Louisiana Supreme Court Writ - Res Judicata

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In line With the Federal Definition, But our Supreme Court Refused the Writ

This is a writ application to the Louisiana Supreme Court on res judicata. The Court did not hear the challenge, eben though the argument would have prevailed in the federal court. I would guess that this kind of issue preclusion will eventually be recognized in our state, but not on this day or with this filing.

MEMORANDUM IN SUPPORT OF WRIT APPLICATION 

STATEMENT OF THE CASE 

In the early morning hours of February 5, 2006, Mr. X and Mr. Y, were on their way to go fishing in Theriot, LA. X was driving his SUV that morning with his boat attached to the trailer; and his dad, Y X, was riding in the front passenger seat. X’s friend, Z, was in the back passenger seat.

The three men left X’s house at around 4:20 AM and were traveling south on Louisiana Hwy 1, just south of Napoleonville, when X saw an 18 wheeler truck pull into his lane, virtually right in front of him, to such a degree that he had to drive off the road in order to avoid a head-on collision and likely save the lives of himself and the passengers in his SUV. This evasive action caused X to lose control of the truck and boat and he ended up flipping over and coming to rest in a road-side ditch.

Two separate suits were filed; one on behalf of Z, et. ux., and the other on behalf of X and Y, et. al. After a request by the Defendants, these separate suits were consolidated by the 23rd Judicial District Court, on March 1, 2007. However, as the trial approached, it was clear that X’s injuries would not be resolved to the degree that he could present a case on damages. The 23rd Judicial District Court then ordered the Z case severed for trial.

The Z case went to trial against the Defendants on April 23, 2008, in the 23rd Judicial District Court, Division ‘B’ – the same court in which the current trial is pending. In the Z trial, X was a named in the pleadings by the Defendants in relation to liability and he testified at trial. The Defendants had every incentive to fully and vigorously argue to the jury for an assignment of liability to X, as any liability on his part would have concurrently reduced their own liability. And finally, X was both on the jury form under possible liable parties and also named in the judgment –where he was found by the jury to have no fault in the crash.

On Oct 4, 2008, the Applicants filed an Exception of Res Judicata in the 23rd Judicial District Court, asserting that the finding of liability in the first suit was precluded from relitigation, as it had been resolved, adversely to the Defendants, in a prior full and fair proceeding.  Applicants also asserted therein, understanding the requirement of ‘identity of parties’ in the Louisiana jurisprudence, that they were essentially the same parties as in the previous suit, have the close legal relationship as stated above, and assert a claim arising from the same transaction or occurrence and exactly the same set of facts and against the exact same Defendants.

The Trial Court granted the Exception of Res Judicata on Oct 11, 2008, and the Defendants filed for a Supervisory Writ in the First Circuit Court of Appeal. On Nov 18, 2008, a divided First Circuit Court of Appeal reversed the trial court ruling on the application of res judicata.

The present writ application is a request to reverse the decision of the First Circuit Court of Appeal and reinstate the trial court ruling on the exception of res judicata.

ASSIGNMENT OF ERRORS

ERROR #1: The First Circuit Court of Appeal erred when it held that X, et. al., did not meet the ‘identity of parties’ requirement under the Louisiana res judicata laws. 

ERROR #2: The First Circuit Court of Appeal erred in using Certified Finance Inc. v. Cunard 838 So.2d 1 (La. App 1 Cir. 2002), to support the reversal of the trial court ruling.

SUMMARY OF THE ARGUMENT

The application of offensive issue preclusion is new to the Louisiana law. The classic application of res judicata in our jurisprudence is an assertion by a defendant, against a plaintiff, to preclude a suit on a claim or issue previously adjudicated. In the case at bar, the Plaintiffs are asserting res judicata against the Defendants, to preclude the Defendants from relitigating an issue previously adjudicated. The offensive assertion of res judicata arises when, as in the present case, there has been a full and fair adjudication of an issue arising from the same transaction or occurrence. 

Despite the substantial changes in the law in 1990, when the Louisiana legislature adopted the classically common law legal concept of issue preclusion and the general movement towards interpreting the res judicata law of Louisiana in a similar manner to federal interpretation, there remains an ‘identity of parties’ requirement in the Louisiana jurisprudence. See generally Burguieres v. Pollingue, 843 So.2d 1049 (La. 2003).

