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Preclusive Effects: Claim and Defense Preclusion in Law, Study notes of Civil procedure

Dr. Bhim Rao Ambedkar UniversityCivil procedure

An overview of the preclusive effects, specifically claim and defense preclusion, in law. It discusses the requirements for claim preclusion, including a final and valid judgment on the merits, and the limitations on a defendant's ability to bring certain causes of action due to claim preclusion. The document also covers the concept of transaction or occurrence test and its implications for claim preclusion.

Typology: Study notes

2012/2013

Uploaded on 01/27/2013

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Preclusive Effect (Res Judicata-used for claim or issue preclusion)
Claim Preclusion requires:
• Final judgment:
o Remember different from “claim-splitting”/”prior-action” pending where you don’t
get final judgment in first action and defendant in second case can ask for 1st to be
dismissed without prejudice so second action can be brought with the first
• Valid judgment:
o Usually not available to you because challenge of validity of earlier argument usually
waived. Available to defendant provided he defaulted in earlier action.
 even if earlier judgment lacked SMJ, its validity cannot be challenged if
defendant appeared, because interests in finality of judgments trumps
considerations of SMJ
o Remember: default judgments are on the merits.
 Valid judgment makes you claim-precluded even if you defaulted (but can
challenge on ground that it lacked validity). Only way to get relief from valid
judgment is by going to rendering court and asking that court to set the
judgment aside
• Judgment “on the merits”— meaning it has claim-preclusive effect
o Dismissal for lack of PJ (not on merits, so P can sue again), SMJ, Service, Venue
doesn’t bar the plaintiff from suing again
o UNLESS court specifically says dismissal is not on the merits, then a dismissal for
“failure to state a claim” IS “on the merits” and will bar re-litigation of claim
Defense Preclusion
• There are limitations on a defendant’s ability to bring certain causes of action as result of
claim preclusion. Essentially those limitations amount to causes of action that try to make the
first judgment ineffective, so those actions must be barred.
• Note: Compulsory Counterclaim Rule is not the same as Claim Preclusion as applied to
defendants
o Compulsory CC rule: not all jurisdictions have this
o Claim Preclusion: all jurisdictions have and binds defendants
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Preclusive Effect ( Res Judicata -used for claim or issue preclusion)

Claim Preclusion requires:

  • Final judgment: o Remember different from “claim-splitting”/”prior-action” pending where you don’t get final judgment in first action and defendant in second case can ask for 1st^ to be dismissed without prejudice so second action can be brought with the first
  • Valid judgment: o Usually not available to you because challenge of validity of earlier argument usually waived. Available to defendant provided he defaulted in earlier action.  even if earlier judgment lacked SMJ, its validity cannot be challenged if defendant appeared, because interests in finality of judgments trumps considerations of SMJ o Remember: default judgments are on the merits.  Valid judgment makes you claim-precluded even if you defaulted (but can challenge on ground that it lacked validity). Only way to get relief from valid judgment is by going to rendering court and asking that court to set the judgment aside
  • Judgment “on the merits”— meaning it has claim-preclusive effect o Dismissal for lack of PJ (not on merits, so P can sue again), SMJ, Service, Venue doesn’t bar the plaintiff from suing again o UNLESS court specifically says dismissal is not on the merits, then a dismissal for “failure to state a claim” IS “on the merits” and will bar re-litigation of claim

Defense Preclusion

  • There are limitations on a defendant’s ability to bring certain causes of action as result of claim preclusion. Essentially those limitations amount to causes of action that try to make the first judgment ineffective, so those actions must be barred.
  • Note: Compulsory Counterclaim Rule is not the same as Claim Preclusion as applied to defendants o Compulsory CC rule: not all jurisdictions have this o Claim Preclusion: all jurisdictions have and binds defendants

o Even in jurisdictions without the compulsory counterclaim rule, claim preclusion still prevents a defendant from bringing up certain causes of action as a result of an earlier action.

Examples

  1. P sues D for nuisance in state court. P gets injunction. D then brings suit against P in federal court for an injunction against state court ordering it to not enforce first injunction. Claim precluded? a. D is claim-precluded (not compulsory counterclaim rule) b. D is trying to undo earlier judgment c. Something going wrong in earlier suit is not grounds for second lawsuit. i. If something went wrong with suit in State Court , D can’t challenge that in a new law suit, he must bring it up in the original suit ii. D must go to the rendering court and appeal properly. D will never be able to succeed if he tries to take this action via a second lawsuit.

