
USCA1 Opinion

	




                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                 ____________________          No. 94-1076                           APPAREL ART INTERNATIONAL, INC.,                                Plaintiff, Appellant,                                          v.                          AMERTEX ENTERPRISES LTD., ET AL.,                                Defendants, Appellees.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                           FOR THE DISTRICT OF PUERTO RICO                  [Hon. Juan M. P rez-Gim nez, U.S. District Judge]                                               ___________________                                 ____________________                                        Before                                 Selya, Circuit Judge,                                        _____________                           Campbell, Senior Circuit Judge,                                     ____________________                            and Lagueux,* District Judge.                                          ______________                                 ____________________               Freddie P rez-Gonz lez with whom Woods, Rosenbaum, Luckeroth               ______________________           ___________________________          & P rez-Gonz lez was on brief for appellant.          ________________               Eugene  F. Hestres  with whom  Bird, Bird  & Hestres  was on               __________________             _____________________          brief for appellees.                                 ____________________                                  February 17, 1995                                 ____________________                                        ____________________          *  Of the District of Rhode Island, sitting by designation.                    LAGUEUX,  District Judge.   This  matter is  before the                              ______________          Court on appeal from  a decision rendered by Judge Juan M. P rez-          Gim nez in the United  States District Court for the  District of          Puerto Rico.  Applying Puerto Rico's res judicata doctrine, Judge          P rez-Gim nez  dismissed  appellant  Apparel  Art  International,          Inc.'s  ("Apparel") claims of fraudulent conveyance, depletion of          corporate  assets,  and  alter  ego  as  contained  in  Apparel's          Supplementary Pleadings in  Aid of Execution of Judgment.   Those          pleadings  were  filed  in  supplementary  proceedings  in  which          Apparel sought  to enforce an arbitration  award rendered against          Amertex  Enterprises  Ltd.  ("Amertex")  by  American Arbitration          Association  ("AAA") arbitrators  and  confirmed by  the district          court.                                 I.  BACKGROUND FACTS                                 I.  BACKGROUND FACTS          A.  The Parties          A.  The Parties                    Apparel  is  a Delaware  corporation  that manufactures          clothing  at a plant  located in Puerto  Rico.  Amertex  is a New          York corporation  with offices in Puerto Rico.  Leo Jacobson is a          resident  of Puerto  Rico and  is president  and chairman  of the          board of directors of Amertex.  Harriet Jacobson is a resident of          Puerto Rico  and is the  wife of Leo  Jacobson.  Leo  and Harriet          Jacobson are the sole stockholders of Amertex.  Co-appellee, D.J.          Manufacturing  Co. ("D.J."), is  a Puerto Rico  corporation.  Co-          appellee, Diego Jacobson, is a resident of Puerto Rico and is the          son of Leo and Harriet Jacobson.  Diego  Jacobson is president of          D.J. and chairman of its board of directors.                                         -2-          B.  The Contractual Relationship Between Apparel and Amertex          B.  The Contractual Relationship Between Apparel and Amertex                    In  1985,  Apparel  entered  into  a  subcontract  with          Amertex under which Apparel was to manufacture certain components          of "Chempro", a camouflage  chemical protective suit for military          use.   Amertex had entered into a contract (the "prime contract")          to  supply  Chempro  suits to  the  United  States  Department of          Defense.  This case  began when Apparel initiated  an arbitration          proceeding claiming that Amertex had breached the subcontract.  A          detailed review of the numerous legal proceedings in this matter,          beginning  with the  arbitration, is a  necessary prelude  to our          determination of the res judicata question at issue on appeal.          C.  The Arbitration          C.  The Arbitration                    On  November  17, 1986,  Apparel  initiated arbitration          proceedings  against Amertex before  the AAA in  San Juan, Puerto          Rico.   The  dispute was  brought before the  AAA pursuant  to an          arbitration clause contained  in the  subcontract.   As the  only          signatories to the subcontract, Apparel and Amertex were the only          parties to the  arbitration.   In its Statement  of Claims  filed          with the AAA  on July 29, 1987, Apparel alleged  that Amertex had          engaged  in the  following  misconduct: 1)  Amertex breached  the          subcontract;1  2)  Amertex  illegally attached  Apparel's  assets          after falsely alleging that  Apparel breached the subcontract; 3)          Amertex  breached certain  modifications of  the subcontract;  4)                                        ____________________          1    Apparel alleged  that  Amertex breached  the  subcontract by          failing to  comply with delivery schedules  and pick-ups, failing          to  file claims or bring  about restitution, and  failing to make          payments.                                         -3-          Amertex   fraudulently  and   negligently  performed   under  the          subcontract; 5) Amertex  failed to  pay an increase  in the  unit          price; and 6) Amertex fraudulently induced Apparel to  enter into          the subcontract.  