Title: Davis v. Marshall Homes
Citation: N/A
Docket Number: 020421
State: Virginia
Issuer: Virginia Supreme Court
Date: February 28, 2003

Present:  Hassell, C.J., Lacy, Keenan, Koontz, Kinser, and 
Lemons, JJ., and Carrico, S.J.*
 
ANITA LEE DAVIS 
 
 
 
 OPINION BY CHIEF JUSTICE LEROY R. HASSELL, SR. 
v.  Record No. 020421 
 
February 28, 2003 
 
MARSHALL HOMES, INC. AND 
MARSHALL MEREDITH, INDIVIDUALLY 
 
FROM THE CIRCUIT COURT OF THE CITY OF VIRGINIA BEACH 
Robert B. Cromwell, Jr., Judge 
 
I. 
 
In this appeal, we consider whether the doctrine of res 
judicata bars a plaintiff's action to recover damages because 
of the defendants' alleged failure to pay deed of trust notes 
when the plaintiff had unsuccessfully filed a prior motion for 
judgment for actual fraud against the defendants. 
II. 
 
In 1999, plaintiff, Anita Lee Davis, filed a motion for 
judgment against Marshall Meredith, Inc., Marshall Homes, 
Inc., Marshall Meredith, individually, Perpetual Homes, Inc., 
and John M. Scott.  Plaintiff pled in her motion for judgment 
that these defendants committed acts of actual fraud against 
her. 
 
Plaintiff alleged that on several occasions in 1995 she 
loaned money to defendants for the purpose of purchasing 
                     
* Chief Justice Carrico presided and participated in the 
hearing and decision of this case prior to the effective date 
of his retirement on January 31, 2003. 
various real properties that defendants agreed to refurbish 
and sell for a profit.  Plaintiff alleged that defendants 
intentionally misrepresented to her the value of the real 
properties and deceived her because even though they told her 
that they would "refurbish" each property, defendants never 
intended to do so. Plaintiff stated in her motion for judgment 
that "[a]t the time of each request [by defendants] for a loan 
and representation as to the value of each real estate, the 
defendants knew that the actual value of the real estate was 
less than what they represented to the plaintiff, and as a 
result of this misrepresentation, the plaintiff lent them 
money for the purpose of the defendants purchasing the 
property, with additional funds available for refurbishing the 
property, at a 10% rate of interest.  Further, not only did 
the defendants know that the value of the property was 
substantially less than what they had represented, they also 
knew at the time of the purchase that they were not going to 
refurbish the property and/or sell it for profit resulting in 
the plaintiff being left with the property and an outstanding 
Note based on an inflated property value." 
 
Plaintiff stated in her motion for judgment that she 
sought "judgment against the defendants, jointly and 
severally, in the amount of $528,486.00 representing the 
                                                                
 
 
2
amount of the inflated price of the real estate, $250,000.00 
in punitive damages, attorney's fees, pre and post judgment 
interest and any and all other costs expended herein."  
Subsequently, plaintiff's motion for judgment for actual fraud 
was dismissed with prejudice against defendants Marshall 
Meredith, Inc., Marshall Homes, Inc., and Marshall Meredith, 
individually. 
 
In 2001, plaintiff filed her present action.  She alleged 
in her amended motion for judgment that Marshall Homes, Inc., 
and Marshall Meredith, individually, executed four separate 
deed of trust notes and that these defendants "failed and 
refused to make any payments on the [notes]" and that the 
defendants "surrendered" the properties that secured the deed 
of trust notes to plaintiff.  Plaintiff alleged that she 
"spent money to improve the properties for sale and incurred 
net losses . . . after the sale of each property."  Plaintiff 
requested a "judgment against the defendants, jointly and 
severally, in the amount of One Hundred Sixty Four Thousand, 
Two Hundred Twenty Dollars and Seventy Six Cents 
($164,220.76), plus interest at 10% per annum through date of 
sale, as well as interest accruing thereafter on the loss at 
9% per annum, attorney's fees, and any and all other costs 
expended herein." 
 
3
 
Defendants filed a plea of res judicata and asserted that 
plaintiff's action was barred because the circuit court had 
entered an order that dismissed with prejudice her prior 
action for actual fraud.  Defendants argued that the factual 
allegations and damages claimed in the fraud action were based 
upon the same facts and damages described in the breach of 
contract action.  The circuit court agreed with the defendants 
and entered an order that sustained the plea of res judicata 
and dismissed plaintiff's action with prejudice.  Plaintiff 
appeals. 
III. 
A. 
 
The principles that this Court must apply to our 
resolution of this appeal are well established and familiar.  
We have repeatedly stated that "[t]he bar of res judicata 
precludes relitigation of the same cause of action, or any 
part thereof, which could have been litigated between the same 
parties and their privies."  Smith v. Ware, 244 Va. 374, 376, 
421 S.E.2d 444, 445 (1992).  Accord Scales v. Lewis, 261 Va. 
379, 382, 541 S.E.2d 899, 901 (2001); Flora, Flora & Montague, 
Inc. v. Saunders, 235 Va. 306, 310, 367 S.E.2d 493, 495 
(1988); Bates v. Devers, 214 Va. 667, 670-71, 202 S.E.2d 917, 
920-21 (1974).  We have consistently held that a litigant who 
seeks to bar a claim based upon the defense of res judicata 
 
4
must establish four elements:  identity of the remedy sought; 
identity of the cause of action; identity of the parties; and 
identity of the quality of the persons for or against whom the 
claim is made.  State Water Control Bd. v. Smithfield Foods, 
Inc., 261 Va. 209, 214, 542 S.E.2d 766, 769 (2001); Balbir 
Brar Assoc., Inc. v. Consolidated Trading and Serv. Corp., 252 
Va. 341, 346, 477 S.E.2d 743, 746 (1996); Wright v. Castles, 
232 Va. 218, 222, 349 S.E.2d 125, 128 (1986). 
 
We have also stated that: 
"The judicially created doctrine of res judicata 
rests upon public policy considerations which favor 
certainty in the establishment of legal relations, 
demand an end to litigation, and seek to prevent the 
harassment of parties. . . .  The doctrine prevents 
'relitigation of the same cause of action, or any 
part thereof which could have been litigated, 
between the same parties and their privies.' . . .  
A claim which 'could have been litigated' is one 
which 'if tried separately, would constitute claim-
splitting.' 
 
" 'Claim-splitting' is bringing successive 
suits on the same cause of action where each suit 
addresses only a part of the claim.  Jones v. Morris 
Plan Bank of Portsmouth, 168 Va. 284, 291, 191 S.E. 
608, 610 (1937).  Courts have imposed a rule 
prohibiting claim-splitting based on public policy 
considerations similar to those underlying the 
doctrine of res judicata:  avoiding a multiplicity 
of suits, protecting against vexatious litigation, 
and avoiding the costs and expenses associated with 
numerous suits on the same cause of action." 
 
Bill Greever Corp. v. Tazewell Nat'l Bank, 256 Va. 250, 254, 
504 S.E.2d 854, 856-57 (1998). 
 
5
 
The doctrine of res judicata only applies if the cause of 
action a plaintiff asserts in the pending proceeding is the 
same as the cause of action asserted in the former proceeding.  
City of Virginia Beach v. Harris, 259 Va. 220, 229, 523 S.E.2d 
239, 243 (2000).  And, the litigant who asserts the defense of 
res judicata has the burden of proving by a preponderance of 
the evidence that the claim is precluded by a prior judgment.  
Scales, 261 Va. at 383, 541 S.E.2d at 901. 
 
