United States District Court, D. Arizona
James A. Teilborg Senior United States District Judge.
Pending before the Court is Plaintiff Airbus DS Optronics GmbH’s motion for partial summary judgment with respect to affirmative defenses pleaded by Defendants Nivisys, LLC (“Nivisys”) and WWWT Enterprises, LLC (“WWWT”). (Doc. 152). Plaintiff contends that these affirmative defenses fail as a matter of law or, in the alternative, are barred by the doctrine of res judicata because they seek to collaterally attack a valid judgment obtained in prior litigation. (Id. at 2). Having reviewed the parties’ filings and considered oral argument, the Court now rules on the motion.
Plaintiff filed the instant action against Defendants in Maricopa County Superior Court on October 28, 2014, which was thereafter removed to this Court pursuant to 28 U.S.C. § 1441(b) (2012). (Doc. 1). The core of the Second Amended Complaint (“SAC”) is Plaintiff’s contention that Defendants are liable for a judgment previously obtained against Nivisys Industries. (Doc. 112 at 5-7). The aforementioned judgment arose out of a contract between Plaintiff and Nivisys Industries, in which Plaintiff agreed to manufacture and supply a number of optic components to Nivisys Industries. (Doc. 153-1 at 3). After Nivisys Industries breached, Plaintiff filed suit in Stuttgart Regional Court, Germany on May 29, 2012. (Doc. 153-6 at 2). The suit culminated in a default judgment against Nivisys Industries for €748, 750. (153-11 at 2-7). Plaintiff later filed suit against Nivisys Industries in Maricopa County,  seeking to “recognize and enforce” the German judgment, (Doc. 153-1 at 2-3), and on April 16, 2014, obtained judgment for $1, 269, 290.05. (Doc. 153-13 at 2-3).
After the current matter proceeded to discovery, a dispute arose concerning certain document production requests. (Doc. 116). Defendants pleaded a number of affirmative defenses in their respective answers, and sought the production of documents to substantiate these defenses. (Doc. 129 at 2-5). Plaintiff objected on the grounds that the requests sought “information concerning issues fully resolved by two prior judgments, ” (Doc. 133 at 1-2), and subsequently filed a motion to strike Defendants’ affirmative defenses pursuant to Federal Rule of Civil Procedure 12(f). (Doc. 136).
On December 7, 2015,  the Court found that the proper means to adjudicate the parties’ discovery dispute-and Plaintiff’s argument that certain of Defendants’ affirmative defenses were barred as a matter of law-was by summary judgment, and ordered Plaintiff to file a Fed.R.Civ.P. 56(f) motion. (Doc. 143 at 1-2). “Those of Defendants’ affirmative defenses that d[id] not fail as a matter of law” would “define the scope of what potentially discoverable evidence is relevant under [Fed. R. Civ. P.] 26(b)(1)” and allow the Court to “rule on the discovery dispute over Defendants[’] request for ‘documents relating to the underlying dispute’ that culminated in a judgment against Nivisys Industries, LLC.” (Doc. 143 at 2 (quoting Doc. 129 at 2)).
The motion has been fully briefed, and oral argument was heard on April 27, 2016. Having set forth the pertinent background, the Court turns to Plaintiff’s Rule 56 motion.
II. Legal Standard
Summary judgment is appropriate when “the pleadings, depositions, answers to interrogatories, admissions on file, and any affidavits show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Assurance Co. of Am. v. Wall & Assocs. LLC of Olympia, 379 F.3d 557 (9th Cir. 2004) (citation omitted); see also Fed. R. Civ. P. 56(a). The movant bears the initial burden of demonstrating to the Court the basis for and the elements of the causes of action upon which the non-movant will be unable to establish a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The burden then shifts to the non-movant to establish the existence of a material fact in dispute. Id. The non-movant “must do more than simply show that there is some metaphysical doubt as to the material facts” by “com[ing] forward with ‘specific facts showing that there is a genuine issue for trial.’” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (emphasis in original) (quoting Fed.R.Civ.P. 56(e) (1963) (amended 2010)). A dispute about a fact is “genuine” if the evidence is such that a reasonable jury could return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The non-movant’s bare assertions, standing alone, are insufficient to create a material issue of fact and defeat a motion for summary judgment. Id. at 247-48. But in the summary judgment context, the Court construes all disputed facts in the light most favorable to the non-moving party. Ellison v. Robertson, 357 F.3d 1072, 1075 (9th Cir. 2004).
