Title: Reed v. Liverman
Citation: N/A
Docket Number: 941420
State: Virginia
Issuer: Virginia Supreme Court
Date: June 9, 1995

Present:  All the Justices 
 
RANDOLPH O. REED 
 
v.  Record No. 941420 
OPINION BY JUSTICE ELIZABETH B. LACY 
                                        June 9, 1995 
LEWIS S. LIVERMAN, SR. 
 
 
From the Circuit Court of Middlesex County 
 
John M. Folkes, Judge 
 
 
In this appeal, we consider whether an order dismissing 
with prejudice an action to collect on a promissory note is 
conclusive as to a subsequent action on the same promissory 
note.   
 
On March 4, 1991, Randolph O. Reed and David C. Eanes, 
Jr., executed a promissory note payable to Lewis S. Liverman, 
Sr., in the amount of $74,000.  Eanes and Reed failed to meet 
their payment obligation and, on July 3, 1991, Liverman filed a 
motion for judgment against them, jointly and severally.  This 
motion for judgment alleged that Reed and Eanes "failed and 
refused to pay the balance due on [the] indebtedness after 
repeated demands for payment." 
 
On August 23, 1991, the action was settled by an agreement 
between the parties, but the case was not removed from the 
docket.  Pursuant to the agreement, Eanes was to transfer 
certain real estate in settlement of his obligation and Reed 
was to pay Liverman the sum of $37,000.  It is undisputed, 
however, that Reed did not pay Liverman at the time the 
agreement was executed nor did he pay Liverman at any time 
thereafter. 
 
On May 22, 1992, Liverman filed a second motion for 
 
 
 
 
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judgment again seeking recovery on the 1991 promissory note.  
In this motion for judgment, Liverman alleged that although 
Eanes had paid Liverman $37,000 on the note, Reed had "failed 
to pay the balance of the note or any part thereof . . . and 
has continued to fail to so pay up to the present."  Only Reed 
was named as a defendant in Liverman's second motion for 
judgment. 
 
Reed filed a demurrer, stating, in part, that Liverman's 
action was prohibited because his first lawsuit was still 
pending in the same court.  In response to the demurrer, 
Liverman initially, but unsuccessfully, attempted to 
unilaterally nonsuit his first action.  He then moved the trial 
court to dismiss the action "with prejudice."  On March 3, 
1993, the trial court entered an order pursuant to which the 
first action was "dismissed against all parties, with 
prejudice."  Liverman personally signed the order with the 
notation "I ask for this." 
 
Reed then filed a plea of res judicata, alleging that 
Liverman's second action on the note was barred by dismissal of 
the first action with prejudice.  The trial court denied this 
plea, finding that there were no facts "either on the face of 
the record or shown by extrinsic evidence which support a 
finding that Suit No. 1 was determined on its merits."  The 
trial court further found that Liverman's "obvious reason for 
moving for the dismissal of Suit No. 1 was the filing of the 
 
 
 
 
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Demurrer to Suit No. 2 on the ground of two suits pending on 
the same promissory note" and stated that "the phrase, 'with 
prejudice', does not terminate Liverman's right to have his day 
in court upon the merits of his case."  The case against Reed 
proceeded to a bench trial and final judgment for Liverman in 
the amount of $37,000 was entered on July 26, 1994. 
 
On appeal, Reed asserts that the trial court erred in 
failing to sustain his plea of res judicata.  In response, 
Liverman argues that the trial court correctly determined that 
his second action was not barred because a determination on the 
merits had not been reached in the first action.  Liverman also 
contends that the expression "with prejudice" in a dismissal 
order should not be conclusive when it is included erroneously, 
as he alleges was done in this case.   
 
Dismissal of a suit with prejudice is defined as "an 
adjudication on the merits, and final disposition, barring the 
right to bring or maintain an action on the same claim or 
cause."  Black's Law Dictionary 469 (6th ed. 1990)  The record 
in this case shows that both the first and second motions for 
judgment sought recovery from Reed based solely on the March, 
1991 promissory note.  The question before us is whether the 
dismissal with prejudice of Liverman's first action stemming 
from settlement of the dispute, rather than from an 
adjudication of the claim, bars prosecution of his second 
motion for judgment.   
 
