Claim Preclusion

Preclusion Defintion

• Requires consideration of at least two suits, one of which has gone to judgment

• Question is whether judgment in first case precludes parties from litigating anything in second

Claim Preclusion/Res Judicata

• once a judgment has been entered with respect to a claim or “cause of action”, any subsequent suit on that same claim will be dismissed

  • Claimant has one chance to vindicate all rights to relief encompassed in single claim; failure to do so means she will lose right to pursue other aspects of relief encompassed in claim

    • Federal courts conclude that if final judgment is appealed, during the interim that judgment still entitled to claim preclusion, state courts disagree

Requirements

1. Valid Final Judgment on the Merits

2. Sufficiently Identical Claims (“cause of action”

3. Sufficiently Identical Parties or in “privity” (mutuality)

Exceptions

(a)     Parties have agreed in terms or in effect that plaintiff may split claim

(b)    Court in first action expressly reserved plaintiff’s right to maintain second action

(c)     Plaintiff unable to rely on certain theory or seek certain remedy in first action due to limitation on subject matter jurisdiction or restrictions on authority to enterain multiple theories

(d)    Judgment in first action was plaint inconsistent with fair implementation of statutory or constitutional scheme

(e)     Plaintiff given option to sue once for total harm or sue from time to time for the damages incurred to the date of suit (substantive law)

(f)       Clearly shown that the policies favoring preclusion of second action are overcome for an extraorditnary reason

Valid final judgment on the merits

1. Valid - court had both personal and subject matter jurisdiction, and the defendant had proper notice and an opportunity to be heard.

2. Final - there is nothing further for the court to do but to order entry of judgment.

3. On the merits - decision must have been made in consideration of the merits of the claim or defense, rather than on technical grounds.

Judgment on the Merits - Examples

• judgment on the merits includes judgment entered after a full trial, summary judgment, judgment as a matter of law, and default judgment (different for issue preclusion) where the court has jurisdiction over the subject matter and personal jurisdiction over the parties.

• A claim or defense does not actually have to have been raised in the earlier action to be barred in the later action. If the claim or defense could have been raised in the earlier action, it will be precluded in the later action.

Excluded judgments

case dismissed due to lack of jurisdiction, improper venue, or for nonjoinder or misjoinder of parties, excluded from claim preclusion effect

Types of voluntary dismissal

1. Voluntary dismissal without prejudice - reserves the right to sue again on the same claim in the same court so long as the statute of limitations has not expired. Unless the notice of dismissal states otherwise, a voluntary dismissal will be “without prejudice.” Rule 41(a)(1)(B).

2. Voluntary dismissal with prejudice - treated as a judgment on the merits and will have a preclusive effect in the court that issued the order of dismissal. A dismissal on the merits under Rule 41(b) will bar a plaintiff from re-filing the claim only in the same federal court, not in state court.

3. Involuntary dismissal - involuntary dismissal on non-jurisdictional grounds will constitute an adjudication on the merits. Rule 41(b). While such an involuntary dismissal will bar re-filing of the claim in the same federal court, it does not preclude re-filing of the claim in state court.

4. Rule 41(b), a dismissal on jurisdictional grounds, or for lack of venue or failure to join a party under Rule 19, is without prejudice, because a court that has no jurisdiction cannot adjudicate a matter on the merits

Diversity Jurisdiction Claim Preclusion

federal court with diversity jurisdiction over an action issues a judgment, a state court must give such judgment the same claim preclusion effect that the judgment would have been given by the courts of the state where the federal court was located

Sufficiently Identical Claims

• original and later-filed claims must be sufficiently identical to be barred under claim preclusion.

• Federal courts apply a transactional approach under which they bar a subsequent claim with respect to all or any part of the transaction, or series of connected transactions, out of which the action arose.

  • If a plaintiff sues on only a portion of a claim arising from a transaction, the unaddressed portions of his claim merge with the judgment if the plaintiff wins, and are barred if the plaintiff loses

Factors on what consitutes a transaction or series of transactions:

i) Whether the facts are related in time, space, origin, or motivation; ii) Whether the facts form a convenient trial unit; and iii) Whether treating the facts as a unit conforms to the parties’ expectations.

Sufficiently identical parties (mutuality)

• claimant and defendant must be the same (and in the same roles) in both the original action and the subsequently filed action. Note that claim preclusion is limited to the parties (or their privies, such as agents, proxies, or successors-in-interest). Thus, a similar action by a different party would not be precluded.

Carter v. Hinkle

Facts: D drove taxi that hit Smith and negligently driven by his agent P. D sued Smith and won for property damage and loss of use. D later filed suit against both Smith and P to recover from same accident but for personal injury. P argued first judment barred second under claim preclusion.
Rule of Law: Virginia follows the minority (English) rule (also called primary rights) that distinguishes between injuries to person and property, allowing separate suits for each. The court prioritized logical consistency and individual rights over procedural efficiency

Majority Rule: Single wrongful act

A single wrongful act gives rise to one cause of action, so a plaintiff cannot split claims for property and personal injury damages.

Restatement Rule: Transactional Test

All claims arising from the same transaction or occurrence constitute one cause of action, regardless of the number of rights violated.

Privity or “nonparty preclusion”

applies only when relationship between a party and a nonparty to Case 1 is such that the nonparty can fairly be bound by the judgment

• Due Process Clause requires that one cannot be bound by a judgment unless she had an opportunity to appear and litigate

• ·Second suit must involve the same parties in the same configuration

six established categories for privity preclusion is allowed:

1.        Agreement to be bound.

2.        Pre-existing substantive legal relationship (e.g., successor in interest, assignor/assignee).

3.        Adequate representation (e.g., class actions, trustees).

4.        Assumed control of the prior litigation.

5.        Proxy or agent relationship.

6.        Special statutory schemes (e.g., bankruptcy, probate).

Taylor v. Sturgell

Facts: Herrick requested docs from D to restore aircraft. D denied, Herrick sued but lost. Later P filed request for same docs. D refused. P sued but D argued barred by claim preclusion because Herrick “virtually represented” P.
Rule of Law: A nonparty cannot be precluded from bringing their own suit merely because they share interests or a relationship with a prior litigant. Claim preclusion applies to nonparties only within the six narrowly defined exceptions recognized by law.

Defense Claim Preclusion

• Claim preclusion compels a claimant to seek all rights to relief arising from a single claim in Case 1

  • Defense preclusion is the defensive analog, compels defendant to raise all defenses in Case 1; failure to do so may waive any defense in Case that was available but not asserted in Case 1

• Defense Preclusion is proper when the claimant in Case 1 and 2 asserts claims against the same defendant but the claims arise from the same real-word event (rare for it to happen)