Applying these well-established principles, we hold that 
the circuit court erred in concluding that plaintiff's cause 
of action for breach of contract is barred by the doctrine of 
res judicata.  As we have already stated, the litigant who 
asserts the doctrine of res judicata as a bar to the 
plaintiff's claim must show, among other things, the "identity 
of the cause of action."  In this case, defendants cannot 
satisfy this requirement. 
 
In her first cause of action, plaintiff alleged acts of 
actual fraud on the part of the defendants.  The basis of 
plaintiff's actual fraud claim was that she was damaged 
because of her reliance upon defendants' misrepresentations of 
the values of collateral that secured the deed of trust notes.  
We have held "that a 'litigant who prosecutes a cause of 
action for actual fraud must prove by clear and convincing 
evidence:  (1) a false representation, (2) of a material fact, 
 
6
(3) made intentionally and knowingly, (4) with intent to 
mislead, (5) reliance by the party misled, and (6) resulting 
damage to the party misled.' "  Prospect Dev. Co., Inc. v. 
Bershader, 258 Va. 75, 85, 515 S.E.2d 291, 297 (1999) (quoting 
Bryant v. Peckinpaugh, 241 Va. 172, 175, 400 S.E.2d 201, 203 
(1991)); accord Richmond Metro. Auth. v. McDevitt Street 
Bovis, Inc., 256 Va. 553, 557-58, 507 S.E.2d 344, 346 (1998); 
Evaluation Research Corp. v. Alequin, 247 Va. 143, 148, 439 
S.E.2d 387, 390 (1994); Winn v. Aleda Constr. Co., Inc., 227 
Va. 304, 308, 315 S.E.2d 193, 195 (1984). 
 
A review of the motion for judgment in the fraud action 
reveals that plaintiff would have been required to establish 
by clear and convincing evidence that defendants approached 
her and requested loans for the purpose of refurbishing and 
selling the real properties for a profit, defendants 
misrepresented the values of the real properties, plaintiff 
relied upon defendants' misrepresentations and loaned funds to 
defendants for the purchases of the real properties, 
defendants purchased the properties at their actual values, 
defendants never intended to honor their promises to plaintiff 
that they would "refurbish and sell the properties," and 
plaintiff incurred damages related to the misrepresentations. 
 
In her later contract action to recover for losses 
sustained because of defendants' failure to pay the deed of 
 
7
trust notes, plaintiff would have been required to prove, by a 
preponderance of the evidence, the existence of the notes, the 
defendants' failure to pay the notes, and damages. 
 
We reject defendants' contention that plaintiff only had 
one cause of action, and that plaintiff improperly split her 
single cause of action because the "same evidence" was 
necessary to prove plaintiff's fraud and breach of contract 
claims.  Defendants are incorrect for numerous reasons.  This 
Court held in Brown v. Haley, 233 Va. 210, 216, 355 S.E.2d 
563, 567 (1987), that "[t]he test to determine whether claims 
are part of a single cause of action is whether the same 
evidence is necessary to prove each claim."  Application of 
this test compels us to conclude that plaintiff did not split 
her causes of action. 
 
In her fraud action, plaintiff would have had to present 
evidence of the deed of trust notes and defendants' failure to 
satisfy those notes to show that she was damaged as a result 
of the misrepresentations.  However, this evidence does not 
satisfy the remaining elements that plaintiff would have had 
to prove to establish a prima facie case of actual fraud by 
clear and convincing evidence.  The mere fact that some 
evidence relevant in plaintiff's action for fraud may be 
relevant to prove her distinct and separate contract claim for 
nonpayment of the deed of trust notes does not, for purposes 
 
8
of res judicata, mean that plaintiff only has one cause of 
action.  Evidence of defendants' failure to satisfy the deed 
of trust notes does not prove that defendants made false 
representations of the values of the real properties 
intentionally and knowingly, with the intent to mislead 
plaintiff.  Evidence of defendants' failure to satisfy the 
deed of trust notes does not establish plaintiff's reliance 
upon defendants' alleged misrepresentations. 
 
It is a fundamental principle of jurisprudence that 
evidence which is not relevant is not admissible.  Most of the 
evidence necessary to prove plaintiff's fraud action would 
have been inadmissible at a trial of plaintiff's contract 
action because of the lack of relevance.  Surely, the circuit 
court would have committed error during a jury trial of 
plaintiff's contract action had the court permitted plaintiff 
to present evidence of defendants' acts of actual fraud. 
 
Additionally, much of the evidence that plaintiff would 
have to present to establish damages in her breach of contract 
action is different from and not relevant to the damages she 
alleged in her fraud case.  In her fraud action, plaintiff 
sought to recover damages based upon defendants' alleged 
misrepresentations of the values of the collateral that 
secured the deed of trust notes, and she sought punitive 
damages.  In contrast, in plaintiff's breach of contract case, 
 
9
she sought to recover money spent to improve the real 
properties and net losses she incurred after she sold the 
properties that she received from defendants in lieu of 
foreclosure. 
 
Our prior decisions plainly illustrate the principle that 
a plaintiff's assertion of separate and distinct causes of 
action will defeat a defense of res judicata.  For example, in 
Brown v. Haley, supra, we considered whether the doctrine of 
res judicata barred the plaintiffs' suit to enforce an implied 
easement.  233 Va. at 212, 355 S.E.2d at 565.  In that case, 
Rufus R. Brown and Sallie W. Brown filed an action at law for 
ejectment against the defendants and/or their privies.  The 
Browns alleged in the ejectment action that Dayton A. Haley 
and Lucy S. Haley had no interest in certain land.  The 
circuit court ruled that the Browns were entitled to "sole 
possession" of the land.  Subsequently, the Haleys filed an 
amended motion for declaratory judgment and bill of complaint 
against the Browns and requested that the circuit court 
declare that the Haleys possessed an easement to cross the 
Browns' land.  The circuit court held that the Haleys had an 
implied easement over the Browns' land.  The Browns argued 
before this Court that the doctrine of res judicata barred the 
maintenance of the Haleys' suit for the declaration of an 
 
10
implied easement because of the prior ejectment action.  Id. 
at 213-15, 355 S.E.2d at 566-67. 
 
We observed in Haley that a judgment in favor of a 
litigant bars relitigation of the same cause of action and any 
part thereof that could have been litigated between the same 
parties and their privies, but we explained that "[t]he 
barring of a cause of action 'which could have been litigated' 
is not directed to an unrelated claim which might permissibly 
have been joined, but, to a claim which, if tried separately, 
would constitute claim-splitting."  Id. at 215-16, 355 S.E.2d 
at 567 (quoting Bates, 214 Va. at 670-71 n.4, 202 S.E.2d at 
920-21 n.4). 
 
We stated that "[t]he test to determine whether claims 
are part of a single cause of action is whether the same 
evidence is necessary to prove each claim."  Haley, 233 Va. at 
216, 355 S.E.2d at 567.  Applying this test, we held that the 
doctrine of res judicata did not bar the Haleys from 
prosecuting their suit to establish an implied easement.  We 
emphasized that ejectment is an action at law to determine 
title and the right of possession of real property, whereas an 
easement is a privilege to use the land of another in a 
particular manner and for a particular purpose.  We held that 
the existence of an easement is not relevant to the issue of 
title.  We observed that ejectment involves ownership rights 
 
11
and the proof necessary to establish this action generally 
consists of documents that vest title, whereas the proof 
necessary to establish the existence of an implied easement 
generally consists of facts that gave rise to the easement.  
Id. at 215-17, 355 S.E.2d at 567-68. 
 
