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Donnelly v. Eklutna, Inc. (2/5/99), 973 P 2d 87


     Notice: This opinion is subject to correction before publication in
the Pacific Reporter.  Readers are requested to bring errors to the attention of
the Clerk of the Appellate Courts, 303 K Street, Anchorage, Alaska 99501, phone
(907) 264-0608, fax (907) 264-0878.


            THE SUPREME COURT OF THE STATE OF ALASKA


THERESE U. DONNELLY, TIMOTHY  ) 
DONNELLY, DEBORAH DONNELLY,   )    Supreme Court No. S-7808
WILLIAM DONNELLY, and KEVIN   )    
DONNELLY,                     )    Superior Court No.
                              )    3AN-86-6085 CI
               Appellants,    )    
                              )    
     v.                       )    O P I N I O N  
                              )    
EKLUTNA, INC.,                )    [No. 5075 - February 5, 1999] 
                              )
               Appellee.      )    
______________________________) 


          Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Anchorage, 
                    Brian C. Shortell, Judge.


          Appearances:  Lawrence A. Pederson, Paul J.
Nangle & Associates, Anchorage, for Appellants.  James S. Crane &
Robert H. Hume, Jr., Copeland, Landye, Bennett and Wolf, LLP, 
Anchorage, for Appellee.


          Before:  Matthews, Chief Justice, Compton,
Eastaugh, Fabe, and Bryner, Justices.


          BRYNER, Justice.


          Eklutna, Inc., and the Donnellys both claim to own the
same 92.5 acres near Eagle River.  Eklutna sued the Donnellys,
seeking ejectment, quiet title, and declaratory relief.  The
superior court entered summary judgment against the Donnellys, who
now appeal.  Because we conclude that the claims of the Donnelly
family are barred by res judicata, we affirm.
I.   FACTS AND PROCEEDINGS
          In 1957 Joseph Donnelly, his wife Therese, and their
children attempted to homestead 160 acres near Eagle River. 
Sometime in 1957 or 1958, the Bureau of Land Management (BLM)
notified Mr. Donnelly that the land was closed to entry and
rejected his homestead application.  For a while, Mr. Donnelly
pursued his application through the administrative process, but by
1959 he abandoned these efforts. [Fn. 1]  Eventually, through a
compromise proposed by BLM, Mr. Donnelly was able to secure a
patent for 67.5 acres of his claim that lay outside the area closed
to entry.   
          In 1970 the United States served Mr. Donnelly with a
notice of trespass with respect to the remaining 92.5 acres in
dispute.  Mr. Donnelly apparently chose to ignore the notice, and
he built a house on the disputed land.  The Donnelly family has not
lived in the house since the mid-1980s.  Sometime in the early
1990s the house was torn down.  
          A.   Federal Litigation
          Meanwhile, Congress had passed the Alaska Native Claims
Settlement Act (ANCSA); [Fn. 2] in 1974 Eklutna, an Alaska native
corporation, selected the disputed land under ANCSA.  In 1975 the
United States commenced a trespass action against Mr. Donnelly in
federal district court. [Fn. 3]  Mr. Donnelly counterclaimed,
arguing that the federal government's wrongful withdrawal of the
lands from entry precluded him from successfully homesteading and
that he in fact possessed equitable title to the homestead. [Fn. 4] 
In 1979 the United States patented title to the surface estate in
the land in Eklutna.  The district court thereafter dismissed the
United States as a party, and Eklutna intervened to replace it. 
Mr. Donnelly then asserted a number of counterclaims against
Eklutna rooted in ANCSA and common law.  Midway through the
litigation, Mr. Donnelly died, and Therese Donnelly, as a personal
representative of his estate, was substituted for him. [Fn. 5]
          After a bench trial, the district court dismissed Mr.
Donnelly's counterclaims against the United States and Eklutna and
entered summary judgment for Eklutna.  On appeal, the United States
Court of Appeals for the Ninth Circuit affirmed. 
          The Ninth Circuit noted that the federal Quiet Title Act
provided the exclusive remedy for resolving title disputes with the
United States. [Fn. 6]  The court concluded that the Act's twelve-
year statute of limitations, which governed Mr. Donnelly's quiet
title claims, had expired by 1973, two years before he raised them
as counterclaims. [Fn. 7]  Because the statute of limitations had
run, the court concluded that it "lack[ed] jurisdiction"to
consider Mr. Donnelly's quiet title claims against the United
States. [Fn. 8]  And because Mr. Donnelly could no longer join the
United States -- an indispensable party -- in the quiet title
claims that he had asserted against Eklutna, the court went on to
dismiss these claims as well.  It explained:  
          In order to challenge the validity of
Eklutna's patents, [Mr. Donnelly] must establish [his] own
entitlement to the lands . . . [He] can only properly [do so] in
direct proceedings against the United States. . . .  It follows
from the fact that the United States is an indispensable party to
this action that the district court's lack of jurisdiction as to
the claims against the United States requires the dismissal of the
claims against the Native corporations.[ [Fn. 9]] 

