decided: April 7, 1982.
FRANCES ACKERMAN, APPELLEE,
MARTIN S. ACKERMAN, APPELLANT.
Appeal from a judgment of the United States District Court for the Southern District of New York, Abraham D. Sofaer, Judge, denying appellant's motion for summary judgment based on an assertedly preclusive California judgment, and granting appellee's motion for partial summary judgment to enforce a subsequent English judgment. Affirmed on the ground that because under California law the California judgment would not be given preclusive effect, New York is free to enforce the English judgment.
Before Oakes and Newman, Circuit Judges, and Haight, District Judge.*fn*
An intransigent husband seeks to avoid his support and property settlement obligations totaling in excess of $1 million. The argument is made that New York must give full faith and credit to a California judgment dismissing with prejudice his former wife's suit for accrued support, and must give no effect to a subsequent English judgment holding that the California judgment was not res judicata and that the husband was liable for both support and property payments. Finding no equities on behalf of the husband in his "flight from judgment," the United States District Court for the Southern District of New York, Abraham D. Sofaer, Judge, sitting in diversity, granted summary judgment to the wife for enforcement of the English judgment.*fn1 In a carefully reasoned opinion, 517 F. Supp. 614 (S.D.N.Y.1981), Judge Sofaer held that California would not give the California dismissal res judicata effect, nor would New York regard it as a judicial proceeding requiring full faith and credit. He held also that "(e)ven if the California dismissal were res judicata under California law and entitled to full faith and credit under New York law, it would be superseded by the English judgment, which must be enforced pursuant to the principles of comity and the New York last-in-time rule." Id. at 623. We affirm on the basis that because under California law the California judgment would not be given preclusive effect, New York is free to enforce the English judgment.
The parties entered into a separation agreement on March 5, 1971, which was incorporated, but not merged, into a judgment of divorce rendered by the New York Supreme Court in Nassau County on June 18, 1971. The settlement agreement provided that the husband would pay the wife, inter alia, for support and education of their children (Paragraph 4); for medical and dental expenses (Paragraph 5); for homeowner's insurance (Paragraph 6); for new automobiles and repairs and liability insurance thereon (Paragraph 7); $950,000 in settlement of estate and property rights, in installments of $45,000 per year through 1975, $75,000 per year in 1976 and 1977, $175,000 in 1978 and 1979, and $225,000 in 1980 (Paragraph 9); $3,750 per month for maintenance irrespective of remarriage (Paragraph 10); and attorneys' fees and expenses in actions to compel payment (Paragraph 18).
As the opinion below fully sets forth, 517 F. Supp. at 615-18, the wife brought suit in New York twice for breaches of the agreement, recovering a judgment for $4,870 in the first action and ultimately obtaining dismissal without prejudice of the second action. She also brought a quasi-in-rem action based on the husband's ownership of $120,000 worth of real property in California, in the Los Angeles County Superior Court on March 10, 1976, seeking to enforce the New York judgment for $4,870 and to recover approximately $45,000 for breaches of the provisions in the separation agreement for child support, medical and dental expenses, automobile payments, and maintenance (i.e., Paragraphs 4, 5, 7, and 10). She did not claim damages in California for breach of Paragraph 9, the property settlement.
Upon learning that the husband had defaulted on $36,000 due under a $50,000 mortgage on the California property and that he did not intend to appear in the California action, the wife decided to sue instead in England, where the husband had moved in 1974. In October 1976 and again in November and January the wife, acting through her father, told her California counsel to discontinue the California action. Counsel failed, however, to file a dismissal form with the clerk of the court, even though at this time, prior to the husband's filing of a cross-complaint, the wife could have obtained a dismissal without prejudice. See Cal.Civ.Proc.Code § 581.*fn2
The wife filed suit against the husband in England in December 1976, serving him with process in London. She now sought the amount due on the property settlement in Paragraph 9, as well as the support due. The husband, however, at last appeared in the California action through counsel on January 11, 1977, filing an answer generally denying liability and a cross-complaint requesting that the wife be enjoined from pursuing the English action or her second New York action.
