Germain Real Estate v. HCH Toyota, No. 13-3492 (8th Cir. 2015)
Annotate this CasePlaintiffs, Germain and GM Enterprises, filed suit against defendants, HCH and Metropolitan, alleging breach of contract claims related to an option to purchase based on the assignment of a lease agreement. The district court dismissed the complaint because plaintiffs were precluded from bringing the action where a state court already had decided the issue underlying the claims alleged in their federal complaint. As a preliminary matter, the court held that the Rooker-Feldman doctrine does not bar plaintiffs' claims where their complaint alleged injuries caused by breach of contract and related to torts. Turning to section 13 of the Restatement (Second) of Judgments, the court believed that the Arkansas Supreme Court would hold that the state-court judgment in this case was sufficiently firm to be considered final for purposes of issue preclusion; based on the state court's conclusion and the terms of the subordination agreement, Germain was not entitled to specific performance of the option and dismissal of the federal declaratory-judgment action was appropriate; and the district court did not abuse its discretion in awarding attorneys' fees to defendants. The court affirmed the judgment of the district court.
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Court Description: Civil case - Contacts. The court concludes that the Arkansas Supreme Court would hold that a dismissal without prejudice for failure to state facts upon which relief could be granted was a final judgment for purposes of issue preclusion; as a result, plaintiff were barred from relitigating the issue of plaintifff's purchase option in federal court; based on the state court's conclusion and the terms of the parties' subordination agreement, plaintiff was not entitled to specific performance of the option, and the district court properly dismissed plaintiffs' federal declaratory-judgment action; attorneys' fees award was not an abuse of the district court's discretion and is affirmed.
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