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Culture Documents
CAMPBELL,
Hospital
Trust
Bogosian
on two separate
Belmont
National Bank
Realty
herself
(the
("Belmont") and
Note").
initiated
was
res
The district
judicata
executed by
guaranteed
by
by Bogosian
filed
in a bankruptcy court
by Belmont
counterclaims.
Bogosian
Island
sued Elizabeth
"Bogosian
earlier decision
"Bank")
Corporation
(the
Rhode
certain
held that an
adversary proceeding
as
to
Bogosian's
for
the
amended
Bank, finding
complaint
counterclaims.
in its
and
favor on
dismissing
Bogosian
appeals.
all counts
all
of
of its
Bogosian's
Belmont appeals
from the
court
adversary
proceeding.
from the
Bogosian's
and
We affirm in part
and
created
Belmont
for
the
purpose
of
in Newport
gave
the
guaranteed
Belmont Note
to
the Bank.
Though she
Bogosian personally
gave one-third of
-2-
Belmont's stock
to her
to her
daughter,
in a real
a bitter
brother.
Bogosian
accepted direct
outstanding loans
Bogosian and
her
personal liability
for
receiving
In
Belmont
the
governmental
Belmont defaulted on
order
necessary
to delay
and Middletown
foreclosure
on the
in early
properties,
Bankruptcy
Court for
"Bankruptcy
brought
the
Proceeding").
the instant
of
Rhode
September
the
Island
1989,
the
United States
Belmont.
In
action in
seeking to collect
District
as Guarantor of the
it from
second claim
Note.
court
District
Belmont Note,
add a
against Bogosian
Bank
"District Court
In October 1989,
(the
based on
the Bogosian
-3-
to "a
simple action
by a
over these
and
promissory notes
United States
Court,
promissory notes."
in three
They
have battled
separate arenas:
United States
leave
behind them
the
Bankruptcy
what
the
Bogosian
ignored
1990,
Belmont
the
District
Court
on the bankruptcy
filed
an
court where, in
adversary
the Bank.
Her
complaint (the
Belmont asserted
could be developed.
Less than six
months later,
decision
"Belmont
Belmont's
adversary
complaint.
determined
that
alleged
issued
(the
the
unenforceable by virtue
Laws.
9-1-4,
the bankruptcy
Decision")
The
oral
of the Statute of
and the
parol
court
would
be
evidence rule.
Bankr. 21
dismissing
bankruptcy
agreement
court
See In re
___ ______
(Bankr. D.R.I.
1990).
Belmont
Belmont Decision to
the district
-4-
B.
withdrew
allowed
in
March
1990,
the
district
against Bogosian.
court
The court
constituted
Bank
Belmont's
Adversary Proceeding.
claims
against
in
the
the
on the
grounds that
the
December
a motion by
on
"newly
1990,
however,
Bogosian to file
discovered"
the
district
court
amended counterclaims
information.
The
amended
the Bank,
as well
oral agreement
allegations of
fraud and
an
respect
district court
relating to Belmont
similarity of
pending in the
the issues
involved
in both
Note
Due to
cases, the
Thus,
-5-
on
the agreement.
The Order
entered a Consent
stated that the
issues," but
Order did
not refer
judicata effects
to
of the
Bankruptcy Appeal.
any agreement
Belmont Decision
as
to the
in the
res
Adversary
Proceeding.
The
already
purposes.
(normal
appeal notwithstanding,
constituted
final
See Katchen
___ _______
rules
of
bankruptcy courts);
judgment
v. Landy, 382
_____
res
judicata
Turshen v.
_______
the Belmont
for
res
U.S. 323,
apply
to
Chapman, 823
_______
Decision
judicata
334 (1966)
decisions
F.2d 836,
of
839
continues); Wright,
Procedure:
Miller &
Jurisdiction
Cooper,
4433 (1981)
under no practical
pending,
compulsion to
-6-
Belmont Decision.
to
Bogosian's
Belmont
to the
raise
If the
counterclaims in
the District
Court Action,
It was not
out any
were dismissed.
potentiality
occurred little
February 28,
to
dismiss the
Belmont had
had
never
more than
Bankruptcy Proceeding
failed to confirm
filed monthly
cash
on
a plan of
flow
Belmont
the
Bankruptcy
did not
Proceeding
object, and
the
later.
On
filed a motion
the grounds
that
reorganization and
and
a year
This
profit
and
loss
March
dismissal was
20,
1992.
considered
voluntary.
