Unpublished Disposition, 865 F.2d 1271 (9th Cir. 1987)

MEMORANDUM^** 

Chapter 13 debtor Eunice M. James (James) appeals pro se the district court's dismissal of her action as barred by res judicata. We affirm.

In her action, James alleged numerous tort claims arising out of a conspiracy by numerous defendants to foreclose against her property. These claims were identical to the tort claims raised by James in a prior adversary proceeding brought in bankruptcy court, which the bankruptcy court judge dismissed without prejudice to James' ability to take them up in state court on the grounds that they were non-core bankruptcy claims.

The named defendants in the district court action were also the same as those in the prior adversary proceeding, with the exception of two additional defendants named in the district court action: Elsie Davis, the trustee in James' bankruptcy, and Arnold Johnson, one of James' former attorneys.¹ 

The district court referred James' tort claims to the bankruptcy court for a determination of whether that court's dismissal of the claims in the first adversary proceeding acted as a res judicata bar to James' district court action. The bankruptcy court dismissed the action with prejudice, ruling that the first adversary hearing acted as a res judicata bar. The district court affirmed. James timely appeals.

James contends that the district court erred in dismissing her action based on res judicata. This court reviews determinations of res judicata de novo. C.D. Anderson & Co. v. Lemos, 832 F.2d 1097, 1100 (9th Cir. 1987).²  James' contention has no merit.

The doctrine of res judicata includes both claim preclusion and issue preclusion. Robi v. Five Platters, Inc., 838 F.2d 318, 321 (9th Cir. 1988). The doctrine of issue preclusion prevents the relitigation of issues " 'that were actually litigated and necessarily decided' in a prior proceeding." Id. at 322 (quoting Segal v. American Tel. & Tel. Co., 606 F.2d 842, 845 (9th Cir. 1979)). "The issue must have been 'actually decided' after a 'full and fair opportunity' for litigation." Id. (quoting 18 C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure, Sec. 4416, at 138 (1981)). Under the modern view, even defendants who were not parties to the previous litigation may assert the doctrine of issue preclusion as a defense to a plaintiff's efforts to relitigate an issue previously decided. See Blonder-Tongue Laboratories, Inc. v. University of Ill. Foundation, 402 U.S. 313, 350 (1971); Hinkle Northwest, Inc. v. S.E.C., 641 F.2d 1304, 1309 (9th Cir. 1981).

Here, James is attempting to relitigate the identical claims that she raised in her first adversary action in bankruptcy court. The only difference is the addition of two new defendants. The bankruptcy court dismissed her first adversary action without prejudice to raise the claims in state court because the claims were non-core bankruptcy claims, and so the bankruptcy court lacked jurisdiction. See 28 U.S.C. § 157 (bankruptcy court jurisdiction). Thus the issue of the federal courts' jurisdiction over James' claims was actually litigated and decided against James. Because the principle of res judicata applies to questions of jurisdiction, the district court did not err in holding that res judicata barred James' relitigation of these claims in the present action. See Underwriters Nat'l Assurance Co. v. N.C. Life & Accident & Health Ins. Guar. Ass'n, 455 U.S. 691, 706 (1982).³ 

Elsie Davis and Cecile Murray request attorney fees as sanctions. These requests should be denied.

This court has discretion to impose attorney fees as sanctions for bringing a frivolous appeal. Olson v. United States, 760 F.2d 1003, 1005 (9th Cir. 1985) (per curiam); Fed. R. App. P. 38; 28 U.S.C. § 1912. An appeal is frivolous "when the result of the appeal is obvious and the arguments of error are wholly without merit." Coastal Transfer Co. v. Toyota Motor Sales, USA, 833 F.2d 208, 212 (9th Cir. 1987). This is the first action in which Elsie Davis is named as a defendant. Further, although James was sanctioned for bringing her second adversary proceeding, that proceeding did not raise the claims she raises in this action, nor were Murray or Davis named as defendants in that proceeding. The record does not indicate that James has been warned that her continued pursuit of these claims was frivolous, and could subject her to sanctions. Nor is the doctrine of res judicata so easily understood by lawyers, let alone pro se litigants, as to make the results of this appeal "obvious."

The judgment is AFFIRMED.⁴ 

KILKENNY, Senior Circuit Judge, concurring in part and dissenting in part:

Although I concur in the result reached in the majority's opinion, I write separately to emphasize two points: first, that our affirmance of the district court's decision to affirm the bankruptcy court's order of dismissal with prejudice of the appellant's adversary proceeding should be limited to the lack of subject matter jurisdiction of the federal courts over the appellant's state tort claims; and second, that I believe that sanctions are warranted for the appellant's conduct in prosecuting this frivolous appeal.

The claims asserted in James's district court "Complaint for Tort Actions" were identical to those previously raised in her first adversary proceeding in the bankruptcy court. Although the bankruptcy court held that it lacked subject matter jurisdiction over those "noncore proceedings", see 28 U.S.C. § 157(b), and dismissed the adversary proceeding without prejudice to James's right to litigate those claims in state court, the bankruptcy court's ruling on the issue of subject matter jurisdiction constituted a de facto dismissal with prejudice as to that question. Cf., In re Duncan, 713 F.2d 538, 544 (CA9 1983).

The bankruptcy court's final order of January 25, 1987 says that the bankruptcy court was dismissing "the matter [i.e., the tort claims reasserted in the federal district court and referred to the bankruptcy court] ... in its entirety with prejudice" (emphasis added). This order, which was affirmed by the district court, clearly says too much by implying that the merits of the appellant's individual state tort claims as well as the issue of subject matter jurisdiction had been ruled on. Since the bankruptcy court had no subject matter jurisdiction, the above language must be deemed to be surplusage.

Because "the result of [this] appeal [was] obvious and the arguments of error [were] wholly without merit", Coastal Transfer Co. v. Toyota Motor Sales, U.S.A., 833 F.2d 208, 212 (CA9 1987), this was a frivolous appeal. Accordingly, I would grant the request of appellees Davis and Murray for sanctions and would assess attorney fees in the amount of $1,000 and impose double costs for the prosecution of this appeal. See Olson v. United States, 760 F.2d 1003, 1005 (CA9 1985) (per curiam).