                                                                                                                           Opinions of the United
2005 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


3-10-2005

United Fed Leasing v. USA
Precedential or Non-Precedential: Non-Precedential

Docket No. 03-4831




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                                                                  NOT PRECEDENTIAL

                        UNITED STATES COURT OF APPEALS
                             FOR THE THIRD CIRCUIT

                                        No: 03-4831

                          UNITED FEDERAL LEASING, INC.,
                                               Appellant

                                             v.

                            UNITED STATES OF AMERICA


                     On Appeal from an Order of Dismissal from the
                            Middle District of Pennsylvania
                              D.C. Civil No. 03-cv-00863
                         District Judge: Christopher C. Conner


                     Submitted Pursuant to Third Circuit LAR34.1(a)
                                   January 19, 2005

                  Before: ALITO, McKEE, and SMITH, Circuit Judges

                           OPINION FILED MARCH 10, 2005

McKEE, Circuit Judge

       United Federal Leasing, Inc. (“UFL”) appeals from an Order of Dismissal of the

District Court for the Middle District of Pennsylvania that was entered pursuant to Fed. R.

Civ. P. 12(b)(1). For the reasons that follow, we will affirm.1


       1
               While there is some uncertainty regarding the proper standard of review
under the circumstances presented here, see Witkowski v. Welch, 173 F.3d 192, 198 n.7
(3d Cir. 1999), we need not resolve the issue here because we would affirm the decision
of the District Court even under the most demanding standard of review.
                                              I.




       Inasmuch as we write only for the parties, we need not set forth the factual or

procedural background of this dispute. Rather, we will proceed directly to our brief

discussion. The doctrine of issue preclusion derives from the principle that “‘later courts

should honor the first actual decision of a matter that has been actually litigated.’”

Burlington Northern Railroad Co. v. Hyundai Merchant Marine, 63 F.3d 1227, 1231 (3d

Cir. 1995) (citation omitted). In order for the doctrine to apply, each of the following

conditions must be satisfied: 1) the issue sought to be precluded is the same as that

involved in the prior action; 2) the issue was actually litigated; 3) the issue was

determined by a final and valid judgment; and 4) the determination was essential to the

prior judgment. Id. at 1231-32, (citing, In re Graham, 973 F.2d 1089, 1097 (3d Cir.

1992)).

       An issue is actually litigated when it is properly raised, by pleadings or otherwise,

is submitted for determination, and is determined. O’Leary v. Liberty Mutual Insurance

Co., 923 F.2d 1062, 1066 (3d Cir. 1991), citing Restatement (Second) of Judgments § 27

comment d, at 255 (1982). A judgment is final and valid when it has been rendered by a

court of competent jurisdiction and the party against whom judgment is rendered has

submitted to the jurisdiction of the court. O’Leary, 923 F. 2d at 1066. If an issue was




                                              2
“critical to the judgment” it is not merely dicta and satisfies the condition of being

“essential to the judgment.” Id. at 1067.

       Issue preclusion is intended to protect litigants from the dual burden of relitigating

an issue with the same party and the promotion of judicial economy through prevention of

needless litigation. Id. at 1069, n.10 (citing Clark v. Troutman, 509 Pa. 336, 340 (1985)).

       Here, the issue to be precluded is the same as the one involved in an earlier action

in Virginia. Second, the jurisdictional issue was actually litigated there, as the defendant

raised the jurisdictional issue based on the applicability of the Contract Disputes Act of

1978.2 UFL submitted to the jurisdiction of the prior court as it filed its earlier lawsuit in

the Eastern District of Virginia. That court ruled that UFL’s claims were dependent on

rights plaintiff obtained through government-related contracts. Thus, the issue of lack of

subject matter jurisdiction was properly raised by the pleadings, and it was essential to the

final judgment of the court. Accordingly, the doctrine of issue preclusion would normally

prevent UFL from bringing the instant suit.




       2
          UFL, in support of its position that the decision in the Eastern District of Virginia did
not reach the merits, has relied on this Court’s prior decisions in Etten v. Lovell Man. Co., 225
F.2d 844 (3d Cir. 1955) and Compagnie Des Bauxites De Guinee, 723 F.2d 357 (3d Cir. 1983).
However, UFL’s reliance is misplaced. Both of those cases dismissed Plaintiff’s claims for lack
of personal jurisdiction, as opposed to the instant matter that was dismissed for want of subject
matter jurisdiction. The merits of whether or not the CDA applies to UFL’s claims have been
reached and decided by a court of competent jurisdiction.

                                                 3
                                             II.

       UFL argues an exception to the doctrine that is outlined in Restatement (Second)

of Judgments § 28 as follows:

       although an issue is actually litigated and determined by a valid and final
       judgment, and the determination is essential to the judgment, relitigation of
       the issue in the subsequent action between the parties is not precluded in the
       following circumstances:

              (2) the issue is one of law and (a) the two actions involve
              claims that are substantially unrelated, or (b) a new
              determination is warranted in order to take account of an
              intervening change in the applicable legal context or
              otherwise to avoid inequitable administration of the laws.

       However, we believe our decision in O’Leary forecloses UFL’s attempt to argue

that the different “legal environment” between the original Virginia suit, and the instant

suit somehow suspends the usual considerations that underlie the doctrine of issue

preclusion. See Appellant’s Br. at 9 (“the law of issue preclusion . . . makes the preclusion

issue dependent upon the legal environment . . .”.).

       Plaintiff’s attempt to circumvent the jurisdictional bar that would arise because of

the possible operation of the Contract Disputes Act of 1978 is both unconvincing and

unavailing. UFL can not satisfy its burden under § 28(2) of establishing that the demand

it made in the District Court for the Middle District of Pennsylvania is so distinct from the

demand it made in the Eastern District of Virginia as to fall within the claim preclusion

exception embodied in § 28(2) of the Restatement (Second) of Judgments. See

                                             4
Burlington Northern Railroad Co., 63 F.3d at 1234 ((“[A] fact, question or right

distinctly adjudged in the original action cannot be disputed in a subsequent action, even

[if] the determination was reached upon an erroneous view or by an erroneous application

of the law.”)) (emphasis in original) (citation omitted).

                                             III.

       Accordingly, we will affirm the Order of Dismissal of the Middle District of

Pennsylvania.




                                              5
