v. Martin Carlin, Index No. 18232/87, (Oct. 29, 1987), at 2,
annexed to Etkin Affidavit as Exhibit B [hereinafter
"Application of Gold Hawk Joint Venture"].
On November 16, 1987, Carlin and the other defendants in the
Texas action moved to set aside the Judgment by Order to Show
Cause in the Northern District of Texas. See Order to Show
Cause, Gold Hawk Joint Venture v. Gold Hawk Investments Co.,
CA4-87-205-K, (N.D.Tex. Nov. 6, 1987), annexed to Etkin
Affidavit as Exhibit C. On March 7, 1988, the Court denied
Carlin's motion and upheld the Judgment. See Memorandum
Opinion. To execute on the Judgment, one of plaintiff's New
York properties, 175 Crary Avenue, Mt. Vernon, NY, was sold at
a Sheriff's sale, at which GHJV was the successful bidder.
Carlin appealed the district court's decision to the United
States Court of Appeals for the Fifth Circuit, which affirmed
the lower court. See Gold Hawk Venture v. G. H. Investment,
869 F.2d 1486 (5th Cir. 1989). Judge Gurahian subsequently granted
GHJV summary judgment in the enforcement action.
On April 5, 1990, Carlin filed a complaint in the Supreme
Court of the State of New York, Westchester County, challenging
the Judgment on the grounds that the cause of action was not
ripe for adjudication. This complaint was dismissed on the
grounds of res judicata and that the Judgment was not subject
to collateral attack. See Decision and Order, Carlin v. Gold
Hawk Joint Venture, Free Lunch, Inc., the State of New York,
and the United States of America, No. 6113-1990, Supreme Court
of the State of New York, County of Westchester, (Feb. 28,
1991), annexed to Etkin Affidavit as Exhibit E.
On April 1, 1991, Carlin filed the present complaint in the
New York Supreme Court, Bronx County and a Notice of Pendency
on the Crary Avenue property with the County Clerk of
Westchester County. In the present action, plaintiff asks for
indemnification from any judgment entered against him by the
FDIC as receiver of Sunrise in a suit now pending against both
plaintiff and defendants, and asks that GHJV be enjoined from
selling the Crary Avenue property and other New York property
obtained from him unless and until judgment is entered against
GHJV in the FDIC action. Plaintiff further requests that if
judgment is entered against GHJV in that action, GHJV be
directed to partially satisfy that judgment by transferring its
interest in the New York properties to the FDIC. Finally,
plaintiff asks that if the FDIC suit is dismissed or satisfied
for less than the fair market value of his New York properties,
that those properties, or the difference in value, be returned
to him. The action was removed to this Court on April 30, 1991.
On May 7, 1991 defendants GHJV, Purvis, and Estate of Jack H.
York moved to dismiss the complaint, cancel the Notice of
Pendency, and award a permanent injunction against plaintiff
under Fed.R.Civ.P. 65. Plaintiff has not responded to this
In considering a motion to dismiss for failure to state a
claim, the Court must take plaintiff's allegations as true.
See Hospital Building Co. v. Trustees of Rex Hospital,
425 U.S. 738, 740, 96 S.Ct. 1848, 1850, 48 L.Ed.2d 338 (1976); Miree v.
DeKalb County, 433 U.S. 25, 27 n. 2, 97 S.Ct. 2490, 2492 n. 2,
53 L.Ed.2d 557 (1977). The Court must construe the complaint in
a manner favorable to the non-moving party. See Scheuer v.
Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90
(1974). The Court should dismiss the complaint only if "it
appears beyond doubt that the plaintiff can prove no set of
facts in support of his claim which would entitle him to
relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99,
101-02, 2 L.Ed.2d 80 (1957) (footnote omitted); Goldman v.
Belden, 754 F.2d 1059, 1065 (1985).
A. Res Judicata
Defendants argue that the doctrine of res judicata prevents
the present litigation and that therefore plaintiff's complaint
must be dismissed for failure to state a claim upon which
relief can be granted. Fed.R.Civ.P. 12(b)(6); see Etkin
Affidavit at 2. Defendants allege that the issues raised
in the present complaint have been fully adjudicated in the
federal courts in Texas and in the state courts of New York.