We noted that the elements that the Haleys were required 
to prove to establish their claim of an implied easement could 
not be proven by the facts presented in the ejectment action 
that showed that the Browns were the owners of the disputed 
land.  Id. at 217, 355 S.E.2d at 568.  We held that the 
ejectment action and the proceeding to establish an implied 
easement "were not part of the same cause of action because 
there was no identity of facts necessary to prove each claim."  
Id.
 
In the present case, just as in Haley, the doctrine of 
res judicata is simply not applicable.  The facts necessary to 
prove plaintiff's action for actual fraud are different from 
the facts she must prove for her action based upon nonpayment 
of the deed of trust notes.  In the present appeal, as in 
Haley, there is "no identity of facts necessary to prove each 
claim."  Id.
 
We also observe that our holding today is consistent with 
our decision in Smith v. Ware, supra.  In Ware, we considered 
whether the doctrine of res judicata barred a claim to recover 
 
12
dower and damages asserted by a litigant who had 
unsuccessfully filed a motion for judgment for unlawful 
detainer.  244 Va. at 375, 421 S.E.2d at 445.  Presley M. 
Smith and Pauline A. Smith were husband and wife.  Mr. Smith, 
sole record owner of the real estate where the couple resided, 
died testate and his will and codicil were probated in 
November 1982.  The will devised the residence to Mr. Smith's 
sister, Ellen Smith Ware.  A codicil contained a provision 
which devised to Mrs. Smith the balance of a debt owed to Mr. 
Smith if any money remained after the estate's expenses were 
paid.  The expenses exceeded the balance of the debt, and Mrs. 
Smith received nothing from her husband's estate.  Id. at 375-
76, 421 S.E.2d at 445. 
 
Ware notified Mrs. Smith that she had to vacate the 
residence.  Mrs. Smith left the premises and filed a motion 
for judgment for unlawful detainer.  The circuit court ruled 
that the unlawful detainer action was barred by the applicable 
statute of limitations, and the case was dismissed.  
Subsequently, Mrs. Smith filed a bill of complaint against 
Ware seeking commutation of her dower interest in the 
residence and damages for withholding of her dower interest.  
Ware argued that the doctrine of res judicata barred any 
recovery.  The circuit court agreed and dismissed the suit.  
Id. at 376, 421 S.E.2d at 445. 
 
13
 
We disagreed with the circuit court's holding that the 
doctrine of res judicata precluded relitigation of the same 
cause of action or any part thereof, which could have been 
litigated between the same parties and their privies.  We 
held, among other things, that the doctrine of res judicata 
did not bar Mrs. Smith's second suit because the cause of 
action in the second suit differed from the cause of action in 
the first proceeding.  We stated: 
 
"The causes of action are . . . different.  
Mrs. Smith asserted a right to occupy the property 
in her motion for judgment for unlawful detainer.  
There, she relied upon former Code § 64.1-33 . . . 
which permitted a surviving spouse to reside in the 
marital residence without charge for rent, repairs, 
taxes, or insurance until dower or curtesy was 
assigned.  Mrs. Smith, in her bill of complaint, 
seeks a commutation of her dower interest.  She pled 
a different cause of action, relying upon former 
Code § 64.1-37 . . . ." 
 
Id. at 377, 421 S.E.2d at 446.  Just like the plaintiff in 
Ware, the plaintiff in this case filed separate causes of 
action and thus the doctrine of res judicata does not bar her 
subsequent cause of action. 
 
We recognize that in Flora, Flora & Montague, Inc. v. 
Saunders, supra, we held that the doctrine of res judicata 
barred a plaintiff from prosecuting a subsequent cause of 
action for breach of contract.  235 Va. at 311, 367 S.E.2d at 
496.  However, our decision in Saunders is clearly 
distinguishable from the present appeal.  In 1961, Willis E. 
 
14
Board owned a tract of land that contained about 200 acres 
located in Franklin County near the waters of the Roanoke 
River.  Board and his wife, Annie L. Board, Saunders' 
predecessors in title, executed an option agreement with John 
Hatcher Ferguson and John Hatcher Ferguson, Jr., who were 
Flora, Flora & Montague, Inc.'s (Flora's) predecessors in 
title.  Pursuant to the agreement, the Boards granted the 
Fergusons a 10-year option to purchase a portion of the 
Boards' land, containing about 100 acres, subject to certain 
conditions.  The Fergusons notified Saunders that they 
intended to exercise the option, but he refused to convey the 
real estate as provided in the option agreement.  Id. at 307-
08, 367 S.E.2d at 493-94. 
 
In July 1971, the Fergusons filed a suit against Saunders 
for specific performance of the agreement.  While the specific 
performance suit was pending, the Fergusons assigned the 
option agreement to Flora and others, who were added as 
complainants.  The amended bill of complaint in this suit (the 
first suit) contained a general recitation about the option 
agreement and stated that "[a] copy of [the] Option is 
attached hereto and made a part hereof."  Id. at 308-09, 367 
S.E.2d at 494.  The circuit court entered an order that Flora 
and the Fergusons were entitled to specific performance of the 
 
15
contract and the option agreement.  Id. at 309, 367 S.E.2d at 
494. 
 
In 1984, Flora filed a suit in chancery against Saunders 
and requested that the court enforce certain terms of the 
option agreement that was the basis of the first suit and 
enter a decree that would require Saunders to convey to Flora 
certain land and easements.  Saunders filed a plea of res 
judicata, and the circuit court, after an ore tenus hearing, 
sustained the plea and dismissed the cause.  Id. at 307, 367 
S.E.2d at 493. 
 
We held that the circuit court properly sustained the 
plea of res judicata because "Flora could maintain only one 
suit to compel specific performance of the option agreement.  
The agreement's subject matter related solely to the sale of a 
tract of land and necessary appurtenances thereto.  Indeed, 
the first suit was instituted to have the court 'grant 
specific performance of [the] Contract,' not a part thereof.  
Moreover, the option agreement was attached to and made a part 
of the bill of complaint."  Id. at 311, 367 S.E.2d at 496.  We 
held that Flora sought "to make severable an indivisible 
contract.  Flora had but one cause of action; thus, Flora's 
claim had to be determined in one suit."  Id.
 
Unlike the circumstances in Saunders, the present case 
does not involve an attempt by a plaintiff to file two 
 
16
separate lawsuits based upon the breach of one indivisible 
contract.  Rather, as we have already stated, plaintiff's two 
lawsuits involved two separate and distinct causes of action. 
B. 
 
Our decision today also is supported by our holding in 
Allstar Towing, Inc. v. City of Alexandria, 231 Va. 421, 344 
S.E.2d 903 (1986).  In Allstar, for purposes of res judicata, 
we adopted a definition of the term "cause of action" as "an 
assertion of particular legal rights which have arisen out of 
a definable factual transaction."  Id. at 425, 344 S.E.2d at 
906 (quoting Bates v. Devers, 214 Va. 667, 672 n.8, 202 S.E.2d 
917, 921 n.8 (1974)).  We concluded in Allstar that the 
doctrine of res judicata did not bar a second action involving 
a challenge to the award of a contract by a municipality.  In 
support of our holding, we emphasized that the two actions did 
not involve the same "definable factual transaction," noting 
that "the facts giving rise to the second cause of action were 
not even in existence when the first action was heard and 
decided on the merits."  Allstar, 231 Va. at 425, 344 S.E.2d 
at 906. 
 
