227 So. 3d 612
Fla. Dist. Ct. App.2017Background
- Philadelphia Financial Management and Blue Lion sued DJSP and individual defendants in federal court (2010) asserting securities and related claims; the amended complaint was dismissed without prejudice for pleading deficiencies.
- Plaintiffs filed a second federal suit (2012) asserting the same federal claims plus state-law fraud and negligent misrepresentation, pleading both federal-question and diversity jurisdiction (and seeking supplemental jurisdiction over state claims).
- The magistrate judge recommended dismissal as the second complaint largely repeated prior allegations and recommended dismissing the pendent state claims; the district court adopted the recommendation and dismissed the case; the Eleventh Circuit affirmed, noting plaintiffs abandoned arguments on the state-law claims on appeal.
- Plaintiffs then filed the same state-law claims in Broward County circuit court; defendants moved for summary judgment arguing res judicata based on the federal judgment.
- The state trial court granted summary judgment, holding the federal dismissal was a final judgment on the merits and barred the state action because plaintiffs had the opportunity to pursue diversity jurisdiction in federal court but failed to do so; the Fourth DCA affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1. Whether newly discovered evidence prevents res judicata | New evidence discovered after federal judgment defeats preclusion | New evidence does not avoid preclusion absent concealment or due-diligence barrier | Denied — new evidence does not overcome res judicata absent fraud or inability to discover earlier (affirmed) |
| 2. Whether the federal dismissal was a final adjudication on the merits precluding state suit | Federal dismissal was not an adjudication on the merits; thus state claims may proceed | Federal dismissal (and plaintiffs’ failure to invoke available diversity jurisdiction) was a final judgment precluding relitigation of the same state claims | Held for defendants — dismissal constituted final adjudication for res judicata because plaintiffs abandoned their opportunity to litigate state claims in federal court (affirmed) |
Key Cases Cited
- Semtek Int’l Inc. v. Lockheed Martin Corp., 531 U.S. 497 (federal common law governs preclusive effect of federal judgments)
- Kale v. Combined Ins. Co. of Am., 924 F.2d 1161 (1st Cir. 1991) (plaintiff must pursue available jurisdictional routes in original federal action or be precluded)
- Shurick v. Boeing Co., 623 F.3d 1114 (11th Cir. 2010) (dismissal of federal claim precludes related state claim arising from same nucleus of operative facts)
- Philip Morris USA, Inc. v. Douglas, 110 So. 3d 419 (Fla. 2013) (standard of review and discussion of res judicata terminology)