Neither Belmont
the
Bankruptcy
advised
of
Appeal.
the
nor Bogosian
The
consensual
district
dismissal
attempted to
court,
of
the
having been
Bankruptcy
reopen
Appeal
-7-
assertion by the
Bank of a res
Bank accordingly
Counterclaims
collateral
to
include
estoppel.
amended its
defenses
By leave of the
Answer to
of
res
Amended
judicata
and
that the
right of Elizabeth
any assertion in
Appeal.
dismissal was
Belmont
to
prejudice to
the
"without
defense or make
The district
summary judgment.
As for the
on res judicata
argument
that
the
Regarding
Bogosian's
amended
grounds.
Consent
The
court rejected
Order
should
be
on
the
court dismissed
grounds
that
-8-
Bogosian's
fraud and
breach of
fiduciary duty
allegations
-9-
II.
As
the Bogosian
to the Belmont
Note and
by considering the
grant of
summary judgment to
The key
issue on
appeal, as
it was
Belmont Note.
below, is
whether the
District Court
disagree
with
the
Action.
We hold
district
court
that it
was.
We
in
respect
to
only
of
uncertain
at
interest on
this
the
part
time whether
the
of the
Bank.
Belmont
We
are
decision had
on
its suit
to collect
judgment in favor of
on the
Belmont Note,
the Bank
the district
court held:
having had the opportunity to litigate
these issues in the Bankruptcy Court,
having received a final judgment on the
merits (right or
wrong), and having
failed to protect its rights with respect
to the appellate process, [Belmont] and
those in privity with it cannot attempt
to relitigate
these issues
in this
proceeding.
On the facts of this case,
any other result would undermine the
primary goal of the doctrine of res
judicata -- that there be finality in
litigation.
The
Dennis v.
______
district court's
point was
well
taken.
-10-
In
893, 898
(1st Cir.
1984), we
aspect of
res judicata
"that
was, or
subject matter
original)
explained that
(citations
"collateral
bars the
the "claim
relitigation of
raised in
litigation."
omitted).
estoppel,"
on
any claim
respect to
Id.
___
"Issue
the
preclusion"
(emphasis in
preclusion"
other
the
hand,
or
prohibits
the same
or on a
different claim.'"
original)
(quoting
(1982)).
We emphasized that
decided even
have
component
original).
Restatement,
when it is
constituted,
of
the
Second,
(emphasis in
Judgments
decision
or
practically,
reached."
the
exception of
issues
and
in section B
claims
the
Id.
___
necessary
in
4402.
of interest
below, we have
in
it may
(emphasis
conflict
litigated
27
be "actually"
logically
allegations discussed
the
Id.
___
that
the
no doubt
Adversary
to the Banks's
that defendant
summary
litigate
those
Proceeding.
judgment, Belmont
matters
Note
had every
exhaustively
On appeal, Bogosian's
in
incentive to
the
Adversary
principal contention
is
-11-
that the usual rules of res judicata should not apply in this
case.
Before
consider
and
turning
reject
to
three
Bogosian.
First, Bogosian
should not
party
in
nor
Proceeding.
privity
The
court
this
other
argument,
arguments
argues that
we
briefly
now
made
by
the district
court
not a
with
below,
party
in
the
Adversary
however, accurately
stated
that,
It is undisputed that Mrs. Bogosian is an
officer of [Belmont], that she participated
directly in obtaining the loan for [Belmont]
to purchase the Newport and Middletown, R.I.
to nothing
of law
or the
that makes
finding of
us doubt either
fact by
the
the district
59(3)(a) (1982)
shareholder who
behalf
of
the
shareholder
and
actively participates
corporation,
corporation
unless
are
so
in
an action
interests
different
on
of
the
that
the
guaranty
and that
"the preclusive
effect
of a
Bankruptcy
-12-
Court
See
___
1990).
issue, as
well as claim,
preclusion.
She does
not dispute
Belmont's
claims
and
that
the
issues
necessarily
in
the
District Court
Action.
Given that
again, even if
the bankruptcy
Decision through
produce
an
Proceeding.
"Source of
internal
sources
Repayment"
the
memorandum
for the
property
by
in
failing
the
to
Adversary
Belmont
Note the
for resale
and
"Sale
refinance
of
a
of repayment
evidence of
Bank
fraud,
assets/Conversion of
mortgage."
discovery
of the
a promise not
completion
of
loan;
it does
not amount
to require repayment
Belmont's
project.