See Memorandum of Law in Support of the Motion of the Gold Hawk
Defendants to Dismiss the Complaint, Cancel the Notice of
Pendency, and Award a Permanent Injunction, May 7, 1991, at 6-7
[hereinafter "Memorandum of Law"].
1. The Prior Federal Action
a. Federal Preclusion Law is Controlling
Under the doctrine of res judicata, a final judgment on the
merits bars the parties or their privies from relitigating
issues that were or could have been raised in that action.
Federated Department Stores v. Moitie, 452 U.S. 394, 398, 101
S.Ct. 2424, 2427, 69 L.Ed.2d 103 (1981); Amalgamated Sugar Co.
v. NL Industries, Inc., 825 F.2d 634, 639 (2d Cir.), cert.
denied, 484 U.S. 992, 108 S.Ct. 511, 98 L.Ed.2d 511 (1987). The
Texas action was litigated in federal court under diversity
jurisdiction. 28 U.S.C. § 1332(a)(1). The present action is
also before this Court pursuant to Section 1332(a)(1). When a
prior action is decided under federal question jurisdiction, it
is clear that federal law is used to determine its res judicata
effect. However, there is a split in authority over whether the
effect of the prior diversity judgment should be evaluated
under federal or state preclusion law. See Johnson v. Eli Lilly
and Co., 689 F. Supp. 170, 172 (W.D.N.Y. 1988) (noting split in
circuits and listing cases).
While the Second Circuit has not ruled on this issue, it has
suggested in dictum that federal law should apply. See Gelb v.
Royal Globe Insurance Co., 798 F.2d 38, 42 n. 3 (2d Cir. 1986),
cert. denied, 480 U.S. 948, 107 S.Ct. 1608, 94 L.Ed.2d 794
(1987). In Gelb, Judge Newman stated:
[T]he Supreme Court has required the federal
courts to give state judgments such collateral
estoppel and res judicata effect as would the
courts of the rendering state. This rule applies
even where the state judgment adjudicates federal
questions. Thus, a state court's power to declare
the victor in a particular controversy includes the
power to define the scope of the victory. It would
seem that federal courts must possess an equivalent
power and that federal law should determine the
preclusive effect of a federal judgment, without
regard to the basis of jurisdiction.
Id. (citations omitted); see also Phoenix Canada Oil Co. v.
Texaco Inc., 749 F. Supp. 525, 533 n. 12 (S.D.N.Y. 1990)
(applying federal law to measure preclusive effect of prior
federal diversity judgment); Johnson v. Eli Lilly and Co.,
689 F. Supp. 170, 172-73 (W.D.N.Y. 1988) (similarly).
In Johnson, the court further explained that the interest in
protecting a federal diversity judgment is "primarily federal
in nature" and that the application of federal preclusion law
in this situation would not undermine the central interests
that the Erie doctrine was meant to protect: the state's
interest in having its law applied in what would be a state
action but for the existence of diversity jurisdiction, and
elimination of the tendency for forum shopping. Johnson, 689
F. Supp. at 173.
It is also worth noting that the Fifth Circuit, where the
prior litigation in the case before us occurred, has adopted
the position that federal law should determine the preclusive
effect of a prior federal diversity judgment in a subsequent
diversity action. See Aerojet-General Corporation v. Askew,
511 F.2d 710, 716-18 (5th Cir.), cert. denied, 423 U.S. 908, 96
S.Ct. 210, 46 L.Ed.2d 137 (1975).
For all of the above reasons, we believe that it is
appropriate to apply federal preclusion law in the present
action. We note, however, that the use of Texas law, the
applicable state law here, would make no difference to the
outcome of this case. The standard of res judicata applied
under Texas law appears essentially similar to that utilized in
federal preclusion law: "[t]he judgment in the first suit
precludes a second action by the parties and their privies not
only on matters actually litigated, but also on causes of
action or defenses which arise out of the same subject matter
and which might have been litigated in the first suit."