On  August 6, 1987, Apparel filed  a Supplement          to its  Statement  of Claims  alleging  that Amertex  engaged  in          fraudulent conduct  that constituted  a  pattern of  racketeering          activity under the Racketeer Influenced and Corrupt Organizations          Act ("RICO"),  18 U.S.C.    1961-1968 (1988 & Supp. V 1993).2  On          September  16, 1987,  the  arbitrators  dismissed Apparel's  RICO          claims because  under the arbitration clause  they lacked subject          matter jurisdiction to hear  those claims.  Apparel did  not seek          judicial  review  of that  dismissal.   On  June 27,  1989, after          nearly two years of hearings, the arbitrators awarded $387,994.00          to  Apparel.  The arbitrators  further decided that  the costs of          arbitration were to be borne equally between the parties.          D.  Apparel I - The District Court Action Before Judge P rez-              D.  Apparel I - The District Court Action Before Judge P rez-                  Gim nez              Gim nez                    On  September  26,  1989, Apparel  filed  this lawsuit,          Civil Action No. 89-1272  (PG) (hereinafter "Apparel I"), against          Amertex  and the  AAA  as  co-defendants  in  the  United  States          District Court  for the District  of Puerto Rico.   The case  was          assigned to  Judge P rez-Gim nez.  Apparel's  complaint sought to          set aside  the arbitration award under  the procedures authorized                                        ____________________          2   Among the conduct that  Apparel alleged to violate  RICO was:          Amertex's  fraudulent inducement  of  Apparel to  enter into  the          subcontract; bribery  of government officials in  order to secure          the  prime contract; and mail and wire fraud in the submission of          false information to the government.                                         -4-          by the Federal Arbitration Act, 9 U.S.C.    10-11 (1988 & Supp. V          1993).    Apparel  alleged   that  the  arbitration  process  was          arbitrary and  the award was  insufficient.  Apparel  prayed that          the court set aside the arbitration award and resubmit the merits          of the  case for resolution  by the  court.  In  the alternative,          Apparel  prayed that the court remand the case to the arbitrators          so the award could be clarified.                    Amertex moved  to dismiss the complaint  on the grounds          that the action was time-barred because Apparel failed to provide          required  notice.    On   March  26,  1990,  Apparel  voluntarily          consented  to  the dismissal,  without  prejudice,  of its  claim          against the AAA.  Apparel also moved to convert the suit  against          Amertex to an action to enforce the arbitration award pursuant to          the Federal Arbitration Act, 9  U.S.C.   9 (1988).  Judge  P rez-          Gim nez granted Apparel's motion  on April 10, 1990, and  entered          an  order dismissing  the action  as to  the AAA,  confirming the          award against Amertex,  and entering judgment for Apparel  in the          amount of $384,994.00 plus  interest, costs, and attorneys' fees.          The court subsequently,  on the motion  of Amertex, modified  the          judgment to remove  the imposition of court  costs and attorneys'          fees against Amertex.                    After entering  judgment on the arbitration  award, the          district   judge  permitted  Apparel   to  conduct  post-judgment          discovery  in  supplementary proceedings  so  that  Apparel could          execute  the  judgment  against Amertex.    In  January of  1991,          Apparel moved the court to compel production of documents and for                                         -5-          sanctions.    Apparel  alleged  that  it  was  investigating  the          transfer  of assets from Amertex to D.J., a company which Apparel          suspected  to have  been  created for  the purpose  of defrauding          Amertex's  creditors.  Amertex opposed  the motion on the grounds          that Apparel's  discovery  request was  onerous.   On January  8,          1991, Apparel moved for execution of the judgment against Amertex          because Amertex had not paid the judgment.  Apparel requested the          court  to  execute the  judgment  via  attachment or  garnishment          against a balance owed by D.J.  to Amertex.  In its opposition to          this  motion, Amertex  argued that  D.J. was  not a party  to the          action and Apparel had not filed notice  of the motion with D.J.,          and  requested a  show  cause hearing  to determine  whether D.J.          should  be  subject to  an order  to  execute the  judgment.   On          January 10, 1991, Amertex  also requested that the court  issue a          protective  order  insulating   Amertex  from  further  discovery          requests.    On  January  24,  1991, the  district  court  denied          Amertex's request  for a protective order,  ordered the execution          of the judgment,  and ordered attachments and  garnishments to be          served on  Amertex's debtors  -  including a  writ of  attachment          ordering  D.J.  to pay  to  Apparel any  sums  that D.J.  owed to          Amertex.                    In response to Apparel's Motion Requesting an Order for          Garnishment  of  Funds  to  be   served  on  the  United   States          Government, on January 31,  1991, Amertex filed an "acquiescence"          to Apparel's motion for garnishment and  requested that the court          issue a  protective order staying Apparel  from filing additional                                         -6-          motions  for execution  of the  judgment.   In its  opposition to          Amertex's  request for  a protective  order, Apparel  argued that          Amertex's claim against the government was uncertain and that the          proceeds  from that claim had already been assigned by Amertex to          the Banco Popular de  Puerto Rico.  Apparel alleged  that Amertex          had  informed  Apparel  it was  unable  to  satisfy  the judgment          because it had no  assets.  Apparel further alleged  that through          post-judgment  discovery it  had discovered  evidence of  illegal          transfers of  assets, conspiracy,  alter ego,  and the  misuse of          corporate  funds by  Leo Jacobson  and others.   