Appeal by the plaintiff from a judgment entered on an order of United States District Court for the Southern District of New York, Kevin T. Duffy, Judge, holding the plaintiff's cause of action for breach of contract barred by res judicata.
Kaufman, Timbers, and Newman, Circuit Judges. Newman, Circuit Judge, concurring.
This appeal from a judgment entered on Judge Duffy's order, 545 F. Supp. 438, raises an unusual issue concerning the application of res judicata. That doctrine is rooted, of course, in considerations of finality and repose, and bars relitigation of issues which were or could have been adjudicated in an initial proceeding.
The facts underlying this dispute may be recounted briefly. PRC Harris, Inc. ("Harris"), an engineering firm, filed an action against The Boeing Company in the District of Columbia district court in April 1980, alleging failure to pay for services rendered. In October 1980 the case was transferred to the Western District of Washington on Boeing's motion. Chief Judge McGovern granted Boeing's motion for dismissal on September 21, 1981, holding the action time-barred pursuant to the applicable three year District of Columbia statute of limitations. Harris did not appeal this determination.
In May 1982 Harris filed a complaint in New York State Supreme Court, which it concedes is virtually identical to that filed in the initial action. Boeing responded by filing a petition pursuant to 28 U.S.C. § 1441, seeking to have the cause removed to the Southern District of New York. After removal Boeing petitioned for summary judgment, asserting that the dismissal in Washington operated as an adjudication on the merits, and that consideration of the subsequent suit was therefore prohibited by res judicata. Judge Duffy granted Boeing's motion, dismissed the action, and awarded Boeing attorney's fees in the amount of $2,135. Harris filed a timely notice of appeal to this court.
After its action had been dismissed by Judge Duffy and the notice of appeal was filed, Harris returned to the Western District of Washington and petitioned Chief Judge McGovern to amend the judgment entered on his order. The district judge granted the motion, and pursuant to Fed. R. Civ. P. 60(b)(6) amended the judgment to specify that the dismissal was without prejudice.
Harris raises a number of claims on this appeal. It contends, first, that Judge Duffy improperly held the initial Washington judgment to be an adjudication on the merits to which res judicata attached. Alternatively, Harris asserts that the subsequent modification of the Washington judgment undercuts the basis for Judge Duffy's holding. Finally, appellant challenges the award of fees to Boeing's counsel.
Fed. R. Civ. P. 41(b) governs the effect given involuntary dismissals. In relevant part, the Rule states, "Unless the court in its order for dismissal otherwise specifies, a dismissal . . . . other than a dismissal for lack of jurisdiction, for improper venue, or for failure to join a party under Rule 19, operates as an adjudication upon the merits." In such a situation, res judicata would preclude a subsequent action on the same claim. See Elfenbein v. Gulf & Western Industries, Inc., 590 F.2d 445, 449 (2d Cir. 1978) (per curiam); La Societe Anonyme des Parfums Le Galion v. Jean Patou, Inc., 495 F.2d 1265, 1275 (2d Cir. 1974).
In the instant dispute the initial dismissal of Harris's complaint did not entail a consideration of the substantive issues raised, because Chief Judge McGovern's action was based upon his conclusion that the contract claims were barred by the statute of limitations. The longstanding rule in this Circuit, however, is that a dismissal for failure to comply with the statute of limitations will operate as an adjudication on the merits, unless it is specifically stated to be without prejudice.*fn1 See Bertha Building Corp. v. National Theatres Corp., 248 F.2d 833, 840 (2d Cir. 1957); Sack v. Low, 478 F.2d 360 (2d Cir. 1973). See also Murphy v. A/S Sobral, 187 F. Supp. 163 (S.D.N.Y. 1960) (concerning a dismissal for laches); Wachovia Bank & Trust Co. N.A. v. Randell, 485 F. Supp. 39 (S.D.N.Y. 1979). Moreover, Rule 41(b) dictates that all but certain enumerated dismissals will be considered "on the merits," and the Rule does not exempt a dismissal on statute of limitations grounds from its general operation.*fn2 Appellant has advanced no persuasive grounds for departing from the clear terms of 41(b), and accordingly, we reject its assertion that the September 21, 1981 judgment allowed relitigation of the issues raised in that proceeding.
The unusual aspect of this case arises as a consequence of Chief Judge McGovern's amendment of his judgment after Judge Duffy had already granted Boeing's motion for summary judgment and dismissed Harris's claims. It is clear that if, at the time of entry, the Washington judgment had been denominated "without prejudice," Rule 41(b) would have been inapplicable, and Harris could legitimately have reasserted its allegations in another jurisdiction. See Elfenbein v. Gulf & Western Industries, Inc., supra. The issue before us is not presented in such pristine form, however. The original Washington decision did not purport to dismiss the claims without prejudice, and Harris successfully amended that judgment only after the completion of the action in the Southern District of New York.
Harris moved to amend the Washington judgment pursuant to Federal Rule 60, which provides that a party may petition for "relief from [a] judgment or order" on a series of enumerated grounds, or "for any other reason justifying relief from the operation of the judgment." Fed. R. Civ. P. 60(b)(6). This provision does not impose a particular time limit, but only requires that the motion be made within "a reasonable time." In considering whether a Rule 60(b)(6) motion is timely, we must scrutinize the particular circumstances of the case, and balance the interest in finality with the reasons for delay. Amoco ...