Texas Water Rights Commission v.
Crow Iron Works, 582 S.W.2d 768, 771-72 (Tex. 1979); see also
Gracia v. R.C. Cola-7-Up Bottling Co., 667 S.W.2d 517, 519
(Tex. 1984); Slatton v. Brazoria County Protective Services
Unit, 804 S.W.2d 550, 553 (Tex. Ct. App. 1991).
b. Application of Federal Preclusion Law to this Action
Res judicata prevents litigation of all grounds for recovery
or defenses to it that were previously available to the
parties, whether or not they were asserted or determined in the
prior proceeding. Brown v. Felsen, 442 U.S. 127, 131, 99 S.Ct.
2205, 2209, 60 L.Ed.2d 767 (1979); Bin Saud v. Bank of New
York, 734 F. Supp. 628, 632 (S.D.N.Y. 1990), aff'd, 929 F.2d 916
(2d Cir. 1991). It is a judicially created doctrine of
"fundamental and substantial justice" that encourages certainty
and reliance on judicial decisions, and promotes judicial
economy. Federated Department Stores, 452 U.S. at 401, 101
S.Ct. at 2429 (quoting Hart Steel Co. v. Railroad Supply Co.,
244 U.S. 294, 299, 37 S.Ct. 506, 507, 61 L.Ed. 1148 (1917));
Brown v. Felsen, 442 U.S. at 131, 99 S.Ct. at 2209. To support
a finding of res judicata, the defendant must demonstrate that:
(1) the court rendered a final judgment on the
merits in the prior case; (2) the prior suit
involved the same parties or their privies; and
(3) the plaintiff bases the subsequent suit on the
same causes of action.
G & T Terminal Packaging v. Consolidated Rail Corp.,
719 F. Supp. 153, 157 (S.D.N.Y. 1989), (citing NLRB v. United
Technologies Corp., 706 F.2d 1254, 1259 (2d Cir. 1983)).
The first requirement, that the prior Texas litigation
resulted in a final judgment on the merits, is clearly
satisfied, and does not necessitate prolonged discussion here.
Second, the doctrine of res judicata requires that the
subsequent action involve the same parties or those in privity
with parties to the first suit. For the purposes of res
judicata, the doctrine of privity "is to be applied with
flexibility." Amalgamated Sugar Co. v. NL Industries, Inc.,
825 F.2d 634, 640 (2d Cir. 1987); see also Cahill v. Arthur
Andersen & Co., 659 F. Supp. 1115, 1120-21 (S.D.N.Y. 1986),
aff'd, 822 F.2d 14 (2d Cir. 1987). Privity exists when the
interests of the nonparty were adequately represented in the
first action. Amalgamated Sugar Co., 825 F.2d at 640; Expert
Electric, Inc. v. Levine, 554 F.2d 1227, 1233 (2d Cir.), cert.
denied, 434 U.S. 903, 98 S.Ct. 300, 54 L.Ed.2d 190 (1977);
Index Fund, Inc. v. Hagopian, 677 F. Supp. 710, 715 (S.D.N Y
The relationship of the parties in the present action to
those in the prior Texas litigation is sufficient to meet the
identity of parties requirement. GHJV, a defendant here, was
the plaintiff in the Texas action. The individual defendants,
Tom Purvis, Estate of Jack York, and William Weeden, were not
named parties in the prior action. However, Purvis, York, and
Weeden were the joint venturers who composed GHJV. As such,
their interests were certainly represented by the entity of
GHJV in the prior action.
Third, it is also clear that the present claim is based upon
the same cause of action presented in the Texas litigation.
Under the Second Circuit's transactional approach, the actions
need be only related and not identical. Bin Saud v. Bank of New
York, 734 F. Supp. at 632 (citing G & T Terminal Packaging Co.,
Inc. v. Consolidated Rail Corp., 719 F. Supp. 153, 157 (S.D.N Y
1989)). The Court considers several related factors, including
whether the same transaction or series of transactions is at
issue, whether the same evidence is required for both claims,
and whether the facts necessary to the second action were
present in the first. Id; see also Phoenix Canada Oil Co. v.