          Apart from his homestead claim, Mr. Donnelly had asserted
in the district court action that as an occupant on the disputed
land, he had a right to title under ANCSA section 14(c)(1). [Fn.
10]  The district court had found that Mr. Donnelly was a
trespasser, and as such, he could not be an occupant within the
meaning of that section. [Fn. 11]  On appeal, Mr. Donnelly argued
that he could not be a trespasser, since he possessed equitable
title to the land as a homesteader. [Fn. 12]  The Ninth Circuit
rejected Mr. Donnelly's claim under section 14(c)(1) without
addressing his equitable title argument, concluding that a
homesteader's equitable title could not be decided in any action in
which the United States could not be added as a party. [Fn. 13] 
The appellate court further rejected Mr. Donnelly's remaining
common law claims, which he had based on constructive trust
notions, holding that ANCSA preempted such common law remedies.
[Fn. 14] 
          The Ninth Circuit decided these issues in 1988. [Fn. 15] 
Its opinion left unresolved Eklutna's state law claims against Mr.
Donnelly for trespass and ejectment. The district court had
retained ancillary jurisdiction over these claims.  It eventually
granted Eklutna summary judgment and ordered Mr. Donnelly evicted,
finding that he was a trespasser and had no basis to challenge
Eklutna's patent. 
          In an unpublished opinion issued in 1991, the Ninth
Circuit affirmed the district court's rejection of Mr. Donnelly's
state law claims, thereby ending Mr. Donnelly's federal litigation: 
               Essentially, [Donnelly] argues that the
district court abused its discretion in retaining jurisdiction over
the ancillary claims because the absence of an indispensable party
precluded [him] from presenting a defense and inevitably led to a
judgment against [him].  However, we find no unfairness in that
result.  The reason the indispensable party (the United States) was
absent was that [Donnelly] had permitted the statute of limitations
to run as to [his] quiet title claim against that party. 
Accordingly, [Donnelly] is in no position to argue that [his] own
failure to act in a timely manner somehow prevents the district
court from adjudicating Eklutna's counterclaim on the merits.[ [Fn.
16]]

          B.   State Litigation
          While the federal case was still in progress, parallel
litigation over the same land arose in state court.  In 1986
Eklutna sued Mrs. Donnelly and several of the Donnelly children
("the Donnellys") for ejectment, quiet title, and declaratory
relief.  The case was stayed pending the conclusion of the federal
litigation.  The superior court lifted the stay after the Ninth
Circuit's 1991 decision affirming the federal district court's
summary denial of Mr. Donnelly's state law claims.  Eklutna then
moved for summary judgment in the state case, asserting that the
federal rulings were binding on the Donnellys under the doctrine of
res judicata.  The superior court granted this motion and entered
summary judgment for Eklutna.  The Donnellys appeal.
II.  DISCUSSION
          The Donnellys raise only two arguments on appeal:  first,
they contend that their ANCSA section 14(c)(1) claims are not
barred by res judicata; second, they maintain that these claims
have merit.  We need address only the res judicata argument, which
we find dispositive.
     A.   The Previous Federal Litigation Resolved Mr. Donnelly's
ANCSA Section 14(c)(1) Claim on the Merits.

