United States District Court, District of Columbia
MEMORANDUM OPINION AND ORDER
BERMAN JACKSON UNITED STATES DISTRICT JUDGE.
before the Court is a motion filed by plaintiffs Stuart Mills
Davenport and Big Bear Cafe, LLC seeking reconsideration of
the Court's November 1, 2017 order granting
defendants' motion to dismiss. Pis.' Mot. for Recons.
Pursuant to Fed. Rule of Civ. P. 59(e) & 60(b) [Dkt. #
16] ("Pis.' Mot."). The Court previously ruled
that plaintiffs' claims against defendants Babak
Djourabchi and Monica Welt were precluded under the doctrine
of res judicata, Davenport v. Djourabchi, 296
F.Supp.3d 245, 248 (D.D.C. 2017), but it concludes here that
reconsideration is warranted.
doctrine of res judicata bars parties "from
relitigating issues that were or could have been raised"
in a previous action. Allen v. McCurry, 449 U.S. 90,
94 (1980), citing Cromwell v. Cty. of Sacramento, 94
U.S. 351, 352 (1876). Under this principle, "a
subsequent lawsuit will be barred if there has been prior
litigation (1) involving the same claims or cause of action,
(2) between the same parties or their privies, and (3) there
has been a final, valid judgment on the merits, (4) by a
court of competent jurisdiction." Smalls v. United
States, 471 F.3d 186, 192 (D.C. Cir. 2006) (citations
omitted). The Court found that all four elements of res
judicata had been met in connection with prior
bankruptcy proceedings, and that plaintiffs were therefore
barred from bringing their civil suit. See
Davenport, 296 F.Supp.3d at 251-54.
ask the Court to "reconsider whether the 'same
claim' element of res judicata is met in this
action." Pis.' Mot. at 4 & n.3. Pointing to
authority they did not raise in connection with the motion to
dismiss, plaintiffs contend that the Court "did not
consider an intervening ruling of the United States Court of
Appeals for the District of Columbia Circuit. . .
demonstrating that Davenport's bankruptcy action was not
the same claim as those brought by [p]laintiffs in this
action." Id. at 3 (emphasis omitted). Further,
they argue that the Court's decision "reflects clear
error in concluding that [p]laintiffs 'could have brought
their . . . claims in the prior bankruptcy proceeding, '
when Bankr. Rules 3007(b) and 7001(1) specifically
prohibited [p]laintiffs from bringing those state
law claims." Id. at 5 (internal citation
omitted) (emphasis in original).
plaintiffs were prohibited from bringing their state and
common law claims for damages in the prior bankruptcy
proceeding, their current claims do not constitute the same
cause of action for res judicata purposes.
Therefore, the Court will grant plaintiffs' motion.
factual and procedural background of this case, the nature of
plaintiffs' claims against defendants, and the basis for
the Court's previous ruling are laid out in detail in the
Court's decision, see Davenport, 296 F.Supp.3d
245, so the Court will address the facts only briefly here.
Davenport is the operator and sole owner of Big Bear Cafe,
LLC, a restaurant on the lower level of the multistory
row-house where he and his family live. Am. Compl.
[Dkt.#9]¶¶7-10. Defendants were Davenport's
neighbors, id. ¶ 13, and they loaned him $80,
000 in exchange for an executed Promissory Note for Business
and Commercial Purposes. Id. ¶ 14; Ex. 1 to Am.
Compl. [Dkt. # 9-1] ("Note"). The loan was secured
by Big Bear Cafe. Id. ¶¶ 16, 21;
see Note; Ex. 2 to Am. Compl. [Dkt. # 9-2]
("Deed of Trust"). This case arises out of
defendants' efforts to collect on the debt and the
bankruptcy proceedings that followed.