On May  8, 1991,          Judge P rez-Gim nez  denied  Amertex's request  for a  protective          order, noting  that  Amertex  had  not yet  satisfied  the  money          judgment owed to Apparel.          E.  Apparel II -  The District Court Action Before Judge Fust           E.  Apparel II -  The District Court Action Before Judge Fust                     While the  enforcement proceedings were  ongoing before          Judge  P rez-Gim nez,  on  May  31,  1990,  Apparel  initiated  a          separate civil action in the United States District Court for the          District of  Puerto Rico.  In that case, Civil Action No. 90-1756          (JAF) (hereinafter "Apparel II"),  assigned to Judge Jose Antonio          Fust , Apparel made several claims under RICO against Amertex, as          well as D.J., Leo Jacobson, Harriet Jacobson, Diego Jacobson, and          Donald  Sherry.3   These  were essentially  the same  allegations          that  had been dismissed by  the arbitrators for  lack of subject          matter  jurisdiction.   Apparel alleged  that Amertex  engaged in          bribery  of government officials  and submitted false information                                        ____________________          3  Donald Sherry was a government contracting officer.                                         -7-          to the government in  its effort to secure the  Chempro contract.          In  addition, Apparel  alleged that  both during  the arbitration          hearings  and  after  the   award  was  rendered,  Leo  Jacobson,          conspiring with Diego Jacobson, diverted Amertex's assets to D.J.          in  order  to  avoid  satisfying the  arbitration  award.   These          allegations  were  made  prior  to  the  post-judgment  discovery          conducted in connection with  the enforcement proceeding  pending          before Judge P rez-Gim nez, but  raised new fraudulent conveyance          and  alter  ego  claims  which  were  never  brought  before  the          arbitrators.   On  March  4, 1991,  Apparel  moved to  amend  its          complaint,  further elaborating its  fraudulent conveyance claims          and  seeking  to  add  a  new  defendant,  one  Ricardo  Charaf.4          Apparel alleged that  its amended complaint was based on evidence          obtained   through  post-judgment  discovery   conducted  in  the          enforcement action before Judge P rez-Gim nez.  On April 1, 1991,          the co-defendants argued in  their opposition to Apparel's motion          for  leave  to amend  that  Apparel's  allegations of  fraudulent          conveyance  should be  submitted in  the enforcement  action then          pending before Judge P rez-Gim nez, and not in Apparel II.                    On August  21, 1991,  Judge  Fust  dismissed  Apparel's          claims as contained in the amended  complaint.  He held that  res          judicata precluded litigation of Apparel's RICO claims pertaining          to the  parties' subcontractual  relationship because  they could          and should have been raised before Judge P rez-Gim nez in Apparel          I before final  judgment was  entered on  the arbitration  award.                                        ____________________          4  Ricardo Charaf was Vice-President of Amertex.                                         -8-          Accordingly,  he ruled  that  further  litigation concerning  the          damages suffered by  Apparel under the subcontract  was barred by          res  judicata.   Although  Judge Fust   also dismissed  Apparel's          fraudulent conveyance  claims, in  so doing  he noted that  those          allegations  should be  raised in  the enforcement  action before          Judge  P rez-Gim nez.   Otherwise,  multiple  judgments might  be          rendered on the same claims.   Accordingly, Judge Fust  dismissed          Apparel's fraudulent conveyance claims  "without prejudice to any          legitimate execution of judgment motions which plaintiff may seek          to  file before Judge P rez-Gim nez."  Apparel Art Int'l, Inc. v.                                                 _______________________          Jacobson,  Civil No. 90-1756 (JAF)  at 7 (D.P.R.  Aug. 21, 1991).          ________          Pursuant to this  order, a copy of the  dismissal order was filed          in the  enforcement proceeding  then pending before  Judge P rez-          Gim nez.                    Apparel then  appealed Judge Fust 's dismissal  to this          Court.  A panel of this Court affirmed Judge Fust 's dismissal of          the  action,  but  did not  base  its  decision  on res  judicata          principles.  Apparel Art  Int'l, Inc. v. Jacobson, 967  F.2d 720,                       ________________________    ________          722  (1st Cir.  1992).    Rather,  it  was  held  that  Apparel's          allegations  failed to  establish  a pattern  of illegal  conduct          sufficient to support a claim under RICO.  Id. at 724.                                                     ___          F.  Apparel's Supplementary Pleadings in Aid of Execution of               F.  Apparel's Supplementary Pleadings in Aid of Execution of                   Judgment              Judgment                    On  October  29,  1992,   Apparel  filed  a  Motion  to          Supplement  Allegations  as  Part  of  Supplementary  Proceedings          before Judge P rez-Gim nez.  In its motion, Apparel  alleged that          while  conducting post-judgment  discovery, Apparel  learned that                                         -9-          Amertex had concealed and diverted its assets in concert with co-          appellee D.J.  and had  thus impeded  execution of  the judgment.          Therefore,   Apparel    initiated   post-judgment   supplementary          proceedings  in an effort to  satisfy the judgment.  Accordingly,          also on October 29, Apparel filed Supplementary  Pleadings in Aid          of  Execution of  Judgment.   The  supplementary pleadings  named          Amertex, D.J., Leo Jacobson, Harriet Jacobson, and Diego Jacobson          as co-defendants involved in Amertex's effort to avoid paying the          judgment.   