HELEN H. MOORHEAD V. CAROLYN A. DODD (CO-EXECUTRIX OF THE ESTATE
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RENDERED : SEPTEMBER 18, 2008
TO BE PUBLISHED
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2006-SC-000251-DG
HELEN H. MOORHEAD
APPELLANT
ON REVIEW FROM COURT OF APPEALS
CASE NUMBER 2005-CA-000700-MR
JEFFERSON CIRCUIT COURT NO. 01-CI-006454
V.
CAROLYN A. DODD (CO-EXECUTRIX
OF THE ESTATE OF J. WILLIAM MANNING,
DECEASED), ET AL
APPELLEES
OPINION OF THE COURT BY JUSTICE SCOTT
REVERSING
This appeal concerns a claim for appellate attorney fees pursuant to a
contractual attorney fees clause . Although Appellant, Helen Moorhead, was
awarded attorney fees in an earlier, related proceeding, she has subsequently
incurred additional expense in litigating this matter, entitling her to further relief
under the parties' agreement . The Court of Appeals and the Jefferson Circuit
Court (in separate proceedings in Division 2 and 5) concluded, however, that the
claim was barred on the basis that it could have been raised in the earlier
proceeding . We disagree as to the later result in Jefferson Circuit Court, Division
5, and reverse.
1. Facts
On April 15, 1995, Manning Equipment Company entered into a lease and
purchase agreement with Appellant, Helen Moorhead, for certain real property.
In connection with the lease and purchase agreement, Appellees, J . William
Manning (now deceased) and Hazel Manning, entered into a separate guaranty
agreement, whereby they personally guaranteed that Manning Equipment
Company would perform the contract . The guaranty contained an attorney fees
clause:
In order to induce Helen H . Moorhead . . . and National City Bank,
Kentucky, Trustee ("Sellers"] . . . to enter into the Agreement
attached hereto, and in consideration of the premises contained in
said Agreement . . . J. William Manning and Hazel Manning . . .
hereby unconditionally and irrevocably guarantee to Sellers . . . (A)
The prompt payment when due and at all times thereafter of all
amounts due under said Agreement; and (B) All fees, expenses,
costs and charges of any nature whatsoever, including without
limitation, reasonable attorneys fees of Sellers required to be paid
by Sellers in enforcing any of their rights and remedies under said
Agreement or under this Guaranty . . .
When the sale did not go through, Moorhead brought an action in the
Jefferson Circuit Court for breach of contract . The case was assigned to Division
2 . A jury returned a verdict in favor of Moorhead and on May 17, 1999, the circuit
court entered final judgment awarding her damages, including $57,439 .56 in
attorney fees . This award of attorney fees was only for legal expenses incurred
in bringing and prosecuting the action in Division 2 of the Jefferson Circuit Court .
Manning, however, appealed the judgment, causing Moorhead to incur
additional legal expense . The Court of Appeals affirmed in an opinion rendered
on February 23, 2001 . Manning Equipment Co., Inc. v. Moorhead , 1999-CA1423-MFG (Ky. App. 2001).
On May 22, 2001, pursuant to the attorney fees clause in the guaranty
instrument, Moorhead then moved Division 2 of the Jefferson Circuit Court for
additional attorney fees incurred on appeal, subsequent to the May 17 judgment.
The circuit court, however, entered an order on August 2, 2001, denying
Moorhead's request on jurisdictional grounds, i.e., the court's jurisdiction had
expired .
Following the circuit court's ruling, Moorhead appealed the order denying
additional attorney fees and also filed a separate, independent action under the
guaranty in Jefferson Circuit Court, Division 5. With regard to the appeal from
Division 2 of Jefferson Circuit Court of the denial of attorney fees, on February
21, 2003, the Court of Appeals affirmed the ruling in a 2-1 split. Moorhead v.
Manninq Equipment Co . , 2001-CA-2061-MR (Ky. App. 2003).
