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Different Factual Predicates and Parties Prevent Dismissal of Subsequent Action On Res Judicata Grounds

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  • Posted on: May 12 2021

Pursuant to CPLR § 3211(a)(5), “a party may move for judgment dismissing one or more causes of action asserted against him on the ground that the cause of action may not be maintained” because of collateral estoppel or res judicata. 

Under the doctrine of res judicata, a party may not litigate a claim where a judgment on the merits exists from a prior action between the same parties involving the same subject matter. The doctrine applies not only to claims actually litigated but also to claims that could have been raised in the prior litigation. The rationale underlying the doctrine is that a party who has been given a full and fair opportunity to litigate a claim should not be allowed to do so again. See O’Connell v. Corcoran, 1 N.Y.3d 179, 184-185 (2003); Gramatan Home Invs. Corp. v. Lopez, 46 N.Y.2d 481, 485 [1979]). 

New York has adopted a transactional approach in deciding res judicata issues. Matter of Reilly v. Reid, 45 N.Y.2d 24 (1978). Under this approach, once a claim is brought to a final conclusion, all other claims arising out of the same transaction or series of transactions are barred, even if based upon different theories or if seeking a different remedy. O’Brien v. City of Syracuse, 54 N.Y.2d 353, 357 (1981) (citation omitted).

Res judicata is designed to provide finality in the resolution of disputes to assure that parties may not be vexed by further litigation.” See Matter of Reilly, 45 N.Y.2d at 28 (citations omitted). “The policy against relitigation of adjudicated disputes is strong enough generally to bar a second action even where further investigation of the law or facts indicates that the controversy has been erroneously decided, whether due to oversight by the parties or error by the courts.” Id. (citations omitted). As the Court of Appeals noted, “[c]onsiderations of judicial economy as well as fairness to the parties mandate, at some point, an end to litigation.” Id. 

When a prior action is discontinued with prejudice, such discontinuance may still have a preclusive effect on a later-filed action. Notwithstanding, the court has the discretion to narrowly interpret or disregard “with prejudice” language when the interest of justice or the equities involved warrant such an approach. See Employers Fire Ins. Co. v. Brookner, 47 A.D.3d 754 (2d Dept. 2008). In exercising its discretion, the court should be mindful that “[i]n properly seeking to deny a litigant two days in court, courts must be careful not to deprive him of one.” Landau, P.C. v. LaRossa, Mitchell & Ross, 11 N.Y.3d 8, 14 (2008) (internal quotation marks omitted).

In Martinez v. JRL Food Corp., 2021 N.Y. Slip Op. 02992 (1st Dept. May 11, 2021) (here), the Appellate Division, First Department addressed the foregoing principles in affirming the denial of defendant’s motion to dismiss on res judicata grounds.

Martinez arose when plaintiff allegedly tripped over a storage case left in the aisle of defendant Keyfood Supermarket on August 5, 2016. Two months later, plaintiff commenced an action (the first of two prior actions) against defendant JRL Food Corp. D/B/A Keyfood Supermarket (“JRL”) as the operator of Fine Fare Supermarket located in the Bronx, New York (“Fine Fare action”). Approximately one year later, plaintiff commenced a separate action (the second prior action) against 320 Fair Farm Food Corp. as owner/operator of Fine Fare Supermarket (“320 Fair Farm action”). Pursuant to a stipulation, the Fine Fare action was discontinued with prejudice against JRL (“Fine Fare stipulation”). Pursuant to another stipulation, executed a year later, the 320 Fair Farm action was discontinued with prejudice (“320 Fair Farm stipulation”). The action before the First Department was filed on the same day as the 320 Fair Farm stipulation.

JRL moved to dismiss the action under CPLR § 3211(a)(5), claiming that the prior stipulation of discontinuance with prejudice barred the action. JRL also moved for dismissal pursuant to CPLR § 3217, alleging that the two prior stipulations of discontinuance with prejudice acted as an adjudication of the merits barring the newly filed claim. 

In opposition, plaintiff argued that the action was not barred by the doctrine because the “pivotal foundation[al] fact” was missing – the locations of the supermarket where plaintiff allegedly fell were not the same. Therefore, plaintiff’s claim in the newly filed action against JRL had not been determined on the merits.

The motion court denied the motion, holding that the stipulations did not bar the subsequent action. The motion court noted that the Fine Fare stipulation “reflected a clear understanding between the parties that the Fine Fare action was being discontinued against JRL because JRL did not operate the Fine Fair Supermarket located at 320 Gun Hill Road.” The motion court noted that the Fine Fare stipulation could not be “considered in a vacuum.” Both the complaint and bill of particulars in the Fine Fare action, said the motion court, “clearly indicated JRL d/b/a Keyfood Supermarket was not, in the true sense of the word, a party to the Fine Fair action.” (citing Chadbourne & Parke LLP v. Warshaw, 287 A.D.2d 119 (1st Dept. 2001)). “Inasmuch as it is undisputed that JRL never operated its business as Fine Fair Supermarket located at 320 East Gun Hill Road,” concluded the motion court, “it cannot be claimed that there was a determination on the merits and consequently the doctrine of res judicata” did not apply.

On appeal, the First Department affirmed.

The Court held that “[t]he issues involved in plaintiff’s prior actions compared to the instant action concern[ed] different factual predicates and, therefore, the instant action [was] not barred by the doctrine of res judicata.” Slip Op. at *1 (citations omitted). The Court explained that “[i]n the prior two actions plaintiff’s counsel had misunderstood where the accident occurred.” Id. And, “[a]fter discovering the error, plaintiff stipulated to discontinue the prior actions, since she had commenced the actions against parties believed to have ownership and control of the incorrect premises.” Id. Once plaintiff’s counsel discovered the true accident location, plaintiff filed the new action. Id. 

Moreover, said the Court, the term “with prejudice” should be “narrowly interpreted in the interests of justice.” Id. (citing Employers’ Fire Ins. Co. v. Brookner, 47 A.D.3d 754, 756 (2d Dept. 2008)). The Court reasoned that this approach was consistent with “the most natural understanding of the language ‘with prejudice’ in the stipulations discontinuing the prior actions” in that “litigation concerning an accident that occurred at the incorrect premises would be discontinued; the stipulation was not that the negligence claim as to the accident itself would be discontinued.” Id. 

Takeaway

Res judicata, or claim preclusion, precludes a party from litigating a claim where a judgment on the merits exists from a prior action between the same parties, involving the same subject matter. The doctrine applies even if the later claim is based on a different theory or seeks a different remedy, so long as it arises out of the same transaction.

A “linchpin of res judicata is an identity of parties actually litigating successive actions against each other: the doctrine applies only when a claim between the parties has been previously brought to a final conclusion.” City of N.Y. v. Welsbach Elec. Corp., 9 N.Y.3d 124,127-28 (2007) (quoting Parker v. Blauvelt Volunteer Fire Co., 93 N.Y.2d 343, 347 (1999) (internal quotations omitted)). As shown in Martinez, the identity of parties was missing. Accordingly, the courts could not apply the res judicata doctrine. 

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