Nalco Co. v. Chen

Dist. Ct. did not err in granting plaintiff’s request to enjoin defendant from proceeding in Chinese lawsuit against plaintiff, where defendant asserted in Chinese lawsuit that plaintiff had violated terms of joint venture agreement by borrowing $300,000 on behalf of unsuccessful joint venture without defendant’s permission. Record showed that plaintiff had previously obtained in federal court $2 million judgment against defendant in action to recoup money plaintiff had spent repaying joint venture’s debts, and defendant could not pursue China lawsuit, where issue regarding responsibility for payment of joint venture’s debts had already been resolved. Moreover, while defendant argued that it should be allowed to pursue China lawsuit because instant claim was only permissive counterclaim that was not pursued in prior federal court action, such argument was without merit since defendant had pursued in prior federal court matter 12 other counterclaims, some of which raised issues of Chinese law. Thus, under merger doctrine, defendant was required to raise all of his counterclaims, including instant action, in prior federal court action, where instant action stemmed from same transaction/operative facts at issue in defendant's other counterclaims that were raised in prior federal action.