The Jefferson Circuit Court, Division 5, action again sought post-judgment
and appellate attorney fees . Manning, however, moved for summary judgment,
which the circuit court granted on the basis that the May 17, 1999 judgment (in
Division 2), affirmed on appeal on February 23, 2001, was res judicata . The
circuit court held that Moorhead could have and should have reserved the issue
of postjudgment and appellate attorney fees in the earlier action . Because
Moorhead failed to do so, she waived her right to recover additional attorney
fees.
Moorhead thereafter appealed the dismissal of this complaint by the
Jefferson Circuit Court, Division 5. The Court of Appeals again, in a 2-1 decision,
agreed with the circuit court that the action was barred by res judicata .
Moorhead v. Manning , 2005-CA-700-MR (Ky. App. 2006). Chief Judge Combs
dissented, noting that "[d]espite a guaranty agreement clearly entitling Moorhead
to be compensated for all costs and fees incurred in enforcing her rights and
remedies with respect to Manning, she has never been able to collect the
attorney's fees resulting from the appeals."
11. Analysis
The sole issue in this case is whether Moorhead may recover postjudgment and appellate attorney fees, and if so, how. As an initial matter, we
note that Moorhead is substantively entitled to these fees pursuant to the parties'
agreement and thus, our focus is initially on whether she is procedurally barred
from recovery . This is a question of law to be reviewed de novo. See Revenue
Cabinet v. Comcast Cablevision of South, 147 S.W.3d 743, 747 (Ky. App. 2003) .
Moorhead contends that her claim is not barred by res judicata or the rule
against splitting causes of action. Moorhead's argument centers on the fact that
she incurred the fees in question after the circuit court's entry of judgment on
May 17, 1999. She asserts that the circuit court could not reserve the issue of
postjudgment and appellate attorney fees because there was no jurisdiction to
do so.
The resolution of this appeal requires an understanding of the doctrine of
res judicata and the rule against splitting causes of action, both of which are
intended to prevent multiplicity of suits. Res judicata consists of two concepts,
claim preclusion and issue preclusion (also called collateral estoppel) . Claim
preclusion bars subsequent litigation between the same parties or their privies,
on a previously adjudicated cause of action . Buis v. Elliott, 142 S .W.3d 137, 13940 (Ky. 2004). Issue preclusion, on the other hand, precludes the relitigation of
an issue that was actually litigated and decided in a prior proceeding . Id . at 140 .
Finally, the rule against splitting causes of action precludes successive actions
arising from one transaction . See Carroll v. Owens-Corninc~Fiberglas Corp. , 37
S.W .3d 699, 700 (Ky. 2000) . In Hays v. Sturgill, 302 Ky. 31, 193 S.W.2d 648,
650 (1946), the Court stated :
The rule that issues which have been once litigated cannot be the
subject matter of later action is not only salutary but necessary in
the administration of justice . The subsidiary rule that one may not
split up his cause of action and have it tried piecemeal rests upon
the same foundation . To permit it would not be just to the adverse
party or fair to the courts . So, as said in Combs v. Prestonsburg
Water Co. , 260 Ky. 169, 84 S .W .2d 15, 18: "The rule is elementary
that, when a matter is in litigation, parties are required to bring
forward their whole case; and `the plea of res judicata applies not
only to the points upon which the court was required by the parties
to form an opinion and pronounce judgment, but to every point
which properly belonged to the subject of litigation, and which the
parties, exercising reasonable diligence, might have brought
forward at the time ."'
Under these circumstances, res judicata does not prevent Moorhead from
maintaining her action, since the present claim relates to attorney fees accrued
after entry of the prior judgment. See Asher v. G . F. Steams Land & Lumber Co .,
241 Ky. 292, 43 S .W .2d 1012, 1014 (1931) ("[res judicata] does not apply . . . to
facts that subsequently arise") . The judgment rendered on May 17, 1999,
awarded fees for legal services performed up to and including the date of
judgment.
