USCA1 Opinion

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT
____________________

No. 95-2278

SUSAN D. LUNDBORG, ETC.,

Plaintiff, Appellant,

v.

PHOENIX LEASING, INC., ET AL.,

Defendants, Appellees.

____________________

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MAINE

[Hon. Gene Carter, U.S. District Judge]

___________________

____________________

Before

Boudin, Circuit Judge,

_____________

Campbell, Senior Circuit Judge,

____________________

and Lynch, Circuit Judge.

_____________

____________________

Ralph A. Dyer with whom Law Offices of Ralph A. Dyer, P.A. was
_____________
___________________________________
briefs for appellant.

David M. Wiseblood with whom Robert B. Kaplan, Joseph N. Dem

___________________
_________________ ______________

Frandzel & Share, Anthony Perkins and Bernstein, Shur, Sawyer & Nel
________________ _______________
_____________________________
were on brief for appellees.

____________________

August 5, 1996
____________________

BOUDIN, Circuit Judge.

_____________

In this case, the district court

dismissed claims brought

Leasing,

by Susan

Lundborg against

Inc. ("Phoenix Leasing"),

were barred by res judicata.

____________

on the ground

leaves open

central aspect

Maine state

of

court.

to Lundborg

to do so on a ground

the opportunity

her claims

For

that they

We affirm the district court's

judgment of dismissal but are compelled

that

Phoenix

by an

to

pursue a

independent action

reasons that will

in

become apparent,

such a suit is not a promising venture.

I.

The facts of the case are complicated and its procedural

history involved; we offer a condensed version here.

the district court dismissed the

to

dismiss,

the

underlying

Because

claims at issue on a motion

"facts"

described

below

are

primarily

drawn

Rockwell v.
________

1994),

from

the

allegations

Cape Cod Hospital, 26 F.3d

__________________

supplemented by pleadings

the district court took judicial

of

the

complaint,

254, 256

(1st Cir.

in related cases

notice.

of which

In fact, there are

six other related cases.

___

Susan

shareholder

Lundborg, a

of

resident of

Community

Cable

("Community Cable"), which

in

Merlin

partnership.

franchises

Cable

after

to construct

Services

and

("Merlin"),

its

formation,

operate two

-2-2-

was the

sole

Maine,

Inc.

of

in 1988 became a

Operators

Soon

Florida,

general partner

Maine

general

Merlin

secured

cable

television

systems

in Maine.

The partnership sought to borrow $850,000

of the estimated $1,000,000 cost of these projects.

In

early

corporation,

interest rate

1989,

agreed to

of 18

required

Merlin to

value of

the

Phoenix

Leasing,

loan Merlin

percent.

pay Phoenix

projects up

that sum

The terms

at an

of the

Leasing 25

to $150,000,

California

loan also

percent

plus an

annual

of the

additional

$50,000 for

each year the

amounting to

what Lundborg

interest rate in

by the

loan was outstanding

claims was

excess of 40 percent.

cable systems

and by

after 1990,

an effective

annual

The loan was secured

Lundborg's personal

guaranty,

itself secured in part by a mortgage on her house in

Suffolk

County, New York.

In 1990, two additional cable television operators owned

wholly or

in part

Phoenix Leasing.

by Lundborg agreed

The loans

New Hampshire limited

Inc.

("Sure"), a

rates of interest

guaranteed

money from

to Cable One CATV ("Cable One"),

partnership, and Sure Broadcasting,

Delaware

corporation, also

and demanding terms.

the loans

to borrow

to Cable

One and

imposed

high

Lundborg personally

Sure, again

giving

Phoenix Leasing a mortgage on

her Suffolk County house.

The

total of the three loans exceeded $4 million.

By December 1990, all three borrowers had stopped making

payments

to Phoenix

Leasing

began

court

Leasing

and

actions

-3-3-

to

in

April

recover

1991,

upon

Phoenix

the

loan

agreements

and

to

foreclose

securing the loans

included

state

on

the

various

properties

and Lundborg's personal guaranty.

court

actions

in

Maine

(against

These

Merlin,

Community Cable, and others) and New York (against Lundborg),

and federal

others)

filed

suits in New

and Nevada (against

claims in

Maine

Hampshire (against

and

in

Sure).1

Merlin's federal

Cable

One's

Phoenix

Cable One

and

Leasing later

bankruptcy proceeding

similar

proceeding

in

in

New

case that

has

Hampshire.2

Phoenix Leasing

reached decision.

has prevailed

in every

In May 1991, Phoenix Leasing began a Maine

state court action to recover on the original $850,000

Merlin

defense

raised several

of

usury,

affirmative

and

brought

defenses, including

several

loan.

the

compulsory

counterclaims, see Me. R. Civ. P. 13(a), including claims for

___

fraud, breach of duty of good faith, negligence, and abuse of

process.

fraud

The usury defense was cast in general terms and the

claims related to

alleged actions of

Phoenix Leasing

quite different than the fraud charges that are now advanced.

