Opinion ID: 2460083
Heading Depth: 1
Heading Rank: 2

Heading: did appellant improperly split his cause of action?

Text: As stated before, Appellant first filed suit against the driver of the automobile at fault in the collision, the owner of the car, and an associated business. A settlement was reached in that action, resolving claims brought by Dan Watts' estate, by Elizabeth Watts for her loss of consortium, and by Elizabeth on Chad's behalf. This action was then filed solely on Chad's behalf by Elizabeth as next friend and guardian. Following entry of the judgment, this appeal was brought by Appellees. Before the Court of Appeals, Appellees presented a number of arguments, including that the trial court erred in failing to allow an instruction that would permit apportionment of fault to Chad's father for failing to secure Chad in a seat belt, that laches should be applied to prevent the bringing of this action because of the delay in filing suit against Appellees, and that the trial court impermissibly extended the dram shop rule by allowing the imposition of liability when the sale of the liquor was not made directly to the tortfeasor. The Court of Appeals used a combination of the laches argument and the dram shop argument to arrive at the resolution that: This appears to be a case in which the plaintiff has been allowed to split her cause of action and try it piecemeal, contrary to the subsidiary res judicata rule making that theory applicable not only to the issues disposed of in the first action, but to every point which properly belonged to the subject of that action. Egbert v. Curtis, Ky.App., 695 S.W.2d 123 (1985), citing Hays v. Sturgill, 302 Ky. 31, 193 S.W.2d 648 (1946). The rule against splitting causes of action is an equitable one which limits all causes of action arising out of a single transaction to a single suit rather than proceeding piecemeal in multiple actions. Capital Holding Corp. v. Bailey, Ky., 873 S.W.2d 187 (1994). Here the equities do slant in favor of the partnership. It is interesting that the liquor store was not mentioned at all in the 1985 action against the drunk driver and that this suit was commenced about six months after the release of Grayson Fraternal Order of Eagles v. Claywell, Ky., 736 S.W.2d 328 (1987), but about four months before the effective date of KRS 413.241. That statute was specifically limited to actions filed after July 15, 1988; Grayson was not specifically stated to be either retroactive or prospective. This is not to say that this cause of action against the owners of the liquor store, if valid under the principles set forth in Grayson , did not accrue prior to the rendering of that case: that represents a shift in common law which could have been asserted by Watts against K, S & H in the 1985 action as it was asserted at about that time by Claywell against the Grayson Fraternal Order of Eagles. Not only could it have been asserted at that time but it should have been asserted at that time and Watts' failure to do so constitutes an impermissible splitting of a cause of action which we cannot allow. It is our opinion that the Court of Appeals has erred in two ways in reaching that particular result: it has based its ruling on an issue that was not raised on appeal, and, in doing so, has misconstrued the rule against the splitting of actions. When the rule against splitting causes of action is examined, it becomes clear that the rule is a subsidiary of the doctrine of res judicata, a defense which must be affirmatively pled. Egbert, supra, at 124; CR 8.03. A thorough search of the record reveals that the defense was not specifically pled, but was asserted via a motion for summary judgment. The motion was denied by the trial court. Following the trial, Appellees' appeal raised a wide range of issues, but the closest the brief came to this particular claim of error was to argue that laches should have been used as a bar to this suit, an argument in equity rather than procedure. As previously stated, the court used the laches argument as a springboard to the grounds for reversal. Rather than basing our ruling on this procedural ground, however, we will address the correctness of the substantive ruling. The cases cited by all parties to this action are Egbert, supra ; Hays, supra ; and Capital Holding, supra . We also have reviewed Kirchner v. Riherd, Ky., 702 S.W.2d 33 (1985), wherein this Court set forth the basis for the rule against splitting causes of action and the legal reasoning therefore, saying: The theory for the prohibition against splitting a cause of action is barred largely on the ground that fairness to the defendant and sound judicial administration require that at some point litigation over a particular controversy be brought to a final conclusion. Kirchner, supra, at 35. The operative and important words in Kirchner and Egbert are the defendant, which refer to the defendant in the first action, against whom all claims must be raised at the time that action is brought. Kirchner concerned claims arising from an automobile accident which were brought successively in the small claims and circuit courts. Id. at 33. Egbert involved the same scenario, with the exception that the claim not brought should have been asserted as a compulsory counterclaim against the plaintiff in small claims court rather than being brought as a third-party claim in the circuit court action. Egbert, supra, at 124. Thus, the teaching of these cases is that when you sue a defendant in regard to a single transaction or event, you must raise all claims arising from that transaction or event. Hays , however, is a more complex opinion involving successive suits between the same parties concerning a deed. The first suit concerned the construction of the instrument, answering the question of whether the document was a deed or a will. The subsequent action concerned whether the grantor was of sound mind or acting under undue influence and whether certain payments were required under the terms of the deed. Hays, supra, 193 S.W.2d at 649. The earlier action was asserted as a bar, and the trial court