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COLLIDOTRONICS, INC. v. STUYVESANT INS. CO.

October 14, 1968

Collidotronics, Inc., Keystate Insurance Agency, Inc., Harry Ostroff, Edward I. Krensel and Louis H. Levitt
v.
The Stuyvesant Insurance Co., Staff Adjusters Corp. and General Acceptance Corp.


Wood, Judge.


The opinion of the court was delivered by: WOOD

WOOD, Judge.

 The defendants here have moved under Rule 56 for summary judgment. Since the issues involved are complex, a statement of the relevant history of the case is necessary before reaching the questions presented.

 Two months before the plaintiffs filed their complaint in the Federal Court, Stuyvesant had filed a complaint in equity against Keystate in the Court of Common Pleas of Montgomery County, Pa. The Stuyvesant Insurance Company v. Keystate Insurance Agency, Inc., et al., C. P. Montgomery County 1961, No. 61-9718. In that suit, Stuyvesant sought an accounting, injunctive relief, and the return of over $200,000 allegedly withheld from Stuyvesant by Keystate. In March 1962, Keystate filed a counterclaim asserting claims and requesting relief which is substantially the same that was sought in counts two and three of the Federal complaint.

 Meanwhile, in January 1962, the defendants in the Federal action had moved for dismissal for lack of jurisdiction because there was no diversity of citizenship among the parties. Affidavits were submitted averring that while Stuyvesant was a New York corporation and Staff Adjusters, a Delaware corporation, both had their principal place of business in Allentown, Pennsylvania. Had the court been satisfied that under 28 U.S.C. § 1332, Pennsylvania was in fact the principal place of business of Stuyvesant and Staff Adjusters, the Federal action would have been dismissed, since under § 1332 a corporation is deemed a citizen of the state where its principal place of business is located.

 However, before that motion was decided, the plaintiffs amended their Federal complaint stating a Federal cause of action, thereby avoiding potential dismissal for lack of diversity. This fourth count incorporated by reference the acts alleged in the first, second and third counts, and alleged a conspiracy among the defendants to perform these acts. Plaintiffs sought treble damages for violation of the Sherman Act Section 1 on this count. Judge Joseph S. Lord, III subsequently dismissed the defendants' motion to dismiss for lack of diversity as moot in view of the plaintiffs' amended complaint.

 At this point the defendants moved to stay proceedings in the Federal Court pending the decision of the State Court on the plaintiffs' claims. Judge Van Dusen, then District Judge, now Third Circuit Court Judge, held, inter alia, that no further discovery would be permitted on the second and third counts, or on the fourth (antitrust) count insofar as it referred to the second and third counts. Discovery was permitted to continue on the first count (since it was unrelated to the Montgomery County case) and on the fourth count as it related to the first count.

 The Montgomery County Court held for Stuyvesant and against Keystate on substantially all issues involved in the Keystate counterclaim. This decision was upheld on appeal to the Superior Court, and to the Supreme Court of Pennsylvania.

 After several more years of pre-trial jousting, the substance of which is not germane to the issues before us, the Federal case has finally found its way to trial. Defendants have moved for summary judgment on the grounds that plaintiffs are barred from litigating in this Court issues which have already been decided by the State Courts. Plaintiffs resist this motion on the general grounds that "summary judgment should not be granted unless the entire record shows a right to judgment with such clarity as to leave no room for controversy . . ."

 It is clear to us that the claims in counts two and three of the Federal complaint were fully and exhaustively determined in the State Court. Plaintiffs' counterclaim in the State Court stated the same claim in almost identical language to counts two and three here, and sought the same relief as they seek here. Plaintiffs are therefore barred from raising these claims in this Court. Williamson v. Columbia Gas and Electric Corp., 186 F.2d 464 (3rd Cir. 1950), cert. denied, 341 U.S. 921, 95 L. Ed. 1355, 71 S. Ct. 743 (1951); Clemens v. Central Railroad Company of New Jersey, et al., 399 F.2d 825 (3rd Cir. 1968). The findings of the State Court are binding not only on the parties to that action but also upon their privies who were present in and controlled the prior adjudication. Restatement of Judgments, § 83 et seq.; Williamson v. Columbia Gas and Electric Corp., supra; Vanderveer v. Erie Malleable Iron Co., 238 F.2d 510 (3rd Cir. 1956). Judge Van Dusen stated in a previous order in this case that the individual and corporate plaintiffs are the same parties who participated in and controlled the State Court proceedings. We concur and grant summary judgment on counts two and three.

 The disposition of the fourth (antitrust) count raises some more difficult problems which were not urged on us by the plaintiff, but consideration of which we deem necessary to dispose of this case. As stated previously, the fourth count alleges that the acts alleged in the first three counts were performed as part of a conspiracy in violation of Section 1 of the Sherman Act. The issues raised in the second and third counts have already been litigated and determined adversely to the plaintiff in the State Court, and the findings of fact of the State Court will bar plaintiffs from relitigating those issues here. Singer v. A. Hollander and Son, 202 F.2d 55 (3rd Cir. 1953).

 There is some authority to the effect that, contrary to the normal rules of res judicata and collateral estoppel that matters actually litigated and determined in a prior action cannot be relitigated, in actions under the Federal antitrust acts Federal courts under certain circumstances will not be bound by previous determinations of State Courts. Lyons v. Westinghouse Electric Corp., 222 F.2d 184 (2nd Cir. 1955), cert. denied, Walsh v. Lyons, 350 U.S. 825, 76 S. Ct. 52, 100 L. Ed. 737 (1955). See Note, Collateral Estoppel Effect of State Court Judgment in Federal Antitrust Suits, 51 Calif. L. Rev. 955 (1963); Comment, 8 Stan. L. Rev. 439 (1956). In Lyons, however, the issue in the State Court was raised as an affirmative defense and there were no findings of fact other than the ultimate conclusion that defendants had failed to sustain their antitrust defense. Here there ...


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