# FILED

December 8, 1998 Cecil W. Crowson Appellate Cou rt Clerk 

## IN THE COURT OF APPEALS OF TENNESSEE

AT NASHVILLE

SHIN YI (SUNNY) LIEN ) and wife, ANN LIEN, ) ) Plaintiffs/Appell

ants, )

) Wilson Circuit VS. ) No. 9230 ) RUTH COUCH , individually, and ) Appeal No. BIG RIDGE EMU RANCH, INC., ) 01A01-9609-CV-00398 ) Defendants/Appel

lees. )



### APPEAL FROM THE CIRCUIT COURT FOR WILSON COUNTY

AT LEBANON, TENNESSEE THE HONORABLE BOBBY CAPERS, JUDGE

For Plaintiffs/A

ppellants : For Defendants/Appellees : Wm. Kennerly Burger Jeff Reed Murfreesboro,

Tennessee Mur free, Cope, Hudson & Sca

rlet t Murfreesboro, Tennessee



## VACATED AND REMANDED

WILLIAM C. KOCH, JR., JUDGE-2- 

## O P I N I O N

This appeal involves an interstate contractdispute over ten pair s of emu chicks. Two Tennessee residents declined to honor their contractto purchase the chicks after the Arkansas breeder

s attempted to substitu

te chicks different from those advertised for sale. The bree

ders filed a breac

h of contract suit in Arkansas against the purchasers seeking to recover t he unpaid purchase pr

ice, and the purchasers filed suit in the Circuit Courtfor Wilson County see king to recover their

down payment as we

ll
as treble damages and

attorney’s fees und

er theTennessee Consume r Protection Act. After the breeders obtained a judgment in Arkansas against the purchas ers, they moved to dismiss the purchasers’ Tennessee l awsuit on the ground

thatthe Arkansas judgment was res judicata to the purchasers’ T ennessee claims.The trial court agreed and dismissed the purchasers’ claims. On this appeal, the purchasers assert that the Arkansas judgment should not have precluded them fro

m pursuing their

Tennessee ConsumerProtection Act claims in Tennesse

e. We agree because the

Arkansas court did not have the power to a

ward the full mea

sure of relief the purcha

sers are seeking in the Tennessee pr

oceedings.

I.

Shin Yi (Sunny) and Ann Lien reside in Wil son County, Tennesse e. In early 1994, they saw an advert isement pla

ced by the B ig Ridge Emu Ranch, Inc. in a mag azine ent itled Emu Today and Tomor row offering for sale

emu chicks born in January or

February 1994. T

he Big Ridge

Emu Ranch is locat

ed in Saline County, Arkansas. The Liens place d a telephone order w

ith Ruth Couch, the ranch’s general manager, for te

n pairs of emu chicks

born preferably in January or February but

no later than early March.

In res ponse to the Liens’ telephone call, Big Ridge Emu Ranch sent them a standard fo rm purcha se contract by fac simile. In the cont ract, the Liens agreed to purc hase ten pairs of emus fo r $65,000 – $16,250 to be paid as a deposit

upon th e execution of the contract and

the remainder to be

paid when they took possessionof the chicks. On Marc

h 9, 1994, the Liens execute d the contract and retur

ned it to Big1 Specifically, the Liens asserte d that Ms. Couch and t

he Big Ridge Emu Ranch had violated Tenn. Code Ann. § 47-18-104(b)(7) (representing that goods are of a particular standard, quality, or grade, or that they are of

a particular style or model, if they are of another); Tenn. Code Ann. § 47- 18-104(b)(9) (advertising goods with intent not to sell them as advertised); Tenn. Code Ann. § 47- 18-104(b)(10) (adv ertis ing goods with intent not to supply reasonably expectable public demand, unless the advertisement discloses a limitation of qu antity); Tenn. Code Ann. § 47-14-104(b)(21) (employing bait and switch advertising); and Tenn. CodeAnn. § 47-18-104(b)(27) (engaging in any act or practice which is deceptive to the consumer). -3- Ridge Emu Ranch along wi th a check for $16,2

50. Big Rid ge Emu Ranc h later executed the agree

ment.