Texaco, Inc., 749 F. Supp. 525, 533-34 (S.D.N.Y. 1990).
The Texas litigation was a direct action to set aside the
Judgment. This action is actually another challenge to the
Judgment. In essence, plaintiff alleges that the Judgment was
premature and therefore invalid, or alternatively that the
amount of the Judgment is inflated. See Complaint ¶¶ 23, 33-36,
38-39. Plaintiff's requests
for indemnification, an injunction, and other actions derive
from his challenge to the validity of the Judgment. For res
judicata purposes, the present case is based on the same cause
of action as the prior Texas litigation.
Res judicata bars the relitigation of issues that were or
could have been raised in the prior action. Plaintiff's
complaint here raises the same issues of ripeness and
subsequent calculation of damages that were litigated and
resolved in the Texas action. In the opinion denying the motion
in the district court of the Northern District of Texas, Judge
Belew stated that defendants:
argue that the instant action is premature and
until Sunrise (or, by operation of law, FSLIC)
sues Defendants on the guaranty to Sunrise. With
this contention, the Court cannot agree. In the
Court's opinion, Plaintiff's complaint did indeed
set out a valid ripe cause of action.
Memorandum Opinion at 18-19. The Judge declined to review the
determinations of the damages hearing at this point. The Court
noted that defendants had submitted a post-hearing letter
including "what they characterized as new evidence suggesting
that the calculation of damages was erroneous." Memorandum
Opinion at 19 n. 33. The Court stated that though it was
inclined to believe that such evidence was improperly before
the Court, if the defendants presented it to the Court via an
appropriate vehicle, the Court would consider modifying the
Judgment at that time. Id. Mr. Carlin did raise this issue, as
well as the ripeness issue, in his appeal to the Fifth Circuit
Court of Appeals. See Exhibit A, at 29-33, annexed to the
Memorandum of Law. This appeal was denied, and no petition for
certiorari to the Supreme Court was filed. See Memorandum of
Law, at 10-11. Clearly the issues now raised by the plaintiff
were raised and resolved in the Texas litigation. Under the
doctrine of res judicata, the current action is barred by the
prior litigation in federal court.
2. The New York State Court Action
Carlin brought another action against GHJV and others in the
Supreme Court of New York, Westchester County, in which he
raised the ripeness issue. The court dismissed the action on
res judicata grounds due to the Texas litigation. See Carlin v.
Gold Hawk Joint Venture, Free Lunch, Inc., the State of New
York and the United States of America, Index No. 6113-1990,
(N.Y. Sup. Ct. Feb. 28, 1991). This decision provides
additional confirmation that the doctrine of res judicata bars
relitigation in the present action of the issues raised in the
Texas suit.*fn2 However, even further, the New York state
court decision is itself a prior proceeding which may have a
preclusive effect on the current action.
In determining the preclusive effect of a state court
decision, the federal courts are bound by the Constitution's
Full Faith and Credit clause, as implemented by
28 U.S.C. § 1738.*fn3 It is well settled that "Section 1738 requires
federal courts to give the same preclusive effect to state
court judgments that those judgments would be given in the
courts of the State from which the judgments emerged." Kremer
v. Chemical Construction Corp.,
456 U.S. 461, 466, 102 S.Ct. 1883, 1889, 72 L.Ed.2d 262 (1982);
Benjamin v. Coughlin, 905 F.2d 571, 575 (2d Cir.), cert.
denied, ___ U.S. ___, 111 S.Ct. 372, 112 L.Ed.2d 335 (1990).
Accordingly, the preclusive effect in the Court of the action
in New York State Supreme Court, Westchester County, is
determined by New York law.
New York has adopted the transactional approach to res
judicata that is used under federal law. Res judicata
"prohibits a party from relitigating any claim which could have
been or should have been litigated in a prior proceeding.
