Opinions of the United
1997 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


2-6-1997

Huck v. Dawson
Precedential or Non-Precedential:

Docket 96-7341,96-7342,96-7444




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               THE UNITED STATES COURT OF APPEALS
                     FOR THE THIRD CIRCUIT
                           __________

                             No. 96-7341
                             No. 96-7342
                             No. 96-7444
                              __________

           LEWIS F. HUCK, derivatively on behalf of
                 SEA AIR SHUTTLE CORPORATION,

                                 v.

  ERIC DAWSON; ROSALIE SIMMONDS BALLENTINE; RHUDEL GEORGE; LEO
 FRANCIS; ROBERT O’CONNOR, JR.; WILLIAM QUETEL; GEORGE GOODWIN;
LUIS SOTOMAYOR; EARL ROEBUCK; MEMBERS OF THE BOARD OF DIRECTORS;
 GORDON A. FINCH, EXECUTIVE DIRECTOR; LT. GOV. DEREK M. HODGE;
ALEXANDER A. FARRELLY, Governor; GOVERNOR OF THE VIRGIN ISLANDS,

    (D.C. No. 94-cv-00001)

           LEWIS F. HUCK, derivatively on behalf of
                 SEA AIR SHUTTLE CORPORATION,


                                 v.

                VIRGIN ISLANDS PORT AUTHORITY;
                 SEA AIR SHUTTLE CORPORATION,

                    (D.C. No. 94-cv-00018)

           Lewis F. Huck, derivatively on behalf of
                 Sea Air Shuttle Corporation,

                                           Appellant

    ON APPEAL FROM THE DISTRICT COURT OF THE VIRGIN ISLANDS
              DIVISION OF ST. THOMAS AND ST. JOHN
                           __________

                   Argued December 13, 1996

      Before: SCIRICA, NYGAARD and McKEE, Circuit Judges

               (Opinion Filed February 6, 1997)




                                Lawrence E. Duffy, Esq. (Argued)
                                Martinez-Alvarez, Fernandez-Paoli,


                                 1
Menendez-Monroig
Centro De Seguros Building
Suite 407
701 Ponce De Leon Avenue
Miramar
San Juan, Puerto Rico, 00907

Counsel for Appellant


Frederick G. Watts, Esq. (Argued)
John H. Benham, III, Esq.
Watts and Benham
No. 1. Frederiksberg Gade
P.O. Box 11720
Charlotte Amalie, Saint Thomas
USVI, 00801

  Counsel for Appellees Dawson,
Ballentine, George, Francis,
O’Connor, Quetel, Goodwin,
Sotomayor, Roebuck, Finch, the
  Virgin Islands Port Authority and
   Sea Air Shuttle Corporation

Maureen P. Cormier
Carol Moore
Office of the Attorney General of
The Virgin Islands
Department of Justice
48B-50 Kronprindsens Gade
Charlotte Amalie, St. Thomas
USVI, 00802

Counsel for Appellees Hodge and
Farrelly




 2
Nygaard, Circuit Judge:

     The appellant, Lewis F. Huck, suing derivatively on behalf

of Sea Air Shuttle Corporation, appeals separate orders of the

district court dismissing his suit and awarding costs and

attorneys’ fees to the appellees.    Huck argues that the district

court erred first by applying the res judicata doctrine, and

second, by awarding costs and attorneys’ fees to the appellees.

We conclude that Huck’s arguments, and indeed this appeal, are

frivolous and will affirm the orders of the district court.

                                I.

     This appeal arises from the Virgin Islands Port Authority’s

(VIPA) refusal to allow Sea Air to use VIPA owned seaplane ramps

in St. Thomas and St. Croix.   As a result of Hurricane Hugo in

September 1989, the seaplane service that operated between St.

Croix and St. Thomas and used VIPA’s seaplane ramps went out of

business.   In early 1990, VIPA issued a request for proposals to

lease the seaplane ramps.   In the course of the bidding process,

VIPA considered the joint proposal of Sea Air and an affiliated

company, Caribbean Airline Services, Inc.    After investigating

the operations of Sea Air and Caribbean, their joint proposal was

rejected in favor of another bidder.