But
to
until after
even
if the
record suggesting
fraud,
that the
Bank
engaged in
discovery
Belmont to engage
-13-
Belmont Decision.
in the District
was
weeks before
Belmont attempt
to bring
it
to the
time
attention of
the
argument here
is
bankruptcy court.
Bogosian's fourth
that the Bank
any res
judicata effects
agreed,
in the
of the
Consent Order,
counterclaims decided
than in
and principal
in
Belmont
to
have the
the District
Decision when
merits of
Court Action
Bogosian contends
the
rather
that the
leads ineluctably
effects
of the
to the
than in the
it
the
Bankruptcy Appeal
conclusion that
the res
Belmont
Decision
were
to
This scenario,
however,
ignores
be
judicata
permanently
cancelled.
the
fact
that,
initiate
further
proceedings in
that
appeal
at will.
of
to do so since, as
defense in
the
District
Action
could
be
-14-
counteracted
by
Belmont's
Appeal.1
It
bankruptcy
that
the
was when
reopening
Belmont
happy balance
its
voluntarily
Bankruptcy
dismissed its
of
of
power
The Bank
that had
supported
the
Consent Order
a missing contract
so.
Nothing
implication, shows
judicata defense.
in
which the
term to
the
Consent
an intent
If the
We see no reason to
Order, expressly
by the Bank
to waive
or
by
its res
by the
to their inability to
for it
find common
ground.
See
___
(1982).
We see
where
E.
Allan
Farnsworth,
nothing unjust
about
Contracts
_________
7.15-16
leaving the
parties
any special
____________________
1. Nor would the unresolved res judicata issue have lingered
to destabilize any judgment later reached in the District
Court Action.
Res judicata is an affirmative defense.
If
the Bank had allowed the District Court Action to proceed to
judgment without raising it, res judicata would have been
deemed waived at that point. Wright, Miller & Cooper, supra,
_____
4405. The judgment would stand, even if inconsistent with
the Belmont Decision. Of course, the chances are slight that
the judgments would remain inconsistent for long, as the
Bankruptcy Appeal could then be reopened and the Belmont
Decision reversed (if need be, to achieve consistency), the
same judge and court being in control of both proceedings.
-15-
agreement,
express or
implied, that
would
bar use
of the
by seeing that
Appeal.
She
failed to do
either.
Consent
Order
requiring
an
agreement
either by reading
that
does not
to amend its
exist,
into a
or
by
order dismissing
we are
not required
Court held
that
effect in a
as
moot
a judgment
either.
could be
to do
rendered unreviewable
by
the
appellate
There,
accorded res
though the
because it
court.
the
The
was
Court
dismiss
the
judgments below,
when the party
the lower court
appeal
with
instructions
destroying their
to
vacate
preclusive effects.
the
But
their peril.
Bankruptcy
Belmont
Appeal
"slept on [their]
not
"passing" of
automatically
a request for
vacate
the
vacatur, it was
not error for the district court to fail to order vacatur sua
___
sponte.
______
Five months after the district judge
appeal and
judicata
60(b)
over four
defense,
Belmont finally
Belmont Decision
motion
could
vacatur,
had no preclusive
be
generously
it is doubtful
Munsingwear.
___________
As the
the
its res
pursuant to
Rule
construed
that such a
as
Even if
a
such a
request
for
district court
noted, Belmont
should
As in
there
is hardship
in
this case,
it
was
Bank raised
moved
dismissed the
district
court erred
in
a colorable argument
passing
the Bankruptcy
Appeal when
it was
controlling law in
not in
fact moot.
While
there is
no
majority rule
-17-
to exercise
adversary proceedings
Collier
Bankruptcy
on Bankruptcy
Service, L.
349.03
Ed.
3C:99
&
nn. 4a,
(1989).
See
___
4b
(1993);
Some
courts
continue
U.S.C.
349(b).
a matter of
See,
___
e.g., In re Morris,
____ _____________
950 F.2d
1531
See,
___
Cas. 2d
Cal. 1982);
In re
_____
But Belmont
appeal
never contested
argument
on appeal
argument
is
dismissal was
that the
therefore
waived.
the
dismissal was
in error.
The
even
the
Moreover,
if
the dismissal of
Under
Munsingwear,
___________
Belmont
must
share
the
court's decision
denial of Belmont's
We
also
Rule 60(b)
based on conflict of
-18-
interest
described below,
we
affirm
court's
Note.