____________________

1Phoenix Leasing Inc. v. Merlin Cable Partners, No. CV_____________________

_____________________
91-343

(Me.Sup.Ct. York Cty.); Phoenix Leasing Inc. v. Susan

____________________
_____

Lundborg, No.
________

91-08094 (N.Y.Sup.Ct.

Suffolk Cty.);

Phoenix
_______

Leasing, Inc. v. Cable One CATV Limited Partnership, Civ. No.

_____________
__________________________________
91-164-D (D.N.H.); Phoenix Leasing Inc. v. Sure Broadcasting,
____________________
__________________
Inc., No. CV-N-91-185-ECR (D.Nev.).
____

2In
re Merlin
Cable Partners,
_________________________________

BK

No.

93-10067

(Bankr.D.Me.); In re Cable One CATV Limited Partnership, BK

__________________________________________
No. 91-12387-JEY (Bankr.D.N.H.).

-4-4-

Phoenix Leasing's Maine state

was dismissed

1991.

after Merlin

In September

court suit against Merlin

filed for

1992, the Maine

bankruptcy in

state court

August

entered a

default judgment against Community Cable on Phoenix Leasing's

claims and Community

Cable's counterclaims.

In

early 1994,

the federal bankruptcy court in Maine awarded Phoenix Leasing

cash and

a promissory note

on account of its

claim against

Merlin.

Phoenix Leasing also

prevailed in February 1992

in its

suit in New York state court against Lundborg to foreclose on

her

mortgage.

In

bankruptcy after

court;

but in

the

ensuing

In

brought

bankruptcy

One

declared

suit in

district

proceeding

and in July 1993

in

New

a settlement

confirmed the

March 1995, Phoenix Leasing won its

the federal district

the loan to Sure.

Cable

in December 1992 approved

of Phoenix Leasing

plan of liquidation.

suit in

Hampshire,

Phoenix Leasing

Hampshire, the court

in favor

New

court in Nevada to

recover on

In February

Merlin,

Cable

Leasing, but

1994, Lundborg

One, and

Sure

learned that

were

the loans

not funded

rather by two limited partnerships,

by

to

Phoenix

in each of

which Phoenix Leasing was general partner.

This fact emerged

during

Phoenix Leasing's

the

deposition of

Gary Martinez,

executive

vice president, in the Sure litigation in district

____

court

Nevada.

in

Lundborg

-5-5-

alleges

that

these

limited

partnerships,

and

not

Phoenix Leasing,

were

the

"actual

lenders" in the loan transactions.

This

is said

to matter because

Phoenix Leasing,

as a

licensed personal property broker, was admittedly exempt from

California's

unlicensed

usury laws which cap the

lender

may

charge.

The

interest rate that an

limited partnerships,

Lundborg claims, were not exempt and the loans were therefore

usurious

and fraudulent.

suing in

its own

standing to

Moreover, Lundborg asserts that by

name, Phoenix

recover

upon the

Leasing misrepresented

loans

in the

various

its

court

actions, and Lundborg says this amounted to additional fraud.

Based

on the Martinez deposition, Lundborg in June 1994

moved in the New York state suit to set aside the judgment on

the

ground that Phoenix Leasing lacked standing to foreclose

on the mortgage because

it was not the true

lender; the New

York

motion and Lundborg

did not appeal.

In

court denied this

the then

summary

district

pending Nevada

federal action, Sure

moved for

judgment on similar

grounds; in December

1994, the

court

rejected

entered judgment for

this argument

and

in

Phoenix Leasing, a ruling

March 1995

later upheld

by the Ninth Circuit in an unpublished opinion.

In the

Lundborg

bankruptcy courts

made

judgments but

somewhat

with the

in Maine

broader

and New

efforts

same result.

to

Hampshire,

reopen

In January

the

1995, the

Maine bankruptcy court (in circumstances more fully described

-6-6-

hereafter)

judgment

rejected

on account

deposition.

