Brief Fact Summary.
Watkins appealed a state judgment dismissing their claims after they re-filed their federal court claims in state courts.
Synopsis of Rule of Law.
A dismissal for insufficient service of process or lack of standing does not prevent relitigation.
Only a judgment on the merits will preclude a later action on the same claim.View Full Point of Law
Watkins and her husband sued several casinos in Atlantic City, including Resorts International Hotel and Casino, Inc. (Resorts). All of Watkins’ claims were filed in federal court and dismissed for lack of standing and insufficient service of process. Watkins re-filed their claims in state courts and Resorts sought to dismiss their claims due to res judicata and collateral estoppel. The state court granted the motion to dismiss and the court of appeals affirmed. Watkins appealed.
Whether a dismissal for insufficient service of process or lack of standing prevents relitigation?
No. The lower court judgment is reversed or remanded. Watkins did not receive a judgment on the merits because her claims were dismissed without prejudice for failure of service and lack of standing. Watkins can relitigate her claims in state court without preclusion.
For state courts to maintain a preclusive effect on federal court judgments: (1) the judgment must be valid, final, and on the merits, (2) the parties in the later action must be the same or in privity with the parties in the original action, (3) the claim must grow out of the same transaction or occurrence as the original claim.