Clinton

Vernon B. Clinton, founder and fifty-percent shareholder in defendant Acequia, Inc., appeals the district court’s entry of partial summary judgment in favor of defendants (collectively, “Acequia”) on Counts One, Two, Four, Five, and in part on Count Three of his complaint, and the denial of his motion for relief from the judgment. In a consolidated appeal, Acequia challenges the district court’s handling of the subsequent trial on Count Three. We vacate and remand.

Clinton originally filed this suit in state court. 1 In 1991, two years after the suit was commenced, Acequia sought removal to the federal district court. Although the district court did not explain why it permitted removal, 2 we may safely infer that it perceived the state law claims to be precluded by the res judicata implications of prior federal judgments against Clinton. The court’s summary judgment orders indicate that it understood Count Four (the breach of contract claim), and Counts One and Two (the shareholder derivative claims), to be barred by a previous bankruptcy action in which Clinton was divested of control of Acequia. See Acequia I, 787 F.2d at 1355-67. Moreover, in its notice of removal, Acequia…