Parsons Steel, Inc. v. First Alabama Bank

PETITIONER: Parsons Steel, Inc.
RESPONDENT: First Alabama Bank
LOCATION: Hardwick's Apartment

DOCKET NO.: 84-1616
DECIDED BY: Burger Court (1981-1986)
LOWER COURT: United States Court of Appeals for the Eleventh Circuit

CITATION: 474 US 518 (1986)
ARGUED: Dec 03, 1985
DECIDED: Jan 27, 1986

ADVOCATES:
Frank M. Wilson - on behalf of the petitioners
M. Roland Nachman, Jr. - on behalf of the respondents

Facts of the case

Question

Media for Parsons Steel, Inc. v. First Alabama Bank

Audio Transcription for Oral Argument - December 03, 1985 in Parsons Steel, Inc. v. First Alabama Bank

Warren E. Burger:

We will hear arguments next in Parsons Steel against First Alabama Bank and Edward Herbert.

Mr. Wilson, I think you may proceed whenever you are ready.

Frank M. Wilson:

Thank you, Mr. Chief Justice, and may it please the Court, the decisions of the courts below in this case destroy the balance between the coexisting equal independent court systems that form the basis of our federal system.

Petitioners here seek the reversal of an injunction of an ongoing state court proceeding.

The Federal District Court's basis for that injunction was its determination that an earlier federal case barred the state action under principles of collateral estoppel and res judicata.

That issue had already been litigated fully and fairly in the state court at the time of the injunction.

In addition, the injunction is directed toward the litigation, who was never a party to that earlier federal judgment, and whose only opportunity to litigate his issues came in the state court decision.

The case arises out of these circumstances.

In February of 1979, a Montgomery steel company, Parsons Steel Industries, its parent corporation, and the stockholders of that corporation filed a lawsuit against the bank, a loan officer, and a number of other individuals in Montgomery County State Court.

This is what we have come to call the state action in this case.

The issues there raised a number of claims under state law, purely under state law, fraud, conversion, breach of fiduciary duty, and a number of other claims.

Approximately six weeks later, that steel company was adjudicated a bankrupt on the petition of several of its creditors, an involuntary bankrupt.

At that time its parent corporation and the shareholders of that corporation lost all authority to act for the subsidiary which was in bankruptcy.

Some six weeks later, the parent corporation and its shareholders filed a second action in Federal District Court.

Although on very similar factual allegations... the complaints are similar... the legal claim made there was a violation of a narrowly drawn federal statute, the Bank Holding Company Act.

It is undisputed in this case that no damages were sought on behalf of the trustee or the bankrupt corporation in that proceeding.

The cases proceeded parallel through the two court systems.

Byron R. White:

What relief was sought in the federal case?

Frank M. Wilson:

Damages on behalf of the parent corporation only and its stockholders, nothing on behalf of the trustee.

Warren E. Burger:

Now, you said they were similar facts.

Were they essentially the same facts alleged in the federal court proceeding?

Frank M. Wilson:

At the time the complaints were filed, they were, very similar facts.

There were amendments to both complaints during the course of these proceedings where additional allegations were made in both actions and they changed some, but at the time of the filing, there is no question that they were very similar, and there is no dispute about that aspect of it.

The federal court bifurcated the case.

They issued a liability from damages.

There was a jury verdict.

The jury resolved the federal action issues in favor of the plaintiffs there.

The trial judge granted judgment NOV, judgment outstanding the verdict.

He held that there had been no proof which would sustain a jury verdict on any of the elements of that cause of action.

That was hotly disputed, as you might imagine, by the appellant.