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holding res judicata inapplicable where a pension plan, sued in an ERISA action, was not named as a party in the first state court action, and holding collateral estoppel was inapplicable where the first action involved state law issues that were not identical to the ERISA issues in the second
Summary of this case from Kirby v. Tad Resources International, Inc.Opinion
Case No. A1-03-87, Docket Number: 30
December 19, 2003
ORDER DENYING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT
Summary : Defendants sought dismissal of the plaintiff's ERISA claims on the grounds that the plaintiff had failed to exhaust his administrative remedies and that his claims were barred under the doctrines of res judicata and collateral estoppel. The Court denied the defendants' motion to dismiss, holding that (1) the exhaustion of administrative remedies would be futile under the circumstances, (2) the plaintiff's prior state court action did not involve the same parties and was not based upon the same claim as those contained in the present action, and (3) the issues decided in the plaintiff's earlier state court action were not identical to those raised in the present action.
This is an action brought by the plaintiff, Dr. Thomas Spagnolia, against his former employer's pension plan and the pension plan trustee pursuant to the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001, et. seq. Spagnolia is seeking the difference between the percentage of the pension plan benefit he received upon his termination from his former employer and the current value of the pension plan benefit to which he feels that he is entitled. On August 28, 2003, the Defendants' filed a Motion for Summary Judgment. For the reasons outlined below, the motion is denied.
I. BACKGROUND
Dr. Mark Monasky is a Bismarck neurosurgeon and the sole shareholder, director, and officer of the defendant, Dakota Neurosurgical Associates, P.C. ("DNA"). In 1996, Monasky contacted Dr. Thomas Spagnolia, a Kentucky neurosurgeon, to inquire of his interest in working for DNA. On January 17, 1997, Spagnolia and DNA executed a Physician Employment Agreement. This agreement provided that the term of Spagnolia's employment would begin on January 13, 1997, and continue until May 31, 1998. Exhibit "A" to this agreement stated that Spagnolia's compensation would be calculated and distributed as follows:
For all services rendered by [Spagnolia] under the Physician Employment Agreement, [DNA] shall pay [Spagnolia] a salary which is based upon the "Net Cash Receipts" of [DNA] receive as a result of [Spagnolia's] total production. The actual compensation level for [Spagnolia], during the term of this Agreement, shall be determined under the formula which is authorized, adopted and declared by the Board of Directors of [DNA] from time to time. For purposes of compensation of the terms and conditions of this Agreement "Net Cash Receipts" shall mean the amount of cash which is actually received by [DNA] resulting from patient services performed as provided by [Spagnolia] and resulting from the allowable gross billings generated by [Spagnolia] for such patient services. In determining the "Net Cash Receipts" under this compensation formula, the allowable gross billings of [Spagnolia] shall be reduced by all necessary adjustments, discounts, and other reductions in determining the "Net Cash Receipts" by [DNA]. Under the present formula adopted by [DNA], which pay formula shall remain in place during the term of this Agreement, expressly provides that the "Net Cash Receipts" of [Spagnolia] shall be reduced by a percentage of the administrative expenses incurred by [DNA] for office and non-physician medical salaries, together will all benefit and payroll taxes, expenses for office manager, expenses for office space, utilities, telephone, non-medical consultants legal and accounting, business supplies, offices supplies office and equipment depreciation, amortization, and insurance, non-physician CME, business promotions, miscellaneous, together with any increase in the general malpractice insurance for [DNA] as a result of adding additional physicians. The percentage of these administrative expenses chargeable to [Spagnolia] under the payment formula shall be equal to the quotient resulting when dividing the "Net Cash Receipts" generated by [Spagnolia], by the total "Net Cash Receipts" of [DNA] generated by all Physician production. [DNA] herein guarantees that the [Spagnolia] shall be entitled to receive Seventy-five Percent (75%) of "Net Cash Receipts," which follow the reduction formula for the administrative expenses set forth above.
Spagnolia became eligible for DNA's Profit Sharing/Money Purchase Plan ("Pension Plan") upon the completion of his first year of employment. According to Spagnolia, DNA made contributions to the Pension Plan on his behalf in calender years 1998, 1999, and 2000.