In

court rejected

Lundborg's

of fraud

motion

and based

November 1995, the New

Cable One's effort

for

relief

upon the

from

Martinez

Hampshire bankruptcy

to set aside

the earlier

settlement

involved

of the case, ruling that the limited partnerships

in

permitting

the

them

California law.

the

Cable

to

One

exceed

At least

Merlin transaction was

loan

the

in

usual

fact

had

usury

licenses

limit

under

one of the limited partnerships in

evidently not involved

with the

Cable One loan.

No comparable effort was made

earlier

Maine state

Community

1994,

Cable in

Lundborg

court default judgment

September 1992.

filed the

Leasing and others

by Lundborg to reopen the

present

in the federal

entered against

Instead, in

December

action against

Phoenix

district court in

Maine,

both on her own behalf and as successor in interest to Merlin

and Community Cable.

allegations

The gravamen was the same

stemming from

the

set of fraud

Martinez deposition

but the

complaint set forth a welter of claims.

Lundborg's complaint

included nine counts:

a statutory

claim for perjury arising under Maine law (count I); abuse of

process in connection with the

litigation in New York (count

II); common

law conversion, fraud,

faith,

interference with

and

breach of

economic

duty of

good

opportunity (counts

III-VI); violation of California's usury statute (count VII);

-7-7-

unjust

civil

enrichment (count VIII); and violation of the federal

RICO statute (count

the limited

loan,

partnerships

IX).

Additional

that allegedly

Gus Constantin (the

defendants were

funded the

chairman of Phoenix

Merlin

Leasing) and

Martinez.

All

defendants in

dismiss.

Adopting

magistrate judge, the

the Maine

the able

district

recommended

claim; in the

decision

district court granted this

September 6, 1995, without a separate

court found

court moved

that Lundborg

opinion.

had failed to

absence of that claim

to

of the

motion on

The district

articulate a

the court held that

RICO

it

had no personal

as to

any of

jurisdiction over the

the counts.

Lundborg

individual defendants

does not appeal

these

rulings.

The

district court further held that the September 1992

judgment in Maine state court barred all of Lundborg's claims

on

res judicata
_____________

grounds and,

further,

that

Lundborg was

estopped by judgments in New York and in the Maine bankruptcy

court from relitigating the issue of Phoenix Leasing's fraud.

Lundborg appeals this ruling as to counts I, III, IV,

and VIII

with respect

to

Phoenix Leasing

and the

V, VII

limited

partnerships.

II.

As an initial matter, Lundborg argues as a matter of law

that her count I claim for perjury, pursuant to 14 Me. R.S.A.

-8-8-

870, cannot

state court.

be precluded by the earlier

Section 870 creates a cause of action "[w]hen a

judgment has been obtained against

judgment in Maine

witness introduced

at trial

a party by the perjury of

by the

adverse party,"

and

provides that "the

to such a suit.

this

judgment in the former action

is no bar"

Phoenix Leasing insists that Lundborg waived

argument by failing

to articulate

it in

the district

court.

We affirm

the dismissal

Lundborg has not stated a

alleges

of the

perjury count

claim under the statute.

because

Lundborg

that pleadings and affidavits submitted in the Maine

state court action were perjurious.

But section 870

applies

only to testimony "introduced at trial by the adverse party,"

and the Maine action was

decided prior to trial.

Supreme Judicial Court has made

be construed strictly,

472

Maine

clear that section 870 is to

Spickler v. Greenberg, 644

________
_________

(Me. 1994); and we have

The

A.2d 469,

no qualm in holding Lundborg to

"the terms of the statute."

Id. (quoting Milner v. Hare, 135

___
______
____

A. 522 (Me. 1926)).

This

claims.

limits

to the

California

the amount

loan; the

from its

brings us

heart

law, which

of interest

law exempts certain

provisions.

of Lundborg's

governed

that can

the Merlin

be charged

classes of loans

Cal. Const.

remaining

Art. 15,

loan,

on any

and lenders

1.

Phoenix

Leasing was a "personal property broker" and therefore exempt

-9-9-

from the usury statute.

Former Cal. Fin. Code

22009.

(The

current version of the statute refers to lenders like Phoenix

Leasing as "finance lenders" but the change appears to be one

of name only.)