In Allstar, we did not adopt a transactional analysis 
test when we decided whether the claims at issue were barred 
by the doctrine of res judicata.  We were not even required to 
consider whether to use such a test because, as we just 
 
17
stated, the facts that gave rise to the second cause of action 
in Allstar were not in existence when the first cause of 
action arose.  Moreover, just one year after this Court 
decided Allstar, we implicitly rejected the transactional 
analysis test in Brown v. Haley, supra, when we stated that 
"[t]he test to determine whether claims are part of a single 
cause of action is whether the same evidence is necessary to 
prove each claim."  233 Va. at 216, 355 S.E.2d at 567.  
Therefore, in accordance with our precedent, we explicitly 
reject the application of the transactional analysis test when 
deciding whether a claim is barred by res judicata.  See, 
e.g., Smithfield Foods, 261 Va. at 214, 542 S.E.2d at 769; 
Ware, 244 Va. at 376, 421 S.E.2d at 445; Saunders, 235 Va. at 
310-11, 367 S.E.2d at 495; Haley, 233 Va. at 216, 355 S.E.2d 
at 567. 
 
In the present appeal, while the facts supporting both 
the fraud and contract actions arose from defendants' efforts 
to procure financing of the properties, we nevertheless 
conclude that those facts did not arise out of the same 
"definable factual transaction."  The alleged 
misrepresentations by defendants constituted a separate 
definable factual transaction.  This separate definable 
factual transaction consisted of alleged misrepresentations of 
the values of the properties and future development plans 
 
18
designed to obscure the actual values of the properties as 
collateral in order to obtain the money later secured by the 
notes.  The contract action arose from a distinct and separate 
definable factual transaction limited to breach of the terms 
and conditions appearing on the face of the notes as well as 
the damages related to the failure to satisfy the notes.  
Thus, the contract claim before us is not defeated by the 
doctrine of res judicata on the grounds that it arose from the 
same "definable factual transaction" as the fraud claim.  
Rather, the existence of separate "definable factual 
transactions" supporting the two claims before us requires 
rejection of the doctrine of res judicata. 
 
Additionally, for purposes of res judicata, a "cause of 
action" involves an assertion of particular legal rights 
arising out of a definable factual transaction.  In this case, 
plaintiff's fraud and contract actions arose from different 
definable factual transactions and, just as important, these 
actions constituted assertions of different particular legal 
rights.  Clearly, the right to enforce a contract is a 
separate and distinct particular legal right from the right to 
enforce an action for fraud. 
IV. 
 
Accordingly, we will reverse the judgment of the circuit 
court and remand this case for a trial on the merits. 
 
19
Reversed and remanded. 
 
JUSTICE KINSER, with whom JUSTICE LACY and JUSTICE LEMONS 
join, dissenting. 
 
 
The sole issue in this appeal is whether the breach of 
contract claim is part of the “same cause of action” as the 
fraud claim and thus “could have been litigated” with the 
motion for judgment alleging fraud.  Because I conclude that 
both claims assert legal rights that arose out of the same 
“definable factual transaction,” I respectfully dissent and 
would affirm the circuit court’s judgment sustaining the plea 
of res judicata. 
 
The majority first holds that the doctrine of res 
judicata does not bar Davis’ breach of contract claim because 
the defendants did not show “identity of the cause of action.”  
The majority next holds that this Court’s decision in Allstar 
Towing v. City of Alexandria, 231 Va. 421, 344 S.E.2d 903 
(1986), supports its conclusion that Davis did not split her 
cause of action because the breach of contract claim did not 
arise out of the same “definable factual transaction” as the 
fraud claim.  In reaching these two conclusions, the majority 
cites numerous cases to support the “principle that a 
plaintiff’s assertion of separate and distinct causes of 
action will defeat a defense of res judicata.”  The majority 
 
20
does not, however, consider the impact of Virginia’s 
separation of law and equity upon the application of the res 
judicata bar.  In my view, the principles of res judicata 
cannot be properly applied in this case without addressing 
that issue. 
 
Res judicata is a judicially-created doctrine premised 
upon public policies favoring certainty in legal relations, an 
end to litigation, and the prevention of harassment of 
parties.  Bates v. Devers, 214 Va. 667, 670, 202 S.E.2d 917, 
920 (1974).  However, as I will demonstrate, these policies 
cannot be fully realized in Virginia because of certain 
procedural barriers that restrict the application of the 
doctrine of res judicata.  Those barriers include the 
separation of law and equity and the absence of a compulsory 
counterclaim rule.  Prior to 1977, the inability to join tort 
and contract claims in the same proceeding also limited the 
use of the res judicata bar.  When such barriers are not 
implicated in a particular situation, such as the present one, 
our decision in Allstar Towing provides the analytical 
framework for deciding whether the res judicata bar applies.  
I will now review the relevant cases that lead me to these 
conclusions and, in doing so, will explain why I respectfully 
dissent. 
 
21
“The doctrine [of res judicata] is firmly established in 
our jurisprudence and should be maintained where applicable.”  
Ward v. Charlton, 177 Va. 101, 115, 12 S.E.2d 791, 796 (1941); 
accord Bates, 214 Va. at 670, 202 S.E.2d at 920.  This Court 
has explained the effect of the doctrine: 
 
When the second suit is between the same parties as the 
first, and on the same cause of action, the judgment in 
the former is conclusive of the latter not only as to 
every question which was decided, but also as to every 
other matter which the parties might have litigated and 
had determined, within the issues as they were made or 
tendered by the pleadings or as incident to or 
essentially connected with the subject matter of the 
litigation, whether the same, as a matter of fact, were 
or were not considered.  As to such matters a new suit on 
the same cause of action cannot be maintained between the 
same parties. 
 
Gimbert v. Norfolk Southern R.R. Co., 152 Va. 684, 689-90, 148 
S.E. 680, 682 (1929), quoted in Allstar Towing, 231 Va. at 
424, 344 S.E.2d at 905.  Stated differently, the doctrine 
“bars the relitigation of the same cause of action, or any 
part thereof which could have been litigated, between the same 
parties and their privies.”  Bates, 214 Va. at 670-71, 202 
S.E.2d at 920-21.  A claim that “ 'could have been 
litigated’ ” is one that, if tried separately, would amount to 
“ ‘claim-splitting.’ ”  Id. at 670 n.4, 202 S.E.2d at 920 n.4; 
accord Bill Greever Corp. v. Tazewell Nat’l Bank, 256 Va. 250, 
254, 504 S.E.2d 854, 856 (1998). 
 
22
 
For many years, this Court has held that a party 
asserting the res judicata bar must establish identity of the 
cause of action as well as identity of the remedy sought, 
identity of the parties, and identity of the quality of the 
persons for or against whom the claim is made.  See Ferebee v. 
Hungate, 192 Va. 32, 36, 63 S.E.2d 761, 764 (1951); Mowry v. 
City of Virginia Beach, 198 Va. 205, 211, 93 S.E.2d 323, 327 
(1956); Wright v. Castles, 232 Va. 218, 222, 349 S.E.2d 125, 
128 (1986); Smith v. Ware, 244, Va. 374, 376, 421 S.E.2d 444, 
445 (1992).  However, it was not until our decisions in Bates 
v. Devers and Allstar Towing that we defined the term “cause 
of action.” 
 