The Liens traveled to the Big Ridge Emu Ranch in earl

y May 1994 to pick up th e emu c hicks and to pay the bal ance due under the c

ontract. Howev

er, when the Liens arrived at the ra

nch, Ms. Couch informed them that chicks born in

January or February or even early Mar ch were no longer a

vailable, but that t

he ranch could providechicks born in late March or April. Mr. Lien decline d this offer because

he believed that the March and A pril emu chicks were of less er value and reques ted a refund of his depos it. The Big Ridge Emu Ranch declined to cancel th e contract.
On August 30, 1994, the Big Ridge Emu Ranch sued the Liens in the Circuit Courtfor Saline County,

Arkansas seeking th

e balance of

the purchase

price of the chicks ($48,750) as w

ell as other damages. The Liens filed an answer denying that they had breached the co ntract and f

iled a coun terclaim against t he ranch and Ms. Couch based on breach of c ontract, misrepr

esentation, and mutu

al mistake of

fac t. On January 31, 1995, the Liens filed suit aga

inst Big Ridge Emu Ra

nch and Ms. Couch in the Circuit Court for Wilson Co unty , Tennessee, se eking injunctive and monetary relief under the Tennessee Consume

r Protection Act o

f 1977 [Tenn. Code Ann. §§ 47-18-101, -

121 (1995 & Supp. 1998)]. 1 Consistent with thei r claims, the Lie ns s ought treble damages pursuant to Tenn. C

ode Ann. § 47-18-109(

a)(3) and attorney’s fees and costs pursuant to Tenn. Code Ann. § 47-18-109(e)(1).

The Liens’ action in Tennessee did not impede the progress of the prio r Arkansas proceeding. Fol lowing a “ full trial” on August 30, 1995, the Arkansas circuit courtfound that the Liens had breached their contract with the Big Ridge Emu Ranch and entered a judgment awarding the ranch $78,870 in damages plus $2,800 in attorney’s fees a

nd dismissingthe Liens’ counter claims against the

ranch and Ms.-4-

Couch. This judgment becam e final after the

Liens voluntarily dis

missed their appeal.

On June 3, 1996, Big Rid ge Emu Ranch and Ms.

Couch moved to dismiss t he Liens’ suit

in Tennessee on the ground that the Arkansas judgment w

as res judicata to the Liens’ claims unde r the Tennessee Consumer Protection Act of 1977. They asserted that the Liens’ consumerprotection claims were compulsory counterclaims in the Arkansas proce

eding and that the Lie

ns ’ f ailure to pursue their Tennessee ConsumerPro tectio n Act claims in the Arkansas proceeding should preclude them from assertingthem in

the subsequent Tennessee proceeding. The trial court agreed and, on June 18, 1996, e ntered an order dismissing the L iens’ complaint on the groundthat the Arkansas judgment was res judicata to their Tennessee Consu mer Protection Act cl

aims.

II.

The parties have direc

ted their arguments

both in th e trial court and on t his appeal toward the issue of whether the Liens’ claims under the Tennessee Consumer Protection

Act of 1977 were compulsor

y counterclaims in

the Arkansas proce

eding. In light of the trial co

urt’s reliance on t

he doctrin e of res judicata to dismiss the Liens’ claims, we shift

the focus to consider

whether the Liens could

have raised their
consumerprotection claims i n the Arkansas proc

eedin g. If they could not, th e doctrine of res jud

icata does not prevent them f rom pursuing these cla

ims in a subsequent proceeding

.
A.

Res judicata is a claim preclusion doctrine that promot

es finality in litigat

ion. See Moulton v. Ford Mo tor Co. , 533 S.W.2d 295, 296 (Tenn.1976); Jordan v. Johns , 168 Tenn. 525, 536-37,

79 S.W.2d 798, 802 ( 1935). It bars a se cond suit between the
same parties or their privies on th e same cause of ac

tion with respect to

all theissues which were or could have been litiga

ted in th e former suit. See Richardson v. Ten nessee B d. of Dentistry , 913 S.W.2d 446, 459 (Tenn.1995); Collins v. Greene County Bank, 916 S.W.2d 941, 945 (Tenn. Ct. App.1995).-5- Parties asserting a res judi cata defense must d

emonstrate that ( 1) a court of competent

jurisdiction

rendered the prior

judgment, (2) the prior judgment was final and on the merits, (3)

the same parties or

their privi es w ere involved in both proceedings, and (4) both proceed ings involved the same ca use of action. See Lee v. Hall , 790 S.W.2d 293, 294 (Tenn. Ct. App . 1990). A prior j udgment or decree does not prohibi t the later consideration of rig hts that had not accru

ed at the time of the earlier proceeding or the re

examinatio n of the same question between the same parties when the facts have changed or new facts have occurred that have altered t

he partie s’ legal rights and relatio ns. See White v. Whi te , 876 S.W.2d 837,

839-40 (Tenn.1994).