Lundborg alleges that the Merlin loan was funded

limited partnerships, Phoenix Leasing

III and Phoenix Leasing Income

partnerships

brokers.

were not

then

Lundborg insists

by two

Cash Distribution Fund

Fund 1975 ALP, and that these

licensed

that the

as personal

property

partnerships were

the

actual lenders in the Merlin transaction, that Phoenix either

assigned the

agent

and

loan to

that

the

the partnerships or

loan

was

held it

therefore

as their

usurious.

The

complaint seeks actual damages of over $6 million.

This

set of

allegations and

Lundborg's remaining claims.

while

variously

defrauded

styled,

Merlin and

identity of

all

name.

Count

VII is

charge that

failing

lenders" at the

negotiated and thereafter,

pursued legal claims

Counts III,

Lundborg by

the "actual

arguments

IV, V, and

Phoenix

VIII,

Leasing

to disclose

time the

to

the

loan was

particularly when Phoenix Leasing

against Merlin and Lundborg

a claim

for treble damages

civil remedy provision of California's

Code

gives rise

usury law.

in its own

under the

Cal. Civ.

1916-3.

It

is far

from

clear

that

the

funding

arrangement

alleged by Lundborg was illegal

under California law.

See,
____

-10-10-

e.g., Strike
____ ______

132,

139

(1979).

v. Trans-West Discount Corp.,

__________________________

(Cal.Ct.App.),

Phoenix

appeal dismissed,
_________________

Leasing points out

155 Cal.

444

Rptr.

U.S.

that a licensed

948

lender

may assign a high-interest loan to an unlicensed third party;

elsewhere

Phoenix

Leasing

internal accounting

the

holder of

its own

argued

arrangements that

the Merlin

argument by Sure

has

note

that

it made, it

under California

that challenged the funding

loan was

despite

rejected by the

the

remained

law.

An

arrangement of

Nevada district

court in

Phoenix Leasing Inc. v. Sure Broadcasting, Inc., CV-N-91-185____________________

_______________________

ECR, slip op. at 8-9 (D. Nev. Dec. 18, 1994):

Phoenix's continued possession

promissory note
negotiation
Cal.Comm.
Phoenix

note.

the

3201.

preclude any

promissory

ownership

receive monies under

may

remain

Cal. Comm

may also enforce

note.

Regardless of whether

transferred

right to
Phoenix

of

appears to

of the

the

or

the

the note,

holder of

3201 & 3203.

the note even if

the

Phoenix
it is

not the owner

of the note.

Cal.Comm.

3301.

But it is

Sure

not certain

that the

facts surrounding

the

loan are identical to those respecting the earlier loan

to Merlin and

the facts concerning the Merlin

developed in the

district court.

case Phoenix Leasing has

to California law,

Indeed, in briefing

this

devoted relatively little attention

understandably relying

res judicata rationale

_____________

loan were not

of the

primarily on

district court.

the

Thus, the

question for us is whether the district court's rationale can

-11-11-

be

sustained, a

matter

we

review de novo.
________

Apparel Art
____________

Internat'l, Inc. v. Amertex Enterprises Ltd., 48

_________________
_________________________

F.3d 576,

582 (1st Cir. 1995).

Were it

application

action

governs

not for

Lundborg's allegations

of res judicata doctrine

_____________

would be

straightforward.

the preclusive

effect

of

to

Under

the

of fraud,

bar this

Maine law,

Maine

state

the

present

which

court

judgment, e.g., Diversified Foods, Inc. v. First Nat'l Bank

____ ________________________
_________________

of Boston,
_________

985 F.2d 27, 30 (1st

Ct. 3001 (1993), a valid

the

same parties

Cir.), cert. denied, 113 S.

____________

prior judgment in an action between

or their

privies

bars relitigation

with

respect to the same claims of "all issues that were tried, or

may have been tried"

in the prior action.

Currier v.
_______

Cyr,
___

570 A.2d 1205, 1208 (Me. 1990).

Functionally, this familiar doctrine--known

in the past

as the merger and bar branch of res judicata and now as claim
____________

preclusion--prevents

splitting

plaintiff

its related claims

Art, 48 F.3d at 583.

___

interest in repose

or

counterclaimant

among several suits.

Such a policy responds to

and the courts' desire

from

Apparel
_______

the parties'

to avoid needless

litigation.

claims

that

Maine

follows the modern

must be

brought

in

rule and defines

one action

by

use

transactional test, so that

subsequent

aggregate of

suit

out

of

operative facts shall be

though the second

not

that arises

advanced in

suit relies upon a

the first

-12-12-

the same

barred even
legal theory

case, seeks

different

the

of a

relief

than that

involves

evidence

sought in

the

different

first case,

from

the

and

evidence

relevant to the first case.

