I. The Binding Effect of Prior Decisions: Res Judicata & Collateral Estoppel
a. Terminology:
i. FOUR COMMON SENSE PRINCIPLES:
1. A party ordinarily gets only one chance to litigate a “claim”; if a party litigates only a portion of a claim the first time around, she risks losing the chance to litigate the rest.
2. A party ordinarily gets only one chance to litigate a factual or a legal “issue”; once litigated, she cannot ask a second court to decide it differently later.
3. A party is entitle to at least one “full and fair” chance to litigate before being precluded.
4. Preclusion may be waived unless it is claimed at an early stage of the litigation.
ii. TWO EFFECTS:
1. MERGER & BAR: The effect of foreclosing litigation of matters that never have been litigated, because of the determination that they should have been advanced in an earlier suit.
2. COLLATERAL ESTOPPEL: The effect of foreclosing relitigation of matters that have once been litigated and decided.
iii. TWO FORMS:
1. Res Judicata (Claim Preclusion): a valid and final adjudication of a claim precludes a second action on that claim or any part of it.
2. Collateral Estoppel (Issue Preclusion): an issue of fact or law, actually litigated and resolved by a valid final judgment binds the parties in a subsequent action, whether on the same or a different claim.
b. Claim & Defense Preclusion:
i. Claim Preclusion:
1. AFFIRMATIVE DEFENSE. BELONGS TO THE DEFENDING PARTY. MUST BE RAISED EARLY IN THE CASE OR IT IS WAIVABLE.
2. When a second suit is brought, the judgment in a prior suit will be considered conclusive, both on the parties to the judgment AND ON THOSE IN PRIVITY WITH THEM, as to matters that ACTUALLY WERE LITIGATED OR SHOULD HAVE BEEN LITIGATED IN THE FIRST SUIT. (Privity: the connection or relationship between two parties, each having a legally recognized interest in the same subject matter (such as transaction proceeding or piece of property); mutuality of interest.)) A JUDGEMENT IF RENDERED ON THE MERITS CONSTITUTES AN ABSOLUTE BAR TO A SUBSEQUENT ACTION.
3. EG—a judgment rendered on a promissory note is CONCLUSIVE as to the validity of the instrument and the amount due on it, EVEN IF IT IS SUBSEQUENTLY ALLEGED that perfect DEFENCES ACTUALLY EXISTED, OF WHICH NO PROOF WAS OFFERED. The judgment is as conclusive, so far as future proceeding at law are concerned, as though the defenses never existed.
4. THE PRECLUSIVE SCOPE OF A JUDGMENT DEPENDS ON FIRST DEFINING THE BREADTH OF THE CLAIM OR CAUSE OF ACTION HAZARDED IN THE FIRST SUIT. IF THE SECOND LAWSUIT INVOLVES A NEW CLAIM OR CAUSE OF ACTION, THE PARTIES MAY RAISE ASSERTIONS OR DEFENSES THAT WERE OMITTED FROM THE FIRST LAWSUIT EVEN THOUGH THEY WERE EQUALLY RELEVANT TO THE FIRST CAUSE OF ACTION.
5. MERGER: if the plaintiff wins, the entire CLAIM IS MERGED IN THE JUDGMENT; the plaintiff CANNOT bring a second independent action for additional relief and the defendant cannot avoid the judgment by offering new defenses.
6. BAR: if the plaintiff loses, the ENTIRE CLAIM IS BARRED by the judgment, even as to evidence, theories, arguments, and remedies that were NOT ADVANCED in the first litigation.
7. CLAIM PRECLUSION REQUIREMENTS:
a. JUDGMENT IN FIRST SUIT MUST BE FINAL, VALID, AND ON THE MERITS
b. THE PARTIES IN THE SUBSEQUENT ACTION MUST BE IDENTICAL TO THOSE IN THE FIRST ACTION* (important distinction between claim and issue preclusion).
c. THE CLAIM IN THE SECOND SUIT MUST INVOLVE MATTERS PROPERLY CONSIDERED INCLUDED IN THE FIRST ACTION. (this requirement turns on what the first action decided or should have decided).