  2. P sues D and gets judgment for $100,000. Court executes judgment. D sues P to get restitution of amount paid. Claim precluded? a. D is claim-precluded. b. He needs to go to rendering court and appeal – that is where relief is available (if possible at all. c. Cannot try to undo earlier judgment via 2nd^ lawsuit

  3. P sues D for breaching contract requiring D to give P coal every winter. In suit, D challenges validity of the contract. The court determines the contract to be valid. P wins damages from D. Next winter, D breaches again. P once again sues D for breach. Is P claim precluded? a. No, P is not claim precluded. b. He couldn’t have brought this 2nd^ action in the first action—he’s not a “time traveler.” c. If D once again challenges validity of the contract. Anything P can do? i. Yes_._ This is an example of when issue preclusion applies to P ii. If you have different claims there may be overlap of issues between the two suits. iii. So if the issue in earlier suit was litigated and decided, as well as essential to the final judgment, then anyone who is a party(or in privity with a party) in the earlier lawsuit, is bound by that earlier proceeding’s determination.

Scope of a Claim

o No. It only matters which suit came to a judgment first. o Why is it appropriate that earlier action is claim precluded by later action?  Punishment is for duplicative adjudication, no matter in what order the suits are brought  Because it involves same T/O and duplicative litigation; shouldn’t matter the punishing nature of claim preclusion about the timing of the actions.

  • Suit No. 1 not barred on S of L (barred on claim preclusion)? Why not barred on S of L? Conspiracies continue, which is key to this action overcoming statute of limitations. o Why should suit 2 bar suit 1 if suit 1 isn’t barred by S of L? o We’re not saying No. 1 is a bad action or doesn’t have merit. We’re saying that it’s barred because plaintiff engaged in duplicative litigation.
  • What could’ve D done in 2nd^ action before one of the actions came up in judgment? What could have been brought up in No. 2 while No. 1 still proceeding? o Prior-action pending or claim-splitting (two lawsuits at same time). o Why didn’t D bring it up? D was probably thinking once one suit comes to a judgment then P will be claim precluded in the other action o Is that fair for D to do that?  Some say, yes. P is should still be punished for splitting the claim. If there’s claim-splitting and D doesn’t mention it, that doesn’t matter so once one suit comes to a judgment, then claim preclusion shouldn’t be applied.  Majority view: if D doesn’t mention claim-splitting and one suit comes to a judgment, claim preclusion shouldn’t be invoked in the other suit. The idea is that when D says 2nd^ action precluded, court will say that D could have/should have mentioned his problem with duplicative lawsuits before final judgment in one action. D did something wrong (according to modern approach) by acquiescing to duplicative lawsuits. - D is a participant in duplicative litigation (wasted time/effort of 2nd court engaging in proceeding) because he could have stopped it and didn’t. So he should be punished just as much as plaintiff, meaning the second action shouldn’t be allowed to be claim precluded.
  • E.g. Assume Williamson (P) sues Columbia Gas (D) on Clayton Act in PA Federal Court where there is a longer S of L. Should Williamson’s action still be barred/claim precluded? o You would say that action was “on the merits”, which bars action from being brought again anywhere. o BUT, generally if an action is dismissed in one state because S of L is up, P can bring in another state with a longer S of L  Claim preclusive effect is only applicable in the state in which judgment was rendered.
  • Dismissal on S of L grounds o In this case, because the 2nd^ suit was dismissed on S of L grounds, the Court is saying (usual view) we don’t like any cause of action concerning the transaction being brought in DE, so bring it somewhere else. o Oddity that 2nd^ action can be brought in another jurisdiction (federal or state court). In fact, according to Green both 2nd^ and 1st^ actions actually can. Thus, claim preclusion only applies in DE. Preclusive effect limited where action dismissed on Statute of Limitations grounds. S of L (on merits in that JX but not elsewhere— “quasi “on the merits”)
  • P sue D – act dismissed on SOL grounds that doesn’t have claim preclusive effect in other jurisdictions o w/in jurisdiction cannot bring any claims that are related to same T/O of original suit o vs. “on the merits” – going to be barred everywhere o Systemic consequence: Horizontal forum-shopping is especially common with statutes of limitations, due to desire to sue in particular forum based on longer S of L( in both state courts and federal courts).
  • Imagine 2nd^ action was dismissed for failure to state a claim. Both 2nd^ and 1st^ action (and any other action about same transaction/occurrence) would be precluded everywhere. Those are truly on the merits, binding everywhere.
  • Max: Since the 2nd^ action was dismissed on claim preclusion grounds, not on S of L grounds, is that judgment one with complete claim preclusive effect, because the dismissal was fully on the merits? Prof: You may be right…
  • Why is this the same claim? Why are both actions the same claim? o The transactional test. Federal approach is similar to Rest. (2d) of Judgments §24: o Use a “transaction” test and what groupings constitute a “series,” are to be determined pragmatically, giving weight to such considerations as whether the facts are related in time, space, origin, or motivation, whether they form a convenient trial unit, and whether their treatment as a unit conforms to the parties’ expectations or business understanding or usage. o Were these two suits considered a part of same transaction?  Same action is the buying of co. and running it into ground (same time, place, motivation)  BUT may require different evidence: but that isn’t sufficient for arguing that they’re different causes of actions for claim preclusion purposes.