     In response to being rejected, Sea Air sued VIPA and the

successful bidder.   In its various amended complaints, Sea Air

alleged that VIPA’s choice of bidders was unlawful because it

violated VIPA’s bidding statute; violated the due process and

equal protection clauses of the Constitution; violated local and

federal antitrust laws; violated Title 29, Section 543 of the


                                3
V.I. Code (defining the powers of VIPA); violated the Commerce

Clause; and, violated federal law under the Federal Aviation Act.

 The district court dismissed the antitrust claims on federal and

state action immunity grounds, and the Commerce Clause and FAA

claims because they were included in Sea Air’s third amended

complaint, filed just two weeks before trial was scheduled to

begin.   The district court then entered summary judgment in favor

of the defendants on the balance of the claims.   Significantly,

Sea Air did not appeal these orders.

     Later, however, Huck recycled Sea Air’s claims and sued as a

shareholder, derivatively on behalf of Sea Air, against VIPA and

various Virgin Islands government and VIPA officials.   The

gravamen of his complaint was the same as that of the earlier

dismissed action.   Huck acknowledges the identity of the two

actions, but defends his right to file the second by contending

that VIPA, in continuing to deny Sea Air access to the ramps,

drove his company into bankruptcy.   Moreover, Huck contends that

the final and unappealed judgment entered against Sea Air in the

earlier case did not bar his lawsuit because the earlier decision

was “fraudulently obtained,” since the defendants in that action

did not reveal that federal funds had been used or that federal

law arguably prohibited the granting of exclusive leases for use

of air navigation facilities.

     The district court found Huck’s claims barred by res

judicata, holding that Huck’s claims on behalf of Sea Air arose

out of the same transaction and events that gave rise to the

earlier lawsuit, and that the same had been earlier adjudicated.


                                4
 Huck, the court held, could not avoid the effects of res

judicata simply because he was now asserting that a different

degree or extent of damage than earlier alleged.    The fact that

he continued to suffer from the effects of the earlier judgment

did not render the claims to be not fully litigated.    Moreover,

it concluded that the parties were in privity, a conclusion that

Huck has never challenged.   Further, the court found that Huck’s

allegations of fraud were meritless and “[could] be characterized

as nothing other than frivolous.”    Accordingly, the district

court dismissed Huck’s claims and entered judgment in favor of

the defendants.   The district court then, upon motion of the

defendants and without opposition from Huck, awarded attorneys’

fees to the defendants.   In its memorandum explaining the award

of attorneys’ fees, the district court stated that Huck’s

lawsuits “were frivolous and groundless, lacking any factual or

legal basis . . . .”   Huck now appeals those orders.

                               II.

     On appeal, Huck offers an array of arguments why he believes

the res judicata doctrine should not have barred his claims in

the district court, including: (1) his claims are for damages

incurred after the first judgment, and thus constitute a

different cause of action; (2) his claims were not fully

litigated in the first lawsuit; (3) his claims are premised on a

different set of facts; (4) his claims seek a different remedy

than the claims in the first lawsuit; (5) res judicata should be

used only sparingly in civil rights cases; (6) res judicata

should not be applied if the first judgment was erroneous; and,


                                5
(7) res judicata should not be applied where it would result in

"injustice."   In addition, and although he did not oppose the fee

motion below, Huck now contends that the district court erred by

awarding attorneys’ fees to the appellees.

     We have jurisdiction over these appeals under 28 U.S.C. §§

1291, 1294(3).   We review the district court’s application of res

judicata to bar the appellant’s claims under a plenary standard.

O’Leary v. Liberty Mutual Ins. Co., 

, 1064-65 (3d

Cir. 1991).    The district court’s award of attorneys’ fees to the

appellees will stand “unless [the court] has erred legally, or

the facts on which the determination rests are clearly

erroneous.”    Commonwealth v. Flaherty, 

, 60 (3d Cir.

1994) (citation and internal quotations omitted).

                                III.