The principle of claim preclusion prevents parties from splitting their cause of actio n a nd requires parties to raise in a single lawsuit all the grounds for recovery arising from a single

transaction or series of transactions that can be brought together. See Bio-Technology Gen. Corp. v. Genentech, Inc. , 80 F.3d 1553, 1563 (Fed. Cir

. 1996); Hawkins v. Dawn , 208 Tenn. 544 , 548, 347 S.W.2d 480, 481-82 (1961); Vance v. Lancaster , 4 Tenn. (3 Hay w.) 130, 132 (1816) . The principle is subject to certain limitations, one of which is that it will not be applied if the i nitial forum did not have the power to award the full measure of relief sought in th e later litigation. See Davidson v. Capuano , 792 F.2d 275 , 279 (2d Cir. 1986) ; Carris v. John R. Th omas & Assocs., P.C. , 896 P.2d 522, 529-3 0 (Okla. 1995); see also Rose v. Stalcup , 731 S.W.2d 541, 542 (Tenn. Ct. App . 1987) (hold ing that a subsequent actionwas not barred because the initial court did not have jur isdiction over the claim). Thus, t

he Restatement of Judgments points out: The genera l rul e [against relitiga tion of a claim] is largely p redicated on the ass umption that the jurisdi

ction in which the first judgm

ent was rendered was one whi c h put no formal barrier

s in the way of

a litigant’s presen

ting to a court in one actio n the entire claim i ncluding any theories of recovery or dem ands for relief tha

t might have been available to him under applicab le l aw. When such f ormal barriers in fact

existed and were o

perative against aplaintiff in the f

irst action, it is unf

air to preclude him from a second action in w

hich he can present

those phases of the claim which he was disabled fr om presenting in the first.2 Like Tenn. Code Ann. § 47 -18-104(b)(7), Ark. Code Ann. § 4- 88-107(a)(1) p rohibits knowingly

making false representations that goods are of a particular standard, quality, or grade; and like Tenn. Code Ann. § 47-18-104(b)(9), Ark. Code Ann . § 4-88-10 7(a)(3) prohibits advertising goods with the intent not to sell them as advertised. Ark. Code Ann. § 4-88-107(a)(10) also contains a catch-all provision similar to Tenn. Code Ann. § 47-18-104(b)(27). -6- Restatement

(Second) of Judgme

nts § 26(1)(c) cmt.

c (1982). This lim

iting principle is applicable here.

B.

Two questions must be answered to determine whether the Liens could have asserted their

Tennessee Consumer Protection Act claims in the Arka

nsas litigation. First, could the Liens have asserted the same

claims against the

Big Ridge E mu Ranch and Ms. Couch under Arkansas statutory or common l aw? Second, coul

d the Liens have a sse rted Tennessee Consumer Protection Act claims in the Arkansas litigation? If the answ er to either or both q uestions is yes, then t

he Liens cannot continuetheir Tennessee lawsui t. If, however, t he answer to both que stions is no, the Arkansas judgment does not pre clude them from proceeding with their Tennessee lawsuit because the Arkansas court could not hav e afforded the reli ef they are now seeking in the Tenne ssee proceeding.

The scope of the Arkans as deceptive trade practices statute s [Ark. Code Ann. §§ 4-88-101, -115 (Michie 1996 & Supp. 1997)] is decidedly narrow er than that of the Tennessee Consumer Protection Act of 1977. While both statutes prohibit similar sorts of unfair

and deceptive prac

tices, 2 the power to file suit t o recover damages

for violations of the Arkansas statute rests al most exclusively with the Arkansas Attorney General. See Ark. Code Ann. §§ 4-88-10 5(d)(6), -113(a). Only elderly or disabled
consumers have a private right of action underthe Arkansas deceptive trade practices stat ut es. See Ark. Code Ann. § 4-88-204(Michie 1996). While elderly or disabled persons may recover punitiv e damages and attorney ’s fees, see Ark. Code Ann. § 4- 88-204, other consumers ma y only receive “ascer

tainable” damages in suits brought by the Arkansas Attorney General on their behal f. See Ark. Code Ann. § 4-88- 113(a)(2)(A).

