
USCA1 Opinion

	




        September 22, 1992                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                _____________________        No. 92-1041                             RICHARD McLAUGHLIN, ET AL.,                               Plaintiffs, Appellants,                                          v.                              JOHN MORTON, ETC., ET AL.,                                Defendants, Appellees.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                          FOR THE DISTRICT OF NEW HAMPSHIRE                       [Hon. Shane Devine, U.S. District Judge]                                           ___________________                                 ____________________                                        Before                                 Breyer, Chief Judge,                                         ___________                           Campbell, Senior Circuit Judge,                                     ____________________                            and Torruella, Circuit Judge.                                           _____________                                 ____________________            Edwin Paul  Gale with  whom Stephen  R. Fine  & Associates was  on            ________________            ______________________________        brief for appellants.            Peter W.  Mosseau with  whom Peter  G. Beeson  and Nelson,  Kinder            _________________            ________________      _______________        Mosseau & Gordon, P.C. were on brief for appellee John Morton.        ______________________            Mark  H. Gardner  for appellees  Edward Reichert  and  Berlin City            ________________        Bank.                                 ____________________                                 ____________________                      Per  Curiam.    Appellants,  McLaughlin  Chevrolet-                      ___________            Buick,  Inc. (the "corporation"),  and its  sole shareholder,            Richard  McLaughlin,  appeal  from  a  district  court  order            dismissing,  on grounds  of res judicata,  the second  of two                                        ___ ________            actions brought under 42 U.S.C.   1983 and various state laws            for  an allegedly  illegal  attachment  of the  corporation's            inventory.   In  its  opinion dated  December  6,  1991,  the            district  court ruled  that the  second action  was precluded            because  the district  court  had already  determined in  the            prior litigation that McLaughlin lacked standing and  because            it  had accepted,  for  purposes of  ruling  on a  motion  by            plaintiff to alter judgment,  that the corporation lacked the            capacity  to sue.   We affirm  for substantially  the reasons            stated in  the district court  order dated December  6, 1991.            We write only to add the following.                      At   argument   before   us,  plaintiffs'   counsel            suggested that the corporation was  not bound by the  earlier            suit  brought by  McLaughlin individually because  no privity            existed between McLaughlin and  the corporation.  We  find no            merit to this contention.  It is well-settled that a nonparty            is bound  by a prior  adjudication where there  is sufficient            legal identity  between the nonparty and  the prior litigant.            E.g.,  Explosives  Corp.  of  America  v. Garlam  Enterprises            ____   ______________________________     ___________________            Corp., 817 F.2d 894,  906-07 (1st Cir.) (majority stockholder            _____            that  financed  and  controlled  initial  litigation  brought                                         -2-            against    corporation   is   bound   by   judgment   against            corporation), cert. denied, 484 U.S. 925 (1987); Aetna Cas. &                          _____ ______                       ____________            Sur. Co. of Hartford,  Connecticut v. Kerr-McGee Chem. Corp.,            __________________________________    ______________________            875  F.2d  1252, 1258  (7th  Cir. 1989)  (judgment  in action            brought by shareholder of closely held corporation is binding            on corporation  in later litigation, absent  evidence of harm            to another shareholder or  creditor); Restatement (Second) of            Judgments    59  (3)(b) (1982).   Here,  there was  virtually            total  identity between Richard  McLaughlin, plaintiff in the            first suit, who was the sole  shareholder of the corporation,            and the  corporation itself.   McLaughlin, indeed,  sought to            represent the corporation's interests  in the initial  action            by seeking  damages for  the allegedly illegal  attachment of            the corporation's inventory.   Under these circumstances, the            corporation as well as McLaughlin personally are bound by the            prior adverse judgment.                      We are  also  unpersuaded by  plaintiffs'  argument            that   the  district   court's  dismissal  of   the  original            litigation  was  not a  decision  on the  merits  and cannot,            therefore, be  given preclusive effect.   While dismissal for            lack of jurisdiction is not  an adjudication that reaches the            merits of  an underlying claim, it  precludes relitigation of            the same issue of jurisdiction in a second action on the same            claim.   E.g.,  Boone v. Kurtz,  617 F.2d 435,  436 (5th Cir.                     ____   _____    _____            1980);  18 Wright,  Miller and  Cooper, Federal  Practice and                                                    _____________________                                         -3-            Procedure:  Jurisdiction    4402 at 11 (1981).   The district            ________________________            court  properly held that  its prior rulings  with respect to            jurisdiction, including its refusal to allow substitution  of            the corporation, precluded relitigation of the same issues in            the subsequent action.                      Finally, we find no merit in plaintiffs' contention            that the district  court's application of the doctrine of res                                                                      ___            judicata  was  improper because  the  district  court's prior            ________            ruling with  respect to the corporation's capacity to sue was            erroneous.  Even assuming  arguendo that the district court's                                       ________            prior ruling was erroneous,  plaintiffs' remedy lay in taking            a direct appeal from that  allegedly erroneous ruling, not in            filing  a new  law  suit  raising  the  same  issue.    E.g.,                                                                    ____            Federated Department Stores, Inc. v. Moite, 452 U.S. 394, 398            _________________________________    _____            (1980) ("the res judicata consequences of a final, unappealed                         ___ ________            judgment on the merits [are not] altered by the fact that the            judgment  may have been wrong"); Rose v. Town of Harwich, 778                                             ____    _______________            F.2d  77,   82  (1st  Cir.  1985)  ("if  courts  relaxed  the            principles of claim preclusion every time  it appeared that a            litigant had a  strong claim 'on the equities,'  the doctrine            would  fail  to  serve  its purposes  of  promoting  judicial            economy  and repose"),  cert. denied,  476 U.S.  1159 (1986).                                    _____ ______            When  McLaughlin chose  not to  appeal, the  district court's            ruling denying  party status to the  corporation ripened into                                         -4-            finality and,  whether or  not based on  erroneous reasoning,            acquired preclusive effect.                      Affirmed.                       ________                                         -5-
