1. Res Judicata
The party that asserts res judicata preclusion bears the burden
of proving its claim. See Computer Associates Int'l, Inc. v.
Altai, Inc., 126 F.3d 365, 369 (2d Cir. 1997), cert. denied,
523 U.S. 1106, 118 S.Ct. 1676, 140 L.Ed.2d 814 (1998).
Specifically, it must prove that four conditions are met in order
to bar a later action: 1) the earlier action terminated with a
final decision on the merits; 2) the parties are identical; 3)
the prior court was competent; and 4) the two causes of action
are the same. See Corbett v. MacDonald Moving Services, Inc.,
124 F.3d 82, 87-88 (2d Cir. 1997).
Res judicata does not preclude this suit if the prior action
did not concern the same cause of action. Identity of the cause
of action is not subject to any automatic test. Instead, the
district court must examine whether "the same transaction,
evidence, and factual issues" are at stake in the current action
as in the prior one. Corbett, 124 F.3d at 89. The Second
Circuit has adopted a standard in which "the fact that both suits
involved essentially the same course of wrongful conduct is not
decisive; nor is it dispositive that the two proceedings involved
the same parties, similar or overlapping facts, and similar legal
issues." S.E.C. v. First Jersey Securities, Inc.,
101 F.3d 1450, 1463 (2d Cir. 1996) (internal citations and quotation marks
omitted). Instead, the two claims must typically involve such
similar transactions that "the same evidence is needed to support
both claims, and . . . the facts essential to the second were
present in the first." Id. at 1464 (internal citations and
quotation marks omitted); see also Computer Associates Int'l,
Inc., 126 F.3d at 369; Interoceanica Corp. v. Sound Pilots,
Inc., 107 F.3d 86, 91 (2d Cir. 1997).
Plaintiffs' alleged injury in this action is breach of the
Abatement CBA, while the earlier injury involved a breach of a
wholly separate contract, namely the separate CBA that Diamond
entered into. Accordingly, the present suit concerns whether
Abatement contracted to be financially responsible for dues
check-offs and fund payments for subcontractor employees. That
obligation is independent of Diamond's obligation and would stand
even if Diamond had never signed a collective bargaining
agreement with the Union. Although the two suits involve similar
and overlapping facts, they assert separate causes of action.
See, e.g., Usina Costa Pinto S.A. Acucar E Alcool v. Louis
Dreyfus Sugar Co., Inc., 933 F. Supp. 1170, 1177 (S.D.N.Y. 1996)
(allowing a fraud claim which arose from dealings between sugar
distributers after those parties had arbitrated their contract
claims regarding the same dealings). Res judicata therefore does
not bar this claim.
2. Equitable Estoppel
The doctrine of equitable estoppel permits a court to estop a
party from enforcing its rights against another where enforcement
would result in fraud or injustice. See In re Ionosphere Clubs,
Inc., 85 F.3d 992, 999 (2d Cir. 1996). It is imposed where "the
person against whom enforcement is sought and who, in justifiable
reliance upon the opposing party's words or conduct, has been
misled into acting upon the belief that such enforcement would
not be sought." Readco, Inc. v. Marine Midland Bank,
81 F.3d 295, 301 (2d Cir. 1996).
Abatement contends that plaintiffs' failure to include it as a
party in the earlier action against Diamond has prejudiced its
interests and that plaintiffs should be estopped from asserting a
claim in this case. Its claims of prejudice, however, do not bear
scrutiny. To the extent that Abatement believes it is precluded
from rebutting any evidence of damages asserted by plaintiffs, it
is wrong. The prior action against Diamond does not inhibit
Abatement from challenging any evidence presented at the damages
inquest ordered by this Court.
Abatement also claims it is prejudiced because it lost the
opportunity to assert
any counter or cross claims in the prior action. Defendant never
explains, however, why it would be unable to assert such claims
in the present action or in a separate action against Diamond
Finally, defendant claims that there are benefits to defending
the action on the merits in a single unitary suit, including the
opportunity to secure the production of documents and testimony
in support of its position from non-party Diamond. The Federal
Rules of Civil Procedure, however, authorize discovery from
non-parties as well as parties.
In sum, Abatement has not established how its failure to be
named as a party in the prior action against Diamond has
prejudiced it, and its claim that plaintiffs should be equitably
estopped from pursuing this action is not meritorious.
As noted above, plaintiffs seek summary judgment on the issue
of damages as well as on liability; Abatement claims that, at a
minimum, a hearing is necessary to establish the amount of
damages. In light of issues of fact raised in the supporting
affidavits concerning the reliability of the underlying project
log books, remittance reports and shop steward reports, an
inquest shall take place to determine the proper amount of
For the foregoing reasons, defendant's motion for summary
judgment is denied and plaintiffs' motion for summary judgment is
granted as to liability and denied as to damages. An inquest
shall take place to determine the proper amount of damages.