B.
the district
claim
of
fraud.
She
based
of
this
claim
on
the
much
forth
properly
than the
granted
Belmont Note.
summary
The
judgment
district
as
to
these
allegations.
Bogosian made one factual allegation concerning the
Belmont
Note,
considered in
before
however,
that
the Adversary
agreeing
to borrow
Bank was
Given
businesses in which
Bogosian
with
the
the
money for
the Bank,
acrimonious
could
not
been
She claimed
that
the
assurances
with any
dissolution
concerned that
would amount to
Newport and
she sought
According to Bogosian,
was
Proceeding.
was allegedly
the brothers
apparently
of her
of several
her brothers,
Bank relationship
a conflict
of interest.
that it
Note.
-19-
In
barred this
granting summary
preclusion would
fraud in
enter
not have
barred
into a
contract
themselves.
Such a claim
pertains to an
District Court
she
grounds.
Without
Her assertion is
favorable to Bogosian,
Belmont did not
discovered
the
hardly air-
this misrepresentation
time
Nevertheless,
in
the
it would be reasonable to
ignorance, claim
have
dismissal of
The
knowing more,
Action began.
Proceeding.
terms
was properly
Adversary
the contract
of interest
inducement to
this conflict
to
to
however.
however, we cannot
tight:
this claim,
Issue
on claim preclusion
this claim.
district court
rather than
barred
judgment, the
most
infer that
preclusion might
light
4415.
not apply.
As
particular fraud claim was not clear from its order, we think
-20-
it is best to
remand
for
further
choose
to accept
proceedings.
additional
as to this claim
The
argument
district
as
to
and
court may
whether
the
material fact
on the merits
summary judgment.
Or else the
has created a
of the
reason the
genuine issue of
claim so as
to survive
-21-
III.
We turn last to the Bogosian Note.
Bogosian admits
been paid.
that the
in order
debt to
the Bank.
She argues
on appeal
that
she created
a genuine
issue
of material
fact as
to
on two factual
allegations.
additional
financing to
"feigned an interest"
her if
she
Second,
in providing
executed the
Bogosian
Note.
The district court held that a fraud claim based on
these allegations could not succeed as
agree.
monitor
creditworthiness
a matter of law.
We
keeping
her
-22-
1985).
As
to the second, we
record to
make us doubt the district court's finding that the Bank made
no material misrepresentation, proof of which is necessary to
substantiate
negotiating
a claim
for
intentional
fraud.
Given
the
sense should
have
interest
non-committal encouragement,
in
known
that the
Bank
had
legitimate
Bogosian's
claim
her version
of the
facts amounts
to an
allegation of
misrepresentation at all.
Bogosian also
fiduciary
business relationship
Baggessen, and
to the
evaluate
whether
a breach
of
to the
loan officer
she had
given him
companies' debts.
fiduciary
with Bank
fact that
make out
her long-term
Robert
attempted to
relationship
to
In order to
existed,
the
the reliance
transaction complained
of;
(3) the
parties'
496
A.2d
126, 129
(R.I.
1985).
See
___
The
-23-
represented by counsel at
are split
exist between
agree.
We have
on whether
a bank and
a borrower.
Liuzzo,
______
766
F. Supp.
may
9, 16 (1st
Cir. 1987).
No
that
fiduciary relationship
previously noted
exist.
61,
68
(granting
beyond
relationship of debtor-creditor).
But as in Reid, where
____
denying a claim
relationship with
banker,
with
whom
A good
one
has
Some
kind
of
dependency
for
advice
that
makes
the
not believe
F.2d at 17 (applying
that a reasonable
Maine law).
jury could
existed here.
have found
We therefore
-24-
In
conclusion,
we
affirm the
grant
of
summary
judgment
We
affirm summary
also
except
for
the
fraud
judgment
in the
allegations of
conflict
district court
for further
also affirm
60(b)
motion
the district
for
of
as to
the
inducement
interest.
court's denial
the district
court
claim
We
proceedings on
Belmont Note,
based
on
to
the
that claim.
We
remand
of Belmont's
to
amend
Rule
its order
__________________________________________________
Each party shall bear its own costs of this appeal, without
_____________________________________________________________
prejudice to appellee's right to recover its own costs of
_____________________________________________________________
this appeal from appellant if appellee prevails on remand.
__________________________________________________________
-25-