Currier, 570
_______

A.2d at 1208;

see Beegan v. Schmidt,

___ ______
_______

451 A.2d

642, 645 (Me. 1982) (citing Restatement (Second), Judgments

_______________________________

24 (1982)).

Lundborg's claims

alleged

wrongdoing

of

at issue

here all

Phoenix

Leasing

arise out of

and

the

the

limited

partnerships in connection with the making and enforcement of

the Merlin loan.

brought

claims against Phoenix

same loan as

bankruptcy,

Cable previously

Leasing arising out

counterclaims in the Maine

_____________

Although Merlin

for

But Merlin and Community

state court action.

was dismissed from the action

default

judgment

of that

was

when it filed

entered

against

Community Cable

in that action,

and a default

judgment has

the same claim-preclusive effect as a judgment on the merits.

Irving Pulp & Paper Ltd.

_________________________

v. Kelly,
_____

654 A.2d 416,

418 (Me.

1995).

Lundborg asserts in conclusory fashion that the

judgment was

never

support of this

made final

but

claim, nor do

we detect any

Nor can

Lundborg seriously deny

privity

with

Lundborg

supra,
_____

Community

present claims

arise

argument

basis for

that she and Merlin

Cable, which

and was a general partner

59(3), 60(2).

offers no

was

default

wholly

of Merlin.

in

it.

are in

owned by

Restatement,
___________

Under the circumstances, Lundborg's

out of

the

same transaction

as

the

-13-13-

counterclaims in

the earlier

action and are

barred by

res
___

judicata, absent some exception to the general rule.

________

III.

Thus

court.

far our view is

the same as

Where we part company--with

that of the district

some reluctance for the

issue

is very close--concerns

res judicata
_____________

invoked by

Lundborg's position

a possible escape

Lundborg

that the

in

this

1992 default

hatch from

case.

It

is

judgment against

Community Cable in the Maine state court cannot be considered

a valid judgment for purposes

_____

tainted by an aspect of the

Lundborg's present claims,

litigation

to

Otherwise,

claim

enforce

of res judicata because it was

____________

same fraud that is the basis

namely, the alleged fraud

the

preclusion

original

applies

loan

to

to

of

in the

Merlin.

underlying

fraud

charges no less than to other tort theories.

This contention takes us to

few peers

lawyers

in the common

and

judges

law as

a body of doctrine that has

a source

alike, namely,

the

of confusion

rules

for

that govern

independent

actions

that

judgment.

Partly,

the

terminology,

see Restatement, supra, ch. 5 intro. note, and,

___ ___________ _____

in

addition, the

stable.

law in

But so far

the rules

are

collaterally

problem

is

this area

a set

preclusion.

-14-14-

one

of

is neither

as the law permits

effectively

attack

of

prior

confusing

uniform nor

collateral attacks,

exceptions

to

claim

In the past

some courts have been unwilling

all litigation fraud as an

___

sometimes

been said that

to treat

exception to res judicata; it has

____________

only special categories

of fraud,

such as bribery of a judge, would permit a collateral attack.

See Restatement, supra,

___ ___________ _____

approach has been

attack

68 cmt. a, 70 cmt. c.

The modern

to lower the substantive bar to collateral

while insisting on severe conditions to the assertion

of such a claim, due diligence

in the original action

in the discovery of the fraud

and clear and convincing

fraud in the collateral one.

Id.
___

70 cmt. d.;

evidence of

cf. Spickler
___ ________

v. Greenberg, 644 A.2d 469, 471 (Me. 1994).

_________

In

our

considering Lundborg's

concern is

court in Maine

with Maine

with

labels

determining which

judgment.

(Me. 1996).

judgment.

at 60-395 (2d ed.

the Restatement,
___________

traditional

law because

has been asked to permit

on a Maine state court

60.37[3],

claim to a

of

no

extrinsic

a federal

a collateral attack

Maine law,

rigidly

and

adheres

intrinsic

Society of Lloyd's v. Baker, 673

___________________
_____

1979), to suggest

in accord

circumstances justify overturning

We read Kradoska
________

district

7 Moore, Federal Practice,

________________

1995).

longer

fraud exception,

to

the

fraud

in

a prior

A.2d 1336, 1339

v. Kipp, 397 A.2d 568-69

____

that Maine is more interested

in

(Me.

whether

the fraud claim was

known or should

have been known at

time of the earlier

action.

