Gonzalez et al v. Artspace Affordable Housing et al
MEMORANDUM DECISION granting 41 Motion to Dismiss for Lack of Jurisdiction ; finding as moot 43 Motion for Partial Summary Judgment ; finding as moot 50 Motion to Strike. Signed by Magistrate Judge Brooke C. Wells on 03/28/2012. (asp)
IN THE UNITED STATES DISTRICT COURT
CENTRAL DIVISION, DISTRICT OF UTAH
KRISTY A. GONZALEZ, SHAWN A.
GONZALES, ANARCHY ARTS, LLC,
Civil No. 2:09-cv-00465
RULING & ORDER
ARTSPACE AFFORDABLE HOUSING,
LP, ARTSPACE RUBBER COMPANY,
LC, EVERGREEN MANAGEMENT
MAGISTRATE JUDGE BROOKE C.
This matter is before the court on defendant Artspace Affordable Housing LP,
Artspace Rubber Company LC, and Evergreen Management Group LLC’s
(“defendants”) Motion To Dismiss For Lack of Jurisdiction,1 plaintiffs’ Shawn Gonzalez,
Kristy Gonzalez and Anarchy Arts (“plaintiffs”) Motion For Partial Summary Judgment,2
and plaintiffs’ Motion To Strike and Request For Sanctions.3
Document Number 41.
Document Number 43.
Document Number 51.
Oral arguments were heard on February 1, 2012.4 At the conclusion, the court
took all pending matters under advisement. On February 3, 2012, the court issued an
“Order and Request For Supplemental Briefing” on specific questions raised by the
parties during oral argument.5 Supplemental briefing was to be filed no later than
February 17, 2012, and not to exceed ten (10) pages.6
In response, defendants filed their timely supplemental brief.7 Plaintiffs,
however, filed a “Motion For Extension Of Time To File Post Hearing Supplemental
Memorandum” seeking an additional business day within which to file their
supplemental memorandum.8 On February 20, 2012, plaintiffs filed their “Post Hearing
Memorandum”9 and two days later plaintiffs filed a “Supplemental Exhibit To The
Gonzaleses’ Post Hearing Memorandum”.10 Defendants object to plaintiffs’ late filings
and ask that the court strike the request for extension as well as the additional exhibits
Document Number 68.
Document Number 69; “Order & Request For Supplemental Briefing”
Id. at pg. 5.
Document Number 30; Defendants’ “Joint Response To This Court’s Order &
Request For Supplemental Briefing”.
Document Number 71; Plaintiffs’ “Motion For Enlargement Of Time To File Post
Document Number 72; “The Gonzaleses’ Post Hearing Memorandum”.
Document Number 73; “Supplemental Exhibit To The Gonzaleses’ Post
Document Number 74; “Memorandum In Opposition To Plaintiffs’ Motion For
Enlargement Of Time”.
While the court is well aware of counsel’s chronic late filings and concomitant
requests for extensions in this case, in an effort to fully address the merits of the
pending matters, the court denies defendants’ objection to plaintiffs’ request for an
extension of time. The court shall consider defendants’ supplemental brief to the extent
that it addresses those questions set forth by the court in its prior order.12
In December 2006, plaintiffs Kirsty and Shawn Gonzalez and Anarchy Arts
purchased a coffee shop “to include good will, furniture and equipment.”13 Thereafter,
they entered into an agreement under which Anarchy Arts, LLC /d/b/a Cup of Joe
leased commercial property for the coffee shop from defendant Artspace Affordable
Housing. The agreement granted Artspace a security interest “in all property of Tenant
now or hereafter place in the Premises.”14 Anarchy Arts defaulted, and on June 20,
2008, Artspace filed a state court unlawful detainer action against Anarchy Arts d/b/a/
Cup of Joe..15
Thereafter, Art Space filed a possession bond, and the state court issued an
Order of Restitution.16 Based upon the Order of Restitution, ArtSpace allowed Anarchy
Document Number 71.