The record be fore us contains no indi cation that the Lie

ns are elderly or disabled. Accordingly, we conclude that they ar

e not among the class of pe

rsons who3 The common-law reme dies available in

Arkansas are eve

n narrower than the comm on-law remedies available in Tennessee. Whi le Arkansas reco

gnizes commonlaw causes of action for fra ud, misrepresentati on, and deceit, see O’Mara v. Dykema , 942 S.W.2d 854, 857 (Ark. 1997), it does not reco gnize a cause of ac tion for negligent misrepresentation

. See South County, Inc . v. First Western Loan Co. , 871 S.W.2d 325, 326 (Ark. 199 4). -7- have a private right of a ction under Arkansa

s law for violations

of the Arkans a s deceptive trade

practices statutes. Consequently, the Liens could not have asserted counterclaims for violation of the Arkansas deceptive trade practices statutes against either the Big Ridge Emu Ranch or Ms. Couch and could not have recovered either enhanced damages or

their legal expense s in the Arkansas pr oceeding.

Even if the Liens could not have asserted counterclai ms in t he Arkansas proceeding

based on violations of the Ar kansas deceptive tr

ade practices statute s, it might be arg ued that they could have asserted substantially similar common-law claims and, therefore, that their failure to do so precluded them

from pursuing

their Tennessee lawsuit. This ar gument fails because the com mon-la w causes of action available to the Liens are not

comparable to thos e available under the Tennessee ConsumerP rotecti on Act. Consumer protection acts and deceptive trade practices statutes are intended to provi de broader remedi

es than those availab

le under the
common law. See Associated Inv

. Ltd. Partnership v. Willi ams Assoc. IV , 645 A.2d 505, 510 (Conn. 1994); Connor v. Mer rill Lynch Realty Inc. , 581 N.E.2d 196, 202 (Ill. App. Ct. 1991); Roane-Barker v. Southeastern Hosp. Sup ply Corp. , 392 S.E.2d 663, 669 (N.C. Ct. App. 1990); Latham v. Castillo , 972 S.W.2d 66, 69 (Tex. 1998). They generally dispense with the element of actual reliance required by common-law actions, and they al so provide for a broa der range of reme

dies. 3

The final question is whether the Arkansas courts could hav e permitted the Liens to assert a counter

claim based on the T

ennessee Consumer P

rotection Act of 1977. Tennessee cannot demand that its laws be given extraterritorial ef fe ct. See BMW of N. Am., In

c. v. Gore , 517 U.S. 5 59, 572, 116 S. Ct. 1589, 1597 (1996). However, courts in other states will, as a matte r of comity , recogn ize and enforce applicable civil law s of

other states if these laws properly govern an asserted c

laim
or defense within the fo rum state. See Bird v. Key , 67 Tenn. 366, 368 (1875); Smith v. Firemens Ins

. Co. , 590 A.2d 24, 27 (Pa. Super. C t. 1991).-8- Arkansas follow s the practice of c omity where Arka

nsas has statutes or
common law policies simila

r to those of the fore

ign state law sought to be

relied upon by the litigant. See St. Louis & S.F. Ry. Co. v. Brown , 35 S.W. 225, 226 (Ark. 1896); overruled on other gr

ounds , Mal one & Hyde, Inc. v. Chisley , 825 S.W.2d 558-5 60 (Ark. 1992). As a gener al matter, Arka

nsas courts decli ne to enforce the la ws of otherstates if they decide thatthese laws contravene the esta blished public policy in Arkansas, see Sutherland v. A rkansas D ep’t of I ns. , 467 S.W.2d 724,

726 (Ark. 1971); Beauchamp v. Bertig , 119 S.W. 75, 79 (Ark. 1909), or if they determine that the other state’s law is penal. See Hinson v. Bond Discount Co. , 218 S.W.2d 75, 78 (Ark. 1949).

