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KUHNS v. CORESTATES FIN. CORP.

March 20, 1998

RUTH S. KUHNS, on behalf of herself and all others similarly situated
v.
CORESTATES FINANCIAL CORP., Successor to MERIDIAN BANCORP, INC. Successor to the FIRST NATIONAL BANK OF ALLENTOWN



The opinion of the court was delivered by: JOYNER

 JOYNER, J.

 March 20, 1998

 This case has been brought before the Court on motion of Defendant, CoreStates Financial Corp. to dismiss the plaintiff's complaint and for sanctions pursuant to Fed.R.Civ.P. 11. For the reasons which follow, the motion to dismiss shall be granted, the motion for sanctions shall be denied and the plaintiff's complaint dismissed with prejudice.

 Background

 This matter has its origins in a profit sharing and retirement trust plan ("the plan") which was created in 1954 for the benefit of the employees of the First National Bank of Allentown, Pennsylvania. According to the allegations in the plaintiff's complaint, in January, 1984, First National merged with Meridian Bancorp, Inc., which was itself subsequently acquired in 1996 by defendant CoreStates Financial. Plaintiff contends that CoreStates (as the successor to both Meridian and First National of Allentown) assumed control over the plan and, as trustee for a group of fifteen or more other pension trusts maintained by it for the benefit of its own or the employees of other banks to which it succeeded in interest, "took" the assets, interest and proceeds from the First National plan and used them to make payments to the beneficiaries of the other trusts. Plaintiff further alleges that the amount "taken" to date is more than $ 35,000,000 and that the taking was in violation of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. ยง 1103, et. seq.

 In response, defendant moves to dismiss plaintiff's complaint under Fed.R.Civ.P. 12(b)(6) on the grounds that her claims were fully litigated in a prior action before Judge Cahn of this Court and the Third Circuit Court of Appeals. In that case, which was docketed in the District Court at No. 92-4065 and in the Third Circuit at Nos. 94-1839 and 94-1869, plaintiff, along with two other retired employees of the First National Bank of Allentown, likewise sought payment of the plan's assets and funds to the members of the proposed plaintiff class (employees and/or former employees of First National of Allentown and/or Meridian Banks) in direct proportion to each person's account balance as of December, 1970, when First National switched from a profit sharing plan to a defined benefit plan. Defendant therefore now asserts that this action is barred under the doctrine of res judicata.

 Standards Governing 12(b)(6) Motions

 It has long been held that the issue of the sufficiency of a pleading may be raised by the filing of a motion to dismiss for failure to state a claim upon which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). In resolving a Rule 12(b)(6) motion, the courts are to primarily consider the allegations in the complaint, although matters of public record, orders, items appearing in the record of the case and exhibits attached to the complaint may also be taken into account. Chester County Intermediate Unit v. Pennsylvania Blue Shield, 896 F.2d 808, 812 (3rd Cir. 1990). In so doing, the court must accept as true the facts alleged in the complaint, together with all reasonable inferences that can be drawn therefrom and construe them in the light most favorable to the plaintiff. Markowitz v. Northeast Land Co., 906 F.2d 100, 103 (3rd Cir. 1990); Hough/Loew Associates, Inc. v. CLX Realty Co., 760 F. Supp. 1141 (E.D.Pa. 1991). The court's inquiry is directed to whether the allegations constitute a statement of a claim under Rule 8(a) and whether the plaintiff has a right to any relief based upon the facts pled. Dismissal under Rule 12(b)(6) for failure to state a claim is therefore limited to those instances where it is certain that no relief could be granted under any set of facts that could be proved. Ransom v. Marrazzo, 848 F.2d 398, 401 (3rd Cir. 1988); Angelastro v. Prudential-Bache Securities, Inc., 764 F.2d 939, 944 (3rd Cir. 1985), cert. denied, 474 U.S. 935, 106 S. Ct. 267, 88 L. Ed. 2d 274 (1985).

 Discussion

 Defendant here moves to dismiss plaintiff's complaint on the grounds that it is barred pursuant to the doctrine of res judicata. Under res judicata or claim preclusion, a final judgment on the merits bars a subsequent suit on the same cause of action by the same parties and their privies. Edmundson v. Borough of Kennett Square, 4 F.3d 186, 189-191 (3rd Cir. 1993); Railway Labor Executives' Ass'n. v. Guilford Transportation Industries, Inc., 989 F.2d 9, 11 (1st Cir. 1993). Res judicata will not be defeated by minor differences of form, parties or allegations where the controlling issues have been resolved in a prior proceeding in which the present parties had an opportunity to appear and assert their rights. Zhang v. Southeastern Financial Group, Inc., 980 F. Supp. 787, 794 (E.D.Pa. 1997). Thus, res judicata prevents a party from prevailing on issues he might have but did not assert in the first action. Gregory v. Chehi, 843 F.2d 111, 116 (3rd Cir. 1988).

 Federal law determines the res judicata effect of a prior federal court judgment and holds that in order for the doctrine to apply, four requirements must be met. Gulf Island-IV v. Blue Streak Gulf Is Ops, 24 F.3d 743, 746 (5th Cir. 1994): (1) the parties in the instant action must be the same as or in privity with the parties in the prior action in question, (2) the court that rendered the prior judgment must have been a court of competent jurisdiction, (3) the prior action must have been terminated with a final judgment on the merits, and (4) the same claim or cause of action must be involved in both suits. Id.; Greenberg v. Potomac Health Systems, Inc., 869 F. Supp. 328, 330 (E.D.Pa. 1994).

 Applying the foregoing to the case at hand and after carefully reviewing plaintiff's complaint and Judge Cahn's and the Third Circuit's orders in Case No. 92-4065, we find that the elements of res judicata have been satisfied and thus dismissal on this basis is appropriate. For one, the plaintiff in this action was one of three plaintiffs in the first action and, as is pled in P1 of the complaint, CoreStates is the successor in interest to First National Bank of Allentown and Meridian Bancorp. Identity of parties has therefore been established.

 We also find that as Case No. 92-4065 was adjudicated in both this court and in the Third Circuit Court of Appeals, the judgments entered in that action were final, made on the merits and were obviously rendered by a court of competent jurisdiction. Indeed, as the records in that action reflect, following Judge Cahn's opinion and order of February 8, 1993 granting in large part defendant's (at that time Meridian Bancorp's) summary judgment motion, plaintiffs sought to take an interlocutory appeal, but that request was denied by the Third Circuit. A non-jury trial was then held and the court determined that while plaintiffs were not entitled to both a retirement and a profit sharing benefit as they claimed, the benefits to which they were entitled should be recalculated using a higher rate of interest than that provided in the defined benefit plan. Plaintiffs then appealed the district court's grant of summary judgment on most of their claims on the basis of the statute of limitations and defendant Meridian cross-appealed Judge Cahn's non-jury decision. The Third Circuit, in an opinion dated September 8, 1995, affirmed the grant of summary judgment but reversed the district court's finding that there had been a continuing violation of ERISA such that the statute of limitations did not apply to plaintiffs' claims as to the amount of their pension checks received between 1989 and 1992. Instead, the Third circuit concluded that ...


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