The husband's counsel refused to consent to termination of the California action without prejudice as the wife's counsel had suggested. The wife's counsel, without advising the wife, filed a dismissal form with boxes checked for dismissal of the "entire action," "with prejudice." The court clerk did not indicate on the form the disposition of the request-though the place to do so was filled in, whited out, then crossed out-but at the bottom of the page wrote in the number "1" and the word "over." Meanwhile the husband's counsel had filed a dismissal form requesting dismissal of the "cross-complaint only," "without prejudice." The clerk numbered this form "2" and marked it "dismissal entered as requested on February 14, 1977." The district court surmised that "(t)he clerk may have meant to combine the two requests for dismissal and to dismiss the entire action without prejudice," 517 F. Supp. at 617, but a Los Angeles County deputy court clerk had stated in an affidavit submitted by the husband in the English action that the complaint was dismissed with prejudice, the cross-complaint was dismissed without prejudice, and the whole procedure was "consistent with the normal course of practice ... and in keeping with applicable statutes and rules."
The husband sought to dismiss the wife's second New York action with prejudice and to dismiss or stay the English action on the ground that the California dismissal was res judicata. The New York Supreme Court instead granted the wife's motion to dismiss without prejudice. The Appellate Division affirmed, declining to decide whether the California judgment was res judicata. Ackerman v. Ackerman, 60 A.D.2d 520, 521, 399 N.Y.S.2d 682, 683 (1st Dep't 1977). The husband's English motion was also denied and the High Court of Justice, Queen's Bench Division, affirmed.
The English action, which the husband continued to defend even though he had moved back to the United States, was tried between June 23 and July 1, 1980. The husband's defense was that the California dismissal barred the wife's recovery in the English action. Justice Boreham of the High Court of Justice examined relevant California law, on which he heard testimony from the parties' experts. He found that he was "very far from being satisfied" that California would find the dismissal a final adjudication, and that in any event California might well apply an equitable exception to the law of res judicata. Even if the California judgment were a final judgment, Justice Boreham found, res judicata would not apply to the property settlement in Paragraph 9 because that paragraph was not relevant to the causes of action sued upon in California. He awarded the wife $1,097,250, of which $1,012,550 represented damages on the property settlement, plus costs. The husband's appeal of this judgment was dismissed for failure to post the required bond for costs.
The wife commenced this action in the New York State Supreme Court, New York County, on December 15, 1980. The husband removed to federal district court on the ground of diversity of citizenship. The parties cross-moved for summary judgment. Judge Sofaer denied the husband's motion. He found that the wife had raised three issues of fact with regard to the validity of the California judgment, which the husband argued was res judicata: first that her California attorney's dismissal of her suit with prejudice was unauthorized, second that the California court clerk's disposition of her and her husband's dismissal requests was not in strict compliance with statute, and third that California would likely apply the doctrine of equitable relief from res judicata in her case. 517 F. Supp. at 619-22.
Judge Sofaer then concluded that "New York Courts would probably not accord full faith and credit to the California dismissal," id. at 623, on the ground that New York would not regard as a "judicial proceeding" a dismissal with prejudice entered by a clerk, arguably improperly*fn3 and upon the unauthorized action of an attorney, without any ruling by a judge.*fn4
Judge Sofaer went on to grant partial summary judgment to the wife on the basis of her English judgment, holding that "(e)ven if the California dismissal were res judicata under California law and entitled to full faith and credit under New York law, it would be superseded by the English judgment," 517 F. Supp. at 623. Under New York law, he noted, the English judgment would be enforced under principles of comity. See, e.g., Clarkson Co. v. Shaheen, 544 F.2d 624, 629-30 (2d Cir. 1976) (Canadian judgment recognized as one from "a sister common law jurisdiction with procedures akin to our own"); Watts v. Swiss Bank Corp., 27 N.Y.2d 270, 265 N.E.2d 739, 317 N.Y.S.2d 315 (1970). He noted also that the New York policy favoring enforcement of foreign judgments is especially strong in marital or family actions, see 517 F. Supp. at 624 (citing Siegel, Practice Commentary C5301:2, 7B McKinney's Consolidated Laws of New York Annotated at 487 (the Uniform Foreign Money-Judgments Recognition Act, N.Y.Civ.Prac.Law § 5301(b), in exempting judgments for support in matrimonial or family matters from the restrictions on enforcing foreign money judgments imposed by sections 5301-5309, is designed "to acknowledge their unique status and treatment and leave them to existing law, which is ... quite generous in New York")).