We have failed to unear

th any decisions by Ar

kansas courts in whic

h they have either specifically enforced or refused to enforce another state’s consumer protection laws. However, we have determined tha t the Arkansas cour

ts woul d most likely recognize and enforce a cau se of action based on the Tennessee Consume

r Protection Act of 1977. The similarities between the substan

tive provisions of the two statutes avoids the possibility that Ar kansas courts would f

ind that Tennessee’ s statute conflicts with Arkansas publi c policy. Secondly,

the substantive provisi

ons of the Tennessee Consumer Protect ion Act would not be c

onsidered penal beca

use th eir primary purpose is to prov ide a remedy for the enfo rcement of a private rig ht. See Hinson v. Bond Dis

count Co. , 218 S.W.2d at 78

.

Even though we have deter mined that the Arka

nsas courts would

recognize a
cause of action b a sed on a substantive violation of the Tennessee Consumer Protection

Act of 1977, it

does not necessarily follow that the Arkansas court s would afford claimants the rem edies contained in the

Tennessee statut

es . The Arkansas courts have clearl y held th at the law of the forum go verns remedies matters

. See Hinson v. Bond Discount Co. , 218 S.W.2d at 77. They have also held with equal claritythat the recovery of attorney’s fees is a remedial matt er and that they are

not required to enforce another state’s statute permitting the recovery of attorney’s fee s. See American Physicians Ins. Co. v. Hruska , 428 S.W.2d 622, 628 (Ark. 1968).

Arkansas law, as we under stand it, would not pe

rmit th e Liens to recover attorney’s fees if they pre vailed in any consumer protection action under Arkansas-9-

statutory or common law. S ince there is no Arkansas statute pe

rmitting the recovery of attorney’s fees by parties such as the Liens, the Arkansas courts w

ould decline to enforce Tenn. Code Ann. § 4 7-18-109(e)(1) on t he ground that it i s a penal law.

We have similar doubt tha t the Arkansa s c ourts would have per mitted the Liens to claim treble dama

ge in accordance w

ith T enn. C ode Ann. § 47-18-109(a)(3). Because the Liens are ne

ithe r elderly nor disable d, they have no right u

nder the Arkansas deceptive trade practices statutes to seek punitive damages. In addition, the trebledamages permitted by Tenn. Code Ann.

§ 47-18-109(a)(3)

are intended to be punitiverather than compensa tory. See Smith Corona Corp. v. Pelikan, Inc. , 784 F. Supp. 452, 483-84 (M .D. Tenn. 1992), aff’d , 1 F.3d 1252 (Fed. C ir. 1993); Lorentz

v. Deardan , 834 S.W.2d

316, 320 (Tenn. Ct. App. 1992). Thus, the Arkans as courts would have declined to enf

orce Tenn. Code Ann. § 47-18 -109(a) (3) on the ground that it was punitive.

Even though the Arkansas c ourts w o uld have permitted the Liens to assert counterclaims against the Big Ridg e Emu Ranch and Ms. Couch based on their alleged violations of Tenn. Code Ann. § 47-18-101(b)(7), (9 ), (10), (21), & (27), we have determi ned th at they would not have permitted the Lie ns to recover trebl

e damages or their attorney’s fees if they had been successful. Acc ordingly, the Arkansas courts could

not have awarded th

e Liens the same measure of relief they are seeking in the Tenne ssee proceeding. Based on the forma l barriers in the

Arkansas proceeding

to the Liens’ full reco

very, the Arkansa

s judgment did not forec

lose the Liens’ suit in Tennessee. It would be unfair to preclude them from pursuing claims here that they would

have been unable to pur

sue in the Arkansas p

roceeding.

III.

We vacate the summar

y judgment dismissing the Liens’ complaint against

Big Ridge Emu Ranch and Ms. Couch and remand the case to the trial courtfor further proceedings consistent with this opinion. Our decisi

on relates only to the r

es judicata issue upon which the trial court based its decis ion and sh ould not be c onstrued as foreclosing Big River Emu Ranch and Ms. Couch from asserting any otherdefense available to them in the Tennessee pr oceeding. We tax t

he costs of this appea

l,jointly and severally, to Big Ri dge Emu Ranch, Inc. and Ruth Couch for which

execution, if necessary, may issue.

______________________________ WILLIAM C. KOCH, JR., JUDGE

CONCUR:

__________________________________ _ HENRY F. TODD, PRESIDING JUDGE MIDDLE SECTION

__________________________________ _ BEN H. CANTRELL, JUDGE