     Case: 19-10961      Document: 00515429567         Page: 1    Date Filed: 05/27/2020




           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT
                                                                            United States Court of Appeals
                                                                                     Fifth Circuit

                                                                                   FILED
                                      No. 19-10961                             May 27, 2020
                                                                              Lyle W. Cayce
HUGH STIEL,                                                                        Clerk


              Plaintiff - Appellant

v.

HERITAGE NUMISMATIC AUCTIONS, INCORPORATED, doing business
as Heritage Auctions,

              Defendant - Appellee




                   Appeal from the United States District Court
                        for the Northern District of Texas
                             USDC No. 3:17-CV-2086


Before SMITH, GRAVES, and HO, Circuit Judges.
PER CURIAM:*
       Hugh Stiel appeals the district court’s Rule 12(b)(6) dismissal of his
claims against Heritage Numismatic Auctions, Inc. (“Heritage”) as barred by
res judicata. After considering the parties’ arguments on appeal, we affirm.




       * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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                                     I. Background
       Appellant Stiel is a collector and seller of rare coins. Appellee Heritage
is a business providing auction services for the sale of rare coins. Between
2012 and 2014, Stiel used Heritage’s services to auction his coin collections and
bid on other coins. In the present suit, Stiel alleges that Heritage and several
of its employees engaged in improper business activities, such as using
“fictitious individuals” to manipulate the bidding process and artificially
increase the price of auction items at the expense of the final bidder; engaging
in “shill underbidding” to churn profit; making misrepresentations to induce
Steil’s consignment of valuable coins and later purchase these coins at lesser
values;    and    concealing      accurate     invoices    and    account      information.
Accordingly, Stiel sued Heritage and its employees 1 in the federal district court
for the Northern District of Texas, asserting claims for Racketeer Influenced
and Corrupt Organizations Act (“RICO”) violations, breach of contract, money
had and received, fraud, and negligent misrepresentation.
       Heritage filed a Rule 12(b)(6) motion to dismiss Stiel’s claims against
Heritage as barred under the doctrine of res judicata. In support of its motion,
Heritage asked the district court to take judicial notice 2 of an appendix and
attachments totaling over 150 pages of Stiel’s prior state court action against
Heritage. Heritage argued that Stiel’s previous state suit barred the federal



       1  Stiel alleges that individual defendants Gregory J. Rohan, Ronald Steven Ivy, and
James L. Halperin own Heritage, and that individual defendant Todd Imhof was “assigned
to Stiel.” His claims against these individual Defendants remain and are not subject to this
appeal.