Wright, Miller &

See 11
___

Federal Practice and Procedure,

_______________________________

-15-15-

1995).

2868,

at 400-01

the

Kane,

(2d ed.

In the present

case, the district court

assumed, as we

do, that fraud in the course of the earlier Maine state court

litigation

might

preclusion.

give

But it

rise

to

an

held that the

exception

to

issue whether
_______

claim

fraud had

occurred had itself been resolved on the merits, adversely to

Lundborg,

in

bankruptcy

the

court.

New

York

As already

deposition, Lundborg sought

in both of

that are the

state

court

noted,

and

after

in 1994 to reopen

the

Maine

the Martinez

the judgments

those courts based on some of the same assertions

bases for Lundborg's affirmative

claims in the

district court.

The district

earlier been

court's ruling

resolved rested upon

that the

the other

fraud issue

had

branch of

res
___

judicata known
________

This

of

as collateral

estoppel or

issue preclusion.

doctrine bars the relitigation between the same parties

any issue

of fact

between them, was

valid judgment

Spickler v.
________

or

law that

was actually

determined and was

in a prior

case.

litigated

necessary to a

final,

Restatement, supra,
___________ _____

York, 505 A.2d 87, 88

____

(Me. 1986).

27;

Unlike claim

preclusion, this doctrine requires an actual determination of

the issue.

We

do not

share

the district

court's

view that

the

decision of the New York state court that Phoenix Leasing had

standing

to

enforce

Lundborg's loan

-16-16-

guaranties

precludes

Lundborg's

papers

claims here.

submitted to

As

us, Lundborg

claims and the related fraud

New

York action;

standing

with

and

far

as we

can tell

did not

from the

raise her

usury

claims in seeking to reopen the

a holding

that

Phoenix Leasing

had

to enforce the loan is not necessarily inconsistent

the possibility that

made by the

the loans' terms

partnerships and were usurious

were originally

under California

law, and that Phoenix Leasing concealed this information from

the Lundborg entities in prior litigation.

The

Maine bankruptcy decision is a closer call.

Merlin

filed for bankruptcy in August 1991; a plan of reorganization

was confirmed in May 1994, awarding Phoenix Leasing $900,000.

In November 1994, Lundborg filed

a motion under Fed. R. Civ.

P.

the judgment

Rule 60(b)

February

1994

testimony

for relief

from

deposition,

revealed

that

arguing

the

based on

that

the

deposition

Merlin loan

was

fraudulent,

usurious, and not enforceable by Phoenix Leasing.

Rule

60(b)

motion thus

the

raised the

same factual

Lundborg's

and legal

arguments that she asserts in this case.

Phoenix

Leasing opposed

the

motion

on

two

grounds:

first,

that the

limitation

on

second, that

usurious

and

motion

Rule

on the

untimely

60(b) motions

collected

was not

by Phoenix

Rule 60(b) motion,

-17-17-

under

grounded

merits the loan

could be

denying Lundborg's

was

the

in

one-year

fraud; and

fraudulent or

Leasing.

the bankruptcy

In

court

found

tersely

granting

that

Lundborg

the motion.

The

had

result

stated

"no

is that

basis"

we cannot

whether the bankruptcy court rested on lack of timeliness

for

tell

or

on the merits in denying the motion to reopen.

Thus Phoenix

Leasing cannot

party claiming the

carry its

burden, as

the

benefit of issue preclusion, to show that

the fraud issue was actually decided in the prior case by the

Maine bankruptcy

U.S. 342, 350

court.

(1990).

See
___

Dowling v. United States, 493

_______
______________

Lundborg may therefore

be free under

Maine law to press her collateral attack on the earlier Maine

state judgment,

assuming that

she can

prove her

charge of

fraud in the prior proceeding and meet the other requirements

for

such an

attack.

At least,

this

possibility is

not

foreclosed by issue preclusion.

IV.

To

say

that

the

claims may

survive

res judicata
____________

was wrong in

defense is

not to say

that the district court

dismissing

the case.

In order

counts in question

first succeed

court

attack

merits on the

(e.g., fraud, conversion),

____

Lundborg must

in her

judgment.

declaration

to reach the

collateral attack

Although in

form she

on the

Maine state

does not ask

for a

or injunction, in substance this is a collateral

because

the

judgment and because

relief

sought

would

undo

the

Maine

res judicata bars the claims unless the

____________

Maine judgment is held to be vitiated by fraud.