October 14, 2015, Davenport filed for Chapter 13 bankruptcy
protection in the U.S. Bankruptcy Court for the District of
Columbia to prevent a threatened foreclosure on his property
by defendants. Am. Compl. ¶¶ 105-06. Defendants
filed a proof of claim with the bankruptcy court, alleging
that Davenport was in default on the Note and that he owed
them $121, 813.88. Id. ¶ 120. Davenport
contested this allegation by filing an objection to the proof
of claim. Id. ¶¶ 120-21. The bankruptcy
court then held a trial to determine the amount due under the
Note, and on July 21, 2016, it ruled that Davenport was not
in default, but that he owed $53, 557.10. Id.
¶¶ 122-23; Ex. 9 to Am. Compl. [Dkt. # 9-9]
("Bankr. Mem."); Ex. 10 to Am. Compl. [Dkt. # 9-10]
the bankruptcy court established that Davenport was not in
default on the Note, Davenport and the cafe filed this civil
lawsuit against defendants. See Am.
Compl. They brought seven claims alleging that
throughout the parties' interactions, defendants have
harassed Davenport, and that plaintiffs have suffered as a
result of defendants' misrepresentations regarding the
Note. See Id. ¶¶ 143-47, 156-57, 162,
176-77, 187-88, 193. Plaintiffs sought at least $150, 000.00
in damages, in addition to punitive damages, and
attorneys' fees. Id. at 30.
under Fed.R.Civ.P. 59(e) are disfavored and relief from
judgment is granted only when the moving party establishes
extraordinary circumstances." Niedermeier v. Office
of Max S. Baucus, 153 F.Supp.2d 23, 28 (D.D.C. 2001),
citing Anyanwutaku v. Moore, 151 F.3d 1053,
lO57(D.C.Cir. 1998). "A Rule 59(e) motion is
discretionary and need not be granted unless the district
court finds that there is an intervening change of
controlling law, the availability of new evidence, or the
need to correct a clear error or prevent manifest
injustice." Ciralsky v. CIA, 355 F.3d 661, 671
(D.C. Cir. 2004), quoting Firestone v. Firestone, 76
F.3d 1205, 1208 (D.C. Cir. 1996).
motion to alter or amend the judgment under Rule 59(e)
"may not be used to relitigate old matters, or to raise
arguments or present evidence that could have been raised
prior to the entry of judgment." Exxon Shipping Co.
v. Baker, 554 U.S. 471, 485 n.5 (2008), quoting 11
Charles A. Wright & Arthur R. Miller, Federal
Practice and Procedure § 2810.1 (2d ed. 1995).
Rather, motions to alter or amend a judgment "are
intended to permit the court to correct errors of fact
appearing on the face of the record, or errors of law."
Hammond v. Kempthorne, 448 F.Supp.2d 114, 118
(D.D.C. 2006), quoting Indep. Petroleum Ass'n of Am.
v. Babbit, 178 F.R.D. 323, 324 (D.D.C.
are only challenging the Court's previous conclusion that
their current claims constitute the same cause of action as
those brought in Davenport's bankruptcy case.
"Whether two cases implicate the same cause of action
turns on whether they share the same 'nucleus of
facts.'" Drake v. FAA, 291 F.3d 59, 66
(D.C. Cir. 2002), quoting Page v. United States, 729
F.2d 818, 820 (D.C. Cir. 1984). "[I]t is the facts
surrounding the transaction or occurrence which operate to
constitute the cause of action, not the legal theory upon
which a litigant relies." Page, 729 F.2d at
820, quoting Expert Elec, Inc. v. Levine, 554 F.2d
1227, 1234 (2d Cir. 1977). The D.C. Circuit has
"embraced the Restatement (Second) of
Judgments' pragmatic, transactional approach to
determining what constitutes a cause of action, " and
has explained that the Restatement gives "weight to such
considerations as whether the facts are related in time,
space, origin, or motivation." U.S. Indus., Inc. v.