Section 2.12 of the Pension Plan set forth the following protocol for submitting a claim for benefits:
Claims for benefits under this Plan may be filed in writing with the Administrator. Written notice of the disposition of the claim shall be furnished to the claimant within 90 days after the application is filed. In the event the claim is denied, the reasons for the denial shall be specifically set forth in the notice in language calculated to be understood by the claimant, pertinent provisions of the Plan shall be cited, and, where appropriate, an explanation as to how the claimant can perfect the claim will be provided. In addition, the claimant shall be furnished with an explanation of the Plan's claims review procedure.
A Summary Description of DNA's Profit Sharing/Money Purchase Plan, a document provided to Spagnolia that explained the benefits of the Pension Plan in non-technical terms, stated the following with respect to claim procedures:
The plan contains detailed provisions for making claims for plan benefits and also contains an appeal procedure if there is a denial of benefits. In brief, you may make a claim for plan benefits at any time within 60 days after the claim arises by submitting a written request with any officer of the company. If your claim is denied, you may request a separate, independent committee to review the decision so long as you request such a review within 90 days after receiving notice of the company's action. The separate committee will consist of three persons appointed by the Board of Directors with the company.
The document also set forth the following vesting schedule for Spagnolia's account:
Years of Service Percentage ________________ ___________ 0-1 0%
2 20%
3 40%
4 60%
5 80%
6 100%
In addition, it described the duties of the Pension Plan's fiduciary as follows:
The people who operate your plan, called "fiduciaries" of the plan, have a duty to do so prudently and in the interest of you and other plan participants and beneficiaries. No one, including your employer, or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a benefit or exercising your rights under ERISA. If your claim for a benefit is denied in whole or in part you must receive a written explanation of the reason for the denial. You have the right to have the plan review and reconsider your claim. Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request materials and do not receive them in 30 days, you may file suit in a federal court. In such a case, the court may require the plan administrator to provide the materials and pay you up to $100 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the administrator. If you have a claim for benefits which is denied or ignored, if fiduciaries misuse the plan's money, or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a federal court. The court will decide who should pay court costs and legal fees. If you lose, the court may order you to pay these costs and fees, for example, if it finds your claim is frivolous.
Finally, it contained the following disclaimer:
ADMINISTRATION OF THE PLAN WILL BE GOVERNED BY THE TERMS OF THE ACTUAL PLAN, A COPY OF WHICH IS AVAILABLE FOR YOUR INSPECTION AND REPRODUCTION DURING REGULAR OFFICE HOURS.
Monasky took a leave of absence from neurosurgery on March 15, 1999. Spagnolia's employment with DNA ended that same day. Upon his termination, Spagnolia received the balance of his salary as calculated by DNA. Spagnolia then went to work for a separate corporation that he formed, Bismarck Neurosurgical Associates, P.C. ("Bismarck Neurosurgical").
Thereafter, Spagnolia filed suit against Monasky and DNA in state court, claiming that he was entitled to a percentage of monies collected by DNA following his termination. Monasky and DNA reciprocated by filing counterclaims against Bismarck Neurosurgical. The matter went to trial on January 8, 2002. The jury returned a verdict on January 14, 2002, finding that DNA and Monasky owed Spagnolia $98,714.54 plus interest. In addition, the jury found that Bismarck Neurosurgical owed DNA $5,000 under the theory of quantum meruit. The Court's Findings of Fact, Conclusions of Law, and Order for Judgment were filed on February 26, 2002. Judgment was entered on February 27, 2002, in favor of Spagnolia against DNA and Monasky, jointly and severally, for $124,583.90 plus costs and disbursements and in favor of DNA against Bismarck Neurosurgical for $5,000. On appeal, the North Dakota Supreme Court affirmed the judgment in favor of Spagnolia and against DNA, reversed the portion of the judgment holding Monasky jointly and severally liable with DNA, and affirmed the judgment against Bismarck Neurosurgical.Spagnolia v. Monasky, 660 N.W.2d 223 (N.D. 2003).
In July 2000, approximately one-year after the initiation of the action in state court, Spagnolia was advised by the Pension Plan's consultant, Benefit Plan Consultant's Inc., that based upon his approximately two years of employment with DNA, he was only 20% vested in the Pension Plan. Spagnolia later learned that a number of DNA employees with less than one year of service were considered to be 100% vested, which prompted Spagnolia to make inquiries to the United States Department of Labor. To account for this apparent discrepancy, DNA informed the Department of Labor that Spagnolia had left DNA of his own accord to form his own corporation whereas the fully vested DNA employees had been involuntarily terminated.
As of June 21, 2000, twenty percent of Spagnolia's account amounted to $9,898.28.