Pursuant to the doctrine of res judicata `once a claim is
brought to a final conclusion, all other claims arising out of
the same transaction or series of transactions are barred, even
if based upon different theories or if seeking a different
remedy.'" County of Nassau v. New York State Public Employment
Relations Bd., 151 A.D.2d 168, 185, 547 N.Y.S.2d 339, 349
(App. Div. 1989), aff'd, 76 N.Y.2d 579, 563 N.E.2d 266, 561
N YS.2d 895 (1990) (quoting O'Brien v. City of Syracuse, 54
N Y2d 353, 357, 429 N.E.2d 1158, 1159, 445 N.Y.S.2d 687, 688
(1981) (citations omitted)); see also In the Matter of Louis
Hodes v. Axelrod, 70 N.Y.2d 364, 372-73, 515 N.E.2d 612, 616,
520 N.Y.S.2d 933, 937-38 (1987). The New York state court
judgment dismissing the complaint with prejudice constitutes a
final judgment on the merits. Plaintiff here was the plaintiff
in the state court action and present defendant GHJV was a
defendant in that action. As explained supra, the interests of
the individual defendants here were sufficiently represented by
GHJV in the prior action to consider them identical parties for
res judicata purposes. Finally, the ripeness issue raised here
is the same one that was raised in the prior state action. See
Carlin v. Gold Hawk Joint Venture, Free Lunch, Inc., The State
of New York, and the United States of America, Index No.
6113-1990, (N.Y. Sup. Ct. Feb. 28, 1991). Thus, the current
action is precluded by the New York state judgment, as well as
the litigation in the federal courts of Texas.
For all of the foregoing reasons, it is clear that the
doctrine of res judicata bars the present action. Finally, as
we noted in a similar context, the fact that the plaintiff has
proceeded pro se cannot alter this conclusion. See Kent v. New
York City Dept. of Sanitation, 549 F. Supp. 570, 573 (S.D.N Y
1982), aff'd, 722 F.2d 728 (2d Cir.), cert. denied,
464 U.S. 941, 104 S.Ct. 357, 78 L.Ed.2d 320 (1983). For, despite the
federal courts' generally flexible approach to pro se
pleadings, the pro se litigant must be bound by the same rules
of law, including preclusion law, as those represented by
counsel. Id. The defendants' motion to dismiss for failure to
state a claim is therefore granted.*fn4
Defendant William Weeden has previously filed a petition in
bankruptcy and pursuant to section 362 of the Bankruptcy Code,
all litigation activities relating to him or his property are
stayed. 11 U.S.C. § 362; see Letter from Marshall Day, Esq. to
Martin Carlin, April 2, 1991, annexed as Exhibit 2 to Verified
Petition for Removal, Bronx County Index No. 8790-1991, April
30, 1991. This Court further notes however that res judicata
precludes the present action against defendant Weeden, a joint
venturer of Gold Hawk Joint Venture, and is therefore also
dismissed as to him.
B. The Notice of Pendency
Because the motion to dismiss the complaint is granted, the
Notice of Pendency must be cancelled. We do not think it is
necessary to reach the question of proper service, and
therefore we do not consider whether plaintiff should be
enjoined from filing subsequent Notices of Pendency under New
York CPLR § 6512.
C. Injunction and Sanctions
Defendants ask this Court to grant a permanent injunction
barring plaintiff from bringing suit in any forum "against any
of the defendants based on any issue
previously litigated and adjudicated in the previous lawsuits"
to which he was a party. Memorandum of Law at 17. It is well
settled that federal courts possess the authority to enjoin
parties from future vexatious litigation. 28 U.S.C. § 1651; see
In re Hartford Textile Corp., 681 F.2d 895, 897 (2d Cir. 1982)
(per curiam), cert. denied, 459 U.S. 1206, 103 S.Ct. 1195, 75
L.Ed.2d 439 (1983). Irreparable injury and inadequate remedy at
law, the traditional measures for injunctive relief, are not
applicable to injunctions against a vexatious litigant. See
Polur v. Raffe, 912 F.2d 52, 57 (2d Cir. 1990), cert. denied,
___ U.S. ___, 111 S.Ct. 1389, 113 L.Ed.2d 446 (1991); In re
Martin-Trigona, 737 F.2d 1254, 1262 (2d Cir. 1984). The federal
courts have an institutional concern and obligation to "protect
their jurisdiction from conduct which impairs their ability to
carry out Article III functions." In re Martin-Trigona, 737
F.2d at 1261. In deciding whether to issue an injunction, the
Court must determine if "a litigant who has a history of
vexatious litigation is likely to continue to abuse the
judicial process and harass other parties." Safir v. United
States Lines, Inc., 792 F.2d 19, 24 (2d Cir. 1986), cert.