Apparel  alleged the  following unlawful  conduct: 1)          Amertex's corporate assets had been depleted; 2) Amertex's assets          were fraudulently  conveyed to  co-appellee D.J.; and  3) Amertex          and  D.J. were alter egos  of their presidents,  Leo Jacobson and          Diego   Jacobson,  respectively.5     Apparel  sought   only  two          remedies.  First, Apparel sought to execute  the judgment against          the assets that were  fraudulently conveyed from Amertex to  D.J.          Second, Apparel prayed that on its  depletion of corporate assets          and alter  ego  claims, all  co-defendants  be held  jointly  and          severally liable  for the  judgment.   The co-defendants  did not          oppose Apparel's attempt to file a supplementary pleading, and on          November 11, 1992, the district court granted Apparel's motion to          supplement  its   allegations  as   part  of  the   supplementary          proceeding in aid of execution of judgment.  On January 29, 1993,          the district court ordered D.J. to appear at a show cause hearing                                        ____________________          5  These  are substantially  the same allegations  as those  made          before  Judge  Fust  in  Apparel II  and  dismissed by  the court          without prejudice to the consideration of them in the enforcement          action before Judge P rez-Gim nez.                                         -10-          and  demonstrate why  the asset transfers  from Amertex  were not          illegal and should not  be rendered null and void so that Apparel          could  execute  the  judgment  directly against  the  transferred          assets.   The order also  directed Apparel to  offer proof of its          alter ego allegations sufficient to show that  liability could be          imposed against the co-defendants.                    On April 12, 1993, co-appellees D.J. and Diego Jacobson          filed  a Motion  to Dismiss,  or in  the Alternative  for Summary          Judgment  on  the  grounds  that,  due  to  Judge  Fust 's  order          dismissing Apparel's  claims in  Apparel II, res  judicata barred          litigation of Apparel's claims in the  supplementary proceedings.          D.J.  and Diego  Jacobson further  argued that  the supplementary          pleadings  were procedurally defective under  Fed. R. Civ. P. 69.          The  motion was opposed  by Apparel.   On  August 3,  1993, Judge          P rez-Gim nez granted the motion to dismiss after concluding that          Apparel's claims were precluded  under Puerto Rico's res judicata          doctrine.  He  reasoned that the underlying purpose  of Apparel's          claims in  the supplementary proceedings  was to raise  claims of          fraudulent conduct  that had  been previously dismissed  by Judge          Fust  in Apparel  II and affirmed  by this Court.   Judge  P rez-          Gim nez reasoned that there was no difference between the persons          or claims in the enforcement action and those in Apparel II, and,          thus,  concluded  that  Apparel  had merely  reworked  its  legal          theories in an effort to secure a more favorable judgment.                    On August 13,  1993, Apparel moved  the court to  amend          and  reconsider  its order  of  dismissal.   Judge  P rez-Gim nez                                         -11-          denied the motion on  October 12, 1993, and judgment  was entered          on  November 30, 1993.    Apparel appealed  the district  court's          dismissal to this Court on December 17, 1993.                    After  carefully considering  the record,  the parties'          briefs,  and the parties'  oral arguments, this  Court holds that          res  judicata does not bar  Apparel's claims as  contained in the          supplementary  pleadings.   Therefore, we  reverse  the dismissal          entered  by the  court  below and  remand  the case  for  further          proceedings.                                   II.  DISCUSSION                                   II.  DISCUSSION                    The decision appealed from  is that res judicata barred          relitigation   of   the   claims   as   contained   in  Apparel's          Supplementary  Pleadings in Aid of  Execution of Judgment.  Judge          P rez-Gim nez reasoned  that, under Puerto Rico's  version of the          res judicata doctrine, there was no difference between the claims          raised in  Apparel's supplementary pleadings and  those dismissed          by Judge Fust  in Apparel  II - a dismissal that was  affirmed by          this Court  of Appeals.  We  review de novo  the district court's                                              _______          dismissal of  Apparel's claims as contained  in the supplementary          pleadings.  See  Kale v. Combined  Ins. Co. of America,  924 F.2d                      ___  ____    _____________________________          1161, 1165 (1st  Cir. 1991), cert. denied,  112 S. Ct.  69 (1991)                                       ____________          (Court  of Appeals  ordinarily reviews  trial courts'  rulings on          motions to dismiss de novo).                             _______                    Apparel's  supplementary  pleadings  were   brought  in          supplementary proceedings pursuant  to Fed. R.  Civ. P. 69(a)  to          aid  in the execution of the district court's judgment in Apparel                                         -12-          I.  Through  that judgment, the court confirmed  the award of the          AAA  arbitrators.  At the outset we must consider whether federal          res  judicata principles are applicable to  this case or whether,          as  the  district court  concluded,  Puerto  Rico's res  judicata          principles should guide the analysis.                    Under  Fed. R. Civ. P. 69(a), supplementary proceedings          in  aid of  execution  of  a judgment  are  to be  conducted  "in          accordance  with the practice and procedure of the state in which          the district court  is held . .  . ."  However,  a district court          must apply only those provisions of state law which  specifically          govern  the enforcement  of judgments.   12  Charles A.  