X was a party to the original suit, even if not physically present at the plaintiff’s table, in that he was named in the pleadings by the Defendants as a liable party, he was subject to an assignment of liability by the jury, and he was named in the final judgment; X also appears in the present suit in the exact same quality as the previous plaintiffs, asserting the exact same theory of liability, arising out of the exact same transaction or occurrence; and against the exact same Defendants who were obligated to present, and did in fact present, a full defense to their liability in the Z suit.

The case sighted by the First Circuit Court of Appeal, Certified Finance Inc. v. Cunard, 838 So.2d 1 (La. App 1 Cir. 2002), despite having a clear analysis of the current ‘identity of parties’ doctrine in the Louisiana jurisprudence is ultimately inapplicable to the X trial. First, the two proceedings in the Certified case, though arising from the same transaction or occurrence, were based on two entirely different theories of recovery. And second, the application of res judicata from Certified involved an assertion of defensive claim preclusion, whereas the Applicants’ assertion of res judicata is based on offensive issue preclusion. A significant difference in procedure, specifically related to whether a party had a full and fair opportunity to present its case and against whom the preclusive effect of the law applies.  As fully developed in the federal law, it is clear that offensive issue preclusion should require a completely different procedural safeguard than defensive claim preclusion.

Lastly, the possibility of different verdicts on liability in the Z and X cases, based on identical facts, with the exact same defendants, would be a gross injustice to the plaintiffs. The issue herein is whether it is in the interest of judicial fairness to relitigate an issue, adjudicated in a full and fair trial, possibly ending up with inconsistent verdicts arising from exact same set of operative facts and exact same defendants. Reversing the ruling by the First Circuit Court of Appeal and allowing the res judicata ruling to stand in the trial court also supports the kind of respect necessary for reliance on judicial decisions and supports the proper use of judicial resources, avoiding needless relitigation of an issue determined by a previous judgment arising from the same transaction or occurrence.

ARGUMENT

ERROR #1: The First Circuit Court of Appeal erred when it held that X, et. al., did not meet the ‘identity of parties’ requirement under the Louisiana res judicata laws. 

Recent changes to the res judicata law in Louisiana

The exception of res judicata, granted in the trial Court and reversed by the First Circuit Court of Appeal, should be more properly called offensive issue preclusion, under LSA-R.S. 13:4231(3)(1990): 

Except as otherwise provided by law, a valid and final judgment is conclusive between the same parties, except on appeal or other direct review, to the following extent:… (3) A judgment in favor of either the plaintiff or the defendant is conclusive, in any subsequent action between them, with respect to any issue actually litigated and determined if its determination was essential to that judgment.

 The above section of this statute was added in 1990, and codifies for the first time in the Louisiana law the common law concept of collateral estoppel or issue preclusion. The stated purpose for the addition was to “serve the interests of judicial economy by preventing re-litigation of the same issue between the same parties.” LSA-R.S. 13:4231, cmt. (b)(1990).

Issue preclusion is historically a common law device. In 1990, the Louisiana legislature added section (3) to the res judicata statute. The stated purpose of the res judicata law is, “to promote judicial efficiency and final resolution of disputes by preventing needless relitigation (citations omitted).” Terrebonne Fuel & Lube, Inc. v. Placid Refining Company, 666 So.2d 624, 631(La. 1996).

With limited treatment of the issue preclusion section of the res judicata law, this Court has defined the chief inquiry for application as,

…whether the second action asserts a cause of action which arises out of the same transaction or occurrence that was the subject matter of the first action. 

Burguieres v. Pollingue, 843 So. 2d 1049, 1053 (La. 2003). In that same decision, this Court set out the criteria under which an assertion of res judicata may be successful,

…when all of the following are satisfied: (1) the judgment is valid; (2) the judgment is final; (3) the parties are the same; (4) the cause or causes of action asserted in the second suit existed at the time of final judgment in the first litigation; and (5) the cause or causes of action asserted in the second suit arose out of the transaction or occurrence that was the subject matter of the first litigation. 

Id at 1053. The judgment upon which Applicants were granted res judicata, as a factual matter, clearly meets four of the conditions defined in Burguieres. The only question arises from the third requirement - whether the ‘parties are the same’ under the res judicata law. 

