Cornus Corp. v. Geac Enterprise Solutions, Inc.
252 Or. App. 595
| Or. Ct. App. | 2012Background
- Cornus Corp. sued Geac and AMSI in Jackson County Circuit Court for breach of contract and related claims arising from a software sales contract.
- The case was removed to federal court based on diversity; later, the district court dismissed for failure to prosecute and comply with court orders (Rule 41(b) dismissal).
- Plaintiff moved for relief from the dismissal under FRCP 60(b); multiple motions were denied or abandoned, with the district court describing plaintiff’s former counsel’s conduct as negligent.
- In December 2007, Cornus filed the same or substantially similar claims in state court; defendants removed, then the district court remanded due to a forum-selection clause.
- The circuit court granted summary judgment for defendants, holding that the prior federal judgment barred the state action under claim preclusion; the court deferred to federal interests.
- The Oregon Court of Appeals reversed, holding that Oregon law governs the preclusion result and that the federal diversity dismissal was not an adjudication on the merits, so the state action could proceed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| What law governs the preclusion effect of a federal diversity judgment? | Oregon law governs preclusion. | Federal law (Semtek) controls when state law conflicts with federal interests. | Oregon law governs unless incompatible with federal interests. |
| Did Oregon preclusion doctrine bar the state action based on the federal dismissal for negligence/failure to prosecute? | Dismissal was not on the merits, so not preclusive under Oregon law. | Dismissal should be treated as an adjudication on the merits under Oregon law. | Oregon does not treat this dismissal as an adjudication on the merits; no claim preclusion. |
| Are Oregon’s and Semtek’s federal-interest exception applicable to a negligent failure to prosecute? | Federal interests require applying federal preclusion rule. | Federal interests justify applying federal rule in cases of willful or egregious conduct. | No broad federal-interest override; only willful conduct or willful violations trigger federal rule. |
| If Oregon law applies, does the prior federal judgment have claim preclusion effect here? | No preclusion under Oregon law since not a merits-based dismissal. | Prior dismissal has preclusion effect under federal rule to protect process integrity. | Oregon preclusion rule applies; the federal judgment was not on the merits; remand warranted. |
Key Cases Cited
- Semtek Int'l Inc. v. Lockheed Martin Corp., 531 U.S. 497 (2001) (federal-interest exception carve-out and state-law choice for preclusion in diversity cases)
- Rennie v. Freeway Transport, 294 Or. 319 (1982) (merits vs. procedural dismissals; preclusion under Oregon law depends on merits)
- Te-Ta-Ma Truth Foundation v. Vaughan, 114 Or. App. 448 (1992) (dismissal with prejudice generally creates res judicata; context matters)
- DeNardo v. Barrans, 59 P.3d 266 (Alaska 2002) (willful failure to follow orders triggers federal preclusion in state action)
- Brown v. Simmons, 270 S.W.3d 508 (Mo. Ct. App. 2008) (negligence vs. willful conduct; distinguishes DeNardo on conduct)