Matosantos Comm. Corp. v. Applebee's Intern. Inc.

Page 1203

245 F.3d 1203 (10th Cir. 2001)

MATOSANTOS COMMERCIAL CORPORATION, Plaintiff-Appellant, v. APPLEBEE'S INTERNATIONAL, INC., Defendant-Appellee.

No. 99-3396

UNITED STATES COURT OF APPEALS TENTH CIRCUIT

April 16, 2001

Appeal from the United States District Court for the District of Kansas. (D.C. No. 99-CV-2105)

Bruce Keplinger (Melissa D. Allemann with him on the brief), Norris, Keplinger & Herman, L.L.C., Overland Park, Kansas, for Appellant.

Michael Thompson (Brian D. Martin with him on the brief), Blackwell, Sanders, Peper, Martin, L.L.P., Kansas City, Missouri, for Appellee.

Before HENRY, and MURPHY, Circuit Judges, and MILLS,^* District Judge.

MURPHY, Circuit Judge.

I. INTRODUCTION

Matosantos Commercial Corporation ("Matosantos") brought suit against Applebee's International, Inc. ("Applebee's") for money allegedly owed by Applebee's to Matosantos. The district court determined that Applebee's liability to Matosantos had already been decided in a prior adjudication and thus granted Applebee's motion for summary judgment.

Subject matter jurisdiction in the district court was based on diversity of citizenship. See 28 U.S.C. 1332(a)(1), (c)(1). On the day the judgment of the district court was entered, Matosantos filed a motion for reconsideration. The district court denied the motion for reconsideration, and within thirty days Matosantos filed a notice of appeal. Because Applebee's had asserted a third-party claim, the district court then entered a certification under Rule 54(b) of the Federal Rules of Civil Procedure. Thus, this court has subject matter jurisdiction pursuant to 28 U.S.C. 1291. See Wagoner v. Wagoner, 938 F.2d 1120, 1122-23 (10th Cir. 1991); Lewis v. B.F. Goodrich Co., 850 F.2d 641, 645-46 (10th Cir. 1988). Because the district court correctly applied collateral estoppel to Matosantos' claim, the grant of summary judgment is affirmed.

II. FACTS AND PROCEDURAL HISTORY

Appellant Matosantos is a distributor of products to national restaurant chains.¹ Appellee Applebee's is a franchiser of casual dining restaurants known as Applebee's Neighborhood Grill and Bar. Applebee's granted a franchise to Apple Development Associates II ("ADA") for two Applebee's restaurants in Puerto Rico. The actual operation of the two restaurants was conducted by Casual Dining Restaurant Management of Puerto Rico, Inc. ("Casual Dining"), an affiliate of ADA.

In April 1995, Matosantos entered into a contract with Casual Dining for the delivery of certain products required for the operation of the two restaurants (the "Purchase and Delivery Contract"). According to the terms of the Purchase and Delivery Contract, Casual Dining was to purchase or arrange for a third party to purchase Matosantos' "inventory and merchandise in transit or committed for purchase" upon termination of the Purchase and Delivery Contract.

Because the two restaurants were not successful, ADA decided to close and sell the restaurants. Applebee's had a right of first refusal on the sale of the restaurants. In order to determine whether they wanted to exercise that right, Applebee's negotiated a contract with ADA on February 13, 1996, allowing Applebee's to manage the two restaurants until March 8, 1996 (the "Management Contract").

According to the terms of the Management Contract, Applebee's was not to "assume or take an assignment of Owner's [ADA and its affiliate Casual Dining] right, title and interest in and to all contracts needed in and for the operation of the Restaurants." Applebee's was responsible for all the expenses incurred while it was operating the restaurants, including the products delivered by Matosantos.

An Applebee's subsidiary operated the restaurants until March 14, 1996, at which time the restaurants were closed. Matosantos made its last delivery to the restaurants on March 12, 1996. Matosantos was paid for all the products it delivered to the restaurants between February 14 and March 12, 1996. Pursuant to instructions from Applebee's, Matosantos delivered to a third party its existing inventory not yet supplied to the restaurants.

On July 12, 1996, Matosantos filed a complaint against Applebee's in the United States District Court for the District of Puerto Rico. In the complaint Matosantos sought payment from Applebee's for Matosantos' remaining inventory not supplied to the restaurants and later delivered to the third party. Matosantos claimed Applebee's had assumed, through the Management Contract with ADA and other verbal representations made to Matosantos at that time, Casual Dining's obligations under the Purchase and Delivery Contract to pay for Matosantos' remaining inventory upon termination of the Purchase and Delivery Contract.