     In determining whether Huck’s suits were barred by the res

judicata doctrine (claim preclusion), we look to the law of the

adjudicating state.   

(citing Gregory v.

Chehi, 

, 116 (3d Cir. 1988)).    Absent local law or

precedent to the contrary, the Restatement (Second) of Judgments

provides the applicable law.   1 V.I.C. § 4;1 Miller v. Christian,

, 1237 (3d Cir. 1992) (citation omitted) (applying

the Restatement (Second) of Property to settle a landlord-tenant
        1
            1 V.I.C. § 4 (1988) reads in its entirety:

The rules of the common law, as expressed in the restatements of
     the law approved by the American Law
Institute, and to the extent not so expressed, as generally
understood and applied in the United States, shall be the rules
of decision in the courts of the Virgin Islands in cases to which
they apply, in the absence of local laws to the contrary.



                                 6
dispute).

     The doctrine has been properly defined by the District Court

of the Virgin Islands as “the legal principle that a final

judgment, rendered upon the merits, without fraud or collusion,

by a court which had jurisdiction over the parties and the

subject matter, is conclusive in a subsequent action between the

parties or their privies based upon the same cause of action.”

Julien v. Committee of Bar Examiners, 

, 716

(D.V.I. 1996) (quoting Bank of Nova Scotia v. Bloch, 

, 1359 (D.V.I.), aff’d, 

(3d Cir. 1982)).

Applying this doctrine, plaintiff’s claims will be barred by the

application of res judicata if: (1) the earlier judgment is final

and on the merits; (2) the claims asserted by the plaintiff are

the same as those asserted in the earlier action; and, (3) the

parties are the same as, or in privity with, the parties from the

earlier action.   

.   This interpretation

is consistent with Section 24 of the Restatement (Second) of

Judgments (1982) which describes the scope of res judicata as

follows:
(1) When a valid and final judgment rendered in an action
     extinguishes the plaintiff’s claim pursuant to the rules of
     merger or bar (see §§ 18, 19), the claim extinguished
     includes all rights of the plaintiff to remedies against the
     defendant with respect to all or any part of the
     transaction, or series of connected transactions, out of
     which the action arose.

(2) What factual grouping constitutes a “transaction”, and what
     groupings constitute a “series”, are to be determined
     pragmatically, giving weight to such considerations as
     whether the facts are related in time, space, origin, or
     motivation, whether they form a convenient trial unit, and
     whether their treatment as a unit conforms to the parties’
     expectations or business understanding or usage.



                                7
Significantly, “it is well established that res judicata

precludes a party both from relitigating matters already

litigated and decided and from litigating matters that have never

been litigated, yet should have been advanced in an earlier

suit.”    

(citing 18 Charles A.

Wright, et al., Federal Practice and Procedure § 4406 (1981));

accord 

; Lawaetz v. Bank of Nova

Scotia, 

, 141 (D.V.I. 1987) (citation omitted).

       Here, there is no doubt that the prerequisites -- finality

of judgment, identity of claims, and privity of parties -- are

met.    Huck’s claims on behalf of Sea Air clearly: (1) arise out

of the same transaction and events that gave rise to the earlier

lawsuit; (2) mirror the claims and causes of actions asserted in

the first lawsuit; and, (3) involve parties in privity.

Accordingly, we find that the district court properly applied the

doctrine of res judicata to bar Huck’s claims.    Huck’s litany of

arguments to the contrary do not raise even a colorable challenge

to this conclusion.

       Huck’s first contention is that after the district court

entered its first judgment against Sea Air, VIPA continued to

deny Sea Air access to the sea ramps and, as a result, Sea Air

was forced to file for bankruptcy.    Accordingly, Huck seeks

compensation “for damages suffered subsequent to the decisions in

the prior lawsuit, as a consequence of the continuing denial of

access to the seaplane ramps, based on Defendants/Appellants'

conduct being violative of federal law and depriving Sea Air of

constitutionally protected rights.”    In other words, Huck asserts


                                 8
that the continued denial of access to the ramps, although fully

in compliance with the court's judgment, creates a new cause of

action for liability, and thus res judicata is inappropriate.