Document Number 42-6; “Findings Of Fact And Conclusions Of Law” pg. 2, ¶
Id. at pg. 2-3. ¶2.
Id. at pg. 4. ¶¶ 5-6. Artspace Affordable Housing v. Anarchy Arts, LLC,
Id. Order of Restitution issued on July 29, 2008.
Arts to remove some of their property prior to locking them out of the building.17 The
remaining property was placed in storage to be sold pursuant to a notice of
On August 11, 2008, Anarchy Arts filed an Amended Answer in the state court
action bringing counterclaims against Artspace for breach of contract, breach of the
implied covenant of good faith and fair dealing, and misrepresentation.19 Additionally,
plaintiffs listed two additional cross-defendants, Chris Montoya and Evergreen
On November 17, 2008, the state court granted Artspace’s motion for summary
judgment and signed a judgment and order against Anarchy Arts in the amount of
$43,472.84.21 In December of 2008, judgment was entered on the unlawful detainer
claim and a Writ of Execution was entered on February 20, 2009.22
On April 30, 2009, Artspace held a public auction at which items from the coffee
shop were sold to the highest bidder.23 The auction resulted in proceeds in the amount
of $3,920 which was then applied to the judgment against Anarchy Arts and reduced
Document Number 42-6; “Findings Of Fact And Conclusions Of Law” Judge
Terry L. Christiansen, case no. 080411274.
Document Number 70-1; “Amended Answer and Counterclaim”.
Document Number 42-5; “Ruling And Order” Judge Terry L. Christiansen, case
Document Number 42-6; “Findings Of Fact And Conclusions Of Law”.
Id. at pg. 8, ¶ .25
the amount owed to $41,623.90.24
On May 21, 2009, the Gonzalez and Anarchy Arts filed their federal court action
currently before this court. In their complaint, plaintiffs allege claims against defendants
for conversion, unjust enrichment, civil conspiracy and violation of
§ 1983. Plaintiffs federal claims are based on, although not limited to, the following
Pursuant to a wrongfully issued writ or restitution, Plaintiffs were forced
out of their coffee shop and defendant seized all of their property–over
$100,00 worth of equipment, furniture, fixtures and supplies.25
Defendants have abused “the legal system and process by filing a lawsuit
for unlawful detainer when there was no factual or legal basis therefor”26
Defendants have wrongfully seized over $100,000 of personal property
and used such seizure “as an unconscionable means of trying to coerce a
settlement from the plaintiffs”27
On July 20, 2009, Anarchy Arts filed a motion to set aside the state court
judgment. The motion to set aside was denied by Judge Terry Christiansen in his
Ruling and Order dated July 30, 2009.28
On January 19, 2010, Judge Christiansen issued “Findings of Fact and
Conclusions of Law” denying Anarchy Arts’ claims that the writ of execution was
wrongfully obtained and concluding that Artspace conducted a commercially reasonable
Id, at pg. 10, ¶ 41.
Document Number 1; “Complaint” pg. 4. ¶ 19.
Document Number 1; “Complaint” pg. 5, ¶24(b).
Document Number 1; “Complaint” pg. 5 ¶24 (d)(e).
Document Number 42-5; “Ruling And Order”.
sale of the collateral.29
Motion To Dismiss30
On September 23, 2011, defendants filed their currently pending motion to
dismiss asserting that this court lacks subject matter jurisdiction and therefore the case
must be dismissed.31 Specifically, defendants contend that plaintiffs’ claims were
previously addressed by Judge Christiansen in the state court action, and are therefore
barred under the doctrines of claim preclusion and issue preclusion.32
The doctrine of res judicata includes two branches: claim preclusion and
collateral estoppel, also known as issue preclusion.33 Claim preclusion involves the
same parties or their privies as well as the same cause of action and “‘precludes the
relitigation of all issue that could have been litigated as well as those that were, in fact,
litigated in the prior action.’”34 Issue preclusion, on the other hand, “‘arises from a
different cause of action and prevents parties or their privies from relitigating facts and
Document Number 42-6; “Findings Of Fact And Conclusions Of Law”.
