised
of company business, as alleged in Elling I, Cai and Cary were able to self-deal, as alleged here.
While the conduct is technically distinct, it is very closely related to the actions Elling admits he
was aware of – the merger, amendments, and adoption of a new incentive plan. As the Tenth
Circuit recently indicated, identification of additional instances of, or injuries from, the same
course of conduct as is at issue in the first suit will not save a second. See, e.g., Goodwin v. Hatch,
781 F. App’x 754, 761 (10th Cir. 2019) (unpublished).
If brought together, the claims would have formed a convenient unit for trial. “In
considering whether the facts form a convenient unit for trial, [the Court] examine[s] overlap of
the witnesses and evidence relevant to the claims in the two lawsuits.” Pielhau, 2013-NMCA-112,
¶ 17 (quoting Anaya v. City of Albuquerque, 1996-NMCA-092, ¶ 14, 122 N.M. 326, 924 P.2d
735). The witnesses and evidence adduced during discovery in Elling I are those necessary to
prosecute Elling II and the issues raised in both cases would have required little more than a short
bench trial for their resolution. It was reasonable for Defendants to expect that conclusion of Elling
I would preclude later claims on substantially overlapping facts and theories.
Finally, Elling had a full and fair opportunity to litigate his current claims in Elling I.
Elling’s strongest argument is that because his deadline to amend without court approval in Elling
I had passed, unless he had a duty to move to amend, res judicata cannot apply to bar facts he
discovered after filing his first case. The Court is convinced this simply is not the law. Where a
party fails to take advantage of an opportunity to litigate a claim based on the same set of facts the
claim will be barred. Apodaca, 2003-NMCA-085, ¶ 82. Elling’s assertion that he could not have
added his current claims to Elling I ignores the very low standard for establishing good cause to
amend (recognized by Magistrate Judge Fashing when she denied relief from judgment - see CV
19-0547 LF/SCY, Doc. 71, p. 7), as well as the fact that he did seek to add his current claims to
Elling I by filing this case and moving to consolidate the two cases, relief that was denied because
of the prejudice it would cause Defendants. [See CV 19-0547 LF/SCY, Doc. 60]. Elling then
abandoned his opportunity to litigate all of his claim in Elling I by failing to appeal Magistrate
Judge Fashing’s ruling. Apodaca, 2003-NMCA-085, ¶ 82 (“The proper recourse for a plaintiff is
to appeal the denial … and/or request the court to expressly reserve the plaintiff’s right to maintain
a second action.”) By opting to file a new case against the same set of defendants, though Elling
did not take the obvious path of showing good cause to amend his original pleadings, he sought
the same benefit without the burden of good cause. The open door of the courthouse is not an
invitation to abandon clearly established rules of procedure.
Elling cannot claim that Defendants wrongfully concealed the “new” information giving
rise to his second lawsuit because he obtained it during discovery in Elling I. See Lenox, 847 F.3d
at 1244 (“Lenox cannot seriously maintain that Defendants’ involvement could not have been
discovered with due diligence because Lenox did, in fact, discover it.”). Nor can he argue that “to
have had a fair opportunity to litigate, [he] must have known of these facts at the time [he] filed
its original complaint.” Id.
[B]roadly speaking, claim preclusion does not bar subsequent litigation of new
claims based on facts the plaintiff did not and could not know when it filed its
complaint…. Critically, though, if the plaintiff discovers facts during the litigation
that stem from the same underlying transaction, it must supplement its complaint
with any new theories those facts support…. A subsequent lawsuit will be allowed
only if the facts discovered mid-litigation give rise to new and independent claims,
not part of the previous transaction…. Put differently, a plaintiff cannot avoid
supplementing his complaint with facts that are part of the same transaction asserted
in the complaint, in the hope of bringing a new action arising out of the same
transaction on some later occasion.
Id. at 1244-1245 (internal alterations and citations omitted; brackets supplied). Thus, the rule
Elling would apply recognizes only genuinely new claims discovered after litigation began. See
Hatch, 471 F.3d at 1150 (“Although a plaintiff may seek leave to file a supplemental pleading to
assert a new claim based on actionable conduct which the defendant engaged in after a lawsuit is
commenced, he is not required to do so…. This does not mean, however, that a plaintiff can avoid
supplementing his complaint with facts that are part of the same transaction asserted in the
complaint, in the hope of bringing a new action arising out of the same transaction on some later
occasion.”). Because the conduct complained of occurred in 2014 and 2018, and Elling was made
aware of it in 2019, he cannot now reasonably claim that he was entitled to bring a new action
based on the same series of transactions.
CONCLUSION & ORDER
Wherefore, because Defendants have established that they are entitled to judgment on the
pleadings on the grounds of res judicata, it is therefore ordered that Defendants’ Motion seeking
the same [Doc. 33] is granted and Elling’s claims are dismissed with prejudice. Elling’s Motion
for a Preliminary Injunction [Doc. 44] and Defendants’ Motion to Stay [Doc. 51] are denied as
moot. A Final Judgment will be entered concurrently.
JERRY H. RITTTER
U.S. MAGISTRATE JUDGE
Presiding by Consent
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