Converse v. Town of Charleston

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 NOTICE:  This opinion is subject to motions for reargument under V.R.A.P. 40
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                                 No. 90-377


 Ralph F. and Rosa L. Converse                Supreme Court

                                              On Appeal from
      v.                                      Orleans Superior Court

 Town of Charleston                           December Term, 1991


 John P. Meaker, J.

 Steven A. Adler of Gensburg Axelrod & Adler, St. Johnsbury, for plaintiffs-
   appellants

 David A. Barra and Joseph R. Weston of Paul, Frank & Collins, Inc.,
   Burlington, for defendant-appellee


 PRESENT:  Allen, C.J., Gibson, Dooley, Morse and Johnson, JJ.


      ALLEN, C.J.   Plaintiff property owners appeal from a directed verdict,
 based on res judicata, for defendant Town of Charleston.  We reverse and
 remand to permit plaintiffs to seek damages for the town's alleged breach of
 duty to properly maintain the road in question from the date of an earlier
 action against a neighbor.
      Plaintiffs purchased property in Charleston in 1970.  A neighbor,
 believing that he owned the road that provided access to plaintiffs'
 property, engaged in various tactics designed to prevent use of the road.
 Ultimately, the neighbor obliterated the road by creating a pond in its
 place which completely denied plaintiffs motor vehicle access to their
 property.
      Plaintiffs, in an earlier action, sued the neighbor seeking damages and
 injunctive relief.  The superior court joined the town as a defendant
 pursuant to V.R.C.P. 19.  Plaintiffs made no claims against the town at the
 first trial, and the court did not order the town to do anything as a result
 of that litigation.  After finding that the road belonged to the town, the
 court issued an injunction against the neighbor requiring him to restore the
 road and permanently enjoining him from further obstructing the road.  This
 Court affirmed that judgment.  Converse v. Hunter, No. 84-532 (Vt. April 11,
 1986).  During the pendency of the appeal and beyond, the neighbor
 continued to obstruct the road.
      In 1987, plaintiffs initiated the instant action against the town,
 seeking damages and restitution on the theories that the town had breached
 its duty to keep the road open for public travel and that the town had been
 unjustly enriched as a result of the first action.  The town moved for
 summary judgment, arguing that plaintiffs were barred by the doctrine of res
 judicata.  The superior court ruled that the resolution of the res judicata
 issue required factual findings and denied the motion.  After plaintiffs
 presented their case at trial before a different judge, the court found
 that their claims were barred by res judicata and directed a verdict for the
 town.
      On appeal, plaintiffs maintain that the doctrine of res judicata
 should not bar their action against the town because the action relied on
 facts not adduced at the first litigation.  They also argue that, based on
 the "law of the case" doctrine, the pretrial judge's denial of the town's
 motion for summary judgment based on res judicata precluded the trial judge
 from granting a directed verdict on the same basis.  Finally, they argue
 that an exception to the "American rule" permits recovery of legal fees
 incurred during the first litigation.  We find that the trial court properly
 ruled that res judicata barred plaintiffs' claims arising from occurrences
 prior to the first litigation, and therefore do not address the issue of
 legal fees related to the suit against the neighbor.
      Plaintiffs cite In re Quechee Lakes Corp. for the proposition that res
 judicata applies "only where a party seeks to relitigate the identical
 issues already decided."  154 Vt. 543, 559, 580 A.2d 957, 966 (1990).  That
 narrow statement of the doctrine, although sufficient to decide the matter
 then before the Court, fails to convey that res judicata also bars issues
 between parties that could have been litigated in an earlier action.  See,
 e.g., American Trucking Ass'ns v. Conway, 152 Vt. 363, 370, 566 A.2d 1323,
 1328 (1989) (claim preclusion bars litigation of claims or causes which were
 or should have been raised in previous litigation); Gilmour v. State, 141
 Vt. 640, 642, 450 A.2d 1153, 1154 (1982) (res judicata binds parties to a
 judgment as to issues litigated and as to issues which could have been
 litigated); Town of Waterford v. Pike Industries, Inc., 135 Vt. 193, 194,
 373 A.2d 528, 529 (1977) (res judicata concludes parties as to issues which
 might properly have been tried and determined in an earlier action).
      The trial court, at the close of plaintiffs' case, ruled that all of
 the claims and issues raised could have been brought against the town in the
 earlier action.  After a review of the record considering the evidence in
 the light most favorable to plaintiff, we find error in the trial court's
 application of the law of res judicata.  Plaintiffs allege in their com-
 plaint that the town breached its common-law and statutory duty to keep the
 road open for public travel.  Any breach of this duty occurring after the
 first action against the neighbor could not possibly have been addressed in
 the earlier litigation.  Res judicata, therefore, did not bar plaintiffs'
 action to the extent it addressed the town's alleged post-judgment breach.
      The court correctly concluded, however, that an action for breach of
 duty based on occurrences before the suit against the neighbor, and for
 attorney's fees related to that action, did not lie.  The parties here were
 adversaries during the first action once the trial court joined the town as
 a defendant.  Nothing prevented plaintiffs from then bringing claims against
 the town for failing to maintain the road and for costs associated with that
 litigation.  Plaintiffs elected instead to focus their attention on the
 neighbor and are barred from initiating new litigation based on facts
 available at the time of the first action.
      On remand, plaintiffs must bear the cost of their own attorney's fees.
 The general rule is that attorney's fees are not recoverable absent a
 contractual provision or statute to the contrary.  Highgate Associates, Ltd.
 v. Merryfield, ___ Vt. ___, ___, 597 A.2d 1280, 1283 (1991).  The exception
 argued by plaintiffs ÄÄ that fees may be recoverable where the wrongful
 actions of one person has involved another in litigation with a third
 person, see Welch v. Lague, 141 Vt. 644, 646, 451 A.2d 1133, 1135 (1982) ÄÄ
 has no application on remand.  Res judicata precludes recovery of legal fees
 related to the first action, and the second litigation does not involve a
 third person.
      Plaintiffs' "law of the case" argument warrants little discussion.
 That doctrine did not preclude the trial judge from directing a verdict for
 the town even though the pretrial judge declined to enter summary judgment
 on the basis of res judicata.  The pretrial judge believed that a
 determination of whether res judicata barred the action against the town
 required factual development.  He did not rule on the merits of the issue,
 and his ruling did not create law of the case.  Even if the pretrial judge
 had decided the res judicata issue on the merits, the trial judge retained
 the power to "'reopen what ha[d] been decided.'"  Perkins v. Vermont Hydro-
 Electric Corp., 106 Vt. 367, 415, 177 A. 631, 653 (1934) (quoting Messinger
 v. Anderson, 225 U.S. 436, 444 (1912)).  See also In re Knapp, 152 Vt. 59,
 63, 564 A.2d 1064, 1066 (1989) (second judge, following a hearing on the
 merits, not bound by first judge's denial of summary judgment motion).
      Reversed and remanded.

                                         FOR THE COURT:




                                         Chief Justice