Spagnolia disagreed with DNA's characterization of his termination as voluntary. On March 22, 2002, he wrote to the Benefit Plan Consultant, and asked that the consultant amend the earlier vesting decision and find him 100% vested. The Benefit Plan Consultant declined to amend the decision and informed Spagnolia that Monasky was the only party with legal authority to change the vesting decision and distribute funds from the Pension Plan.
Spagnolia informed the consultant of the following special Finding of Fact made by the state court and which is binding on the parties:
On or about January 15, 1999, Monasky advised his employees, including Spagnolia, and St. Alexius Hospital and Prime Care that he would be taking a leave of absence and temporarily close DNA. Begining on or about January 15, 1999, Monasky also advised his patients of his leave of absence and referred his patients to either Dr. Yundt or Dr. Spagnolia. Spagnolia did not have the option of staying on as an employee of DNA.
(emphasis added).
Spagnolia then initiated this action in Federal Court by filing a complaint on July 21, 2003. He filed an amended complaint on July 30, 2003, alleging that the Defendants had violated his rights under ERISA and applicable state law; that Monasky's vestment decision was made in retaliation for Spagnolia's commencement of the state court action; and that Monasky had breached his duties as a fiduciary of the Pension Plan. Spagnolia seeks, among other things, all benefits due him under the Pension Plan, all unpaid contributions plus interest, a declaration that his rights and benefits are 100% vested, and reasonable costs and attorney's fees. All of Spagnolia's benefits remain in the Pension Plan which, as of July 30, 2003, exceed the sum of $50,000.
The Defendants filed a Motion for Summary Judgment on August 28, 2003. The basis for the Defendants motion is that Spagnolia did not exhaust his administrative remedies and that his claims are barred by the doctrines of res judicata and collateral estoppel. In addition, the Defendants assert that Spagnolia's claim for attorneys fees is unwarranted. Spagnolia filed a response to the motion on November 6, 2003, asserting that his ERISA claims had not been previously litigated and that he had not failed to exhaust his administrative remedies. This matter is now ripe for the Court's consideration.
II. STANDARD OF REVIEW
It is well-established that summary judgment is appropriate when, viewed in a light most favorable to the non-moving party, there are no genuine issues of material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Graning v. Sherburne County, 172 F.3d 611, 614 (8th Cir. 1999). A fact is "material" if it might effect the outcome of the case and a factual dispute 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 basic inquiry for purposes of summary judgment is whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law. Quick v. Donaldson Co., Inc., 90 F.3d 1372, 1376 (8th Cir. 1996). The moving party has the initial burden of demonstrating to the Court that there are no genuine issues of material fact. If the moving party has met this burden, the non-moving party cannot simply rest on the mere denials or allegations in the pleadings. Instead, the non-moving party must set forth specific facts showing that there are genuine issues for trial. Fed.R.Civ.P. 56(e). A mere trace of evidence supporting the non-movant's position is insufficient. Instead, the facts must generate evidence from which a jury could reasonably find for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986).
III. LEGAL DISCUSSION
The Defendants assert that Spagnolia's claims fail under the doctrines of res judicata and collateral estoppel. In addition, the Defendants assert that Spagnolia is not entitled to judicial review of his claims because he failed to exhaust his administrative remedies. As the exhaustion of administrative remedies is a threshold issue, the Court will address it first.
A) EXHAUSTION OF ADMINISTRATIVE REMEDIES
The Defendants assert that Spagnolia neglected to follow the Pension Plan's appeal procedure and, consequently, failed to exhaust his administrative remedies. Specifically, the Defendants assert that Spagnolia forfeited his right of recovery because he did not file his claim for benefits in the manner prescribed by either the Summary Description of the Plan or the Pension Plan. See Simmons v. Wilcox, 911 F.2d 1077 (5th Cir. 1990).
In response, Spagnolia notes that the Pension Plan did not limit the time for bringing a claim for benefits. Spagnolia asserts that he had filed his claim for benefits on several occasions, i.e, through his correspondence with the Department of Labor as well as contacts with the Pension Plan's consultant regarding the issue of involuntary termination and, as such, has fulfilled the Pension Plan's administrative requirements. Spagnolia also contends that the Defendants failed to comply with the Pension Plan's requirements and the requirements of ERISA because they failed to provide him with adequate notice of the vesting decision or advise him of his administrative remedies. Finally, Spagnolia asserts that the exhaustion of administrative remedies was not clearly mandated by the Pension Plan and, in any event, would be wholly futile under the circumstances. The Court agrees with the arguments asserted by Spagnolia.