In Bates, we explained that the scope of the term “cause 
of action” may vary depending on the context but that, for 
purposes of res judicata, it is the “assertion of particular 
legal rights which have arisen out of a definable factual 
transaction.”  214 Va. at 672 n.8, 202 S.E.2d at 921 n.8.  
Thus, we held in Bates that a claim alleging breach of a 1968 
instrument and claims based on earlier, separate instruments 
were “ ‘distinct divisible claims, depending on separate 
contracts, made at different times and upon different 
principles; and the evidence to support one [was] not 
necessary to support the other, but much of it that would be 
material to sustain the one would be irrelevant to the 
 
23
other.’ ”  Id. at 672, 202 S.E.2d at 922 (quoting Kelly v. 
Board of Public Works, 66 Va. (25 Gratt.) 755, 762-63 (1875)).  
In that holding, we implicitly recognized that the legal 
rights asserted by the plaintiff did not arise out of a single 
“definable factual transaction.” 
The definition of the term “cause of action” enunciated 
in Bates was central to our subsequent decision in Allstar 
Towing.  In its first case, Allstar challenged a determination 
by the City of Alexandria that Allstar was a “ ‘non-
responsible’ bidder.”  231 Va. at 425, 344 S.E.2d at 906.  In 
a subsequent case filed by Allstar after the City had issued a 
second invitation to bid, Allstar sought relief on the basis 
that the City had awarded the contract to a bidder that 
allegedly did not satisfy certain specifications.  Id.  
Because the facts underlying the second cause of action were 
not even in existence when the first case was decided, we 
concluded that “the legal rights asserted in the second action 
arose from a factual transaction that was different from the 
factual transaction giving rise to the assertion of legal 
rights in the first action.”  Id.
One year after Allstar Towing, we decided Brown v. Haley, 
233 Va. 210, 355 S.E.2d 563 (1987).  There, the plaintiffs, 
Dayton A. and Lucy S. Haley and others, asked the court to, 
among other things, declare that they had an easement to cross 
 
24
the property of Rufus R. Brown to reach the waters of a lake 
and to enjoin the defendants from impeding access to the lake.  
233 Va. at 214, 355 S.E.2d at 566.  However, invoking the 
principles of res judicata, Brown asserted that a prior 
ejectment action at law filed by him and Sallie W. Brown 
against the Haleys barred the second litigation concerning the 
easement.  Id.
We disagreed with Brown, finding that the “proof 
necessary to support the [ejectment] action consist[ed] of the 
documents which vest title in the owner and any other evidence 
related to the issue of title[;]” whereas, “[t]he existence of 
an easement is not relevant to the issue of title.”  Id. at 
217, 355 S.E.2d at 568.  The easement claimed in the second 
action could not have been established by the facts that 
proved ownership of the property in the ejectment action.  Id.  
“The two claims . . . were not part of the same cause of 
action because there was no identity of facts necessary to 
prove each claim.”  Id.
Nor was there an identity of remedies because the two 
claims could not have been brought in one proceeding.  If the 
Haleys had asserted what would have been a counterclaim in the 
ejectment action, the court could not have granted the 
requested relief regarding the easement in that action since 
the relief was equitable in nature and the ejectment action 
 
25
was at law.  Id. at 218, 355 S.E.2d at 568.  Therefore, the 
plaintiffs’ recourse was to file the separate suit in equity.  
Id.  If we had accepted Brown’s position, the practical effect 
would have been to implement, albeit implicitly, a compulsory 
counterclaim rule. 
The holding in Brown did not mention the definition of 
the term “cause of action” adopted the year before in Allstar 
Towing for good reasons.  That definition was not relevant in 
Brown because of our distinction between law and equity and 
its impact upon the application of the res judicata bar.  That 
impact is exemplified by our decision in Wright v. Castles, 
decided after Allstar Towing and before Brown. 
The issue in Wright was the effect of a chancery suit for 
injunctive relief upon a subsequent action at law seeking 
compensatory and punitive damages.  232 Va. at 220, 349 S.E.2d 
at 127.  In the chancery suit, the plaintiff sought to enjoin 
the defendant from interfering with the plaintiff’s use of a 
certain road.  Id.  The bill of complaint contained no prayer 
for an award of damages.  Id.  In the subsequent action at 
law, the plaintiff alleged that the defendant had falsely and 
maliciously slandered his title by interfering with the use of 
the same road, and that the defendant had tortiously 
interfered with the consummation of a contract to sell the 
plaintiff’s land.  Id. 
 
26
Although we acknowledged that the same events gave rise 
to both proceedings, id., meaning that both claims arose out 
of a single “definable factual transaction,” we, nevertheless, 
refused to apply the res judicata bar.  Declining the 
defendant’s invitation to abrogate Virginia’s distinction 
between law and equity, we pointed out that a party seeking 
monetary damages in a tort case must bring the action on the 
law side of the court.  Id. at 222, 349 S.E.2d at 128.  
However, a party asking for injunctive relief must sue in 
equity.  Id.  Thus, we concluded that “a chancery suit is not 
res judicata to a subsequent law action unless the very matter 
in controversy in the pending action was decided in the prior 
suit.”  Id. 
 
The decision in Wright, rather than that in Allstar 
Towing, also provided the foundation for our refusal to apply 
the res judicata bar in Smith v. Ware.  There, the plaintiff 
initially filed a motion for judgment for unlawful detainer, 
seeking not only possession of the residence in which she had 
resided after her husband’s death but also damages.  244 Va. 
at 375, 421 S.E.2d at 445.  The trial court ruled that the 
statute of limitations barred the unlawful detainer action.  
Id. at 376, 421 S.E.2d at 445.  The plaintiff then filed a 
bill of complaint seeking commutation of her dower interest in 
 
27
the residence and also damages for withholding that interest.  
Id.
We reversed the trial court’s judgment that res judicata 
barred litigation of the second suit.  Id.  Citing Wright but 
not Allstar Towing, we held that there was neither an identity 
of remedies nor an identity of causes of action as between the 
motion for judgment for unlawful detainer and the bill of 
complaint for commutation of the plaintiff’s dower interest.  
Id.  In the unlawful detainer action, the plaintiff sought 
possession of the property based on the provisions of former 
Code § 64.1-33; whereas, in the chancery suit, she asked for a 
commutation of her dower interest, relying upon former Code 
§ 64.1-37.  Id. at 377, 421 S.E.2d at 446. 
 
In contrast, the decision in Allstar Towing had a bearing 
on our application of the res judicata bar in Flora, Flora & 
Montague, Inc. v. Saunders, 235 Va. 306, 367 S.E.2d 493 
(1988), because the law-equity distinction was not a factor.  
There, a vendee first sought specific performance of an option 
agreement to purchase real estate and asked the court to 
convey the property at issue.  Id. at 309, 367 S.E.2d at 494.  
The second suit, also filed in chancery, involved the vendee’s 
claim that, among other things, it was entitled to use certain 
rights-of-way, pursuant to the option agreement, over the 
 
28
residual land owned by the vendor.  Id. at 310, 367 S.E.2d at 
495. 
 