X was a party to the Z trial as defined under the ‘Identity of Parties’ doctrine

Applicants assert that, consistent with the requirement of ‘identity of parties’ in the Louisiana jurisprudence, they were essentially parties to the original suit.[1] Plaintiffs are standing in the identical legal position as the Zs, asserting claims against the same defendants arising from the same transaction or occurrence and the same set of operative facts. Additionally, having been named in the pleadings by the Defendants as a liable party, having originally been joined as actual parties to the suit, having testified at trial, having been subject to an assignment of liability by the jury, and having been named in the final judgment; X believes he meets the conditions of ‘identity of parties’ as contemplated in the Louisiana jurisprudence.

Identity of parties exists whenever the same parties, their successors, or others appear, so long as they share the same “quality” as parties (emphasis added). 

Welch v. Crown Zellerbach Corp., 359 So.2d 154 (La.1978).

In each of the many Courts of Appeal decisions, the Courts cite as instructive to their interpretation of the Louisiana law, when under federal law,

…the preclusive effect of a judgment binds the parties to the action and nonparties who are deemed the “privies” of the parties in these limited circumstances… (3) the nonparty’s interests were adequately represented by a party to the action, who may be considered the ‘virtual representative’ of the nonparty, because the interests of the party and the nonparty are so closely aligned.

 

Terrebonne at 631;  Mandalay Oil & Gas, L.L.C. v. Energy Development Corp, 880 So.2d 129 (La. App. 1st Cir. 2004); Thomas v. Janzen, 800 So.2d 81 (La. App 2 Cir. 2001). There is no question that the Z interests and the X interests are exactly the same, in terms of liability. And the facts that each has to prove under liability are also exactly the same. It is also without challenge that the Defendants had to prove the exact same facts, in relation to liability, as to X in the Z case as they will against X in the case at bar. For these reasons, the Applicants assert that the issue of liability has been fully litigated and should have a preclusive effect against the Defendants.  

ERROR #2: The First Circuit Court of Appeal erred in using Certified Finance Inc. v. Cunard 838 So.2d 1 (La. App 1 Cir. 2002), to support the reversal of the trial court ruling.

 Certified Finance Inc. v. Cunard

This case centers on an assertion of defensive claim preclusion – where the defendant is asserting res judicata, through a motion for summary judgment, against the plaintiff in an attempt to preclude litigation of the entire suit by the plaintiff. The Court of Appeal reversed the trial court’s ruling on res judicata on appeal because the claim being made in the subsequent suit was completely different than in the first suit and the defendant asserting res judicata was not a party to the original suit in any manner.

The X case centers on an assertion of offensive issue preclusion – where the plaintiffs are asserting res judicata, as to the issue of liability only, against the Defendants who have fully litigated the exact same issue in a previous trial, where the exact same claims of liability are being made by the plaintiffs and exact same defenses to liability are being asserted by the Defendants. In this case, X was a party to the first suit insomuch as he was named in the pleadings by the Defendants as a liable party, he was originally an actual party to the suit, he testified at trial, he was subject to an assignment of liability by the jury, and he was named in the final judgment.

Certified is a case involving collection on a promissory note. Three partners of a law firm entered into a note with Certified Finance Inc. to borrow money – only two of the partners actually signed the note with Certified. The two partners who signed the note settled the claim, and the third, Ms. Cunard, was sued by Certified to collect the balance. Certified sued Ms. Cunard on the theory of unjust enrichment, as opposed to the settled claims which arose out of  contract law, because she had not signed the note with the other two partners. Ms. Cunard attempted to assert res judicata, defensive claim preclusion, and failed.

The First Circuit Court of Appeal holds in Certified that,

…[the original defendants] were not Cunard's virtual representatives. While their interests were aligned from the standpoint that all three now seek to prevent being cast in judgment to Certified, [the original defendants] had no reason to take steps in the Orleans Parish suit to defend an unjust enrichment claim against Cunard. 

Cunard was not named in the prior suit, nor was an unjust enrichment claim raised in that suit. She was not sued as a co-maker of the note.  