 
 
 
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We considered this issue in Virginia Concrete Co. v. Board 
of Supervisors, 197 Va. 821, 91 S.E.2d 415 (1956), and stated 
that "as a general proposition a judgment of dismissal which 
expressly provides that it is 'with prejudice' operates as res 
judicata and is as conclusive of the rights of the parties as 
if the suit had been prosecuted to a final disposition adverse 
to the plaintiff."  Id. at 825, 91 S.E.2d at 418.  The Virginia 
Concrete opinion also noted that such a dismissal commonly 
implies "not only the termination of the particular action or 
proceeding then before the court but also the right of action 
upon which it is based."  Id.  Nevertheless, the words "with 
prejudice" are not always a bar to a subsequent action, but 
must be considered in light of the circumstances in which they 
are used.  In Virginia Concrete, the res judicata bar was not 
applicable because the attorneys for the appellee did not have 
the authority to consent to the entry of the decree in issue.  
Id. at 825, 829, 91 S.E.2d at 418, 421. 
 
In this case, Liverman's counsel prepared a draft order 
which specifically included the language "with prejudice" and 
which was circulated to opposing counsel 13 days in advance of 
its presentment to the trial court.  Significantly, Liverman 
had prepared an earlier draft order with which he hoped to 
nonsuit his action "without prejudice."  Furthermore, the order 
indicates that Liverman himself appeared before the trial court 
and signed the dismissal order.  While Liverman's purposeful 
 
 
 
 
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actions in seeking dismissal of his action with prejudice may 
have been ill-advised and the consequences of his actions 
unintended, there is no justification in this record to support 
Liverman's contention that the phrase "with prejudice" was 
erroneously or inadvertently chosen.  Accordingly, the trial 
court erred in concluding that the order terminating the first 
action was not res judicata as to this subsequent action on the 
same promissory note. 
 
Because we find that Liverman's second action on the 
promissory note is barred by the doctrine of res judicata, we 
do not address Reed's additional assignments of error.  The 
decision of the trial court will be reversed and final judgment 
will be entered for Reed. 
 
Reversed and final judgment. 
 
JUSTICE COMPTON, with whom JUSTICE WHITING and JUSTICE HASSELL 
join, dissenting. 
 
 
I disagree on two grounds with the majority's ruling 
sustaining Reed's plea of res judicata. 
 
First, the Court does not have a sufficient record to 
sustain the plea.  In Bernau v. Nealon, 219 Va. 1039, 1041, 254 
S.E.2d 82, 84 (1979), the Court held that whether a former 
adjudication is affirmatively or defensively asserted, the record 
of the prior action must be offered in evidence.  Id.  The record 
in the first action in the present case was never offered in 
evidence in support of Reed's plea.  The only portion of the 
record from the 1991 action, the dismissal of which forms the 
 
 
 
 
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basis of the plea, contained in the manuscript record filed in 
this Court is a copy of the notice of motion for judgment and the 
dismissal order entered in 1993.  Certainly there exist other 
portions of the record in a case that had been pending for almost 
two years.  And, the duty to introduce that record rested on 
appellant Reed, not on appellee Liverman.  Id. at 1043, 254 
S.E.2d at 85. 
 
The Bernau rule is clear, unequivocal, and contains no 
exceptions; it is an established rule of civil procedure, both 
trial and appellate.  The majority chooses to disregard that 
settled precedent.  I would follow it, and would dismiss the 
appeal. 
 
Second, even if the Court has a sufficient record, I do not 
agree that the plea should be sustained.  The words "with 
prejudice" appearing in an order of dismissal are not always 
conclusive against the plaintiff.  Their effect is determined by 
the conditions under which they are used.  Virginia Concrete Co. 
v. Board of Supervisors, 197 Va. 821, 825, 91 S.E.2d 415, 418 
(1956). 
 
The burden was upon Reed to establish the validity of his 
plea of former adjudication.  The trial judge wrote:  "The record 
in Suit No. 1 does not reveal any evidentiary hearing, 
dispositive motions, orders, etc., . . . which touch upon the 
issues raised by the pleadings.  Liverman's obvious reason for 
moving for the dismissal of Suit No. 1 was the filing of the 
 
 
 
 
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Demurrer to Suit No. 2 on the ground of two suits pending on the 
same promissory note." 
 
In my opinion, Reed has not established the validity of his 
plea.  Rather, the record affirmatively shows the conditions 
under which the words "with prejudice" were used in the order, 
and they were not used to extinguish the plaintiff's right of 
action against Reed.  That dismissal was merely a vehicle to 
eliminate one of two pending actions brought on the same 
promissory note.  Upon this ground, I would affirm the judgment 
of the trial court.