Judge Sofaer held that the English judgment would take priority over the California judgment under the last-in-time rule of Treinies v. Sunshine Mining Co., 308 U.S. 66, 76-78, 60 S. Ct. 44, 49-50, 84 L. Ed. 85 (1939) (third forum must recognize judgment of second forum that refused to recognize judgment of first forum), which New York follows, see, e.g., Ambatielos v. Foundation Co., 203 Misc. 470, 116 N.Y.S.2d 641 (Sup.Ct.1952) (conflict between two foreign judgments); Perkins v. DeWitt, 279 A.D. 903, 111 N.Y.S.2d 752 (1st Dep't 1952) (conflict between New York and foreign judgment). This rule, Judge Sofaer noted, follows from the propositions that one trial-in the second forum-of the issue whether the first forum's judgment was conclusive is enough, and that the party losing in the second forum should appeal that judgment, not relitigate the issue in the third forum. 517 F. Supp. at 625-26; see Treinies v. Sunshine Mining Co., 308 U.S. at 77-78, 60 S. Ct. at 50. The husband in this case, however, "did not even attempt to pursue an appeal of the English judgment." 517 F. Supp. at 626.
Acknowledging that some scholars have criticized the application of the last-in-time rule to judgments by foreign forums,*fn5 Judge Sofaer examined the English court's impartiality and reasoning about the res judicata effect of the California dismissal, and found neither wanting in any respect. Id.
Learned professional assistance was enlisted in this attempt at a legal tour de force to remake the husband, the author of a book entitled Money, Ego, Power, into a legal Harry Houdini, escaping all of his many unpaid obligations through the California clerk's dismissal. As the English court observed, however, giving res judicata effect to the California dismissal "would mean that the Plaintiff would never have had her opportunity to litigate and that all her remedies under an apparently handsome agreement would be barred everywhere and for ever." If the law is such that the husband in this situation is to prevail, then as Mr. Bumble said in Oliver Twist, it is "a ass, a idiot." We must examine it with great care nevertheless.
On appeal the husband argues that until superseded by another judgment entitled to full faith and credit, the California judgment retains the effect it would have in California. The English judgment, he contends, not being that of a sister state, is not constitutionally entitled to full faith and credit, nor to superseding effect under the last-in-time rule. The California dismissal with prejudice, the husband continues, was valid under California law,*fn6 and would have res judicata effect in California. It would thus preclude the wife's recovery on the claims she made for support, as well as her unalleged but assertedly nonseverable claims under the property settlement. In light of this preclusive California judgment, he concludes, the wife cannot enforce the English judgment.
It is clear, however, that if the California dismissal would not be given preclusive effect in California, it need not be given such effect in New York. The Constitution and federal law*fn7 entitle a judgment to no more faith or credit in the enforcing state than it would receive in the judgment state. See, e.g., Thomas v. Washington Gas Light Co., 448 U.S. 261, 270, 100 S. Ct. 2647, 2655, 65 L. Ed. 2d 757 (1980); Morris v. Jones, 329 U.S. 545, 551, 67 S. Ct. 451, 455, 91 L. Ed. 488 (1947). And if New York need not give the California judgment preclusive effect, it is free to enforce the English judgment, and the question whether the English judgment supersedes the California judgment need not be reached. In short, if California would not give res judicata effect to the dismissal in this case, then the husband's arguments topple like a house of cards.
Having reviewed this issue independently, we have reached the same conclusion as the English court and the court below: this case is one of the "rare instances " in which the California courts would give equitable relief from the doctrine of res judicata under Greenfield v. Mather, 32 Cal.2d 23, 35, 194 P.2d 1, 8 (1948).*fn8 Justice Boreham, after hearing expert academic testimony from both sides on the applicability of the Greenfield doctrine, concluded that the doctrine was "alive in California" to be "applied only in very special circumstances," and that he was "far from satisfied that it would not be applied" here. Judge Sofaer concluded that "(i)f the California courts are to apply the Greenfield doctrine in any case, it is likely that they would apply it here...." 517 F. Supp. at 622. We agree, and therefore affirm the grant of summary judgment to the wife for enforcement of the English judgment.*fn9
In Greenfield*fn10 the California Supreme Court wrote that in rare cases the doctrine of res judicata "will not be applied so rigidly as to defeat the ends of justice or important considerations of policy." 32 Cal.2d at 35, 194 P.2d at 8. Over twenty years later, the Court declined to overrule Greenfield but noted that
We consider the Greenfield doctrine of doubtful validity and it has been severely criticized. (See 4 Witkin, (Cal.Proc. (2d ed. 1971) ), Judgment, § 150, p. 3295, et seq.) While we find it is unnecessary for our present purposes to reach the question of whether Greenfield itself should be directly overruled, we expressly hold that the rule of that case is inapplicable where, as here, the only possible basis for its implementation is founded on a change in law following the original judgment.
