Title: McDaneld v. Lynn Hickey Dodge, Inc.

State: oklahoma

Issuer: Oklahoma Supreme Court

Document:

McDaneld v. Lynn Hickey Dodge, Inc.  McDaneld v. Lynn Hickey Dodge, Inc. 1999 OK 30 979 P.2d 252 70 OBJ 1215 Case Number: 90658 Decided: 04/20/1999 Mandate Issued: 05/28/1999 Supreme Court of Oklahoma DELORES LYNN McDANELD A/K/A DEE LYNN McDANELD, Plaintiff/Appellant, v. LYNN HICKEY DODGE, INC., Defendant/Appellee. [979 P.2d 253] ON CERTIORARI TO THE COURT OF CIVIL APPEALS, DIV. III. ]¶0 Car dealer brought a small claim against buyer to collect a debt on a promissory note. The district court gave judgment to the buyer. Buyer then brought an action - arising out of the same transaction - for fraud, misrepresentation and certain violations of the Oklahoma Consumer Protection Act. The District Court, Oklahoma County, John M. Amick, trial judge, dismissed the new action as barred by buyer's failure to counterclaim in the small-claim proceeding. The Court of Civil Appeals affirmed, treating the trial court's disposition as a summary judgment. On certiorari granted upon buyer's petition, THE COURT OF CIVIL APPEALS' OPINION IS VACATED, THE TRIAL COURT'S JUDGMENT IS REVERSED, AND THE CAUSE REMANDED FOR FURTHER PROCEEDINGS TO BE CONSISTENT WITH TODAY'S PRONOUNCEMENT. Joseph C. Schubert, Oklahoma City, Oklahoma for appellant C. Craig Cole, C. Craig Cole & Associates, Oklahoma City, Oklahoma for appellee OPALA, J. ¶1 Certiorari was granted to settle the first-impression question whether a small-claim defendant with a counterclaim in excess of the statutory limit (excess counterclaim) is required to assert it and press for a transfer of the case to another district court docket at the peril of losing the opportunity to bring the counterclaim in a later action. Though we answer in the affirmative, we give today's pronouncement a purely prospective application. I THE ANATOMY OF LITIGATION ¶2 This case arises out of a transaction in which Delores McDaneld [McDaneld or buyer] purchased a vehicle from Lynn Hickey Dodge [dealer] and applied for financing. According to McDaneld, in the course of this transaction the dealer not only forged her name upon a promissory note, but also made certain affirmative misrepresentations and failed to communicate other matters it had a duty to disclose. She acknowledged that the dealer had earlier brought against her a small claim - arising out of the same occurrence - to collect the promissory-note debt. ¶3 McDaneld then filed a new action - based on the same occurrence - alleging fraud, misrepresentation and certain violations of the Oklahoma Consumer Protection [979 P.2d 254] Act. ¶4 The Court of Civil Appeals [COCA] affirmed, correctly treating the nisi prius "dismissal" as a summary judgment for the dealer. ¶5 On McDaneld's petition, certiorari was granted to give precedential effect to the conclusion reached by COCA and to extricate this plaintiff (defendant in the earlier small-claim case) from the law's bar by giving today's pronouncement purely prospective application. II THE LEGISLATIVE REGIME FOR SMALL-CLAIMS PROCEDURE REQUIRES A DEFENDANT TO (1) PLEAD AN EXCESS COUNTERCLAIM ARISING FROM THE SAME TRANSACTION AND (2) PRESS FOR THE REMOVAL OF THE CASE TO THE GENERAL DOCKET IN ORDER TO ESCAPE THAT COUNTERCLAIM'S BAR IN A LATER-BROUGHT ACTION ¶6 The legislative regime for small-claims procedure contemplates a transfer of the case to the general docket when a defendant presses a counterclaim that exceeds the statutory limit upon the amount in controversy. ¶7 An excess counterclaim may be plead by a timely-brought verified answer. ¶8 The purpose of a compulsory counterclaim, as well as of claim preclusion, is to prevent multiplicity of litigation over related claims. ¶9 The dealer's defense of claim preclusion is inextricably intertwined with its plea for interposition of the compulsory-counterclaim bar. The former cannot be effective if the compulsory nature of the latter remained unsettled. In short, there can be no res judicata bar if the procedural regime in effect at the critical time in question did not clearly bar a later action upon a claim left unpressed as a counterclaim to the small claim. Res judicata presupposes that the issues barred by its teaching could or should have been litigated in the earlier case. ¶10 Although it is clear on this record that McDaneld's present claim "arises out of the transaction or occurrence" that was the subject of the dealer's earlier small-claim proceeding, the law in force at the critical time was far from settled. It did not mandate that related excess counterclaims be pressed and their removal sought at the peril of losing them. If the dealer's earlier claim had been litigated as an action on the district court's general docket, there would be no doubt about the law's preclusive bar against today's suit. III DUE PROCESS CALLS FOR ADEQUATE NOTICE TO A PARTY WHOSE RIGHTS MAY BE ADVERSELY AFFECTED BY JUDICIAL ACTION ¶11 Although the result reached by COCA is doubtless conformable to the legislative intent, it cannot bind this plaintiff. It would be patently unfair (as well as offensive to due process standards) to saddle McDaneld with a compulsory-counterclaim bar when the very issue in contest - whether a small-claim defendant with an excess counterclaim was duty-bound to assert it and to have the case transferred to another docket - had not been clearly settled by precedent-setting jurisprudence at the time she forewent bringing her counterclaim. Due process requires adequate notice to the party whose rights may be adversely affected by judicial action. ¶12 [ 979 P.2d 257 ] Because we give today precedential effect to a point of Oklahoma procedural law that stood unresolved at the time critical to this controversy, we hold that this pronouncement will have purely prospective effect V SUMMARY ¶13 The law provides a mechanism for an interdocket transfer of the case when an excess compulsory counterclaim is interposed in a small-claim proceeding. Because it is in keeping with legislative intent that all related claims be resolved in the same litigation, an excess compulsory counterclaim not filed in a small-claim case (and where the case was not concurrently pressed for transfer to another docket) cannot be litigated in a later-brought suit. ¶14 When, as here, the dispositive rule of adjective law on the point in controversy was far from clearly settled, the notions of fundamental fairness (implicit in due process) require that today's pronouncement be accorded purely prospective effect. It will govern only those excess compulsory counterclaims whose timely filing may be effected after the effective date of this opinion. ¶15 On certiorari granted upon buyer's petition, the Court of Civil Appeals' opinion is vacated, the trial court's judgment is reversed, and the cause remanded for further proceedings to be consistent with today's pronouncement. ¶16 SUMMERS, C.J. and HODGES, LAVENDER, OPALA, KAUGER and WATT, JJ., concur; ¶17 HARGRAVE, V.C.J. and SIMMS, J., concur in part and dissent in part. FOOT