See Griffith
___ ________

-18-18-

v. Bank of New York, 147 F.2d 899, 901 (2d Cir. 1945).
________________

But

collateral

the

"[t]he

principle"

is

attacks, "relief should

that,

where

possible

ordinarily be

in

sought in

court that rendered the judgment" being thus challenged.

Restatement, supra,
___________ _____

79, cmt. b:

see also id.

________ ___

79 cmt.

d.

This preference

reflects

court

and

practical

has

deciding

in

is not

the

merely a matter

considerations:

advantage over

all

of comity

here, the

other

but also

Maine

courts,

state

both in

whether fraud occurred in its own prior proceedings

determining

whether

Lundborg

adequately

pursued

discovery efforts in that case.

Maine's own Rule

that

an independent

fraud may

60, like the federal

collateral attack

be brought

even after the

motion to reopen has passed.

Cohen,
_____

432

A.2d

800

(Me.

rule, recognizes

based

on litigation

one-year period

for a

Me. R. Civ. P. 60(b); Lewien v.

______

1981).

Quite

apart

from

administrative reasons for this distinction between reopening

and

collateral attack,

the conditions

on

relief are

more

severe when it

supra,
_____

is made by independent action.

78 cmt.

c.

The Maine

state courts

Restatement,
___________

are thus

an

available forum.

The Supreme Court has warned that federal courts are not

lightly to relinquish jurisdiction, and that even a difficult

issue of state

law or parallel

pending state litigation

not automatically a warrant to abstain.

-19-19-

is

See Wright, Federal

___
_______

Courts
______

52

(5th ed. 1994)(collecting the

Yet the Court has said

that its own abstention decisions are

not "rigid pigeonholes,"

1, 11 n.9,

pertinent cases).

Pennzoil v. Texaco, Inc.,

________
____________

107 S. Ct. 1519,

1526 n.9 (1987), but

of considerations

case.

See Moses H. Cone Hospital v. Mercury Construc. Corp.,

___ ______________________
_______________________

deals

U.S. 1,

19-26 (1983).

directly

with

collateral attack under

judgment.3

vary with

reflect a

skein

460

that

481 U.S.

And

case

the facts

no Supreme

such

state law upon

as

ours

of each

Court decision

involving

a prior state

court

Here, we

think that

this case, abstention

assurance

available

that

in the

is appropriate.

relief,

if

26 (noting the

all,

complete

is

fully

indeed, Maine's own law

by

interest nor any issue of federal

the collateral

underlying claims in the complaint.

23,

at

of

Conversely, and of great importance,

there is no direct federal

presented either

There is a

available

in the Maine state court;

controls on this issue.

law

peculiar circumstances

pertinence of an

(or lack thereof) and of

attack

or by

the

Compare Cone, 460 U.S at

_______ ____

available state remedy

federal issues) with Colorado River

____ ______________

Water Cons. Dist. v. United States, 424 U.S. 800, 819 (1976)
_________________
______________

____________________

3Similarly, federal appellate decisions in this area are

sparse and the few cases we
Lapin v.
_____
denied,
______

Shulton, Inc.,
______________
379

U.S.

904

have found are divided.

333

F.2d 169

(1964),

and

(9th

Carr
____

v.

Cir.),

Compare
_______
cert.
_____

District of
____________

Columbia, 543 F.2d 917, 927 (D.C. Cir. 1976), with Locklin v.
________
____ _______
Switzer Bros., Inc., 335 F.2d
____________________

331, 334-35 (7th

and Wohl v. Keene, 476 F.2d 171 (4th Cir. 1973).

____
_____

-20-20-

(emphasizing the existence of a state remedy).

Cir. 1964),

Further, this suit

preexisting,

matters

final

is effectively an attempt

judgment

of a

state

court

to undo a

based upon

pertaining solely to the conduct of prior litigation

in that court.

While there is no flat bar to conducting this

autopsy in a federal court, the considerations of "comity and

orderly

administration of

rendering court as the

172,

may have

court.

U.S.C.

Cf.
___

justice"

that

point toward

preferable forum, Lapin, 333 F.2d

_____

special weight

where the

latter is

the

at

a state

Younger v. Harris, 401 U.S. 37, 43-45 (1971); 28

_______
______

2283

(ordinarily

barring

federal

courts

from

enjoining state proceedings).

