Daewoo Electronics America v. Opta Corp., No. 14-17498 (9th Cir. 2017)
Annotate this CaseUnder New Jersey's traditional res judicata doctrine, a claim asserting breach of a contractual guarantee of a third party's debt does not preclude later alter ego and successor liability claims to collect the debt directly from entities related to the debtor. Further, although New Jersey's procedural joinder rules may require such claims to be joined in a single action, New Jersey law declines to impose these rules on other courts. The Ninth Circuit reversed the district court's dismissal of most of Daewoo's claims as barred by a prior judgment of the United States District Court for the District of New Jersey. In this case, the district court failed to apply New Jersey law correctly and erred in ruling that the claims in the present action were precluded under New Jersey law.
Court Description: Claim Preclusion. The panel reversed the district court’s dismissal of almost all of Daewoo Electronics America Inc.’s claims as barred by a prior judgment of the United States District Court for the District of New Jersey; and remanded for further proceedings. Daewoo brought this diversity action to recover unpaid debt from four entities affiliated with GoVideo for GoVideo’s purchase of DVD players from Daewoo. Daewoo previously filed suit in New Jersey federal court seeking to enforce a guaranty agreement, and the court ruled against Daewoo. The panel held that the summary judgment ruling of the federal district court in New Jersey on Daewoo’s prior breach of contract claim (based on the guaranty agreement) against Opta Corporation and TCL Industries Holdings Limited did not preclude Daewoo from bringing the present alter ego and DAEWOO ELECTRONICS AMERICA V. OPTA 3 successor liability claims against Opta and TCL Multimedia Technology Holding Limited. The panel held that because the claims in the present action and in the prior guaranty action did not arise from the same transaction or occurrence, New Jersey’s version of traditional res judicata did not apply. The panel further held that although New Jersey’s “entire controversy doctrine” may have prevented Daewoo from bringing the present claims in New Jersey, this procedural joinder rule did not bar the claims from being heard in the federal district court sitting in California. The panel concluded that the district court erred in ruling that the claims in the present action were precluded under New Jersey law. Judge Bybee dissented because the majority opinion erred in not applying New Jersey law just as New Jersey state courts would apply it. Judge Bybee would apply New Jersey’s “entire controversy doctrine” which would bar Daewoo’s claims, and affirm the district court’s judgment.
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