Brief Fact Summary.
Man that entered into a consent judgement with Defendant years earlier brings suit against Defendant again. Defendant attempts to bar the suit under FRCP 13(a) governing compulsory counterclaims and res judicata
Synopsis of Rule of Law.
A consent judgement has res judicata effect barring relitigation between parties.
The convenience of a party with a compulsory counterclaim is sacrificed in the interest of judicial economy.View Full Point of Law
Plaintiff Martino and Defendant McDonald’s entered into a franchise and lease agreement. The agreement contained a provision that prevented Martino or his immediate family from acquiring a stake in a competing self-service food business without the consent of McDonald’s and Financial Realty Interstate Corporation (FRIC). Year later Martino’s son bought a Burger Chef franchise in Kansas which Martino financed. McDonald’s and FRIC brought suit against Martino and his three brothers in Iowa under diversity jurisdiction, alleging Martino violated the contract. The case resulted in a consent judgement that included both findings of fact and law. Martino sued McDonald’s in this action alleging the provision limiting acquisition of a competing franchise violated the Sherman Act. Martino sued for damages for the amount he would have made as a McDonald’s franchise owner. McDonald’s contends that there are two ways Martino’s suit can be barred: (1) under FRCP 13(a) for compulsory counterclaims and (2) res judicata.
Does a consent judgement have res judicata effect?
Yes, a consent judgement has res judicata effect preventing relitigation between the parties. Therefore the judgement of the district court is affirmed.