Baek v. Clausen

Dist. Ct. did not err in dismissing on res judicata grounds plaintiffs’ RICO action arising out of defendants’ administration of construction loan agreement that allegedly caused delays in distribution of loan proceeds, where plaintiffs had been losing parties in defendants’ prior state-court foreclosure and loan guaranty actions arising out of said construction loan, as well in plaintiffs’ prior state court fraud and breach of contract actions. All elements of res judicata had been met, where: (1) at time of dismissal there had been final judgments in all prior state-court actions; (2) there had been identity of parties or their privies in said prior actions and in instant federal action; and (3) all state and instant federal actions involved single group of operative facts that formed parallel allegations of misconduct in prior state-court actions and in instant federal action. Fact that plaintiff had unsuccessfully attempted to file instant RICO action in prior state-court proceeding did not preclude application of res judicata, where plaintiffs had failed to comply with timeline to file said action in prior state-court proceeding. Ct. further rejected plaintiffs’ claims that: (1) state-court decision in Wilson, 981 N.E. 2d 971, allowed them to proceed with instant RICO action, even though other theories of relief had been rejected in prior state-court proceedings; and (2) Dist. Ct. had improperly stayed instant case under Colorado River abstention principles so as to allow plaintiffs’ pending appeal in prior state-court action to become final, and then applying res judicata doctrine based, in part, on said final decision.