“The constitutional mandate of full faith and credit requires that a judgment validly rendered in a state court be accorded the same validity and effect in every other state’s courts as it had in the state rendering it.” Pioneer Fed. Sav. Bank v. Driver, 804 P.2d 118, 121 (Ariz.Ct.App. 1988) (citing Lofts v. Superior Court, 682 P.2d 412, 415 (Ariz. 1984)); U.S. Const. art. 4 § 1. “The purpose and effect of this clause is to nationalize the doctrine of res judicata, ” and it “is effectuated when states recognize a sister state’s final judgments as binding and conclusive.” Fremont Indem. Co. v. Indus. Comm’n, 697 P.2d 1089, 1092 (Ariz. 1985) (citing Durfee v. Duke, 375 U.S. 106, 109 (1963)).
“The preclusive effect of a state court judgment in a subsequent federal lawsuit generally is determined by the full faith and credit statute, which provides that state judicial proceedings ‘shall have the same full faith and credit in every court within the United States . . . as they have by law or usage in the courts of such State . . . from which they are taken.’” Marrese v. American Academy of Orthopaedic Surgeons, 470 U.S. 373, 380 (1985) (quoting Title 28 U.S.C. § 1738 (1982)). Mechanically, “[t]his statute directs a federal court to refer to the preclusion law of the State in which judgment was rendered.” Id. (citation omitted); see also Kremer v. Chemical Construction Corp., 456 U.S. 461, 481-82 (1982) (noting that “[i]t has long been established that § 1738 does not allow federal courts to employ their own rules of res judicata in determining the effect of state judgments”). “Section 1738 embodies concerns of comity and federalism that allow the States to determine, subject to the requirements of the statute and the Due Process Clause, the preclusive effect of judgments in their own courts.” Id. Accordingly, the Court turns to the preclusion law of Arizona. Hannah v. GMC, 969 F.Supp. 554, 559 (D. Ariz. 2006) (citation omitted); Nourbakhsh v. Gayden, 162 B.R. 841, 844 (9th Cir. Bankr. Jan. 10, 1994).
Under Arizona law, a “properly filed foreign judgment has the same effect and is subject to the same procedures as a final judgment in the state of Arizona.” A.R.S. § 12-1701 et seq.; Pioneer Fed. Sav. Bank, 804 P.2d at 120 n.3 (citation omitted). And a valid default judgment has the same preclusive effect “as a judgment on the merits where the issues were litigated.” A. Miner Contr., Inc. v. Toho-Tolani Cty. Improvement Dist., 311 P.3d 1062, 1070 (Ariz.Ct.App. 2013) (quoting Norriega v. Machado, 878 P.2d 1386, 1391 (Ariz.Ct.App. 1994)); see also Restatement (Second) of Judgments § 18, cmt. a. (noting that “[i]t is immaterial whether the judgment was rendered upon a verdict or upon a motion to dismiss or other objection to the pleadings or upon consent, confession, or default”). Preclusion is not absolute, however. There are certain circumstances where a foreign judgment shall not be given recognition and effect. Specifically, a foreign judgment “may be attacked if the rendering court lacked jurisdiction over person or subject matter, or judgment was obtained through lack of due process or was the result of extrinsic fraud, or if the judgment was invalid or unenforceable.” Pioneer Fed. Sav. Bank, 804 P.2d at 121 (citing Phares v. Nutter, 609 P.2d 561, 563 (Ariz. 1980)); see also Bebeau v. Berger, 529 P.2d 234, 235 (Ariz. 1974). The Arizona Court of Appeals has also noted that full faith and credit may not be extended where “‘such recognition or enforcement . . . would involve an improper interference with important interests of the sister state.’” Jones v. Roach, 575 P.2d 345, 348 n.2 (Ariz.Ct.App. 1977) (quoting Restatement 2d. of Conflict of Laws, § 103)).
Turning to the particulars of this case, it is undisputed that on May 29, 2012, Plaintiff filed suit against Nivisys Industries in Stuttgart Regional Court for breach of contract. This suit culminated in a default judgment entered in the amount of €748, 750 on July 3, 2013. (Doc. 153-11 at 2-7). On December 20, 2013, Plaintiff filed suit in Maricopa County Superior Court to “recognize and enforce the [Stuttgart Regional Court] Judgment against Nivisys [Industries]” as an Arizona judgment. (Doc. 153-1 at 2-4). On April 16, 2014, pursuant to Ariz. R. Civ. P. 55(b)(1), the Superior Court recognized the German judgment as “valid and fully enforceable as a Judgment in the State of Arizona” and awarded Plaintiff $1, 269, 290.05. (Doc. 153-13 at 2-3). Nivisys Industries was a recognized corporate entity until August 21, 2014. (Doc. 166 at 10). The result is a ...