Blake Constr. Co., 765 F.2d 195, 205, (D.C. Cir. 1985),
quoting Restatement (Second) of Judgments § 23(2)
(1982). The determination of whether two cases involve the
same cause of action requires consideration of not only
claims that were actually raised in prior litigation, but
also matters that "could have been raised in that
action." Allen, 449 U.S. at 94, citing
Cromwell, 94 U.S. at 352.
argue that their two cases do not constitute the same claim
or cause of action because the relief they seek now was not
available in the bankruptcy action. Pis.' Mot. at 5. To
support their position, they insist that an intervening D.C.
Circuit opinion held that "the transactional 'same
nucleus' of facts test the Court applied here is
not applicable where the second action seeks a
remedy unavailable in the first action - money damages."
Id. (emphasis in original), citing Hurd v.
District of Columbia Gov't, 864 F.3d 671, 679-80
(D.C. Cir. 2017). They maintain that a monetary remedy was
unavailable in the first proceeding because the bankruptcy
rules prohibited Davenport from bringing state or common law
damages claims in his contested matter. Id.
The Court of Appeals' Decision in Hurd
it is unclear if the Court of Appeals' decision in
Hurd is an "intervening change to controlling
law" since the opinion predates this Court's
opinion,  and it applied already-existing legal
principles espoused by the Supreme Court, see Walsh v.
Hagee, 316 F.R.D. 1, 2 (D.D.C. 2014) (holding that an
intervening case decided on "well-established
principles" did not constitute an "intervening
change of controlling law"); see Hurd, 864 F.3d
at 679-80 (citing mostly Supreme Court cases for its
interpretation of the preclusive effect of the plaintiffs
state court habeas proceeding on his federal section 1983
claim), the Court finds the case to be a useful clarification
on when two cases constitute the same cause of action for
purposes of res judicata.
Hurd, the Court of Appeals held that an inmate's
section 1983 civil lawsuit was not barred by the doctrine
of res judicata despite the fact that the inmate had
previously brought a habeas proceeding in D.C. Superior Court
challenging his confinement as a violation of procedural and
substantive due process. 864 F.3d at 674-75, 679-80. In 2007,
the Federal Bureau of Prisons released Michael Hurd from
prison after he had served approximately thirteen months of a
forty-two month sentence. Id. at 674. He believed
that his motion for a sentence reduction had been granted,
and he proceeded to participate in three-years of supervised
release. Id. In 2011, Hurd pleaded guilty to
possession of marijuana in D.C. Superior Court, and he was
sentenced to serve three consecutive weekends in D.C. jail.
Id. at 674-75. After the second weekend, the D.C.
Department of Corrections disregarded the Superior Court
order specifying Hurd's release, and instead kept him
imprisoned for an additional twenty-seven months - apparently
the remainder of his original sentence. Id. at 675.
On November 16, 2011, he filed a habeas petition against the
United States in D.C. Superior Court challenging his
confinement as a violation of procedural and substantive due
process. Id. The court denied his petition from the
bench in July 2012, and even though Hurd appealed the
decision, the appeal was dismissed as moot because it was not
considered until after he had been released. Id.
then filed a damages action against the District of Columbia
under 42 U.S.C. § 1983, again pursuing both procedural
and substantive due process claims. Hurd, 864 F.3d
at 675. The district court dismissed his substantive due
process claim as precluded by the D.C. Superior Court's
2012 decision, but the D.C. Circuit reversed this decision.
Id. The Court concluded that "the Superior
Court's 2012 decision lacks the preclusive effect the
district court perceived . . . because section 1983 claims
cannot be joined in a habeas proceeding." Id.
Court observed that the inquiry for assessing whether a claim
is precluded by a prior judgment is based on the following
questions: "(1) whether the claim was adjudicated
finally in the first action; (2) whether the present claim is
the same as the claim which was raised or which might have
been raised in the prior proceeding; and (3) whether the
party against whom the plea of preclusion is asserted was a
party or in privity with a party in the prior case."
Hurd, 864 F.3d at 679, quoting Patton v.
Klein,746 A.2d 866, 870 (D.C. 1999). Thus,
plaintiffs' suggestion that the Hurd Court
created an exception to the transactional "same nucleus
of facts" test, see Pis.' Mot. ...