Applebee's responded by filing a motion to dismiss, arguing the Puerto Rico district court did not have in personam jurisdiction over it. One of the dispositive issues raised in the personal jurisdiction analysis was whether Applebee's had "assumed liability for the [Purchase and Delivery Contract] executed by [Matosantos] and Casual Dining." Matosantos Commercial Co. v. Applebee's Int'l, Inc., 2 F. Supp. 2d 191, 195 (D.P.R. 1998) ("Matosantos I"). The Puerto Rico district court concluded Matosantos had failed to produce sufficient support for its claim that Applebee's had assumed the obligations of the Purchase and Delivery Contract. See id. at 195-96. The Puerto Rico district court thus granted Applebee's motion to dismiss for lack of personal jurisdiction. See id. at 197.

Rather than appeal the Puerto Rico district court's decision, Matosantos next filed a complaint in the United States District Court for the District of Kansas. In the complaint, Matosantos sought payment from Applebee's for Matosantos' inventory remaining after the restaurants closed which was later delivered to the third party. In support of its claim for relief, Matosantos asserted six causes of action: breach of contract, breach of oral contract, third-party beneficiary to the Management Contract, contract by estoppel, intentional misrepresentation, and negligent misrepresentation.

Applebee's answered Matosantos' complaint and filed a motion for summary judgment, arguing Matosantos' claims were barred by collateral estoppel (also known as "issue preclusion") because the issues underlying Matosantos' causes of action had already been decided against Matosantos in the Puerto Rico district court. The Kansas district court granted Applebee's motion for summary judgment. See Matosantos Commercial Corp. v. Applebee's Int'l, Inc., 64 F. Supp. 2d 1105, 1113 (D. Kan. 1999) ("Matosantos II"). The Kansas district court determined that the issue presented in Matosantos' complaint was identical to the issue decided by the Puerto Rico district court--"whether Applebee's assumed or represented that it would assume Casual Dining's purchase agreement with Matosantos." Id. at 1109. The Kansas district court rejected Matosantos' arguments that a dismissal for lack of personal jurisdiction is not an adjudication on the merits and that Matosantos was not given a full and fair opportunity to litigate the issue. See id. at 1109-11.

Matosantos filed a motion for reconsideration, arguing that the issues raised in the Kansas complaint were not identical to the issues decided by the Puerto Rico district court. The Kansas district court rejected Matosantos' argument, noting that the arguments advanced by Matosantos were "merely a new spin on the exact same evidence and facts, in an attempt to prove the matter which Matosantos failed to prove in Puerto Rico: an agreement or representation by Applebee's to pay for the Matosantos inventory." See Matosantos Commercial Corp. v. Applebee's Int'l, Inc., 189 F.R.D. 467, 473 (D. Kan. 1999) ("Matosantos III"). Thus, the Kansas district court denied Matosantos' motion for reconsideration. See id. at 474.

III. DISCUSSION

A. Motion for Summary Judgment

This court reviews de novo the Kansas district court's grant of Applebee's motion for summary judgment based on collateral estoppel. See Dodge v. Cotter Corp., 203 F.3d 1190, 1197 (10th Cir. 2000). Summary judgment is appropriate if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(c).

This court has previously stated that "the preclusive effect given in federal court to a prior federal decision is subject to federal law." Dodge, 203 F.3d at 1197. In Dodge, fourteen plaintiffs attempted to use offensive collateral estoppel to prevent the defendant from relitigating the defendant's negligence in the operation of a uranium mill in Colorado. See id. at 1193-98. In an earlier lawsuit filed by eight plaintiffs, the defendant had been found negligent under state law. See id. at 1194. Both the original suit by the eight plaintiffs and the latter suit by the fourteen plaintiffs were filed in federal court. See id. at 1192-94. Although subject matter jurisdiction in Dodge for the federal district courts to consider the state negligence claims made in both suits was apparently based on 28 U.S.C. 1367 supplemental jurisdiction, the collateral estoppel rule announced in Dodge would seem to apply when jurisdiction in the federal courts is based on 28 U.S.C. 1332 diversity jurisdiction, as is the case here. See 19 Charles Alan Wright et al., Federal Practice and Procedure 4520 (2d ed. 1996). Having determined that the collateral estoppel effect to be given the prior federal judgment was a question of federal law, the Dodge court proceeded to delineate this court's collateral estoppel requirements: "(1) the issue previously decided is identical with the one presented in the action in question, (2) the prior action has been finally adjudicated on the merits, (3) the party against whom the doctrine is invoked was a party, or in privity with a party, to the prior adjudication, and (4) the party against whom the doctrine is raised had a full and...