     Huck’s contention is absurd.   First, Huck’s argument ignores

the fact that in the initial judgment the district court

determined that VIPA had a right to deny Sea Air access to the

sea ramps, thereby settling the question of whether Sea Air was

being deprived of its constitutional rights.2   Second, the

conduct of which Huck complains, i.e., the denial of access to

the sea ramps, is precisely the same conduct challenged in the

earlier suit.   Finally, it is difficult to understand how Huck

can conclude that VIPA, by acting upon authority of and in

accordance with the final judgment of the district court, created

a new cause of action that was not barred by res judicata.    This

is not a case where there has been a change of circumstances

concerning material operative facts that would serve to make the

application of res judicata improper, nor does Huck argue so.

See Restatement (Second) of Judgments § 24 comment f.   Instead,

he argues that the same facts that resulted in the earlier

judgment have caused continued damage.

     Huck’s second argument against the application of res

judicata is that the district court, by denying Sea Air leave to

amend its complaint in the earlier action, prevented all claims

from being fully litigated, and thus he should be allowed to

bring those claims now.   This argument was foreclosed when
        2
          We note that neither Sea Air, nor Huck, in a derivative
capacity, appealed this finding.



                                9
neither Sea Air nor Huck, derivatively, appealed the first

judgment.   The issues that Huck contends were not fully litigated

in the earlier action -- the Commerce Clause and FAA claims --

could have been properly raised and litigated by Sea Air, but

were not.   As such, the application of res judicata to bar the

assertion of those claims in this action is appropriate.

(citation omitted); 

.   Indeed, the Restatement offers a complete response

to Huck’s argument:
The rule of § 24 applies to extinguish a claim by the plaintiff
     against the defendant even though the plaintiff is prepared
     in the second action

(1) To present evidence or grounds or theories of the case not
     presented in the first action, or

(2) To seek remedies or forms of relief not demanded in the first
     action.


Restatement (Second) of Judgments § 25; see also Restatement

(Second) of Judgments § 25, Comment a (“The rule of § 24 puts

some pressure on the plaintiff to present all his material

relevant to the claim in the first action . . . .   The material

to be brought forward comprises, roughly, `evidence’ -- connoting

facts; `grounds’ -- facts grouped under a legal characterization;

`theories of the case’ -- premises drawn from the substantive

law; `remedies or forms of relief’ -- measures or kinds of

recovery.”).   The trial court’s decision to deny Sea Air’s motion

to amend its complaint does not change this outcome.   Restatement

(Second) of Judgments § 25 comment b (“It is immaterial that the

plaintiff in the first action sought to prove the acts relied on

in the second action and was not permitted to do so because they


                                10
were not alleged in the complaint and an application to amend the

complaint came too late.”).   Moreover, neither Sea Air nor Huck,

in a derivative capacity, ever appealed the trial court’s denial

of the motion to amend the complaint, which would have been the

proper recourse to preserve the right to litigate the claims.

See, e.g., Sendi v. NCR Comten, Inc., 

, 1207

(E.D.Pa. 1986) (holding that “the fact that plaintiff was denied

leave to amend does not give him the right to file a second

lawsuit based on the same facts”).3

     Huck’s third argument is also frivolous.   Huck maintains

that since he is alleging a cause of action for harm that

occurred after the first judgment, he may prove different facts,

and thus res judicata is inapplicable.   This, however, is an

incorrect statement of the law, and, as we noted earlier, there

is no merit to Huck’s claim that he suffered a separate injury as

the result of the continued losses from denial of access to the

sea ramps.   See Restatement (Second) of Judgments § 25 comment b.

     The remainder of Huck’s contentions are likewise without

merit.   Huck argues that since he is pursuing a different remedy

         3
          We note also that, despite its decision to deny Sea
Air’s motion to amend its complaint, the trial court’s opinion
clearly indicates that it was aware of the substance of the
Commerce Clause and FAA claims and found them to be unpersuasive.
 In addition, insofar as one of the “unlitigated” claims Huck
wishes to bring is for damages resulting from violations of
federal law under the FAA, we note that he has no standing from
which to assert this claim. Montauk-Caribbean Airways, Inc. v.
Hope, 

, 97-98 (2d Cir.) (holding that Congress created
no express or implied private right of action under the Federal
Aviation Act), cert. denied, 

(1986); accord Air
Transport Ass’n v. Public Utilities Commission, 

,
207-08 (9th Cir. 1987), cert. denied, 

(1988).