Examples

d. What about “new” smells that come into the apartment after filing of first – is P still claim precluded to sue about them? i. No. P can sue about wrongs done after filing of first suit – that is a different claim ii. Does that mean P can sue over and over again about new smells? iii. Theoretically yes, but if P loses on the ground that the smells are not a nuisance, D can invoke issue preclusion and P win in subsequent suits. (might try to wiggle out of issue preclusion by saying that these are “different types of smells.”)

Claim Preclusion v. Issue Preclusion

  • Claim preclusion for P: causes of action P should’ve brought BUT didn’t do.
  • Issue preclusion: only applicable if the issue was actually litigated and decided. If so parties and there privies in earlier suit are bound. Not saying you should have brought up issue but rather that you ALREADY did and it was decided.

Sutcliffe Storage & Warehouse Co. v. United States (1st^ Cir. 1947)

  • P leased space to the Navy on a recurring lease. P suing because D did not pay rent over the course of several years, alleging that Navy used space not in the lease and owes rent for the use.
  • P split the claims into 4 different actions from the lease for different years. Each time the contract was renewed, P wanted it to be a separate claim. o U.S. brings up claim splitting/prior action pending rather than rely on one suit to come to a judgment and invoke claim preclusion (United States is being “nice guy”)
  • Why are these actions the same transaction?

o P suing based on separate leases  is P really suing about breach of lease? He really wants more money for stuff outside the lease  wrongful taking of property o but even if they WERE suits under lease, they were all renewals of original lease. o Characterize as a “running account” (tied to business practices) o Big rule: if there is a running account or renewed contract, P must bring the entire amount due at the time of the suit or lose the rest

  • Note: SMJ in federal court is not diversity or federal question; it’s based on concept of suit brought against United States. o cause of action likely one of state law.
  • Say that we have running account and D wants to pay storekeeper in promissory notes. Do you think storekeeper must sue on promissory notes all at same time?

o No. Idea of promissory note is that it is individuated. Parties expect each note would be sued upon individually. Why give separate notes if you don’t think they can be sued upon separately.

Commercial Box & Lumber Co. v. Uniroyal Inc. (5th^ Cir. 1980)

  • D had a contract to buy boxes from P. D changed the location of delivery which caused a lot

of extra expense and difficulty on the part of P, because security at the second location was much tighter.

  • Then brought suit alleging that defendant did not pay enough money court held claim preclusion did not apply o This sounds like the same transaction - Appears case is wrongly decided. EXTRA ELEMENT HERE.

Example

P sues D for breach of contract, alleging car P bought didn’t meet specifications. After judgment

for D, P sues D, for breach of contract, alleging late delivery of car as the breach. Claim

preclusion?

o Suit 1: D did not give P the type of car P wanted o Suit 2: D delivered car late so he breached the contract o Yes, claim preclusion does apply. Wrong-doings are different but they affect the same car o Think broadly. It’s about performance under transaction and complaints about that transaction, so both must be brought together unless delivery happened after the 1st lawsuit was filed.