We held that the second suit was barred by the doctrine 
of res judicata.  Id.  The vendee had but one cause of action 
to compel specific performance of the option agreement because 
the agreement’s subject matter concerned the sale of the land 
and the necessary appurtenances thereto.  Id. at 311-12, 367 
S.E.2d at 496.  In other words, there was a single “definable 
factual transaction” out of which both claims arose. 
 
We did not apply the doctrine of res judicata in Brown, 
Wright, and Smith because the respective plaintiff in each of 
those cases sought a remedy that was not available in a prior 
proceeding due to the separation of law and equity.  These 
cases unquestionably demonstrate that the distinction between 
law and equity limits the application of the res judicata bar 
in Virginia.  Indeed, that distinction was the essence of the 
Wright decision.  However, the separation of law and equity 
did not play a role in Bates or Flora, nor is it a factor in 
the case before us.  Like the plaintiffs in Bates and Flora, 
Davis sought relief on the same side of the court in both of 
her cases. 
A jurisdiction’s separation of law from equity is 
recognized in the Restatement of Judgments (Second) § 26(1)(c) 
(1982), as an exception to the general rule concerning claim-
 
29
splitting.  The rule that “a valid and final judgment rendered 
in an action extinguishes the plaintiff’s claim . . . , 
includ[ing] all rights of the plaintiff to remedies against 
the defendant with respect to all or any part of the 
transaction . . . out of which the action arose,” id. at § 24, 
does not apply when: 
 
[t]he plaintiff was unable to rely on a certain theory of 
the case or to seek a certain remedy or form of relief in 
the first action because of the limitations on the 
subject matter jurisdiction of the courts or restrictions 
on their authority to entertain multiple theories or 
demands for multiple remedies or forms of relief in a 
single action, and the plaintiff desires in the second 
action to rely on that theory or to seek that remedy or 
form of relief[.] 
 
Id. at § 26(c).  Instead, the rule against claim-splitting is 
predicated on the assumption that the jurisdiction 
in which the first judgment was rendered was one 
which put no formal barriers in the way of a 
litigant’s presenting to a court in one action the 
entire claim including any theories of recovery or 
demands for relief that might have been available to 
him under applicable law. 
 
Id. at § 26(1)(c) cmt. c.  One of the formal barriers 
referenced in the Restatement is the separation of law and 
equity.  Id.; see also id. at § 25 cmt. i. 
 
That such formal barriers affect the rule against claim-
splitting is not a new concept in Virginia.  In Bates, where 
we first defined the term “cause of action” for res judicata 
purposes, this Court acknowledged that procedural barriers can 
restrict the application of res judicata principles.  There, 
 
30
we cited the Restatement of Judgments §§ 47, 62, 83 (1942), in 
our discussion of a claim that “could have been litigated.”  
214 Va. at 671, 202 S.E.2d at 921.  Comment c to § 62 provided 
that “[a]s a result of one tortious act or breach of contract 
there may be a number of invasions of a single interest or of 
different interests.”  Restatement of Judgments § 62 cmt. c 
(1942).  To decide whether there is a single cause of action 
arising from the tortious act or breach of contract, the first 
question, being one of procedure, was whether a plaintiff “can 
recover in one action for all of the harms or breaches of 
contract[.]”  Id.  “[I]f because of procedural rules separate 
actions must be brought,” a judgment for one invasion would 
not prevent an action for others wrongs.  Id. 
 
However, if all claims could have been brought in one 
proceeding, the next question concerned the effect of a 
judgment for one invasion or breach on other claims not 
included in that action.  Id.  “This [was] a question of 
substantive law.  The answer depend[ed] upon whether the 
events or series of events [were] regarded as constituting one 
inseparable cause of action at the time of the judgment.”  Id.
 
In addition to the separation of law and equity, another 
procedural barrier affected the application of the res 
judicata bar in the past when tort and contract claims could 
not be joined in the same proceeding in Virginia.  See, e.g., 
 
31
Standard Products Co. v. Wooldridge & Co., Ltd., 214 Va. 476, 
481, 201 S.E.2d 801, 805 (1974); Kavanaugh v. Donovan, 186 Va. 
85, 93, 41 S.E.2d 489, 493 (1947).  However, in 1977, the 
General Assembly eliminated that barrier with the enactment of 
§ 8.01-272.  In pertinent part, that statute provides that 
“[a] party may join a claim in tort with one in contract 
provided that all claims so joined arise out of the same 
transaction or occurrence.”  In Code § 8.01-281, the General 
Assembly also authorized the pleading of alternative facts and 
theories of recovery “provided that such claims, defenses, or 
demands for relief so joined arise out of the same transaction 
or occurrence.” 
 
As we stated in Fox v. Deese, 234 Va. 412, 423, 362 
S.E.2d 699, 705 (1987), those statutes “represented a radical 
departure from the common-law pleading rule[.]”  Similarly, 
our implementation in Allstar Towing of the concept that a 
cause of action, for purposes of res judicata, must be viewed 
in terms of a “definable factual transaction” was a shift in 
our res judicata jurisprudence to the approach employed by a 
majority of jurisdictions: 
 
 
The present trend is to see [a] claim in factual 
terms and to make it coterminous with the transaction 
regardless of the number of substantive theories, or 
variant forms of relief flowing from those theories, that 
may be available to the plaintiff; regardless of the 
number of primary rights that may have been invaded; and 
regardless of the variations in the evidence needed to 
 
32
support the theories or rights.  The transaction is the 
basis of the litigative unit or entity which may not be 
split. 
 
Restatement of Judgments (Second) § 24(1) cmt. a.  See also, 
Williamson v. Columbia Gas & Electric Corp., 186 F.2d 464, 
469-70 (3rd Cir. 1950); Ramseyer v. Ramseyer, 569 P.2d 358, 
360 (Idaho 1977); Kent County Bd. of Educ. v. Bilbrough, 525 
A.2d 232, 236 (Md. 1987); Eastern Marine Constr. Corp. v. 
First Southern Leasing, Ltd., 525 A.2d 709, 712 (N.H. 1987). 
 
Our shift was consistent with the General Assembly’s 
transactional approach employed in Code §§ 8.01-272 and –281, 
as evidenced by its use of the language “same transaction or 
occurrence.”  Both concepts, “definable factual transaction” 
and “same transaction or occurrence,” advance public policies 
embracing judicial economy, ending litigation, providing 
certainty in legal relationships, and preventing party 
harassment.  However, a transactional approach must “strike a 
delicate balance between, on one hand, the interests of the 
defendant and the courts in bringing litigation to a close 
and, on the other hand, the interests of the plaintiff in the 
vindication of a just claim.”  Restatement of Judgments 
(Second) § 24 cmt. b. 
 
The transactional analysis utilized in Allstar Towing is 
limited by the distinction between law and equity.  In 
determining whether the principles of res judicata bar a 
 
33
particular proceeding, the Allstar Towing definition of the 
term “cause of action” becomes relevant only when the law-
equity distinction is not in play.  In other words, legal 
rights asserted in two separate cases could arise out of a 
single “identifiable factual transaction,” as they clearly did 
in Wright, but the second proceeding would not be barred if 
the relief sought therein was not available in the prior 
proceeding due to the separation of law and equity.  See 
Wright, 232 Va. at 222, 349 S.E.2d at 128.  I believe that is 
the reason Allstar Towing was not mentioned in the Brown, 
Wright, and Smith decisions. 
 
