Commercial Litigation and Arbitration

RICO and Res Judicata

Several years after his business was put into receivership to effect a settlement agreement he had entered into with the FTC (for deceptive trade practices), the plaintiff in Peterson v. Saperstein, 2008 U.S. App. LEXIS 4213 (10th Cir. Feb. 27, 2008) (unpublished), brought a civil RICO action attacking the conduct of the receivership and raising anew issues resolved by the settlement. The Tenth Circuit, in affirming dismissal, addressed application of issue/claim preclusion in RICO actions:

"RICO is many things, but it is not an exception to res judicata." In re Met-L-Wood Corp., 861 F.2d 1012, 1016 (7th Cir. 1988); see also Fox v. Maulding, 112 F.3d 453, 456-60 (10th Cir. 1997) (affirming dismissal of RICO action on basis of res judicata). Accordingly, if a party fails to raise objections or defenses at the proper time in one case, he "cannot be allowed to mount a collateral attack on [an] otherwise valid and final [judgment] and the rights established therein by subsequently raising those defenses in the disguise of civil RICO claims." Henry v. Farmer City State Bank, 808 F.2d 1228, 1237 (7th Cir. 1986); see Fox, 112 F.3d at 457-58 (holding res judicata barred RICO claims that could have been raised in a prior foreclosure action because they "would impair rights that were established in the [prior] action").

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