In

forum

addition, the

Maine state

court

that can most readily determine

is obviously

the

whether in fact fraud

_______

occurred

in its own

prior proceedings and

discovery

by the plaintiff

uncovered

in a

more

claimed to be vital.

not only

but

also

proceedings are

in those proceedings

timely

fashion

the

would have

information

now

This appraisal is likely to be informed

by the records

by that

whether diligent

possessed by the Maine

court's

superior

state court

knowledge of

customarily conducted and what

how

its

discovery is

available.

Finally, in deciding to defer to the Maine state courts,

it is significant,

S.

Ct. 1712,

see Quackenbush v. Allstate Ins. Co., 116

___ ___________
_________________

1721-22 (1996),

that

-21-

the implicit

threshold

-21-

relief

required

collateral

equitable

Despite

attack

to

on

entertain

the

remedy within the

Maine

Lundborg's

claims--the

judgment--is

sound discretion of

itself

an

the court.

some limited common law antecedents, equity has been

the main source of collateral relief from judgments,

independent

action

is

treated as

equitable

and the

in character.

Wright, Miller & Kane, supra,

_____

2868, at 396 (citing cases);

see, e.g., Lewien v. Cohen, 432 A.2d at 805.

___ ____ ______
_____

This appraisal leads us to affirm the dismissal of count

I on the

merits but to affirm

IV, V, VII and

by the district

the dismissal of

VIII on a ground different than

court and with

counts III,

that adopted

different consequences.

In

principle, Lundborg may pursue these counts by filing suit in

Maine state

collateral

court and by

attack on

persuading the state court

the 1992

Maine

state court

that a

judgment

should be allowed.

V.

It may be of help to the parties, and to any Maine state

court that

may

grapple with

this

matter, to

explain

our

concerns

about Lundborg's collateral attack.

Our problem is

not with Lundborg's attempt to avoid on technical grounds the

loan

obligations that

commercial

narrowly

venture.

she or

her

Technical

companies took

defenses

read, but Lundborg is as free

she would be to invoke

are

on in

sometimes

to argue for them as

a statute of limitations to avoid

-22-22-

an

otherwise just debt.

Rather, our concern is primarily with the timing of this

defense.

It

is

uncertain

partnerships were

Lundborg

in

Partnership,
___________

D.N.H.,

Nov.

whether

involved came

the

as a

Cf.
___

BK

91-12387-JEY, slip

29,

1995)

misrepresentation since

that

complete surprise

1994.

No.

news

the

to

In re Cable One CATV Limited

_________________________________

("[I]t is

the

op.

difficult

principal

at

to

[Lundborg]

6 (Bankr.

find any

had

the

checks involved and was on notice as to who was advancing the

monies.").

Lundborg can

But assuming

be excused

surprise, it

for not

is doubtful

discovering this

defense in the course of lawsuits brought in 1992.

whether

possible

This is

jurors or

imagine

case of forged

other kinds of

or uncover.

the usury

Merlin

not a

Phoenix

afoul

is a

of the

routine planning decisions

knew full

well of

hard to

Leasing was licensed to exceed

fair guess that,

restriction

limited partnerships, which is far

Lundborg

bribery of

litigation fraud uniquely

restriction and it

loan ran

documents or

because of

the

from clear, it was due to

made for tax or

the

if the

similar reasons.

usury laws--a

boilerplate

defense bearing this label was actually asserted--and she was

free

in

the

Maine

state

court

action

to

explore

the

underpinnings of the loan.

It is possible,

but we think unlikely, that a potential

usury claim based on the role of the limited partnerships was

-23-23-

so substantial but

that

it

would

discovery.

due diligence

would itself

at the same time so

have

escaped

Under the

diligent

Restatement, the failure

___________

to unearth

bar a

even

thoroughly concealed

such a claim

later collateral

in the

attack.

effort

at

to exercise

earlier case

Restatement,
___________

supra,
_____

70 cmt. d.

In sum, even assuming that

usury defense, we are very

defense was diligently

there was a

doubtful that the possible

pursued or that fraud can

usury

be said to

infect the Maine state judgment.

Our substantial doubts are not a legal defense against a

new state

for

court action.

unfounded

lawsuits,

consideration to her

seven straight

Lundborg

an eighth lawsuit

"The law

to

in related

give

careful

succession of

cases--before

bearing a strong

abhors fraud and

abhors interminable litigation."

623, 625 (Me. 1923).

ought

sanctions available

own position--and to her

litigation defeats

she embarks upon

resemblance.

But given the

family

perjury.

It also

Cole v. Chellis,
____
_______

119 A.2d

Affirmed.
________

-24-24-