       2  Citing Federal Rule of Evidence 201, Heritage asked the district court to “take
judicial notice of the records in Stiel v. Heritage Numismatic Auctions, Inc. d/b/a Heritage
Auctions, No. DC-15-09220, in the 162nd Judicial District Court, Dallas County, Texas.”
Heritage specifically directed the court’s attention to Exhibit D, Stiel’s first amended state
court petition, and Exhibit I, the state court’s final judgment on Heritage’s counterclaims
against Stiel and third-party claims against Lafitte Coin Company, LLC.
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suit because Stiel’s state court petition asserted the same claims against
Heritage for breach of contract, money had and received, and negligent
misrepresentation. On the day that Stiel filed the federal suit, Stiel voluntarily
nonsuited all of his claims against Heritage in the state action, and the state
court dismissed those claims without prejudice.
      On January 23, 2019, the district court issued an order granting the
motion to dismiss with prejudice Stiel’s claims against Heritage. Two months
later, Heritage filed a motion for entry of final judgment, and the district court
entered a final judgment disposing all of Stiel’s claims against Heritage. Stiel
timely appealed.
                           II. Standard of Review
      “Dismissal of a complaint for failure to state a claim is reviewed de novo.”
Gines v. D.R. Horton, Inc., 699 F.3d 812, 816 (5th Cir. 2012). “The res judicata
effect of a prior judgment is a question of law that this court reviews de novo.”
Test Masters Educ. Servs., Inc. v. Singh, 428 F.3d 559, 571 (5th Cir. 2005).
                                III. Discussion
      Stiel contends that the district court erred by (i) improperly applying the
test for res judicata; (ii) relying on documents outside his complaint to
determine whether res judicata applied; and (iii) failing to convert the motion
to dismiss into a motion for summary judgment.
                                        A.
      The district court ruled that Stiel’s claims against Heritage are barred
by res judicata because these claims “could and should have been raised and
litigated in the state court action along with the determination of Heritage’s
counterclaim and third-party claim under Texas’ transactional test.” At no
point in his initial brief, however, does Stiel provide an argument to find error
in the district court’s res judicata analysis. Instead, Stiel briefly mentions that
limited discovery would have “assist[ed] the district [court] in determining if
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Stiel’s claims are truly barred by res judicata.” Stiel raises issue with the
district court’s application of Texas res judicata law only in his reply brief,
presumably after realizing that Heritage’s response brief offered a concise one-
page defense of the district court’s res judicata holding. Unfortunately, Stiel’s
eleventh hour argument is too little, too late. “Because we do not consider
arguments raised for the first time in a reply brief, we decline to address this
issue.” United States v. Transocean Deepwater Drilling, Inc., 767 F.3d 485, 492
(5th Cir. 2014). Although we have discretion to consider such arguments in
extraordinary circumstances, we decline to do so here as Heritage has been
deprived of a chance to adequately respond to Stiel’s newly raised argument.
Cousin v. Trans Union Corp., 246 F.3d 359, 373, n.22 (5th Cir. 2001) (noting
the “contemptible situation where an appellant raises a completely new issue
in its reply brief, disadvantaging the appellee”). Accordingly, Stiel waived the
res judicata issue, and the district court’s analysis stands undisputed.
                                         B.
      We next turn to Stiel’s two remaining arguments that the district court
erred in considering state court documents attached to Heritage’s motion to
dismiss and in not converting the motion into one for summary judgment.
Heritage maintains, however, that Stiel made these arguments for the first
time on appeal. We address whether these arguments were properly raised
before the district court and can be considered on appeal. See Celanese Corp.
v. Martin K. Eby Constr. Co., 620 F.3d 529, 531 (5th Cir. 2010).
       “[A]n argument is not waived on appeal if the argument on the issue
before the district court was sufficient to permit the district court to rule on it.”
In re Liljeberg Enterprises, Inc., 304 F.3d 410, 428 n.29 (5th Cir. 2002). A
review of Stiel’s briefing on the motion to dismiss reveals that Stiel made no
mention of the impropriety of Heritage’s attachments or challenge to the
authenticity and accuracy of such records. In fact, Stiel only argued for the
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first time in his response opposing Heritage’s motion for entry of final
judgment that the district court erred in its finding of res judicata and took
improper notice of extrinsic evidence that was not “central” to Stiel’s claims in
his complaint. Even if we were to construe these arguments as a separate
motion pursuant to Federal Rule of Civil Procedure 60(b), “[a] motion for
reconsideration may not be used to rehash rejected arguments or introduce
new arguments.” LeClerc v. Webb, 419 F.3d 405, 412 n.13 (5th Cir. 2005)
(citing Westbrook v. C.I.R., 68 F.3d 868, 879 (5th Cir. 1995)).
      Moreover, “[w]e will not consider an issue that a party fails to raise in
the district court, absent extraordinary circumstances.”          N. Alamo Water
Supply Corp. v. City of San Juan, 90 F.3d 910, 916 (5th Cir. 1996) (citing
Singleton v. Wulff, 428 U.S. 106, 120 (1976)). “Extraordinary circumstances
exist when the issue involved is a pure question of law and a miscarriage of
justice would result from our failure to consider it.” Id. (citing Verdin v. C &
B Boat Co., 860 F.2d 150, 155 (5th Cir. 1988)). Stiel has failed to demonstrate
a miscarriage of justice, especially considering that he made no responsive
pleading to the district court’s order staying the case “pending the [c]ourt’s
decision on whether res judicata and/or collateral estoppel bar this action.” It
was only after losing his claims against Heritage that Stiel covertly raised new
arguments and attempted to attack the district court’s consideration of state
records. Although “generally a res judicata contention cannot be brought in a
motion to dismiss,” a district court may consider it in that posture when the
plaintiff “did not challenge [the defendants’] ability to argue res judicata in a
motion to dismiss rather than in their response or a motion for summary
judgment.” Test Masters, 428 F.3d at 570 n.2.
      Accordingly, Stiel waived any challenges to the authenticity and judicial
notice of the state court documents presented in Heritage’s motion to dismiss.


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In any event, the district court may properly take judicial notice of public state
court records.
                                          C.
      When “facts are admitted or are not controverted or are conclusively
established so that nothing further can be developed by a trial of the issue, the
matter may be disposed of upon a motion to dismiss whether the decision of
the District Court be considered as having been arrived at under the provisions
of Rule 12(b)(6) or Rule 56(c).” Larter & Sons v. Dinkler Hotels Co., 199 F.2d
854, 855 (5th Cir. 1952) (emphasis added). Therefore, a district court “may
consider” other “sources” when deciding a Rule 12(b)(6) motion, such as
“documents incorporated into the complaint by reference or integral to the
claim, items subject to judicial notice, matters of public record, orders, items
appearing in the record of the case, and exhibits attached to the complaint
whose authenticity is unquestioned.” Meyers v. Textron, Inc., 540 F. App’x 408,
409 (5th Cir. 2013) (citing Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S.
308, 322 (2007)).
      Federal Rule of Evidence 201 also authorizes the court to take judicial
notice of “adjudicative facts,” not legal determinations. We have allowed a
“district court to take judicial notice of the public records in . . . prior state court
proceedings.” Kahn v. Ripley, 772 F. App’x 141, 142 (5th Cir. 2019), cert.
denied, 140 S. Ct. 835, 205 L. Ed. 2d 483 (2020) (citing Taylor v. Charter Med.
Corp., 162 F.3d 827, 829 (5th Cir. 1998) and Cinel v. Connick, 15 F.3d 1338,
1343 n.6 (5th Cir. 1994)). Accordingly, the district court was allowed to take
judicial notice of the state court’s orders, final judgment, and docket as matters
of public record attached to the motion to dismiss. See Anderson v. Wells Fargo
Bank, N.A., 953 F.3d 311, 314 (5th Cir. 2020); see also Lowe v. Hearst
Commc’ns, Inc., 487 F.3d 246, 249 n.3 (5th Cir. 2007) (“All court records are


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                                 No. 19-10961
presumptively available to the public and may be sealed only pursuant to the
conditions of Texas Rule of Civil Procedure 76a.”).
                                  III. Conclusion
      For these reasons, we AFFIRM the district court’s dismissal of Stiel’s
claims against Heritage.




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