Slater v. Blackwood, 15 Cal.3d 791, 796, 543 P.2d 593, 595, 126 Cal.Rptr. 225, 227 (1975). Some subsequent decisions have followed the holding in Slater on similar facts, i.e., when a second lawsuit was brought on an old cause of action after a change in the law, see, e.g., Smith v. Brovan, 97 Cal.App.3d 19, 25, 158 Cal.Rptr. 515, 518 (1979), which is not the situation here. Other subsequent decisions have declined to apply Greenfield because the parties seeking equitable relief had not demonstrated that application of res judicata would cause them injustice, see, e.g., Carroll v. Puritan Leasing, 77 Cal.App.3d 481, 489-90, 143 Cal.Rptr. 772, 778-79 (1978), which is also not the situation here. In no California case has Greenfield been overruled, or the dictum in Slater been applied to foreclose equitable relief from res judicata.
Rather, California intermediate appellate courts have followed Greenfield, granting equitable relief from res judicata in marital or family actions. In Jackson v. Jackson, 253 Cal.App.2d 1026, 62 Cal.Rptr. 121 (1967), decided before Slater, a husband was not permitted to avoid arrearages on a marital property settlement by interposing a prior erroneous judgment that the settlement was not merged in the divorce decree, a result the court said would have defeated the ends of res judicata by forcing the wife into further, duplicative litigation to obtain such a merger.
In Hight v. Hight, 67 Cal.App.3d 498, 136 Cal.Rptr. 685 (1977), noting that Greenfield had been questioned but not overruled in Slater, the court disregarded the Slater dictum and concluded that "this is a situation calling for application of the Greenfield doctrine," 67 Cal.App.3d at 503, 136 Cal.Rptr. at 687. In Hight a wife living in Colorado and seeking support arrearages from her former husband in California was represented in absentia by a California district attorney, who failed to solicit any evidence from her that might have rebutted the husband's successful affirmative defense that she had frustrated his visitation rights. In a second action, which the wife brought personally in California, the court refused to give res judicata effect to the previous judgment in the husband's favor, noting that the merits of the affirmative defense were never meaningfully tried. A later case, citing Hight, noted that "(t)he Greenfield rule will be applied where the record shows the lack of a fair opportunity to litigate the issue of support." Ruddock v. Ohls, 91 Cal.App.3d 271, 281, 154 Cal.Rptr. 87, 91 (1979) (dictum) (holding that a settlement between parents was not res judicata of their child's right to litigate for support). This is in keeping with the general American rule favoring equitable relief from res judicata in cases in which "a party was deprived of an opportunity adequately to present his claim or defense." Restatement (Second) of Conflict of Laws § 115, Comment a, Comment e (1971). See also Restatement (Second) of Judgments ch. 5 passim (Tent. Draft No. 6, 1979).
Mrs. Ackerman surely had no more meaningful an opportunity to litigate in California than did Mrs. Hight. Mrs. Ackerman's California action involved only quasi-in-rem jurisdiction based on property worth much less than she thought when she filed her complaint. She sued only for past due support obligations, not for the much larger amount owed under the property settlement. The husband's attorneys advised her attorneys that the husband did not intend to appear in or defend the action or to file a responsive pleading. By the time she acquired personal jurisdiction over the husband in England, where he had moved of his own volition, he had still not answered the wife's California complaint, and the statutory time for answering, Cal.Civ.Proc.Code § 412.20(a)(3), had expired. In these circumstances she had no incentive to litigate. Nonetheless she was deprived, by the neglect of her California counsel over several months to follow her instructions, of the opportunity to discontinue this dormant action without prejudice. Finally, the clerk's disposition of the requests for dismissal was on its face ambiguous. These circumstances seem to us sufficiently exceptional to warrant application of the Greenfield doctrine. We note that it would be especially unjust to preclude her claim under the property settlement,*fn11 on which there were no pleadings or evidence in the California action, see Greenfield, 32 Cal.2d at 34, 194 P.2d at 8, and which was adjudicated fully for the first and only time in the English action.
California would not give res judicata effect to the dismissal here. Therefore New York, in giving the dismissal full faith and credit, need not give it preclusive effect. Thus no antecedent judgment stands in the way of enforcing the English judgment, to which Judge Sofaer's decision below gave full effect.
Judgment affirmed for the reasons stated in this opinion.