It is well-established that ERISA requires that all employee benefits plans include internal dispute resolution procedures for participants and beneficiaries. See 29 U.S.C. § 1133. Specifically, 29 U.S.C. § 1133 mandates that every employee benefit plan shall:
(1) provide adequate notice in writing to any participant or beneficiary whose claim for benefits under the plan has been denied, setting forth the specific reasons for such denial, written in a manner calculated to be understood by the participant, and
(2) afford a reasonable opportunity to any participant whose claim for benefits has been denied for a full and fair review by the appropriate named fiduciary of the decision denying the claim.
Where the claim is strictly a claim for benefits under an ERISA plan, federal courts have "uniformly concluded that benefit claimants must exhaust administrative review procedures mandated by 29 U.S.C. § 1133(2) [ERISA § 503(2)] before bringing claims for wrongful denial to court." Kinkead v. Southwestern Bell Corporation Sickness Accident Disability Benefit Plan, 111 F.3d 67, 68 (8th Cir. 1997). The trial court may dismiss an ERISA claim for lack of jurisdiction if the claimant has not exhausted available administrative remedies under the respective ERISA plan.
The exhaustion requirement serves to minimize the number of frivolous ERISA lawsuits, promote the consistent treatment of benefit claims, provide a nonadversarial dispute resolution process, and decrease the cost and time of claims settlement. In addition, it "enhances the ability of trustees to interpret plan provisions and helps assemble a factual record which will assist a court in reviewing claim denials."Id.
In this case, there is little evidence in the record to support Spagnolia's assertion that he has exhausted the available internal administrative dispute resolution procedures. Section 7 of the Summary Description of the Plan provided that Spagnolia may "make a claim for plan benefits at any time within 60 days after the claim arises by submitting a request with any officer of the company." Section 2.12 of the Plan provided that "[c]laims for benefits under the plan may be filed in writing with the Administrator." The record reveals that Spagnolia did correspond with the United States Department of Labor as well as the Pension Plan consultant and counsel about the divergent vesting determinations amongst DNA employees. There is scant evidence in the record to indicate that Spagnolia submitted a claim for plan benefits with Monasky, but that administrative requirement is discretionary in nature rather than mandatory. More important, the record also reveals that neither the Plan Administrator nor the Plan Trustee have fully complied with the requirements of the claim procedure. See Section 2.12 of the Plan and 29 U.S.C. § 1133. As such, the Defendants have waived any argument that Spagnolia failed to exhaust his administrative remedies.
It is also well-established that courts have recognized exceptions to the exhaustion of the administrative remedies requirement. For example, exhaustion is generally not required if the plaintiff can demonstrate that the resort to administrative remedies would be futile or the remedy inadequate. See Glover v. St. Louis-San Francisco Ry. Co., 393 U.S. 324, 330 (1969). Such a demonstration requires a "clear and positive showing" that the plaintiff did not pursue an administrative appeal because it was certain that the appeal would be denied. Makar v. Health Corp., 872 F.2d 80, 83 (4th Cir. 1989);Drinkwater v. Metropolitan Life Ins. Co., 846 F.2d 821 (1st Cir.), cert. denied, 488 U.S. 909 (1988).
The Court finds that Spagnolia has made such a showing in this case and that exhaustion of administrative remedies would have been futile. Although Spagnolia arguably did not formally file a claim, he learned through the Department of Labor and DNA's counsel the basis for Monasky's vesting determination; namely, that Spagnolia had voluntarily terminated his employment as opposed to being involuntarily terminated with DNA. It should be noted that Spagnolia learned of the vesting determination approximately one-year after he had initiated an action in state court. More important, it is clear that a hearing on this issue is unlikely to change Monasky's decision, particularly in light of the parties contentious relationship and the fact that Monasky has consistently maintained the position that this matter was previously litigated and that Spagnolia was involuntarily terminated. n The Plan Administrator is DNA, a defunct corporation of which Monasky is the sole shareholder, officer, and director. If DNA as Plan Administrator has not changed its position by virtue of the state court trial and the factual finding that Spagnolia was involuntarily terminated, there is no possibility that a hearing before the Plan Administrator (controlled solely by Monasky as Plan Trustee) will change the Administrator's decision. The possibility that Monasky would reconsider his position with respect to vesting upon the proper filing of a formal claim or after conducting a hearing on the matter is beyond remote. It is clear and undisputed that exhaustion would be futile and the Court concludes that Spagnolia falls within the exception to the exhaustion requirement. Spagnolia has established that he has no further duty to exhaust administrative remedies, and that summary judgment is not appropriate.
