USCA1 Opinion

September 22, 1992

UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
_____________________
No. 92-1041
RICHARD McLAUGHLIN, ET AL.,
Plaintiffs, Appellants,
v.
JOHN MORTON, ETC., ET AL.,
Defendants, Appellees.
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APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
[Hon. Shane Devine, U.S. District Judge]
___________________
____________________
Before
Breyer, Chief Judge,
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Campbell, Senior Circuit Judge,
____________________
and Torruella, Circuit Judge.
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____________________

Edwin Paul Gale with whom Stephen R. Fine & Associates was
________________
______________________________
brief for appellants.
Peter W. Mosseau with whom Peter G. Beeson and Nelson, Kin
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________________
____________
Mosseau & Gordon, P.C. were on brief for appellee John Morton.
______________________
Mark H. Gardner for appellees Edward Reichert and Berlin C
________________
Bank.
____________________
____________________

Per Curiam.
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Buick,
Richard

Appellants,

Inc. (the "corporation"),

McLaughlin,

dismissing,

appeal

on grounds

an allegedly

inventory.

In

district

court ruled

because

the district

opinion dated

court

court

the second

order
of two

1983 and various state laws

attachment

that the

Chevrolet-

sole shareholder,

district

of res judicata,
___ ________

illegal
its

and its

from

actions brought under 42 U.S.C.

for

McLaughlin

of the

December

second action

had already

corporation's
6,

1991,

the

was precluded

determined in

the

prior litigation that McLaughlin lacked standing and

it

had accepted,

for

purposes of

plaintiff to alter judgment,

capacity
stated in

to sue.

ruling

on a

because

motion

by

that the corporation lacked the

We affirm

for substantially

the district court

the reasons

order dated December

6, 1991.

We write only to add the following.

At

argument

before

us,

suggested that the corporation was

suit

brought by

merit to this contention.

by a prior

legal identity
E.g.,
____

that

the corporation.

between the nonparty and

Explosives Corp. of America

______________________________

financed

and

earlier

no privity
We

find no

It is well-settled that a nonparty

adjudication where there

Corp., 817 F.2d 894,

_____

counsel

not bound by the

McLaughlin individually because

existed between McLaughlin and

is bound

plaintiffs'

is sufficient

the prior litigant.

v. Garlam Enterprises
___________________

906-07 (1st Cir.) (majority stockholder

controlled

initial

litigation

brought

judgment

against

-2-

against

corporation

is

bound

by

corporation), cert. denied, 484 U.S. 925 (1987); Aetna Cas. &
_____ ______
____________
Sur. Co. of Hartford, Connecticut v. Kerr-McGee Chem. Corp.,
__________________________________
______________________
875

F.2d

1252, 1258

(7th

Cir. 1989)

(judgment

in action

brought by shareholder of closely held corporation is binding

on corporation

in later litigation, absent

to another shareholder or
Judgments
total

59

creditor); Restatement (Second) of

(3)(b) (1982).

Here,

identity between Richard

first suit, who was the sole

and the

virtually

McLaughlin, plaintiff in the

McLaughlin, indeed,

represent the corporation's interests

damages for

there was

shareholder of the corporation,

corporation itself.

by seeking

evidence of harm

in the initial

the allegedly illegal

the corporation's inventory.

sought to
action

attachment of

Under these circumstances, the

corporation as well as McLaughlin personally are bound by the

prior adverse judgment.
We are
that

the

litigation

also

district
was

therefore, be

unpersuaded by
court's

not a

merits of

dismissal

decision

on the

given preclusive effect.

lack of jurisdiction is not

plaintiffs'
of
merits

the

argument
original

and cannot,

While dismissal for

an adjudication that reaches the

an underlying claim, it

precludes relitigation of

the same issue of jurisdiction in a second action on the same

claim.
1980);

E.g.,
____

Boone v. Kurtz,
_____
_____

18 Wright,

Miller and

617 F.2d 435,

436 (5th Cir.

Cooper, Federal Practice and

_____________________

-3-

Procedure: Jurisdiction
________________________
court

4402 at 11 (1981).

properly held that

its prior rulings

The district
with respect to

jurisdiction, including its refusal to allow substitution

of

the corporation, precluded relitigation of the same issues in

the subsequent action.
Finally, we find no merit in plaintiffs' contention
that the district
judicata
________

was

ruling with
erroneous.

court's application of the doctrine of res

___

improper because

district

court's prior

respect to the corporation's capacity to sue was

Even assuming

arguendo that the district court's

________

prior ruling was erroneous,

a direct appeal from that
filing

the

a new

law

suit

plaintiffs' remedy lay in taking

allegedly erroneous ruling, not in

raising

the

same

issue.

E.g.,
____

Federated Department Stores, Inc. v. Moite, 452 U.S. 394, 398

_________________________________
_____
(1980) ("the res judicata consequences of a final, unappealed
___ ________

judgment on the merits [are not] altered by the fact that the
judgment
F.2d

may have been wrong"); Rose v. Town of Harwich, 778

____
_______________

77,

82

(1st

Cir.

1985)

("if

courts

principles of claim preclusion every time

litigant had a
would

fail

economy
When

to

and repose"),

McLaughlin chose

ruling denying

its purposes

of

cert. denied,
_____ ______
not to

the doctrine

promoting

476 U.S.

appeal, the

party status to the

the

it appeared that a

strong claim 'on the equities,'

serve

relaxed

judicial

1159 (1986).

district court's

corporation ripened into

-4-

finality and,

whether or

acquired preclusive effect.

Affirmed.
________

not based on

erroneous reasoning,

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