Document Number 41; “Defendants Motion To Dismiss For Lack Of
Document Number 1; “Complaint And Jury Demand”. Plaintiffs bring causes of
action for: conversion, unjust enrichment, civil conspiracy and Section 1983 violation.
Document Number 42; “Memorandum In Support Of Rule 12(B)(1) And (6)
Motion To Dismiss For Lack Of Subject Matter Jurisdiction” pg. 3.
Swainston v. Intermountain Health Care, 766 P.2d 1059, 1061 (Utah 1988).
Schaer v. State, 657 P.2d 1337, 1340 (Utah 1983)(quoting, Searle Bros. V.
Searle, 588 P.2d 689, 690 (Utah 1978)).
issues in the second suit that were fully litigated in the first suit.’“35 The purpose of both
doctrines, is to promote the conclusive resolution of disputes and to “preclude parties
from contesting matters that they have had a full and fair opportunity to litigate.”36
Moreover, “[t]o preclude parties from contesting matters that they have had a full and
fair opportunity to litigate protects their adversaries from the expense and vexation
attending multiple lawsuits, conserves judicial resources, and fosters reliance on judicial
action by minimizing the possibility of inconsistent decisions.”37
In their supplemental briefing, defendants appear to argue that both branches of
res judicata could apply.38 However, although the doctrines are closely related, different
Id. Under the doctrine of issue preclusion four elements must be present for
the doctrine to apply: “[f]irst, the issue challenged must be identical in the previous
action and in the case at hand. Second, the issue must have been decided in a
final judgment on the merits in the previous action. Third, the issue must have been
competently, fully and fairly litigated in the previous action. Fourth the party against
whom collateral estoppel is invoked in the current action must have been either a party
or privy to a party in the previous action. Jones, Waldo, Holbrook & McDonough v.
Dawson, 923 P.2d 1366, 1370 (Utah 1996).
Montana v. United States 440 U.S. 147, 154 (1979).
In their initial briefing and at oral argument, defendants focus primarily on
applying claim preclusion as a bar to plaintiffs’ claims. However, in their supplemental
briefing defendants include argument on application of issue preclusion. Specifically,
defendants argue that the issue in both the state and federal cases are identical:
whether defendants had the right to take the property and sell it. Moreover, “a party
cannot by negligence or design withhold issues and litigate them in a separate actions.
If the second action involves an issue as to which the judgment in a prior action is a
conclusive adjudication, the estoppel, so far as that issue is concerned, extends to
every matter which was or might have been urged to sustain or defeat the
determination actually made.” Marcris II, ¶ 40 (citing, 46 Am. Jur. Judgments § 545).
rules govern each branch and therefore “they are usually mutually exclusive”.39
1. Claim Preclusion
Claim preclusion prevents a party from re-litigating a claim that was, or could
have been, the subject of a prior litigation. Defendants contend that plaintiffs’ claims
currently before this court should have, or could have, been brought in the parties’ state
In order for claim preclusion to bar a subsequent cause of action, three
requirements must be met: “(1)“ a judgment on the merits in the earlier action; (2)
identity of the parties or their privies in both suits; and (3) identity of the cause of action
in both suits.”40 Furthermore, the 10th Circuit has adopted the transactional approach in
determining what constitutes “identity” of the cause of action.41 Specifically, a claim
arising out of the same “transaction or series of connected transactions” as a previous
suit, which resulted in a final judgment, is precluded.42 What amounts to the same
transaction or series of transactions is:
Schaer at 1340. This court, however, agrees that several factors relevant to
the issue preclusion analysis apply to plaintiffs’ claims in this action.