Wright &          Arthur  R. Miller, Federal Practice and  Procedure   3012 (1973).                             _______________________________          The district court  need not follow general state procedural law.          Id.   Therefore, because  Puerto Rico's res  judicata doctrine is          ___          not  uniquely applicable  to supplementary  proceedings, Fed.  R.          Civ.  P. 69(a) does not  compel the application  of Puerto Rico's          principles of res judicata in this case.6                    Plainly,  the  district  court  was  mistaken  when  it          applied  Puerto Rico's  preclusion  law in  dismissing  Apparel's          supplementary pleadings.  Federal  law principles of res judicata          govern the preclusive effect of a prior federal  court's judgment          on a  subsequent action brought in  federal court.  In  re El San                                                              _____________                                        ____________________          6  Puerto  Rico's res judicata doctrine is codified  in P.R. Laws          Ann.  tit. 31,   3343  (1991).   This is  a general  provision of          Puerto Rico's  law of civil  procedure which is  not specifically          applicable  to supplementary proceedings in aid of execution of a          judgment.                                         -13-          Juan Hotel Corp., 841  F.2d 6, 9 (1st Cir. 1988).7  In this case,          ________________          the  Court  must analyze  the  preclusive  effects of  the  prior          judgments rendered by the district court in Apparel I and Apparel          II  to  determine  whether   they  bar  litigation  of  Apparel's          supplementary pleadings.  Because both of these earlier judgments          were  rendered by a federal court, the preclusive effect of those          judgments  in  this  federal  case  is governed  by  federal  res          judicata  principles.8   Accordingly, federal  principles of  res          judicata,  not those  of  the Commonwealth  of  Puerto Rico,  are          controlling here with respect  to this Court's de novo  review of                                                         _______          the   district  court's  dismissal   of  Apparel's  supplementary          pleadings.                    Under  the  federal  law  of  res  judicata,9  a  final                                        ____________________          7  This  Court has held  that where a  federal court has  subject          matter  jurisdiction under  diversity,  federal  law governs  the          preclusive effect of  prior federal court judgments.   Johnson v.                                                                 _______          SCA Disposal Servs.,  Inc., 931  F.2d 970, 974  (1st Cir.  1991).          __________________________          Similarly,  federal law  governs  the res  judicata effects  of a          federal  court judgment  in a  prior federal  question case  on a          subsequent case  that presents  a federal  question to a  federal          court.   See  Blonder-Tongue  Lab., Inc.  v.  University of  Ill.                   ___  __________________________      ___________________          Found.,  402 U.S. 313, 324  n.12 (1971); Gonz lez  v. Banco Cent.          ______                                   ________     ___________          Corp., 27 F.3d  751, 755 (1st Cir. 1994).   The policy underlying          _____          the application  of federal res  judicata principles is  that the          federal courts must have the power to define the effect  of their          own judgments.   See Johnson,  931 F.2d at  974 (quoting Kern  v.                           ___ _______                             ____          Hettinger, 303 F.2d 333, 340 (2d Cir. 1962)).          _________          8  Although  the district  court's judgment in  Apparel I  simply          confirmed the  award rendered by  the AAA arbitrators,  under the          Federal Arbitration Act such a judgment has the same effect as  a          judgment in an action.  9 U.S.C.    13 (1988).  Therefore, it is,          in all respects, a federal court judgment.          9  Res  judicata is  sometimes referred to  as claim  preclusion.          The  doctrine of  collateral  estoppel, or  issue preclusion,  is          related  but distinct.   Under collateral estoppel,  once a court          has actually  decided an  issue of fact  or law necessary  to its                                         -14-          judgment  on the  merits of  an action  precludes the  parties or          their privies from relitigating claims  that were raised or could          have been raised in that action.   Allen v. McCurry, 449 U.S. 90,                                             _____    _______          94 (1980); Gonz lez v.  Banco Cent. Corp., 27 F.3d  751, 755 (1st                     ________     _________________          Cir.  1994).   The  policy rationale  behind  res judicata  is to          "relieve parties of the  cost and vexation of multiple  lawsuits,          conserve  judicial resources,  and,  by  preventing  inconsistent          decisions, encourage reliance on  adjudication."  Allen, 449 U.S.                                                            _____          at  94.    Res  judicata,  therefore,  prevents  plaintiffs  from          splitting their  claims by providing a strong  incentive for them          to plead  all factually  related allegations and  attendant legal          theories for recovery the first time they bring suit.  See  Kale,                                                                 ___  ____          924 F.2d at 1166.                    This  Court   has  articulated  a  three-part  test  to          determine whether res judicata  precludes litigation of a party's          claims.  For a claim to be precluded, the following elements must          be present:   1) a  final judgment  on the merits  in an  earlier          suit;  2) sufficient  identicality between  the causes  of action          asserted  in the  earlier  and  later  suits; and  3)  sufficient          identicality  between the parties in the two suits.  Gonz lez, 27                                                               ________          F.3d  at 755; Kale,  924 F.2d at  1165.  