                                11
in his action (monetary damages in contrast to the injunctive

relief sought by Sea Air), res judicata cannot be applied.      This

assertion is again contrary to the law.     Restatement (Second) of

Judgments § 25 comment f (“[a]fter judgment for or against the

plaintiff, the claim is ordinarily exhausted so that the

plaintiff is precluded from seeking any other remedies deriving

from the same grouping of facts . . . .”).     In addition, Huck

declares without support that res judicata should be used only

sparingly in civil rights cases.     He further insists that res

judicata cannot be applied where “it is based on a prior decision

which is clearly erroneous.”   These arguments amount to little

more than a demand that the decision of the trial court be

redecided on the merits -- an option Sea Air and Huck waived when

they failed to appeal the initial judgment against Sea Air.

Finally, Huck maintains that res judicata should not be applied

where it would result in injustice.     We find no injustice when

the doctrine of res judicata is properly applied to prevent

appellees from being subjected to “endless relitigation of issues

already decided.”   

.     This is

especially so here, when even a cursory review of the doctrine's

basic principles should have alerted counsel that Huck’s

derivative suit was repetitious and without colorable legal or

factual support.

     In summary, we find no merit to any of Huck’s arguments that

 the district court inappropriately applied res judicata to bar

his claims against the appellees.     It is clear that Huck’s

derivative actions arose from the same core of operative facts


                                12
and circumstances as the earlier Sea Air suit.   It is also

undisputed that there was privity between the parties in Huck’s

suits and the earlier Sea Air action.   Given that there was an

identity of facts, claims, and parties between the Sea Air suit

and Huck’s derivative actions we conclude that the application of

res judicata to bar Huck’s action was proper.    Accordingly, we

will affirm the district court’s order granting the appellees’

motions for summary judgment and dismissing Huck’s suits.

                                IV.

     Huck also challenges the order of the district court

awarding costs and attorneys’ fees to the appellees.   At the

outset, we note that Huck failed to oppose the appellees’ motion

for costs and attorneys’ fees and thus cannot raise the issue for

the first time on appeal.   See Kiewit Eastern Co., Inc. v. L & R

Construction Co., Inc., 

, 1203-04 (3d Cir. 1995)

(affirming district court’s finding that party waived right to

attorneys’ fees and costs because issue was not adequately raised

before the court); McDonald v. McCarthy, 

, 119 (3d

Cir. 1992) (holding that defendants who had an opportunity to

contest the accuracy and reasonableness of requested attorneys’

fees, but failed to do so, waived their right to raise objections

on appeal); accord Chicago v. Matchmaker Real Estate Sales
Center, 

, 1101 (7th Cir. 1992) (“By challenging the

attorneys’ fees award for the first time on appeal, the

defendants have waived the issue.”), cert. denied, 

(1993); accord Pope v. MCI Telecommunications Corp., 

, 266-67 (5th Cir. 1991), cert. denied, 

(1992).



                                13
Huck has offered no explanation for his failure to oppose the

appellees’ motion.

       Notwithstanding his waiver, we will briefly consider Huck’s

challenges to the district court’s award of attorneys’ fees.

Huck’s first contention is that the award of attorneys’ fees

cannot be sustained if “the lower court erred in dismissing the

suit on res judicata grounds.”    Since we have already held that

the application of res judicata was appropriate, Huck’s

contention is meritless and cannot serve as the basis for

reversing the award.