B) RES JUDICATA
The Defendants contend that claims regarding the Pension Plan vestment determinations were raised by Spagnolia in the antecedent state court proceedings and are barred under the doctrine of res judicata. The essence of the doctrine of res judicata, also known as claim preclusion, is that a final judgment on the merits bars further claims by the same parties or their privies based on the same cause of action. Costner v. URS Consultants, Inc., 153 F.3d 667, 673 (8th Cir. 1998);see U.S. v. Gurley, 43 F.3d 1188, 1195 (8th Cir. 1995) (stating that "a prior judgment is binding not only as to every matter which was offered and received to sustain or defeat the claim or demand, but as to any other admissible matter which might have been offered for that purpose"); Ohio Cas. Ins. Co. v. Clark, 583 N.W.2d 377, 383 (N.D. 1998) ("Res judicata means that a valid, existing final judgment from a court of competent jurisdiction, is conclusive, with regard to the issues raised, or those that could have been raised, and determined therein, as to the parties and their privies in al other actions"). The Eighth Circuit has held as follows:
A claim will be held to be precluded by a prior lawsuit when: (1) the first suit resulted in a final judgment on the merits; (2) the first suit was based upon proper jurisdiction; (3) both suits involve the same parties; and (4) both suits are based upon the same claims or causes of action.Costner v. URS Consultants, Inc., 153 F.3d 667, 673 (8th Cir. 1998).
Whether a second lawsuit is precluded depends in part on whether the present ERISA claim arises out of the same nucleus of operative facts as the prior claims. 153 F.3d 667, 674. "The legal theories of the two claims are relatively insignificant because a litigant cannot attempt to relitigate the same claim under a different legal theory of recovery."Id. Thus, when determining whether the present and prior claims constitute the same claim, the Court considers "whether the facts are related in time, space, origin, or motivation, whether they form a convenient trial unit, and whether their treatment as a unit conforms to the parties' expectations. . . ." United States v. Gurley, 43 F.3d 1188, 1196.
In the present case, the first two elements of the doctrine of res judicata have been satisfied, namely, a final judgment on the merits was entered in the state court action by a court of competent jurisdiction. However, the same cannot be said about the third element. The state court action was commenced in 1999 for breach of an employment contract between Spagnolia and DNA. The Pension Plan was not a party to the state court action. The crux of the parties dispute in state court centered on DNA's and Monasky's failure to pay Spagnolia a percentage of the "Net Cash Receipts" collected after his termination from DNA on March 15, 1999. The partial transcript of the state court proceedings submitted by the Defendants reveals that the Pension Plan and vesting decisions were topics of discussion at the trial. Although Spagnolia contested the vesting decisions, it appears that the propriety of these decisions was a peripheral issue in the state court action. Notably, Spagnolia did not learn of the vesting decision until after he had initiated the state court action. It appears that the parties focus on the Pension Plan in the state court action related to the extent to which retirement benefits would be taken into account when calculating the "Net Cash Receipts." Ultimately, the jury awarded Spagnolia $98,714.54 in compensation. However, DNA never requested a special interrogatory on the verdict form about the pension deduction, nor was the jury or the court requested to vest Spagnolia 100% in his Plan contribution. No jury question was posed suggesting or requesting payment of funds for the Pension Plan or any decisions made on vesting. All of Spagnolia's benefits remain with the Plan. The Defendants cannot claim that the jury addressed the issue in the state court proceedings. It is undisputed that no questions were posed to the jury regarding the propriety of the vesting decision, the distribution of benefits from the Pension Plan, or the recourse available to Spagnolia under either the Pension Plan or ERISA. Consequently, the jury made no express findings with respect to the distribution of Pension Plan benefits.
In contrast to the state court proceedings, the validity of the vesting decision and distributions under the Pension Plan are squarely at issue in the present action. Spagnolia explicitly alleges in his amended complaint that the Defendants failed to comport with ERISA requirements, that the vesting decision was made in retaliation for Spagnolia's commencement of the state court action, and that Monasky breached his duties as a fiduciary of the Pension Plan.