Yapp v. Excel Corp., 186 F. 3d 1222, 1226 (10th Cir. Colo); See Yapp, ftn. 4(
while occasionally reference is made to a fourth requirement , generally, “Supreme
Court precedent, Tenth Circuit precedent, and the majority of circuit courts note only
three requirements in the initial determination of whether claim preclusion may apply”).
Petromanagement Corp. V. Acme-Thomas Joint Venture, 835 F.2d 1329,
1335-36 (10th Cir. 1988).
Yapp, at 1227 (citing, Restatement (Second) of Judgments § 24 (1982).
to be determined pragmatically, giving weight to such considerations
as whether the facts are related in time, space, origin or motivation,
whether they form a convenient trial unit, and whether their treatment
as a unit conforms to the parties’ expectations or business understanding
A) Same Parties Or Privies
At oral argument, plaintiffs’ counsel conceded that the plaintiffs in this lawsuit
(Kirsty and Shawn Gonzales and Anarchy Arts) are privies of the state court litigants
(Anarchy Arts d/b/a/ Cup of Joe). Accordingly, this element of claim preclusion is met.
B) Same Claims
Defendants argue that the “same claims” prong of claim preclusion applies
because plaintiffs’ claims for conversion, unjust enrichment, civil conspiracy and
violation of §1983 should have been, and in fact were, raised in the state court action
just under different “names” or “titles”.44 Moreover, defendants contend that all of the
claims brought in the federal case arise from the same facts and circumstances as the
unlawful detainer action, and therefore should have been brought in state court.45 This
Applying the transactional approach, it is clear that both plaintiffs’ state court
counterclaims and their current federal causes of action are based upon a discrete and
unitary factual occurrence. They both seek to redress the same perceived injury—
Restatement (Second) Judgments § 24.
Document Number 70; “Joint Response To This Court’s Order & Request For
Supplemental Briefing” pg. 2.
Document Number 42; Defendants “Memorandum In Support Of Rule 12(B)(1)
And (6) Motion To Dismiss For Lack Of Subject Matter Jurisdiction” pg. 4.
plaintiffs’ alleged wrongful eviction and “taking” of their property. All of plaintiffs’ claims
in the state court and federal court actions rest on this same “transaction” or “operative
nucleus” and involve the same facts and evidence. The doctrine of res judicata works
to preclude parties from re-litigating issues that actually were or could have been raised
and plaintiffs cannot now defeat the doctrine’s application by simply alleging new legal
theories based on the same “transaction”.46
In the state court case, after the judgment was entered47 and the writ of
execution was executed, but before the final resolution of the case, plaintiffs filed their
Amended Answer and Counterclaim bringing new causes of action for breach of
contract, breach of the implied covenant of good faith and fair dealing, and
misrepresentation.48 Given the nature and basis for those claims, to allow plaintiffs to
proceed with their claims in federal court based upon the exact same “transaction”
would undermine the fundamental policies of res judicata. All claims arose at the time
of execution and abandonment of the property at issue. Moreover, the state court has
issued detailed findings of fact and conclusions of law determining that defendants had
a right to take the property at issue and sell it. The proper avenue for plaintiffs to
challenge the state court ruling is to file an appeal, not to bring a separate action in
federal court. To allow plaintiffs to proceed with the litigation of the same claims in a
Clark v. Haas Group, Inc., 953 F.2d 1235, 1238 (10th Cir. Colo 1992); See also,
Alexander v. Chicago Park District, 773 F.2d 850, 854 (7th Cir. 1985)(“a mere change in
legal theory does not create a new cause of action”).
Document Number 42-1; “State Court Docket”. July 2, 2008, Judgement
entered against defendant in amount of $11868.26.
