Scholzen Products v. Palmer

----ooOoo----

Scholzen Products Company,
a Utah corporation,
Plaintiff and Appellant,

v.

Kent Palmer and Robin Palmer,
Defendants and Appellees.

MEMORANDUM DECISION
(Not For Official Publication)

Case No. 990627-CA

F I L E D
June 22, 2000
  2000 UT App 191 -----

Fifth District, St. George Department
The Honorable James L. Shumate

Attorneys:
Clifford V. Dunn, St. George, for Appellant
Paul D. Veasy and Laura S. Scott, Salt Lake City, for Appellees

-----

Before Judges Jackson, Bench, and Orme.

BENCH, Judge:

Scholzen contends that the trial court erred in determining that the claim preclusion branch of res judicata barred its claims for fraud in the inducement, negligent misrepresentation, bad faith, and willful misconduct (collectively the "tort claims").

"Claim preclusion bars a cause of action . . . if the suit in which that cause of action is being asserted and the prior suit satisfy three requirements. First, both cases must involve the same parties or their privies. Second, the claim that is alleged to be barred must have been presented in the first suit or must be one that could and should have been raised in the first action. Third, the first suit must have resulted in a final judgment on the merits."

American Estate Mgt. v. International Inv. & Dev., 1999 UT App 232,¶6, 986 P.2d 765 (quoting Madsen v. Borthick, 769 P.2d 245, 247 (Utah 1988)). "If these three requirements are met, 'the result in the prior action constitutes the full relief available to the parties on the same claim or cause of action.'" Id. (quoting Ringwood v. Foreign Auto Works, Inc., 786 P.2d 1350, 1357 (Utah Ct. App. 1990)). Because Scholzen does not dispute the existence of the first requirement--that the parties in both actions were the same--our analysis will focus on the second and third requirements.

Scholzen argues that it was not required to bring the tort claims as part of its earlier cross-claim against the Palmers. However, our longstanding rule is that a plaintiff must include claims in a suit if the plaintiff is aware, "at the time the first petition was filed[,]" of the facts upon which another claim may be based. Badger v. Badger, 69 Utah 293, 254 P. 784, 787 (1927); see also Lane v. Honeywell, Inc., 663 F. Supp. 370, 373 (D. Utah 1987) (stating that plaintiff must assert "all theories for relief against a defendant with respect to all or any part of a transaction, or series of transactions out of which the action arose"). The Utah Supreme Court has defined claim or cause of action as "'the aggregate of operative facts which give rise to a right enforceable in the courts.'" Swainston v. Intermountain Health Care, 766 P.2d 1059, 1061 (Utah 1988) (citation omitted).

The operative facts in this case demonstrate the following: (1) Scholzen alleged that it specifically informed the Palmers of their duty to provide the easement to Dockstader before purchasing the real property; (2) Scholzen alleged that the Palmers agreed to provide the easement as a condition of the purchase; and (3) the Palmers refused to provide the easement to Dockstader. Those facts were sufficient to notify Scholzen that its theories for relief would be that the Palmers breached the contract it had with Scholzen to provide the easement to Dockstader, or in the alternative, that the Palmers had committed one or more of the alleged torts. At the time it cross-claimed against the Palmers for indemnification, Scholzen was therefore aware of all the facts upon which tort claims could have been based and simply failed to assert any tort claims. Because Scholzen failed, in its cross-claim, to allege known tort claims based on the same operative facts, the second requirement of claim preclusion was met. See Ringwood 786 P.2d at 1358 (providing if only reason claim was not litigated in prior action was because party that should have asserted it failed to do so, second requirement of claim preclusion is met).

Scholzen also argues that claim preclusion does not apply because "none of [its] tort claims against Palmer were litigated to a judgment on the merits." However, for claim preclusion to apply, it is the "'first suit [which] must have resulted in a final judgment on the merits,'" American Estate Mgt., 1999 UT App 232 at ¶6 (citation omitted; emphasis added), not claims that the party should have brought but for some reason failed to bring. See id. at ¶8. In the instant case, the first suit was Scholzen's cross-claim for indemnification against the Palmers. That suit resulted in a final judgment on the merits when the trial court granted the Palmers' motion for summary judgment. Thus, the third requirement of claim preclusion was also met and the trial court properly dismissed Scholzen's subsequent Complaint alleging the tort claims.(1)

Accordingly, we affirm.
 
 
 
 
 

______________________________
Russell W. Bench, Judge -----

WE CONCUR:
 
 
 
 
 

______________________________
Norman H. Jackson,
Associate Presiding Judge
 
 
 
 
 

______________________________
Gregory K. Orme, Judge

1. Because the trial court properly dismissed Scholzen's Complaint under the claim preclusion branch of res judicata, we need not address the other bases relied upon by the trial court in dismissing the Complaint.