dismissed. On appeal, the then Court of Appeals noted: The general rule for determining a question of res judicata embraces several conditions. The element primarily involved in this case is the question of identity of the two causes of action. The appellant denies identity.... [O]nly the construction of the writing was involved in the first case. Specifically, the issues were as to the character of the instrument, the identity of the grantees, and the kind of title conveyed. As to whether those whom the court decided were granted the title took it subject to a trust in favor of the other heirs was a question not raised. Id. at 649-50 Having held that further construction of the deed was a point which properly belonged to the prior litigation, the Court next considered whether the challenge to the execution of the document was likewise barred. Concluding that it was not, the Court said: A decree of construction of a deed or will does no more than to ascertain and determine the intent of the grantor or testator, as the case may be. It does not change its status nor augment or diminish its binding force.... So an action contesting the validity of deed is essentially upon a plea of non est factum, while a suit to construe the instrument is merely to ascertain the grantor's intention. A suit seeking to have it adjudged void because of incapacity to have any intention is an entirely different matter. Id. at 651. Thus the Court held that even successive suits between the same parties concerning the same instrument were not necessarily forbidden by the rule against splitting causes of action. This is so because the prior judgment is not necessarily conclusive of matters which were not germane to, implied in or essentially connected with the actual issues in the case although they may affect the ultimate rights of the parties and might have been presented in the former action. Hays, supra, at 648, quoting 34 C.J.S. 823, 911. The most recent case on the subject from this Court is Capital Holding, supra , wherein the plaintiffs in an asbestos suit sought to bring claims for both outrageous conduct causing severe emotional distress and negligence claims for exposure to asbestos fiber against the same defendant. Therein, this Court ruled that the claimants' severe emotional distress claim should be allowed to proceed to trial, but that the negligence suit was not yet ripe for adjudication because there was not yet any evidence that the asbestos exposure had caused an injury, there being no physical manifestations of injury shown. We noted that the rule against the splitting of actions has a number of exceptions, and the present situation provides such an exception because the plaintiffs cannot sue on the negligence claim before the cause of action accrues. This is the same equitable consideration that underlies the decision in the Louisville Trust Co. v. Johns-Manville Products Corp., Ky., 580 S.W.2d 497 (1979), case, extending the discovery rule to a claim otherwise cut off by a statute of limitations, and it is a corollary to our refusal to recognize a statute of repose cutting off a cause of action before it exists. See Tabler v. Wallace, Ky., 704 S.W.2d 179 (1985). Capital Holding, supra, at 193. The teachings of these cases are that to utilize the defense that the plaintiff has improperly split the cause of action, the actions must both involve the same parties and the relitigation of the same facts and issues. Egbert, supra, at 124. Additionally, the defense cannot be used to cut off a cause of action before it accrues. Each of these cases in essence demonstrates the application of the Restatement (Second) of Judgments, § 49 and 50, particularly that in § 49 which states: A judgment against one person liable for a loss does not terminate a claim that the injured party may have against another person who may be liable therefore. In the instant case, the issues were whether the Appellees, their agents, or employees negligently sold alcoholic beverages to a minor; whether they negligently failed to ascertain the age of the purchaser of the beverages; whether they knew, or should have known, the purchaser was a minor; whether they knew, or should have known, that the underage purchaser would share the beverages with other minors who consumed them; and whether that consumption resulted in the motor vehicle collision that caused the damages sought compensated. The parties are Chad Watts, by his next friend, and the Appellee. The earlier action brought against the teenage driver of the other vehicle sought damages for Chad Watts, individually, for his personal injuries; for the estate of his father, and for the father's personal injury and pain and suffering; for Chad's brother for the loss of parental consortium; and for Elizabeth Watts for her loss of consortium. Also named as defendants were the driver's parents and the corporate owner of the vehicle. Put simply, at issue were the negligent entrustment to, and operation of, the vehicle by the teenager, and the causation and magnitude of the damages suffered by the named plaintiffs. Theoretically, all of these claims could have been litigated in the same action, along with others that the fertile imagination of experience might devise, such as a cross-claim by the Neal family against current Appellees for negligence in selling the alcoholic beverages to the purchaser who may have negligently provided them to their son, as well as an action against that minor's parents since they are, perhaps, responsible for his actions. A broad reading of that part of Egbert which states that res judicata [is] applicable not only to the issues disposed of in the first action, but to every point which properly belonged to the subject of the litigation in the first action and which in the exercise of reasonable diligence might have been brought forward at the time, would foreclose all possible or potential claims against any known potential defendant not brought within the first litigation. Egbert, supra, at 124. The rule is simply not that broad, nor is it that simple to apply. The Court of Appeals erred in its holding.