Document Number 42-6.
different venue could result in inconsistent results based upon the same facts and
At oral argument, plaintiffs raised the state court case of Macris II arguing that
they were not required to add claims to the state court lawsuit after its commencement
that they were not aware of at the time.49 While the court agrees with the reasoning
Macris II, it is not applicable here.50 A mere change in the name or type of legal theory
does not allow plaintiffs to re-litigate matters based upon the same facts, claims or
C) Judgment On The Merits
Under the third prong of res judicata, finality requires “that the court dispose of all
the parties and issues; the judgment is not final if claims are left pending.”52 Plaintiffs
argue that because the state court lawsuit has not yet been resolved, there is no “final
judgment on the merits” and therefore this prong of claim preclusion is not met.
As an initial matter, this court declines to adopt plaintiffs’ argument that their
Macris & Associates, Inc.v. Neways, Inc., 2000 UT 93, ¶25. (“a party is required
to include claims in an action for res judicata purposes only if those claims arose before
the filing of the complaint in the first action”).
Schaer v. State, 657 P.2d 1137, 1140. See also, Mitchell v. City of Moore, 218
F.3d 1190, 1202-03 (citing, Johnson v. Bd. of Cnty. Comm’rs of Johnson Cnty., 1999
U.S. Dist. LEXIS 20801, *3-4 (D. Kan. Dec. 9, 1999)(“Because a plaintiff has no
obligation to expand his or her suit in order to add a claim that her or she could not
have asserted at the time the suit was commenced, res judicata does not bar a second
lawsuit to the extent that suit is based on facts occurring after the first suit was filed.”)).
Alexander, at 854.
Nickols v. Chesnoff, 2011 U.S. App LEXIS 15756 *770 (unpublished)(citing,
Miller v. USAA Cas. Ins. Co., 2002 UT 6, 44 P.3d 663, 678 (Utah 2002)).
unresolved counterclaim filed on August 11, 2008, precludes this court from applying
res judicata. At oral argument, plaintiffs admitted that in nearly four years they have
done nothing to move forward on those claims. In addition, the issues raised in the
counterclaim have been decided by Judge Christiansen through his findings of fact,
rulings and orders. For plaintiffs to now use the state court counter claims as a shield
from the application of claim preclusion is antithetical to the purpose of the doctrine and
invites litigation based on artifice and not substance.
Instead, this court finds that plaintiffs had an full and fair opportunity to litigate
the execution and sale of the property. Judge Christiansen allowed plaintiffs to have
two post-judgment evidentiary hearings on those exact issues.53 Principles of due
process require that parties receive “notice, reasonably calculated, under all the
circumstances, to apprise them of the pendency of the action” and an “opportunity to
present their objections”.54 Here, plaintiffs were given both notice and an opportunity to
object. Having lost, after a full and fair opportunity to litigate, plaintiffs claims before this
court are now barred.
In conclusion, finding that plaintiffs’ claims were either adjudicated in state court
or should have been raised at that time, the court finds that res judicata applies and
grants defendants’ motion to dismiss plaintiffs’ claims.
See, Nickols, at *771 (finding post judgment hearing provided due process
under Utah law).
Nickols at *772 (citing, Career Serv. Review Bd. v. Utah Dep’t of Corr., 942
P.2d 933, 939 (Utah 1997)).
Summary Judgment55 & Motion To Strike56
Having granted defendants’ motion to dismiss, plaintiffs’ motion for partial
summary judgment and defendants’ motion to strike affidavit and for sanctions are
For the reasons stated, it shall be the order of the Court:
1. Defendants’ Motion To Dismiss is GRANTED.
2. Plaintiffs’ Motion For Partial Summary Judgment is moot.
3. Defendants’ Motion To Strike and Request For Sanctions is moot.
DATED this 28th day of March, 2012.
BY THE COURT:
Brooke C. Wells
United States Magistrate Judge
Document Number 43; “Plaintiffs Motion For Partial Summary Judgment”.
Document Number 50; “Defendant’s Motion To Strike Affidavit”.
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