8. POLICY GOALS: relieve parties of the cost and vexation of multiple suits, conserve judicial resources, and by preventing inconsistent decisions, encourage reliance on adjudication.
9. TRANSACTION TEST (commonly used test for determining the preclusive effect of a prior judgment):
a. The preclusive effect of a prior judgment extends to all rights the original plaintiff had WITH RESPECT TO ALL OR ANY PART OF THE TRANSACTION, OR SERIES OF CONNECTED TRANSACTIONS OUT OF WHICH THE ORIGINAL ACTION AROSE.
b. CONSIDERATIONS: what factual group constitutes a transaction:
i. whether the facts are related in time, space, origin, or motivation
ii. whether they form a convenient trial unit
iii. whether their treatment as a unit conforms to the parties’ expectations or business understanding or usage
iv. *KEY ISSUE*–THE CRITICAL ISSUE IS WHETHER THE TWO ACTIONS UNDER CONSIDERATION ARE BASED ON THE SAME NUCLEUS OF OPERATIVE FACTS.
c. A claim is seen in FACTUAL TERMS and is coterminous with the transaction REGARDLESS of the number of substantive theories, or variant forms of relief flowing from those theories; regardless of the number of primary rights that may have been invaded; and regardless of the variations in the evidence needed to support the theories or rights. THE TRANSACTION IS THE BASIS OF THE LITIGATIVE UNIT OR ENTITY, WHICH MAY NOT BE SPLIT. CLAIM =TRANSACTION
d. Problem with Transaction Test: a court may interpret the claim presented in the first lawsuit more broadly than a litigant does, the litigant my unknowingly forfeit parts of his action by failing to raise them.
e. CONTINUING OR RENEWED CONDUCT: if the conduct that is the subject of the first action continues AFTER JUDGMENT in the first action, claim preclusion would NOT PREVENT A SECOND SUIT. (Issue Preclusion MAY APPLY, however, to matters of STATUS OR TO ISSUES OF FACT RESOLVED IN THE FIRST
n clause if payments were missed. The guy missed two payments. The company sued and received a default judgment. The guy satisfied the judgment. He then missed two more payments. The company sued again, the guy defended on grounds of res judicata. The company took a non-suit. (non-suit: a plaintiff’s voluntary dismissal of a case or a defendant without a decision on the merits. 2) compulsory non-suit: a court’s dismissal of a case or defense because the P has failed to make out a legal case or to bring forward sufficient evidence.) The company then repossessed the car. The guy sued for conversion. (Conversion: the act of changing from one form to another’ the process of being exchanged. 2) the wrongful possession or disposition of another’s property as if it were its own; an act or series of actions of willful interference without lawful justification, with an item of property in a manner inconsistent with anothers right whereby the other person is deprived of the use and possession of the property.)
a. The court found that the note and the conditional sales contract were not severable. Therefore every right of the bank/company was bound up in the first suit. When the bank sued for the first two nonpayments they lost their right to sue again. The note was satisfied when Jones paid the two months. Therefore title had passed to Jones when the company took the car back and sold it. Damages were awarded to Jones.
b. How the bank could have avoided this issue: 1) sued for the entire amount due under the acceleration clause or 2) made the acceleration at their option—then each payment would have been a continuing obligation and each payment would have been a separate cause of action. (Similar to Aiglon Associates Ltd—where the lease had acceleration at the landlords option the landlord was not barred from multiple suits for back rent).
16. Nesbit v. Riverside Independent District (1892): when a debt is secured by a series of notes or when a bond includes a number of interest coupons, an action on one of the notes or coupons, even though others are due, does not bar a subsequent action on those others.
a. Each matured coupon is a separable promise—gives rise to a separate cause of action. It may be detached from the bond and sold by itself.
Defense Preclusion: where in a second action by the original plaintiff, in which the defendant seeks to raise defenses that were equally available in the first action but were not advanced there—1) the claim involves matters that were not advanced in the first action, 2) the claim involves matters that