Accordingly, the Court finds that the third and fourth elements of the res judicata analysis have not been satisfied. Although the vesting determinations were discussed during the course of the state court proceedings, the claims presently before this Court do not mirror the claims raised by Spagnolia in state court. In addition, the Pension Plan was not named as a party in both actions. The defendants have failed to meet their burden of establishing that the doctrine of res judicata bars Spagnolia's ERISA action. Therefore, the Court concludes that Spagnolia's ERISA claims are not precluded under the doctrine of res judicata.
C) COLLATERAL ESTOPPEL
Next, the Defendants contend that Spagnolia's claim fails under the doctrine of collateral estoppel. The Defendants cite to a case entitledLiberty Mutual Insurance Co. v. FAG Bearing Corp., 335 F.3d 752 (8th Cir. 1993), for the proposition that federal courts must look to state law when determining whether to apply the doctrine of collateral estoppel.
Collateral estoppel, or issue preclusion, "means simply that when an issue of ultimate fact has once been determined by a valid and final judgment, that issue cannot again be litigated between the same parties in any future lawsuit." Stoebner v. Parry, Murray, Ward Moxley, 91 F.3d 1091, 1094 (8th Cir. 1996); see Hofsommer v. Hofsommer Excavating, Inc., 488 N.W.2d 380, 383 (N.D. 1992) (collateral estoppel "generally forecloses the relitigation, in a second action based on a different claim, of particular issues of either fact or law which were, or by logical and necessary implication must have been, litigated and determined in the prior suit").
There is authority for the view that state law, and not federal law, is controlling as to the applicability of the doctrine of collateral estoppel in a non-diversity action in federal court, where the issues involved in the prior judgment were issues of state law. See Ruple v. City of Vermillion, S.D., 714 F.2d 860, 862 (8th Cir. 1983)("If by that law a second action would be precluded in a state court, then it is also normally precluded in a federal court");Burks v. County of Miller, Mo., 750 F. Supp. 408, 411-12 (W.D. Miss. 1990) ("[I]f state preclusion law would bar litigation of claims or issues raised in a subsequent action that could have been raised in a prior action, then the federal court should give the same preclusive effect to the state court judgment as would a subsequent state court");see also D'Amario v. Butler Hosp., 921 F.2d 8, 10 (1st Cir. 1990) (The res judicata effect of a state judgment is governed by state law); Town of Deerfield, N.Y. v. F.C.C., 992 F.2d 420, 429 (2d Cir. 1993).
In this case, there is no dispute that issues involved in Spagnolia's prior action were issues of state law. Accordingly, to accord full faith and credit to the state court judgment, the Court will apply North Dakota's principles of collateral estoppel. In North Dakota, four tests must be met before collateral estoppel will bar re-litigation of a fact or issue involved in an earlier lawsuit:
(1) Was the issue decided in the prior adjudication identical to the one presented in the action in question?;
(2) Was there a final judgment on the merits?;
(3) Was the party against whom the plea is asserted a party or in privity with a party to the prior adjudication?; and
(4) Was the party against whom the plea is asserted given a fair opportunity to be heard on the issue?
There is no dispute that a final judgment was entered on the merits in Spagnolia's earlier state court action. However, it cannot be said that the issues decided in that state court action are identical to the issues presented in this federal lawsuit. It was a dispute over Spagnolia's salary that was at the heart of the state court action. In the present case, the issues before the Court concern Spagnolia's pension benefits. As previously noted, the topic of Spagnolia's pension benefits arose in the state court action but only in the context of calculating his compensation under the employment agreement. It is clear that the propriety of the vesting decision was not litigated in the state court action and that the doctrine of collateral estoppel does not apply. The defendants have failed to meet their burden of establishing that the doctrine of collateral estoppel bars Spagnolia's ERISA claim.
IV. CONCLUSION
The Court expressly finds that exhaustion of any administrative remedies would be futile. There is clear and convincing evidence that the pursuit of administrative remedies in this long-standing, contentious battle between Spagnolia and Monasky would be an exercise in futility. The parties should pursue mediation in an attempt to put closure to this medical nightmare rather than engage in further prolonged and costly litigation. In addition, the Court finds that neither the doctrine of res judicata nor the doctrine of collateral estoppel bars Spagnolia from asserting ERISA claims in the present federal court action. The Court declines to rule on the Defendants' contention that an award of attorney's fees is unwarranted, and such a ruling would be premature given the present posture of this case. The Defendants' Motion for Summary Judgment (Docket No. 7) is DENIED.
IT IS SO ORDERED.