In the present action, however, Moorhead requests fees incurred after the
date of judgment, to which she is clearly entitled, which were not provided for in
the award . Therefore, res judicata does not preclude this claim because the
circuit court, when it entered judgment, had not yet addressed the issue of postjudgment and appellate attorney fees. See Yeoman v. Com., Health Policy Bd. ,
5
983 S.W.2d 459, 465 (Ky. 1998) (for issue preclusion to apply, "[t]he issues in the
former and latter actions must be identical") . This issue was first presented to
the circuit court when Moorhead filed a motion with Division 2 on May 22, 2001 .
In our view, it was not necessary for Moorhead to reserve the issue, nor is
it a prerequisite to recovery of postjudgment and appellate attorney fees . The
general rule that one may not split up his or her cause of action and have it tried
piecemeal has no applicability here, since Moorhead's claim for such fees did not
accrue until after the circuit court entered judgment, when she began to incur
additional legal expenses . See National Bond & Inv. Co. v. Withorn , 281 Ky.
318, 136 S .W.2d 40, 42 (1940) ("[T]he rule against splitting causes of action is
restricted in its application to claims and demands which are parts of a single and
indivisible causes of action, and which are capable of recovery in the first
action .") . Thus, the present action for postjudgment and appellate attorney fees
constitutes a distinct and separate cause of action from the previous action, for
which she has already received an award of attorney fees . While that original
action was pending, Moorhead had no cause of action for additional attorney
fees above and beyond the $57,439 .56 which had already been incurred .
As a matter of policy, the purpose of res judicata and the rule against
splitting causes of action is to prevent multiplicity of suits. The two related
principles are applied to prevent injustice to the parties by protecting defendants
against fragmented, harassing, vexatious, and costly litigation, and the possibility
of conflicting outcomes . 1 A C.J.S . Actions ยง 226 (2008). Moreover, these
principles help to avoid unnecessary waste of judicial resources . Id . However,
we can discern no policy reasons for applying either principle in the matter at
hand, given that the present action arose from Manning's own conduct, when he
challenged the circuit court's award, knowing that he was contractually obligated
to pay Moorhead's legal expenses .
Although parties are required to bring forward their whole cause, we
decline to impose a duty to anticipate (and guess at) any or all fees or expenses
which may flow from an appeal . Otherwise, attorneys would be forced to ask
circuit courts to reserve the issue of post-judgment and appellate attorney fees,
costs, and expenses in every case where a statute or contract authorizes such
charges, even though there may be no appeal. Such a procedure would be
burdensome on litigants, the court, and the clerks.
111111. Conclusion
For the foregoing reasons, we conclude that the Jefferson Circuit Court,
Division 5, and the Court of Appeals erred in holding that res judicata bars
Moorhead's subsequent action for attorney fees . Moorhead is entitled to recover
legal fees arising from her agreement with Manning, above and beyond those
already awarded on May 17, 1999. Accordingly, we reverse and remand this
case to the Jefferson Circuit Court (Div. 5) for such further proceedings as are
necessary and consistent with this opinion .
Minton, C.J . ; Abramson, Cunningham, Noble, Scott and Venters, JJ .,
concur. Schroder, J., not sitting .
It would be more convenient and cost-efficient for a party to simply ask
the appellate court (by motion) to remand the matter back to the trial court postopinion in order to determine such an award, thereby reviving jurisdiction in the
original trial court.
COUNSEL FOR APPELLANT :
James Hays Lawson
Pedley Zielke Gordinier & Pence, PLLC
2000 Meidinger Tower
462 S. Fourth Ave.,
Louisville, KY 40202-2555
John H. Dwyer, Jr.
Pedley Zielke Gordinier & Pence, PLLC
2000 Meidinger Tower
462 S. Fourth Ave.,
Louisville, KY 40202-2555
COUNSEL FOR APPELLEE:
Simon-Brooks Berry
Ackerson & Yann, PLLC
One Riverfront Plaza
401 West Main Street, Suite 1200
Louisville, KY 40202
William David Kiser
Ackerson & Yann, PLLC
One Riverfront Plaza
401 West Main Street, Suite 1200
Louisville, KY 40202
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