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Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc. - 814 F.2d 844 (1st Cir. 1987)

Rule:

The doctrine of res judicata generally binds parties from litigating or relitigating any issue that was or could have been litigated in a prior adjudication and prevents claim splitting. 

Facts:

Mitsubishi Motors Corporation (Mitsubishi) filed a motion to withdraw reference of Soler Chrysler-Plymouth, Inc.’s (Soler) Chapter 11 bankruptcy proceedings from the bankruptcy court. The district court granted the motion and issued an order that removed the case from the bankruptcy court's jurisdiction, vacated the stay and directed the parties to proceed to arbitration on Soler's antitrust claims against Mitsubishi in Japan. Soler’s motion for reconsideration was denied.

Soler now seeks review of an order issued by the district court vacating the automatic stay, 11 U.S.C. § 362, and directing Soler and Mitsubishi to proceed to arbitration in Japan. Soler contends that, because it is unable to afford the cost of arbitration in Japan, the district court's order amounts to an abuse of discretion.

Issue:

Did the district court abuse its discretion by summarily granting relief to Mitsubishi from the bankruptcy stay and directing that the arbitration proceed?

Answer:

No

Conclusion:

The court affirmed the order and held that the district court did not abuse its discretion by summarily granting relief from the bankruptcy stay and directing that the arbitration proceed. Because Soler could have raised the issue of its financial incapacity at two prior adjudications concerning arbitration, the court held that Soler was barred by the doctrine of res judicata from raising the issue now as a basis for opposing Mitsubishi's attempt to lift the automatic stay. Further, the court held that given the circumstances of the case, the district judge's action in lifting the automatic stay without a hearing was justified.

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