In this  case, the Court                        ____                                        ____________________          judgment, that decision may preclude relitigation of that factual          or legal issue in a suit on a different cause of action involving          a party to the first  action.  Allen v. McCurry, 449  U.S. 90, 94                                         _____    _______          (1980).  Although Apparel's allegations  of fraudulent conveyance          were  raised in Apparel II  and dismissed by  the district court,          neither factual  determinations nor  conclusions as to  the legal          merit of these claims were made by the trial court.  Accordingly,          collateral estoppel  is  inapplicable in  this  case.   Only  the          application of res judicata is at issue.                                         -15-          need  not  entertain detailed  analysis  of the  first  and third          elements of this test.   Our examination of the second element of          the test clearly establishes that res judicata is inapplicable to          Apparel's claims.                    Only  where  two  separate  suits  involve sufficiently          identical causes of action  does a judgment in an  earlier action          preclude  litigation  of  claims in  a  subsequent  action.   See                                                                        ___          Gonz lez, 27  F.3d at 755;  Kale, 924  F.2d at 1165.   The  focal          ________                    ____          inquiry  in   assessing  the   applicability  of   res  judicata,          therefore,  is whether  the causes of  action raised  in separate          lawsuits  are  indeed  the same.    This  Court  has adopted  the          methodology of the Restatement  (Second) of Judgments in defining          the cause of action for res judicata purposes.  Manego v. Orleans                                                          ______    _______          Bd. of  Trade, 773 F.2d 1,  5 (1st Cir. 1985),  cert. denied, 475          _____________                                   ____________          U.S.  1084  (1986).    Accordingly,  we  follow  a  transactional          approach to determine  the identity of  the underlying claims  or          causes of action.  See  Gonz lez, 27 F.3d at 755; Kale,  924 F.2d                             ___  ________                  ____          at 1166; Manego, 773 F.2d  at 5.  Under this approach, a cause of                   ______          action is defined as a set of facts which can be characterized as          a  single transaction or a  series of related  transactions.  The          cause  of action, therefore, is a  transaction that is identified          by a common nucleus of operative facts.  Although a  set of facts          may  give  rise  to  multiple  counts  based on  different  legal          theories, if the facts form a common nucleus that is identifiable          as a transaction  or series of  related transactions, then  those          facts represent one  cause of  action.  See,  e.g., Gonz lez,  27                                                  ___   ____  ________                                         -16-          F.3d at 755; Kale, 924 F.2d at 1166.  This  Court must determine,                       ____          therefore, whether  the facts  that underlie Apparel's  claims as          contained  in its  supplementary  pleadings arise  from the  same          nucleus  of operative facts as those that were adjudicated by the          prior  judgments of the district  court.10  Only  if the actions'          factual bases are the same will Apparel's claims be barred by res          judicata.  If Apparel's  claims as advanced in  the supplementary          proceedings  are separate  and distinct  from those  litigated in          Apparel I  and Apparel II, that  is, if they rest  on a different          factual basis, then res judicata does not preclude litigation  of          Apparel's claims.   See Landrigan  v. City of  Warwick, 628  F.2d                              ___ _________     ________________          736, 741 (1st Cir. 1980).                    This Court  has enumerated  several  factors which  are          useful in  determining  whether a  party has  advanced claims  in          multiple  litigations  which  derive  from the  same  nucleus  of          operative facts.   See Gonz lez, 27  F.3d at 756.   These factors                             ___ ________          include:  1) whether the facts are related in time, space, origin          or motivation; 2) whether the facts form a convenient trial unit;          and  3) whether  treating the  facts as  a unit  conforms to  the          parties'  expectations.   Id.   Additionally,  when defining  the                                    ___          contours  of the common nucleus  of operative facts,  it is often                                        ____________________          10    Although  Apparel's  claims were  raised  in  supplementary          proceedings and not  in a separate  action, the policy  rationale          underlying  the doctrine of res judicata makes it applicable to a          supplementary proceeding just  as it would to  a separate action.          See  Mitchell v.  Commission on  Adult Entertainment  Estabs., 12          ___  ________     ___________________________________________          F.3d 406, 409 (3d Cir. 1993).  It is clear that a party could not          relitigate claims  through  supplementary proceedings  that  were          previously litigated to a judgment in an earlier action.                                         -17-          helpful  to consider  the  nature of  the  injury for  which  the          litigant seeks to recover.  See id.  With these considerations in                                      ___ ___          mind,   this  Court   now  examines   Apparel's  claims   in  the          supplementary pleadings,  Apparel I, and Apparel  II to determine          whether they are rooted in the same nucleus of operative facts.                    We begin by analyzing  Apparel's claims as contained in          its  supplementary  pleadings.   