Parsons Steel, Inc. v. First Alabama Bank

474 U.S. 518 (1986)

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Nature of the Case

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Facts

Parsons (P) sued First Alabama (D) in state court for fraud. Eventually, Parsons Steel (P) was declared bankrupt, and the trustee in bankruptcy was added to the state court action. In May 1979, P sued D in District Court for the same conduct but based on a violation of the Bank Holding Company Act. The trustee in bankruptcy chose not to participate in the federal action. The federal action got to trial first, and the jury gave the verdict to P, but the District Court granted judgment n.o.v. to D. That was affirmed on appeal. D then pled res judicata and collateral estoppel in the state action. The Alabama court ruled that res judicata did not bar the state action. A UCC claim was eventually added to the state action and the jury awarded P $4.0 million. D then returned to the District Court and filed an injunctive action against P. The District Court determined that res judicata was applicable and enjoined P from further prosecuting the state action. The Court of Appeals affirmed; the fraud and UCC claims could have been and should have been raised in the Federal action. The injunction was deemed proper under the Anti-Injunction Act 28 U.S.C. section 2283. The court refused to consider the preclusive effect of the state court determination that the earlier federal judgment did not bar litigation in state courts. The Supreme Court granted certiorari.