       Huck next asserts that the award of was erroneous because

the district court opinion did not explicitly find that Huck’s

suits were frivolous or groundless.    Essentially, Huck argues

that because “[t]here is only one mention of the word `frivolous’

in [the] memorandum and it is with respect to a very limited part

of the cases,” attorneys’ fees cannot be imposed as a matter of

law.    Huck’s contention, however, is patently wrong.   The

district court, in its order supporting the award of attorneys’

fees, expressly found that “both of these lawsuits were frivolous

and groundless, lacking any factual or legal basis . . . .”

Moreover, the fact that Huck’s claims were dismissed based on the

application of res judicata further supports the district court’s

conclusion that there was no basis upon which to bring these

suits and thus they were frivolous.

       Finally, Huck stands logic on its head and asserts that

because the claims made by Sea Air in the earlier suit were not

frivolous, his reassertion of those claims in his suits cannot be


                                 14
considered frivolous or groundless.     We infer from his argument

that Huck would have this court adopt the position that once

particular claims are deemed not to be frivolous, they are not,

and cannot be, frivolous no matter how many times and in what

context they are reasserted.     As with his other “legal arguments”

challenging the award of attorneys’ fees, Huck offers no support

for his position and we find it to be without merit.

       It is clear that a court may award attorneys’ fees to a

prevailing defendant in a civil rights action if the court finds

that the action was frivolous.     

.   Here,

the district court expressly held that Huck’s suits “were

frivolous and groundless, lacking any factual or legal basis . .

. .”    Based on our review of the record and our disposition of

the present appeal, we agree with the district court’s assessment

of the substance of Huck’s actions.     Accordingly, we will affirm

the order of the district court awarding costs and attorneys’

fees to the appellees.

                                   V.

       One final matter: we observe that the appellees have not yet

sought costs or damages under Federal Rule of Appellate Procedure

38.4   Although we do not usually raise the issue of Rule 38

damages sua sponte, and do not do so now, given our decision on

the merits herein, the history of the case, and that appellees
          4
              Rule 38 reads in its entirety:

If a court of appeals determines that an appeal is frivolous, it
     may, after a separately filed motion or notice from the
     court and reasonable opportunity to respond, award just
     damages and single or double costs to the appellee.



                                   15
may anticipate recovering attorneys’ fees herein, we feel it

advisable to offer a note of instruction.

     The purpose of an award of attorneys’ fees under Rule 38 is

“to compensate appellees who are forced to defend judgments

awarded them in the trial court from appeals that are wholly

without merit, and to preserve the appellate court calendar for

cases worthy of consideration.”    Nagle v. Alspach, 

,

145 (3d Cir. 1993) (citations and internal quotations omitted),

cert. denied, 

(1994).    We note that this appeal was

wholly without merit.   Indeed, the district court’s decision to

award costs and attorneys’ fees to the appellees because it found

Huck’s suits to be frivolous should have urged upon him and his

counsel some extra caution, and given him pause to devote

additional examination to the legal validity and factual merit of

his contentions.   Moreover, instead of producing strong legal

arguments to convince us that his appeals were meritorious,

Huck's counsel has offered unsupportable legal and factual

conclusions and merely reargued the already-litigated claims.

Hence, the predicate for an award under Rule 38 is met.

     Rule 38, however, is not just a sanctions provision,

arguably raising an obligation upon the court to act to protect

its own integrity or that of a party.    Instead, when the court

determines that an appeal is frivolous, it is given the option of

awarding damages upon "notice from the court," or, alternatively,

awaiting a motion from the injured party.    Because, however, the

remedy this rule offers an injured party is more in the nature of

an award upon a finding of liability in tort, we believe in this


                                  16
case the more sound jurisprudential approach is to stay our hand

and await a request for redress, if appellees feel strongly

enough, and consider themselves injured sufficiently by the

action of appellant or its counsel on appeal.   This permits the

usual opportunities and procedures that attend a claim upon

injury -- i.e., demand, discussion, settlement, alternate dispute

resolution, etc. -- to function before we are called upon to act.

                              VI.

     In sum, we will affirm the orders of the district court

dismissing the appellant’s suits and awarding costs and

attorneys’ fees to the appellees.




                               17
TO THE CLERK:

     Please file the foregoing opinion




                                         Circuit Judge



DATED:




                               18