United States District Court, D. South Dakota, Southern Division
ORDER DENYING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT AND DENYING DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT
KAREN E. SCHREIER UNITED STATES DISTRICT JUDGE
Plaintiff, National Music Museum (NMM): America’s Shrine to Music, brings a declaratory judgment action against defendants, Robert Johnson and Larry Moss. NMM seeks a declaration that it is the valid, legal owner of a Martin D-35 guitar that was once owned by Elvis Presley. Both NMM and Moss move for summary judgment. The court denies both motions.
The undisputed facts are as follows:
This litigation revolves around a Martin D-35 guitar that was formerly owned by Elvis Presley. In February 1977, Presley dropped and broke the guitar during a concert in St. Petersburg, Florida. Presley gave the guitar to a female fan at the show. The guitar eventually made its way into the hands of Johnson, a collector of musical instruments and memorabilia. Both NMM and Moss claim ownership of the guitar based on their respective agreements with Johnson.
In 2007, Moss and Johnson started negotiating about the purchase of the Elvis guitar. In February 2008, the parties reached an agreement. Moss would pay Johnson $120, 000 for four guitars, one being the Elvis guitar. The parties agreed to two separate exchanges. Moss would take immediate possession of two guitars and pay Johnson $70, 000. And by April 12, 2009, Johnson would later deliver to Moss the Elvis guitar and the remaining guitar. Upon delivery Moss would pay Johnson the remaining $50, 000.
At the time of contracting, the Elvis guitar was on display at the Rock ‘n’ Soul Museum in Memphis. During discovery, Moss testified that he agreed to the continued display through January 2009 of the Elvis Guitar at the Rock ‘n’ Soul Museum. On November 21, 2008, however, Johnson removed the guitar from the Rock ‘n’ Soul Museum. Johnson listed the guitar on Alexander’s, an auction website, in the summer of 2009. Moss testified in his deposition that he saw the guitar on Alexander’s, but Moss did not take any legal action against Johnson at that time. Docket 41 at 5.
In 2012, Johnson contacted NMM about the sale and donation of a number of musical instruments, including the Elvis guitar. NMM and Johnson came to an agreement. NMM would pay Johnson $250, 000 for a John Entwistle Gibson Korina Explorer, and Johnson would donate to NMM various instruments, including the Elvis guitar. The deal was conditioned on NMM’s authentication of all of the instruments. During discovery NMM employees testified that they confirmed the authenticity of the instruments by contacting various professionals in the field and comparing the instruments to photographs of the original. After NMM authenticated the instruments, NMM entered into a one page written agreement with Johnson. Johnson delivered the Elvis guitar to NMM on February 4, 2013. Later, on December 10, 2013, Moss contacted NMM regarding his claim over the Elvis guitar.
On July 7, 2014, NMM filed its complaint in state court seeking a declaratory judgment that NMM is the legal owner of the Elvis guitar. On July 22, 2014, Moss removed the action to this court on diversity grounds. Both parties now move for summary judgment.
I. Full Faith and Credit, Res Judicata, and Collateral Estoppel
Before discussing the parties’ motions for summary judgment, the court must address a threshold issue. Moss argues this court is bound by a judgment of the Chancery Court of Tennessee for the Thirtieth Judicial District of Memphis, which found that “Moss holds legal and equitable title to the [Elvis] guitar . . . [on] the date of contracting, February 12, 2008.” Docket 29-5. Moss bases his argument on the doctrines of full faith and credit, claim preclusion, and issue preclusion. Docket 41 at 12-14. For the following reasons, the court disagrees.
The Full Faith and Credit Clause of the United States Constitution compels federal courts to recognize valid state court judgments. See Baker by Thomas v. General Motors Corp., 522 U.S. 222, 233 (1998). The text of the clause reads, “Full Faith and Credit shall be given in each State to the public Acts, Records, and judicial Proceedings of every other State.” U.S. Const. art. IV, § 1. This means that a valid state court judgment receives the same recognition in federal court as the judgment would receive in the issuing state. 28 U.S.C. § 1738. Thus, the court must determine what effect the Tennessee judgment would have in Tennessee, and the court must consider Tennessee’s law on res judicata and collateral estoppel.
A. Res judicata
Tennessee’s law on res judicata bars parties and their privies from litigating “the same cause of action with respect to all issues which were or could have been litigated in the former suit.” Hooker v. Haslam, 393 S.W.3d 156, 165 n.6 (Tenn. 2012) (emphasis removed from original). To determine whether a suit stems from the “same cause of action, ” Tennessee applies the “transactional test” from the Restatement (Second) of Judgments. Id. at 166 n.6. Although the transactional test “is not capable of a mathematically precise definition, ” “the expression connotes a natural grouping or common nucleus of operative facts.” Restatement (Second) of Judgments § 24 cmt. b. (1982). The transactional test balances “the interests of the defendant and of the courts in bringing litigation to a close” against “the interest of the plaintiff in the vindication of a just claim.” Id.
Under the transactional test, NMM’s suit would not be barred by the doctrine of res judicata. NMM and Moss claim title to the Elvis guitar based on two different factual circumstances. NMM derives its claim to the Elvis guitar from the February 6, 2013 Sales-Donation Agreement it signed with Johnson. The prior Tennessee litigation concerned the February 12, 2008 sales agreement between Johnson and Moss. There is no ...