The majority, however, states that this Court did not 
adopt a transactional approach in Allstar Towing.  I disagree.  
The definition of the term “cause of action,” first introduced 
in Bates and then explicitly relied upon in Allstar Towing and 
Waterfront Marine Constr., Inc. v. North End 49ers Sandbridge 
Bulkhead Groups, A, B and C, 251 Va. 417, 434, 468 S.E.2d 894, 
904 (1996), employs the phrase “definable factual 
transaction.”  I find no analytical difference between that 
phrase and the phrase “same transaction or occurrence,” which 
is the language used by the General Assembly in Code §§ 8.01-
272 and –281 and characterized by this Court as “so plain and 
unambiguous that it requires no interpretation.”  Powers v. 
Cherin, 249 Va. 33, 37, 452 S.E.2d 666, 669 (1995).  If use of 
 
34
the language “definable factual transaction” in the definition 
of the term “cause of action” was not indicative of this 
Court’s decision to use a transactional analysis when deciding 
whether to apply the res judicata bar, then what was the 
intent of the Court? 
In truth, the effect of the majority’s explicit rejection 
of a transactional approach is to overrule our decision in 
Allstar Towing.  However, the majority does not explain why 
this precedent should be cast aside.  Despite rejecting a 
transactional approach and overruling Allstar Towing, the 
majority, nevertheless, utilizes the Allstar Towing definition 
of the term “cause of action,” and the majority states that 
its decision is supported by the holding in that case. 
 
I find no reason to overrule the precedent established in 
Allstar Towing.  Thus, I conclude that the dispositive inquiry 
in this case, since the separation of law and equity is not a 
factor, is whether Davis’ claim alleging breach of contract 
and the former claim alleging fraud arose out of a single 
“definable factual transaction.”  In my opinion, they did. 
The “definable factual transaction” was the events 
surrounding Anita Lee Davis’ loans to Marshall Homes, Inc. and 
others for the purpose of purchasing certain parcels of real 
estate.  In the present motion for judgment, Davis alleged 
breach of contract for failure to pay four deed of trust 
 
35
notes.  Those notes, signed by Marshall Homes, evidenced the 
loans made by Davis to purchase four parcels of real estate 
that previously had been deeded to her in lieu of foreclosure 
and were executed in conjunction with Davis’ loans to purchase 
those properties. 
Although the majority asserts that Marshall’s alleged 
misrepresentations constituted one “definable factual 
transaction” and the terms and conditions of the notes arose 
from a separate “definable factual transaction,” those notes 
did not come into existence at some later point in time or as 
a result of different negotiations between the parties.  Even 
the majority acknowledges that “the facts supporting both the 
fraud and contract actions arose from defendants’ efforts to 
procure financing of the properties[.]” 
 
The majority also calls Davis’ claims different legal 
rights and emphasizes that the elements of a claim for fraud 
are different from the elements of a claim for breach of 
contract.  However, the determination whether a particular 
claim “could have been litigated” in a prior action and is, 
thus, barred by the doctrine of res judicata does not depend 
on whether the elements of the prior claim and the present 
claim are identical.  In Jones v. Morris Plan Bank of 
Portsmouth, 168 Va. 284, 191 S.E. 608 (1937), this Court 
stated: 
 
36
 
If suit is brought for a part of a claim, a judgment 
obtained in that action precludes the plaintiff from 
bringing a second action for the residue of the claim, 
notwithstanding [that] the second form of action is not 
identical with the first, or different grounds for relief 
are set forth in the second suit. 
 
Id. at 291, 191 S.E. at 610 (emphasis added); accord Saunders, 
235 Va. at 311, 367 S.E.2d at 495; Snyder v. Exum, 227 Va. 
373, 377, 315 S.E.2d 216, 218 (1984); see also Restatement of 
Judgments (Second) § 25 and § 24 cmt. c.1
 
If the application of res judicata turned on whether the 
elements of the legal rights asserted were the same in both 
cases, the doctrine would bar only those legal rights based on 
the same legal theory and asserting the same grounds for 
relief.  A claim that “could have been litigated” would 
seldom, if ever, be barred.  For example, under the majority’s 
holding today, a plaintiff could assert claims alleging 
intentional interference with contract and business 
expectancies, and conspiracy to injure another in trade or 
business in separate proceedings without fear of the second 
                     
1 The Restatement of Judgments (Second) § 24 cmt. c. 
states: 
 
That a number of different legal theories casting 
liability on an actor may apply to a given episode does 
not create multiple transactions and hence multiple 
claims.  This remains true although the several legal 
theories depend on different shadings of the facts, or 
would emphasize different elements of the facts, or would 
call for different measures of liability or different 
kinds of relief. 
 
37
proceeding being barred by the principles of res judicata even 
though the same events gave rise to both claims. 
 
Davis’ “second form of action” as well as the “grounds 
for relief” were obviously not identical with the form of 
action and grounds of relief set forth in the first case.  
Jones, 168 Va. at 291, 191 S.E. at 610.  The second case 
alleged breach of contract while the first alleged fraud.  
Those differences, however, do not change the fact that the 
legal rights asserted by Davis arose out of a single 
“definable factual transaction.”  Allstar Towing, 231 Va. at 
425, 344 S.E.2d at 906. 
 
My conclusion is consistent with this Court’s decision in 
Waterfront Marine Constr., Inc. v. North End 49ers Sandbridge 
Bulkhead Groups A, B and C.  Applying the Allstar Towing 
definition of the term “cause of action,” we held that a 
second arbitration demand was barred by a prior arbitration 
award under the principles of res judicata.  251 Va. at 435, 
468 S.E.2d at 905.  In the first arbitration proceeding, the 
landowners asserted a breach of contract based on alleged 
design and construction defects in a bulkhead.  Id. at 434, 
468 S.E.2d at 904.  The landowners argued that the second 
arbitration demand claiming breach of warranty was not 
identical to the first because the bulkhead had not failed at 
the time of the first demand.  Id.  We disagreed and 
 
38
specifically stated that “[l]abeling the claim a breach of 
warranty rather than a breach of contract [did] not alter the 
nature of the claim.”  Id. at 435, 468 S.E.2d at 904.  
Similarly, different labeling does not alter the fact that 
both of Davis’ claims arose out of a “definable factual 
transaction.” 
 
By analyzing identity of the cause of action in terms of 
the elements of the legal rights asserted and addressing that 
issue apart from the Allstar Towing definition of the term 
“cause of action,” the majority is also able to say that the 
facts necessary to prove Davis’ claim for fraud were different 
from the facts required to establish her breach of contract 
claim.  In Brown, we stated that “[t]he test to determine 
whether claims are part of a single cause of action is whether 
the same evidence is necessary to prove each claim.”  233 Va. 
at 216, 35 S.E.2d at 567. 
However, unlike the majority, I do not believe that the 
“same evidence test” should be construed in terms of the 
elements of the legal rights asserted, nor should it be 
applied so narrowly as to require each piece of evidence to be 
exactly the same in both cases.  See Restatement of Judgments 
(Second) § 25 cmt. b.  Otherwise, as I have already stated, a 
claim that “could have been litigated” in a prior proceeding 
would never be barred.  The doctrine of res judicata would 
 
39
apply only when an unsuccessful plaintiff re-files the 
identical claim based on the same legal theory. 
 
