                           NOT FOR PUBLICATION

                    UNITED STATES COURT OF APPEALS                            FILED
                            FOR THE NINTH CIRCUIT                             NOV 19 2013

                                                                          MOLLY C. DWYER, CLERK
                                                                            U.S. COURT OF APPEALS

LEN WALLACE and PAMELA                           No. 12-35423
WALLACE,
                                                 D.C. No. 1:11-cv-00084-RFC
              Plaintiffs - Appellants,

  v.                                             MEMORANDUM*

NORMAN HAYES; et al.,

              Defendants - Appellees.


                   Appeal from the United States District Court
                           for the District of Montana
                Richard F. Cebull, Senior District Judge, Presiding

                          Submitted November 5, 2013**
                                Portland, Oregon

Before: M. SMITH and HURWITZ, Circuit Judges, and MAHAN, District
Judge.***




        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
        **
             The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
        ***
             The Honorable James C. Mahan, District Judge for the U.S. District
Court for the District of Nevada, sitting by designation.
      Len and Pamela Wallace appeal from the district court’s judgment

dismissing the action for lack of jurisdiction under the Rooker-Feldman doctrine,

or alternatively, as barred by res judicata. The Wallaces also challenge the district

court’s imposition of sanctions under Federal Rule of Civil Procedure 11. Because

the parties are familiar with the facts and procedural history of this case, we repeat

only those facts necessary to resolve the issues raised on appeal. We affirm.

      The district court properly dismissed the action for lack of subject matter

jurisdiction under the Rooker-Feldman doctrine because the Wallaces’ complaint

was a de facto appeal of Montana state court decisions. See Kougasian v. TMSL,

Inc., 359 F.3d 1136, 1140 (9th Cir. 2004). Because the Wallaces already litigated

their contentions of extrinsic fraud in Montana state court, the claims of extrinsic

fraud that are the basis for this federal action are inextricably intertwined with the

state court decisions. Therefore, adjudication of these claims in federal court

would undercut the state rulings. See Reusser v. Wachovia Bank, N.A., 525 F.3d

855, 859–60 (9th Cir. 2008).

      Additionally, the Wallaces’ claims are barred by res judicata. Under

Montana law, res judicata applies if: “1. The parties or their privies are the same;

2. The subject matter of the present and past actions is the same; 3. The issues are

the same and relate to the same subject matter; and 4. The capacities of the parties


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are the same to the subject matter and issues between them.” Touris v. Flathead

Cnty., 258 P.3d 1, 4 (Mont. 2011); see also Hawkins v. Risley, 984 F.2d 321, 324

(9th Cir. 1993) (“[F]ederal courts apply state law to determine the preclusive effect

of state court judgments . . . .”). All four elements are present in this case.

      The district court properly imposed sanctions against the Wallaces and their

counsel for bringing a frivolous lawsuit. See Metabolic Research, Inc. v. Ferrell,

693 F.3d 795, 802 n.8 (9th Cir. 2012). The district court did not abuse its

discretion in concluding that the Wallaces’ complaint is legally baseless, and that

counsel did not conduct a reasonable and competent inquiry before filing it. See

Strom v. United States, 641 F.3d 1051, 1059 (9th Cir. 2011); Holgate v. Baldwin,

425 F.3d 671, 676 (9th Cir. 2005).

      Nevertheless, we decline to impose sanctions against the Wallaces under

Federal Rule of Appellate Procedure 38 for filing a frivolous appeal, because

Norman Hayes only requested sanctions in his answering brief, which did not

provide sufficient notice to the Wallaces. See Fed. R. App. P. 38; Gabor v. Frazer,

78 F.3d 459, 460–61 (9th Cir. 1996) (citing advisory committee notes).

      AFFIRMED.




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