Id. at 8. The denial of her assertion of res judicata rests not only on Ms. Cunard’s absence in the first trial, but on Ms. Cunard having to defend a completely different claim in the subsequent trial. In fact, the Court goes on to say,

Had she been sued as a co-maker in the original suit, and had the unjust enrichment claim not been raised, the result today would likely be different.

 Id.

In the case at bar, X Poirier was ‘present’ in the first suit, as examined above, and the claims asserted in the Z trial and in the X trial are exactly the same in relation to liability.

The procedural differences notwithstanding, in making a direct comparison between the Certified case and X case, in relation to the ‘identity of parties’ analysis, an additional problem comes to light. The procedural rights afforded parties under the res judicata law should not be identical in defensive and offensive assertions of res judicata.

An assertion of Offensive Issue Preclusion

In Certified, the assertion of claim preclusion is against the plaintiff, and as such, should include a different set of protections and procedures than an assertion against a defendant.  An assertion against a defendant is by definition an offensive assertion of issue preclusion, and substantively different than an assertion against a plaintiff.

The application of res judicata in most of the Louisiana cases is historically defensive, and the ‘test’ as to ‘identity of parties’ is almost always focused on the party being prejudiced by the assertion of res judicata.[2] In the federal jurisprudence, as an advisory example only, the Courts find that requiring a strict ‘mutuality of parties’ when the party against whom the preclusive effect is being asserted was in fact fully present and represented at the previous suit, is untenable. Parklane Hosery Co., Inc. v. Shore, 439 U.S. 322, 326-328 (1979). In the seminal case on offensive issue preclusion in the federal court, Parklane, the Supreme Court addresses the doctrine of ‘mutuality of parties’, where the courts applied the requirement of the identity of parties strictly, and treated different assertions of issue preclusion, offensive or defensive, as the same. The court says definitively,

By failing to recognize the obvious difference in position between a party who has never litigated an issue and one who has fully litigated and lost, the mutuality requirement was criticized almost from its inception (emphasis added). 

Id at 327.

It is central to the reasoning in the federal jurisprudence that an offensive assertion of issue preclusion is different precisely because it is asserted against a party that had a full and fair opportunity to litigate the issue and affording them another ‘bite at the apple’ is patently unfair.

With these succinct statements, it is clear that affirming the Trial Court’s application of offensive issue preclusion in the X case is the fair and just outcome, for two reasons;

First, that applying the jurisprudence of defensive issue preclusion, as in Certified, to an instance of offensive issue preclusion is inherently unfair. Given the Louisiana jurisprudence in relation to res judicata is almost exclusively related to defensive assertions, it is not reasonable to think that this same manner of applying the law will be simply applicable to offensive assertions. This kind of application of the law is subject to the same criticism in the quote from Parklane above.

Again, looking at the well-developed federal jurisprudence in the res judicata framework, when a party asserts res judicata, the test for ‘identity of parties’ is properly focused on the party suffering the preclusive effect of the law. It is after all the party being prejudiced by the law that should be strictly protected by its procedure, as the Supreme Court states,

the requirement of determining whether the party against whom an estoppel is asserted had a full and fair opportunity to litigate is a most significant safeguard(emphasis added). 

Id at 650. Citing Kerotest Mfg. Co. v. C-O-Two Co., 342 U.S. 180 (1952). This protective test is applied consistent with the purpose of the res judicata law – to avoid denying someone their rightful ‘day in court’. In an assertion of defensive claim or issue preclusion the strict application of this test, as to the party against whom the res judicata is being asserted, is warranted. However, in an assertion of offensive issue preclusion, the strict application of the test, to all parties, seems out of place.

The Defense in this case had their day in court. The Court of Appeal held that the exception of res judicata was improperly granted because Applicants did not meet the ‘identity of parties’ requirement; but there is no prejudice to the Defendants in the assertion of res judicata from which they can object to its application. The strict application of ‘identity of parties’ does not work in offensive assertions of res judicata precisely because the party being affected by the application of the law is not suffering any prejudice to their right to a full and fair trial – having already had that opportunity.