          The Donnellys argue that res judicata does not bar their
claims under section 14(c)(1), because the district court did not
reject Mr. Donnelly's section 14(c)(1) claim on its merits.  We
conclude that it did.  
          The res judicata doctrine recognizes that litigation must
eventually come to an end; when a court issues a judgment on the
merits of a claim, the doctrine bars the parties and persons in
privity with them from relitigating the same claim in a subsequent
action. [Fn. 17]  Thus, under the doctrine, a party who presents a
claim and has the opportunity to contest it in court may not renew
the claim in another court. [Fn. 18]  But "[j]udicial actions must
achieve a basic minimum quality to become eligible for res judicata
effects.  The traditional words used to describe this quality
require that there be a judgment that is valid, final, and on the
merits."[Fn. 19]  We have explained that
          [t]he claims extinguished by the first
judgment include "all rights of the plaintiff to remedies against
the defendant with respect to all or any part of the transaction
. . . out of which the action arose,"a mere change in the legal
theory asserted as a ground for recovery will not avoid the
preclusive effect of the judgment.[ [Fn. 20]]  

          In arguing that the federal case did not resolve Mr.
Donnelly's section 14(c)(1) claim on the merits, the Donnellys
point to the district court and Ninth Circuit opinions, which
dismissed Mr. Donnelly's claims against the United States for want
of jurisdiction, and dismissed his 14(c)(1) claims against Eklutna
for failing to join the United States as an indispensable party. 
The Donnellys contend that these dismissals were procedural, rather
than on the merits.  They are only partly correct.  Although the
federal courts did rely on a procedural flaw as a starting point
for their legal analyses, they ultimately concluded that this flaw
required them to dismiss Mr. Donnelly's section 14(c)(1) claim on
the merits.  
          As we have already mentioned, the district court
dismissed Mr. Donnelly's federal quiet title claim because the
statute of limitations barred him from naming the United States
(whose participation was indispensable) as a party.  Based on this
procedural violation, the court proceeded to reject Mr. Donnelly's
section 14(c)(1) claim.  The court found that, as a trespasser on
federal land, Mr. Donnelly could not qualify as an occupant for
purposes of a section 14(c)(1) conveyance.  Then, on the state law
claims for ejectment and trespass that Eklutna advanced against Mr.
Donnelly, the court granted Eklutna summary judgment, concluding
that, as between Eklutna and Mr. Donnelly, Eklutna had the superior
claim to title because Mr. Donnelly was a mere trespasser on
Eklutna's land.
          Having reached this conclusion, the court entered a
judgment that unequivocally ordered Mr. Donnelly off the disputed
land and unconditionally barred his reentry, thereby resolving --
fully, finally, and on the merits -- all claims of right to
occupancy that Mr. Donnelly had asserted. [Fn. 21]

           The Ninth Circuit later dispelled any lingering doubt
that the district court had ruled on the merits.  While recognizing
that Mr. Donnelly's statute of limitations violation had prevented
Mr. Donnelly from litigating his equitable title theory in
defending Eklutna's quiet title action, the Ninth Circuit held
expressly that because Mr. Donnelly had caused the problem and
could no longer remedy it, his claim had properly been rejected on
the merits: 
          [Donnelly] is in no position to argue that
[his] own failure to act in a timely manner somehow prevents the
district court from adjudicating Eklutna's counterclaim on the
merits.[ [Fn. 22]]