These claims  were brought  in a          post-judgment supplementary proceeding in which Apparel sought to          satisfy  the judgment rendered in its favor by the district court          in Apparel I.   Apparel's supplementary pleadings allege numerous          instances in  which Amertex,  in conjunction  with the  other co-          defendants,  acted  to  defraud  Amertex's  creditors,  including          Apparel.  We need  not recite each and every  alleged wrongdoing.          It  suffices to identify  the three  general allegations  made by          Apparel: 1) that Amertex  depleted its corporate assets; 2)  that          Amertex made fraudulent conveyances; and 3) that Amertex and D.J.          are  alter egos  of their  respective  presidents, Leo  and Diego          Jacobson.  The remedies that Apparel seeks further illustrate the          factual  bases  of  its  claims.    For  the  alleged  fraudulent          conveyances, Apparel seeks  to execute the judgment  in Apparel I          directly against those assets that were transferred to D.J.  With          respect to  the  depletion  of corporate  assets  and  alter  ego          allegations, Apparel seeks to  make all the co-defendants jointly          and severally liable on the judgment.   It is obvious on the face          of the supplementary pleadings that Apparel's  cause of action in          the supplementary  proceedings is  the alleged effort  by Amertex                                         -18-          and the  other co-defendants, including co-appellees,  to defraud          Apparel through measures taken to prevent Apparel from collecting          on its judgment.  Apparel's supplementary pleadings seek  only to          satisfy the judgment.   They do not raise any  new legal theories          on which Apparel seeks to recover additional  damages.  Apparel's          supplementary pleadings  can only be precluded by res judicata if          the  same cause  of  action, i.e.  the co-defendants'  fraudulent          efforts to avoid  execution of the judgment against  Amertex, was          previously  litigated  to a  judgment  on  the merits  in  either          Apparel  I or Apparel II.  Upon  analysis of the causes of action          litigated in Apparel I and Apparel II, it is clear that the cause          of action  raised in  Apparel's supplementary pleading  has never          before  been  litigated  on  the  merits  and  simply  represents          Apparel's effort to enforce the  judgment already entered by  the          district court in Apparel I.                    In Apparel  I, the  district court confirmed  the award          rendered  by the AAA arbitrators and entered judgment for Apparel          in the amount of $387,994.00.  An arbitration award generally has          res  judicata effect as to  all claims heard  by the arbitrators.          See  Pujol v.  Shearson/American  Express, Inc.,  829 F.2d  1201,          ___  _____     ________________________________          1206-07 (1st Cir.  1987); 18  Charles A. Wright  et al.,  Federal                                                                    _______          Practice and Procedure    4475 (1981).   A judgment by a  federal          ______________________          court  confirming   an  arbitration   award  under   the  Federal          Arbitration  Act has "the same force and effect, in all respects,          as, and [is] subject to all the provisions of law  relating to, a          judgment in an action  . . . ."  9 U.S.C   13 (1988).  Therefore,                                         -19-          when  a federal  district court enters  a judgment  confirming an          arbitration award  pursuant to the Federal  Arbitration Act, that          judgment has res judicata effect as to all matters adjudicated by          the  arbitrators and  embodied  in their  award.   See  6  C.J.S.                                                             ___          Arbitration    148 (1975).   Accordingly,  to assess  whether the          ___________          district court's  judgment in  Apparel I precludes  litigation of          Apparel's  supplementary pleadings,  this  Court  must  determine          whether  Apparel's  claims in  arbitration  arose  from the  same          nucleus  of operative facts as those raised by its allegations in          the supplementary pleadings.                    The   claims  that  Apparel   raised  before   the  AAA          arbitrators  arose  from  a  common nucleus  of  operative  facts          relating  to  Amertex's   misconduct  while  entering   into  and          performing  under the  subcontract.11   This was  Apparel's cause          of action and it  formed the basis for the  claims adjudicated by          the arbitrators and the  district court's judgment confirming the          arbitrators' award.    For  the  purposes  of  our  res  judicata          analysis,  this cause  of action  is clearly  distinct from  that          raised by Apparel's supplementary pleadings.  None of the factual          circumstances  giving rise  to Apparel's  claims of  depletion of          corporate assets,  fraudulent conveyance,  or alter ego  was ever          raised before  the arbitrators.  Therefore,  the district court's          judgment  in Apparel I  does not, under  res judicata principles,          preclude  litigation  of Apparel's  claims  as  contained in  the          supplementary pleadings.                                        ____________________          11  See supra pp. 2-3.              ___ _____                                         -20-                    Finally, the  Court must consider whether  the judgment          rendered by Judge Fust  in Apparel II precludes the litigation of          Apparel's supplementary pleadings.  Apparel's claims as contained          in its Amended Complaint were based on two separate sets of facts          and thus  raised two separate causes of action.  The first set of          facts gave rise to Apparel's claim that Amertex violated RICO and          included  allegations  that Amertex  bribed  government officials          while securing  the prime  contract and also  committed mail  and          wire fraud both in inducing Apparel to enter into the subcontract          and  through  Amertex's subsequent  breaches of  the subcontract.          