Thus, I conclude that the focus must be on the evidence 
that is “necessary” to successfully prove both claims.  Here, 
in order to prevail on her fraud claim, Davis had to establish 
the existence of the loans, the nonpayment of the notes 
evidencing those loans, and the amounts due and owing.  
Although that evidence, without more, would not have 
established fraud, it did prove the breach of contract.  In 
proving fraud, Davis at the same time proved breach of 
contract.  Under the particular facts of this case, the fraud 
claim subsumed the breach of contract claim.  For that reason, 
I conclude that the same evidence was necessary to prove both 
claims. 
 
Finally, I would be remiss if I failed to discuss the 
impact of my analysis and conclusions on this Court’s decision 
in Carter v. Hinkle, 189 Va. 1, 52 S.E.2d 135 (1949).  The 
issue presented there was whether a person who had sustained 
both property damage and personal injury as the result of a 
single negligent act of a defendant could maintain two 
separate actions for the injuries or was a judgment obtained 
in an action for the property damage a bar to a subsequent 
action to recover for the personal injury.  Id. at 3, 52 
S.E.2d at 136.  Aligning ourselves with the minority view, 
 
40
this Court held that the common law rule allowing two actions 
in this situation still applied because the General Assembly 
had not changed or altered the common law in that respect.  
Id. at 12, 52 S.E.2d at 140. 
 
I acknowledge that the separation of law and equity 
played no role in that decision.  However, I conclude that the 
rationale for the holding in Carter remains sound in the 
particular situation presented there.  In 1977, the General 
Assembly abrogated the common law with regard to pleading tort 
and contract claims in the same proceeding by  enacting Code 
§§ 8.01-272 and –281.  But, it did not alter the particular 
common law rule discussed in Carter even though the enactment 
of those statutes promotes judicial economy and an end to 
litigation while the common law rule in Carter does not. 
 
Similarly, the General Assembly enacted Code § 8.01-6.1 
in 1996.  That statute states that an amendment of a pleading 
changing or adding a claim or defense relates back to the 
original pleading for purposes of the statute of limitations 
if, among other things, “the claim or defense asserted in the 
amended pleading arose of the conduct, transaction or 
occurrence set forth in the original pleading.”  The statute 
altered the limited definition of the term “cause of action” 
 
41
employed by this Court in Vines v. Branch, 244 Va. 185, 418 
S.E.2d 890 (1992).2
 
As with the enactment of Code §§ 8.01-272 and –281, the 
passage of Code § 8.01-6.1 reflected the General Assembly’s 
shift to a transactional approach, but again the General 
Assembly left intact the common law rule followed in Carter.  
See Weathers v. Commonwealth, 262 Va. 803, 805, 553 S.E.2d 
729, 730 (2001) (General Assembly, when acting in an area, is 
presumed to know the applicable law as stated by an appellate 
court).  And, I believe that it did so for good reasons.  
After an automobile accident causing injury to person and 
property, “[q]uestions involving the rights of automobile 
insurance carriers, both liability and collision, rights of 
assignees, receivers, trustees in bankruptcy, and subrogees, 
render it essential in certain cases to allow one action for 
                     
2 In Vines, we concluded that an amendment alleging breach 
of contract to a plaintiff’s original motion for judgment in 
tort for the recovery of property stated a new cause of cause, 
and was thus barred by the applicable statute of limitations, 
because different elements needed to be proved and a different 
measure of recovery would apply.  244 Va. at 189, 418 S.E.2d 
at 893.  Notably, both the original motion for judgment and 
the amendment arose out of the same transaction, specifically 
the events surrounding the plaintiff’s purchase of an 
automobile and the defendant’s placing the title of the 
vehicle in her name and retaining possession of it. 
The majority’s analysis regarding identity of the cause 
of action is not consistent with the General Assembly’s 
enactment of Code § 8.01-6.1 in response to the decision in 
Vines. 
 
42
personal injury and another for property damage.”  Carter, 189 
Va. at 12, 52 S.E.2d at 140. 
 
For these reasons, I conclude that the doctrine of res 
judicata bars litigation of the present case alleging breach 
of contract.  Therefore, I respectfully dissent and would 
affirm the judgment of the circuit court. 
JUSTICE LEMONS, dissenting. 
I join Justice Kinser’s dissent in every respect and 
write separately only to emphasize the potential consequences 
of the majority opinion. 
In essence, the majority pretends that the Court never 
decided Bates or Allstar Towing and ignores the special 
definition of “cause of action” adopted for the express 
purpose of res judicata analysis.  In Bates, 214 Va. at 672 
n.8, 202 S.E.2d at 921 n.8, we clearly stated that “[a] ‘cause 
of action’, for purposes of res judicata, may be broadly 
characterized as an assertion of particular legal rights which 
have arisen out of a definable factual transaction.” 
In Allstar Towing, we quoted the passage above from 
Bates, and in determining that res judicata did not bar the 
successive action, we stated the following: “In sum, the legal 
rights asserted in the second action arose from a factual 
transaction that was different from the factual transaction 
 
43
giving rise to the assertion of legal rights in the first 
action.”  Allstar Towing, 231 Va. at 425, 344 S.E.2d at 906. 
It is unmistakable that the Court embraced a 
transactional analysis for the purpose of res judicata.  In 
doing so Virginia joined the majority of states.  Today, 
without acknowledging its reversal, the majority ignores the 
special definition of “cause of action” for res judicata 
purposes and reverts to the national minority on this issue of 
great importance to individuals and businesses alike. 
It is commonplace for a single transactional event to 
provide the foundation for multiple lawsuits.  See, e.g., 
Simmons v. Miller, 261 Va. 561, 544 S.E.2d 666 (2001); 
Feddeman & Co. v. Langan Assocs., 260 Va. 35, 530 S.E.2d 668 
(2000).  In the hypothetical case of a business dispute that 
spawns multiple theories of recovery, the majority opinion 
would permit separate and successive lawsuits between the same 
parties on theories of breach of contract, breach of fiduciary 
duty, common law conspiracy, statutory conspiracy, common law 
fraud, constructive fraud, and conversion.  Under the majority 
opinion, unless all of the elements are identical, res 
judicata would not prohibit successive suits between the same 
parties.  Of course, the reason there are separate legal 
theories is precisely because there are differences in the 
elements of the causes of action. While the extent of 
 
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potential harassment of litigants and misuse of judicial 
resources may be affected by the application of collateral 
estoppel to narrow the matters subject to proof, and the 
expiration of the statute of limitations may preclude a 
particular cause of action, the reality of successive suits, 
even in different venues, remains a potential consequence of 
the majority opinion. 
As these causes of action have proliferated in American 
law, a restraining concept designed to promote judicial 
efficiency and avoid harassment of litigants developed.  That 
concept was the transactional analysis approach to the 
application of the doctrine of res judicata.  While a litigant 
could pursue multiple theories of recovery, the transactional 
approach would permit such multiplicity, but only if the 
courts and litigants were required to meet such challenges in 
one proceeding.  With a transactional analysis, the correct 
balance is achieved between access to the courts for 
remediation of wrongs and freedom from successive harassment, 
while husbanding judicial resources.  Perhaps that is why the 
majority of jurisdictions have taken such an approach.  
Perhaps that is why Virginia did as well in Bates and Allstar 
Towing.  Perhaps that is why the General Assembly adopted a 
transactional analysis as a predicate for Code §§ 8.01-272 and 
–281.  Perhaps that is why it is so perplexing to witness this 
 
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inexplicable retreat in the face of such overwhelming 
justification for transactional analysis in the application of 
res judicata. 
I dissent. 
 
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