The Ninth Circuit thus unequivocally ruled that the district court
had resolved the title dispute between Eklutna and Mr. Donnelly "on
the merits."[Fn. 23] 
     B.   For Purposes of Applying Res Judicata, the Donnellys Were 
in Privity with Mr. Donnelly During the Federal Litigation. 
          Generally speaking, a judgment that determines an
interest in real property will be binding on successors in
interest, even if they were not parties to the litigation from
which the judgment issued. [Fn. 24]  Mrs. Donnelly acknowledges
that she is in privity to the federal judgment insofar as she
acquired an interest in Mr. Donnelly's homestead claim as his
devisee.  But Mrs. Donnelly and other members of the Donnelly
family argue that even if the federal judgment adjudicating Mr.
Donnelly's section 14(c)(1) claim was a judgment on the merits, it
could not bar them from independently asserting their own section
14(c)(1) claims to the same land, since they were not parties to
the federal case.
          Citing Pennington v. Snow, [Fn. 25] Eklutna insists that
Mrs. Donnelly was in privity with Mr. Donnelly in the federal
litigation.  The Donnellys reply that Pennington can be
distinguished on its facts.  We find the arguments of both parties
irrelevant, for state law does not govern the res judicata issue in
this case; instead, we must look to federal law to determine the
preclusive effect of the federal litigation. [Fn. 26]   Otherwise,
federal judgments would be subject to the uncertainties of state
law wherever a litigant chose to bring a subsequent suit. [Fn. 27]
          Under federal law, res judicata "treats a judgment, once
rendered, as the full measure of relief to be accorded between the
same parties on the same 'claim' or 'cause of action.'"[Fn. 28] 
While the general rule is that litigants are not bound by judgments
resulting from prior litigation to which they were not parties, the
most common exception is that nonparties who are in privity with
parties may be bound. [Fn. 29]  Courts will conclude that parties
are in privity with one another where the parties are so closely
related that it is fair to legally bind both. [Fn. 30]  The
relationship between the party and nonparty may be based on
succession, nonparty control of the prior litigation, adequate
representation in prior litigation, or a unity of interests. [Fn.
31]  But parties are not in privity for res judicata purposes
merely because another party makes identical claims against them.
[Fn. 32] 
          Applying these principles, we find ample basis to
conclude that the Donnellys were in privity with Mr. Donnelly in
the federal litigation.  The Donnelly family occupied the disputed
land jointly as homesteaders.  Though each now asserts an
individual claim, the claims all derive from the family's common
occupancy and are essentially identical to the section 14(c)(1)
claim that Mr. Donnelly advanced in the federal case.  The
Donnellys knew of Mr. Donnelly's federal litigation, and Mrs.
Donnelly actually participated in the case, first as a witness and
later as a personal representative of Mr. Donnelly's estate.
          Nevertheless, the unity of interests between Mr. Donnelly
and the remaining members of his family might, at first blush, seem
questionable.  Theoretically, at least, the homestead claim that
Mr. Donnelly asserted in the federal litigation is adverse to the
individual section 14(c)(1) claims that the other members of his
family are now asserting, since the two categories of claim are
mutually exclusive.  Establishing Mr. Donnelly's right to occupy
the disputed land as a homesteader would have mooted his own claim
of occupancy under section 14(c)(1); by the same token, it would
have defeated the section 14(c)(1) claims of remaining family
members.  But upon closer scrutiny, the potential conflict between
Mr. Donnelly and his family proves insubstantial.  As we have
indicated above, all of the Donnelly family members acquired their
interests through Mr. Donnelly's original homestead entry; by all
accounts, the Donnellys occupied the land as a family unit.  As Mr.
Donnelly's devisee, Mrs. Donnelly acknowledges privity to his
homestead interests.  Moreover, Mr. Donnelly himself did not
hesitate to assert his own mutually exclusive homestead and
section 14(c)(1) claims simultaneously, as alternative grounds for
relief in the federal action.  And even though a ruling in Mr.
Donnelly's favor on either ground presumably would have foreclosed
all other family members from asserting their own section 14(c)(1)
claims, no other member of the family attempted to intervene in the
federal action or objected to the district court's ejectment order,
which on its face plainly extended to the entire family.
          In sum, absent record evidence of actual disharmony or
conflict, all members of the Donnelly family appear to have had a
primary and overarching family interest in the homestead claim that
Mr. Donnelly asserted to the disputed land.  This unity of interest
suffices to establish privity among all family members for purposes
of res judicata.  Thus, all family members became bound when the
federal court rejected Mr. Donnelly's section 14(c)(1) claim on the
merits. 
III. CONCLUSION
          Res judicata bars the section 14(c)(1) claims of all 
members of the Donnelly family in this case because the federal
court finally and validly decided Mr. Donnelly's identical claim on
its merits, and the members of his family are privy to that
decision.  We therefore AFFIRM the superior court's order granting
summary judgment to Eklutna.


                            FOOTNOTES


Footnote 1:

     See Donnelly v. United States, 850 F.2d 1313, 1319 (9th Cir.
1988).


Footnote 2:

     43 U.S.C.A. sec.sec. 1601 - 1629f (1986 & Supp. 1998).


Footnote 3:

     See Donnelly, 850 F.2d at 1316.


Footnote 4:

     See id. at 1316, 1321.


Footnote 5:

     See id. at 1315 n.1.


Footnote 6:

     See id. at 1317.


Footnote 7:

     See id. at 1318-20.


Footnote 8:

     Id.


Footnote 9:

     Id. at 1320 (citation omitted).