These claims closely  parallel the RICO claims  raised by Apparel          in arbitration and dismissed  by the AAA arbitrators for  lack of          subject  matter  jurisdiction.   As in  Apparel  I, the  cause of          action defined  by  this common  nucleus  of operative  facts  is          clearly distinct from that raised by Apparel in its supplementary          pleadings.12    It  does not  pertain  to  the  actions taken  by          Amertex and the other co-defendants to obstruct Apparel's efforts          to collect on the judgment.                    The second  set of facts alleged by  Apparel in Apparel          II formed the basis for essentially the same claims of fraudulent          conveyance,  depletion  of assets,  and  alter  ego that  Apparel                                        ____________________          12   This Court noted  the distinction  between the  two sets  of          facts  in another context in  the decision in  Jacobson, where it                                                         ________          was  observed that the fraudulent conveyance "was not part of the          conduct  aimed at  securing the  contract .  . .  the [fraudulent          conveyance was] too unrelated --  too separate, too distinct, too                              __            ___           ___           ___          obviously  related  to a  simple effort  to  avoid a  later court          judgment -- to  permit a  finding that, taken  together with  the          earlier  acts, it is part of a racketeering 'pattern.'"  967 F.2d          at 724.                                         -21-          raised in its  supplementary pleadings.   In Apparel II,  Apparel          alleged that  while the  arbitration was pending,  Amertex, along          with  co-appellees  and  the  other   co-defendants,  engaged  in          transactions intended to  defraud Amertex's creditors,  including          Apparel.  Accordingly, Apparel's  Amended Complaint in Apparel II          prayed that Leo and  Harriet Jacobson, along with Diego  Jacobson          and D.J., be held jointly and severally liable to Apparel for the          amount of the judgment on the arbitration award, plus interest.                    Although  Apparel's  Amended  Complaint in  Apparel  II          includes claims based  on the same cause of action as that raised          in the  supplementary pleadings,  Judge Fust 's dismissal  of the          complaint in  Apparel II does  not preclude  litigation of  these          claims  in  the supplementary  proceedings.    Under a  generally          accepted  exception to  the res  judicata doctrine,  a litigant's          claims  are not  precluded  if the  court  in an  earlier  action          expressly reserves the litigant's right to  bring those claims in          a later action.  Kale, 924 F.2d at 1167;  Restatement (Second) of                           ____          Judgments   26(1)(b) (1982).  In Judge Fust 's opinion dismissing          Apparel's Amended Complaint in Apparel II, he noted that:                      Essentially,   the  fraudulent   transfer                      claim is merely one aspect of plaintiff's                      attempt  at  collection  of the  judgment                      issued  [in Apparel I].   Since plaintiff                      has  already  begun that  process  in the                      case   before  Judge   P rez-Gim nez,  we                      cannot entertain these claims  again here                      without  a real risk of allowing multiple                      judgments  to  issue  for the  same  harm                      . . . .      The  dismissal   is  without                      prejudice to any legitimate  execution of                      judgment motions which plaintiff may seek                      to  file  before Judge  P rez-Gim nez [in                      the supplementary proceedings].                                         -22-          Apparel Art Int'l  v. Jacobson,  Civil No. 90-1756  (JAF) at  6-7          _________________     ________          (D.P.R. Aug. 21, 1991).                    It is  clear, therefore,  that Judge Fust   intended to          preserve  Apparel's  right  to  raise  its fraudulent  conveyance          claims  in  the  supplementary  proceedings  before  Judge P rez-          Gim nez.   Accordingly,  Judge  Fust 's  dismissal  of  Apparel's          claims in Apparel  II does not  preclude litigation of  Apparel's          supplementary pleadings.                                   III.  CONCLUSION                                   III.  CONCLUSION                    We reverse the district court's  dismissal of Apparel's          claims  as contained  in the  Supplementary Pleadings  in Aid  of          Execution of Judgment.  The cause of action alleged by Apparel in          its supplementary  pleadings has  never before been  litigated on          the merits,  and  therefore res  judicata does  not preclude  its          litigation  in supplementary  proceedings.   Apparel may  well be          dissatisfied with the  award it received  in arbitration, as  co-          appellees contend,  but  in this  case  Apparel merely  seeks  to          enforce the judgment rendered in its behalf by the district court          in  Apparel I.  Accordingly, Apparel may prosecute its claims for          depletion of corporate  assets, fraudulent conveyance,  and alter          ego  either in  the  supplementary proceeding  or  in a  separate          lawsuit.                    We decline to address co-appellee's arguments regarding          the procedural inadequacy  of appellant's supplementary pleadings          under Fed. R. Civ. P. 69(a) since that was not  the basis for the          dismissal.  All that we hold is  that it was error to dismiss the                                         -23-          supplementary pleadings  in the supplementary proceedings  on res          judicata grounds.  We  remand this case to the district court for          further proceedings consistent with this decision.                    Reversed and Remanded.  Costs to appellant.                    _____________________                                         -24-