denied, 479 U.S. 1099, 107 S.Ct. 1323, 94 L.Ed.2d 175 (1987);
see also In re Martin-Trigona, 737 F.2d at 1262. However, as
Judge Weinfeld noted in Kane v. City of New York, "litigious
affinity alone does not support the grant of an injunction, for
`access to the Courts is one of the cherished freedoms of our
system of government.'" Kane v. City of New York, 468 F. Supp. 586,
590 (S.D.N.Y.), aff'd, 614 F.2d 1288 (2d Cir. 1979)
(quoting Ex parte Tyler, 70 F.R.D. 456, 457 (E.D.Mo. 1975)).
Plaintiff first litigated the issues of ripeness and
calculation of damages in his action in the Northern District
of Texas and appeal to the Fifth Circuit. He again raised these
issues in New York state court in Westchester County, which was
dismissed on res judicata grounds. Less than two months later,
Carlin filed the present complaint in New York state court in
Bronx County. At each stage, Mr. Carlin's attempts to
invalidate the Judgment against him have been denied.
It is clear that at this juncture, Mr. Carlin's litigation
has become duplicative, and that after this Court's dismissal
of the present action he can no longer hold an objective good
faith expectation of prevailing in any future litigation in
this matter. However, denial of access to the Court is a
serious matter and injunctions against such access must be
issued only sparingly. See Raffe v. John Doe, 619 F. Supp. 891,
898 (S.D.N.Y. 1985); Kane v. City of New York, 468 F. Supp. at
590. The history of this litigation to this point simply does
not demonstrate the level of vexatiousness or harassment that
has convinced the courts in this Circuit to issue such
injunctions. See, for e.g., In the matter of Hartford Textile
Corp., 681 F.2d 895, 896-97 (2d Cir. 1982) (issuing injunction
after "almost unparalleled history" of over one hundred
frivolous and repetitious claims, motions, petitions, demands,
and appeals arising out of bankruptcy court's denial of
executrix's claim, and after warning that continuation may
result in injunction); Sassower v. Sansverie, 885 F.2d 9, 10-11
(2d Cir. 1989) (per curiam) (upholding district court's
enforcement of injunction issued due to litigant's "avalanche
of litigation"). Even in Sassower, where the Second Circuit
found the litigant's appeal frivolous and noted that it was the
sixth appeal filed with them in one year, that Court did not
enjoin him from free access to them, but instead warned him
that such an injunction would be forthcoming if he continued to
abuse the judicial process. Sassower, 885 F.2d at 11.
Finally, and perhaps most important, we note that Mr. Carlin
has failed to respond to the defendants' motion to dismiss this
action. It may be that he realizes that the value of this
litigation has come to an end.
For these reasons, we do not believe it is appropriate at
this point to grant defendants' request to enjoin plaintiff
from any action relating to the issues previously adjudicated
against him. Further, we do not at this stage believe that
granting an award of attorneys' fees or sanctions against this
pro se litigant would be productive. With the dismissal of this
complaint, the litigation surrounding the validity
of the Judgment should be at an end and enforcement of that
Judgment may proceed.
However, we give plaintiff fair warning that, apart from a
direct appeal of this Court's decision, any further litigation
of these issues will be considered frivolous and vexatious, and
may result in the issuance of injunctive relief, as well as an
award of attorneys' fees and sanctions against him.
For the reasons set forth above, plaintiff's complaint is
dismissed with prejudice as to all defendants. The Westchester
County Clerk shall cancel the Notice of Pendency filed in this
action. Defendants' requests for a permanent injunction, costs,
and sanctions against plaintiff are hereby denied.