Footnote 10:

     See id. at 1320-21.  43 U.S.C.A. sec. 1613(c)(1) (1986 & Supp.
1998) provides:

               Upon receipt of a patent or patents:

               (1)  the Village Corporation shall first
convey to any Native or non-Native occupant, without consideration,
title to the surface estate in the tract occupied as of
December 18, 1971 . . . as a primary place of residence[.]


Footnote 11:

     See Donnelly, 850 F.2d at 1320.


Footnote 12:

     See id. at 1321.


Footnote 13:

     See id.


Footnote 14:

     See id.


Footnote 15:

     See id. at 1313.


Footnote 16:

     United States v. Donnelly, No. A75-027-Civ-JMF, 1991 WL
180080, at *2 (9th Cir. Sept. 16, 1991).


Footnote 17:

     See Drickerson v. Drickerson, 546 P.2d 162, 169 (Alaska 1976);
Restatement (Second) of Judgments sec.sec. 19, 21(1) (1982).


Footnote 18:

     See DeNardo v. State, 740 P.2d 453, 455 (Alaska 1987).


Footnote 19:

     18 Charles Alan Wright et al., Federal Practice and Procedure
sec. 4427, at 269 (1981 & Supp. 1998).  See Hooker v. Klein, 573
F.2d
1360, 1367-68 (9th Cir. 1978) (discussing doctrine of res
judicata).


Footnote 20:

     DeNardo, 740 P.2d at 455-56 (quoting State v. Smith, 720 P.2d
40, 41 (Alaska 1986)).


Footnote 21:

     The judgment provided, in relevant part: 

          That Joseph F. Donnelly and his estate are
ordered to remove all personal property placed on the Land by
either of them, to remove all improvements constructed by either of
them from the Land and to restore the Land to a safe, neat and
clean condition; . . . and That any persons possessing, holding,
using, occupying, or otherwise claiming any interest in or right to
possess, use, hold or occupy the Land or any portion thereof, which
right or interest derives from Joseph F. Donnelly or his estate,
are ordered to vacate the premises, to remove all personal property
placed on the Land by them, to remove all improvements constructed
by them, and to restore the Land to a safe, neat and clean
condition; and . . . The estate of Joseph F. Donnelly and those
claiming any right or interest in the Land deriving from him or his
estate, are prohibited from re-entering the Land except for
purposes of its restoration.  United States v. Donnelly, J. No. A
75-27 CI (Alaska Dist. Ct., Jan. 2, 1991).


Footnote 22:

     United States v. Donnelly, No. A75-027-Civ-JMF, 1991 WL
180080, at *2 (9th Cir. Sept. 16, 1991) (emphasis added).


Footnote 23:

     Id.


Footnote 24:

     See, e.g., Restatement (Second) of Judgments sec. 43 (1982):

          Effect of Judgment Determining Interests in
Property on Successors to the Property

          A judgment in an action that determines
interest in real or personal property:

          (1) With respect to the property involved in
the action:

          (a) Conclusively determines the claims of the
parties to the action regarding their interests; and

          (b) Has preclusive effects upon a person who
succeeds to the interest of a party to the same extent as upon the
party himself. 

See also In re Lindsay, 59 F.3d 942, 952 (9th Cir. 1995) (adopting
these standards).


Footnote 25:

     471 P.2d 370, 375-76 (Alaska 1970).


Footnote 26:

     See Shoup v. Bell & Howell Co., 872 F.2d 1178, 1179 (4th Cir.
1989); 18 Charles Alan Wright et al., Federal Practice and
Procedure sec. 4466, at 618 (1981 & Supp. 1998); Restatement
(Second)
of Judgments sec. 87 (1982).


Footnote 27:

     See Shoup, 872 F.2d at 1180


Footnote 28:

     McClain v. Apodaca, 793 F.2d 1031, 1033 (9th Cir. 1986).


Footnote 29:

     See Class Plaintiffs v. City of Seattle, 955 F.2d 1268, 1277
(9th Cir. 1992).


Footnote 30:

     See id.


Footnote 31:

     See Hart v. Yamaha-Parts Distributors, Inc., 787 F.2d 1468,
1472 (11th Cir. 1986).


Footnote 32:

     See id. at 1473; accord Fabricus v. Freeman, 466 F.2d 689, 693
(7th Cir. 1972) ("Privity is not established by showing that the
prior decision involves the same issues of law or fact and will
affect the subsequent litigant's rights as judicial precedent.").