And second, the real possibility of inconsistent decisions arising from the exact same cause of action is abhorrent to our legal system. This is the very purpose of the res judicata statutes, which was made stronger by the amendments to the res judicata law in 1990. As stated so eloquently by our former Chief Justice, John A. Dixon, Jr., and quoted in Terrebonne Fuel & Lube, Inc,

It is implicit in the concept of a judicial system that controversies be finally resolved…. Precluding relitigation prevents inefficient use of the courts’ resources, reduces the possibility of harassment through vexatious suits, and helps maintain respect for the judicial proceeds by guarding against inconsistent decisions. (citation omitted). 

Id at 631. It would be a gross injustice to the Xs and to our legal system on the whole to end up with a completely different liability determination arising out of the exact same transaction or occurrence. The Defendants should not have an opportunity to ‘replay’ the trial in a second attempt to avoid liability – the First Circuit Court of Appeals ruling should be reversed and the Trial Courts’ ruling on the exception of res judicata should be reinstated to avoid the potential of inconsistent decisions, to comport with judicial efficiency and to avoid needless relitigation. 

CONCLUSION

The paramount issue here is whether it is in the interest of judicial fairness to relitigate an issue, adjudicated in a full and fair trial, possibly ending up with inconsistent verdicts arising from the exact same set of operative facts and exact same defendants. Reversing the ruling by the First Circuit Court of Appeal and allowing the res judicata ruling to stand in the trial court also supports the kind of respect necessary for reliance on judicial decisions and supports the proper use of judicial resources, avoiding needless relitigation of an issue determined by a previous judgment arising from the same transaction or occurrence.

In order to promote the kind of respect properly due our Courts and their decisions, the defendants in this case should not be allowed another ‘bite at the apple’ – the trial of the Z case afforded the Defendant a full and fair opportunity to present a defense to their liability. The Applicants assert that the important safeguard is whether the party being prejudiced by the preclusive effect of the law will suffer unfairly, and whether the party being prejudiced was in fact fully represented in the first trial. There is seemingly no reasonable explanation as to why a party who was not bound by a previous judgment, but essentially a party to that judgment should be precluded from asserting it as res judicata against a party who was bound by that judgment.

At the same time, Applicants also appreciate that the concept of offensive issue preclusion is new to the Louisiana law; and there remains an ‘identity of parties’ requirement in the Louisiana jurisprudence.

X was a party to the original suit, even if not physically present at the plaintiffs’ table, in that he was named in the pleadings by the Defendants as a liable party, he was subject to an assignment of liability by the jury, and he was named in the final judgment; X also appears in this present suit in the exact same quality as the previous plaintiffs, asserting the exact same theory of liability, arising out of the exact same transaction or occurrence; and against the exact same defendants who were obligated to present, and did in fact present, a full defense to their liability in the Z suit.

The possibility of different verdicts on liability in the Z and X cases, based on identical facts, with the exact same defendants, would be a gross injustice to the plaintiffs. Applicants respectfully request that this Court grant this writ application and reverse the decision of the First Circuit Court of Appeal, reinstating the Trial Court decision granting the exception of res judicata, finding that the issue of liability in this case has already been decided against the defendants by the final judgment in the Z case and is therefore precluded from re-litigation by law.  

[1] Tracy Z and Dana Z v. M, et. al., No. xxxx of the docket of the Twenty Third Judicial District Court for the Parish of Ascension.

[2] There are a number of fairly inconsistent cases that address offensive issue preclusion, and an assertion against a defendant, with differing degrees of clarity.

(1) Alonzo v. State ex rel. Dept. of Natural Resources, 884 So.2d 634 (La. App 4th Cir. 2004). The decision in this case seems contrary to our assertion, but upon close reading, reveals a mistaken statement of the law. The court seems to avoid discussion of the application of issue preclusion against a defendant by stating that the Louisiana law does not recognize this doctrine – directly contrary to the amendment to La. R.S. 13:4291 in 1990. Id at 639. 

(2) Tranchina v. State, 740 So.2d 713 (La. App. 4th Cir. 1999). The assertion of offensive res judicata in this case arises from parties that “have no legal relationship with the parties in the prior action.” Id. Applicant argues specifically herein that he has a legal relationship with the prior plaintiffs.

(3) Paradise Village Children's Home, Inc. v. Liggins, 886 So.2d 562 (La. App. 2 Cir. 2004). This case involves an application of a federal court decision in state court, where the Circuit Court affirms the assertion of offensive issue preclusion.

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