Opinion ID: 1664339
Heading Depth: 1
Heading Rank: 3

Heading: analysis

Text: CNH argues that the Tallapoosa Circuit Court erred by entering a summary judgment in favor of McDonald on the grounds of res judicata because, it argues, the requirements for res judicata are not satisfied. CNH contends that there is no final judgment on the merits, that the parties in the two actions are not the same, and that the administrative appeal and the civil action are not the same causes of action because different standards of proof apply in the administrative appeal and the civil action. CNH also argues that even if res judicata or collateral estoppel does apply, McDonald should be estopped from raising those affirmative defenses because it was she who compelled CNH to elect which action it would pursue, and it is that election that resulted in the dismissal of CNH's administrative appeal in the Coosa Circuit Court. We initially address whether the affirmative defenses of res judicata and collateral estoppel apply to procedurally bar CNH's civil action in the Tallapoosa Circuit Court. Res judicata and collateral estoppel are two closely related, judicially created doctrines that preclude the relitigation of matters that have been previously adjudicated or, in the case of res judicata, that could have been adjudicated in a prior action. `The doctrine of res judicata, while actually embodying two basic concepts, usually refers to what commentators label claim preclusion, while collateral estoppel ... refers to issue preclusion, which is a subset of the broader res judicata doctrine.' Lee L. Saad Constr. Co. v. DPF Architects, P.C., 851 So.2d 507, 516 (Ala.2002) (quoting Little v. Pizza Wagon, Inc., 432 So.2d 1269, 1272 (Ala.1983) (Jones, J., concurring specially)). Two causes of action are the same for res judicata purposes when the following four elements are satisfied: (1) a prior judgment on the merits, (2) rendered by a court of competent jurisdiction, (3) with substantial identity of the parties, and (4) with the same cause of action presented in both actions. Equity Res. Mgmt., Inc. v. Vinson, 723 So.2d 634, 636 (Ala.1998). If those four elements are present, then any claim that was, or that could have been, adjudicated in the prior action is barred from further litigation. Id. (citing Dairyland Ins. Co. v. Jackson, 566 So.2d 723, 725-26 (Ala.1990)). CNH denies that the first element of res judicata, a prior judgment on the merits, is satisfied because the final judgment McDonald relies upon is the Coosa Circuit Court's dismissal of its administrative appeal. CNH contends that the dismissal was not a prior judgment on the merits because the dismissal order recognized that CNH had elected to pursue the action in the Tallapoosa Circuit Court rather than the Coosa Circuit Court. McDonald responds that there is a final judgment on the merits because, she argues, the hearing officer's findings that McDonald had not engaged in dishonest or criminal behavior became final by operation of law when CNH dismissed its appeal and the statutory time allotted for appeal had elapsed. [5] We agree with McDonald that CNH's dismissal of its appeal from the decision of the administrative agency operates as a final judgment on the merits. CNH appealed the adverse decision of the hearing officer to the Coosa Circuit Court pursuant to § 25-4-95, Ala.Code 1975. CNH subsequently dismissed its appeal, and once CNH's time to appeal the decision of the hearing officer had elapsed, the dismissal of the appeal was effectively with prejudice. Ex parte Buffalo Rock Co., 941 So.2d 273, 278 (Ala.2006) ([An] agreement to dismiss personal-injury claim without prejudice precluded the filing of a new claim when plaintiff failed to present evidence indicating that agreement included waiver of the statute-of-limitations defense. (summarizing holding in Jones v. Phillips, 553 So.2d 106 (Ala.1989))). Once the time for appeal had expired, the hearing officer's decision that CNH had failed to adduce sufficient evidence proving that McDonald had committed fraud became a final judgment on the merits. We therefore conclude that the first element of res judicata is satisfied. The second element of res judicata is that the final judgment on the merits must have been rendered by a court of competent jurisdiction. This second element is satisfied because this Court has held that an administrative agency is empowered to issue decisions on matters that fall within the ambit of its statutory jurisdiction. `The rule which forbids the reopening of a matter once judicially determined by competent authority applies as well to the judicial and quasi-judicial acts of public, executive, or administrative officers and boards acting within their jurisdiction as to the judgments of courts having general judicial powers.' Limbaugh v. Board of Managers, City of Birmingham Ret. & Relief Sys., 628 So.2d 623, 624 (Ala.Civ.App.1993) (quoting Mahaffey v. Board of Managers, 515 So.2d 1261, 1262 (Ala.Civ.App.1987)). Because the hearing officer has statutory jurisdiction to render binding decisions on unemployment-compensation-benefit claims, the decision that McDonald was entitled to unemployment benefits was rendered by a court of competent jurisdiction. CNH argues that the third element of res judicata is not satisfied because, it says, the parties in the unemployment-compensation dispute differed from the parties in the civil action. CNH argues that the parties in the two cases are not substantially similar because the Department of Industrial Relations was a defendant in the unemployment-compensation action, but it is not a party in the civil action. McDonald contends that the parties in the two actions are substantially similar because CNH and McDonald were adverse parties in the unemployment-compensation dispute and are adverse parties in the civil action. We agree with McDonald. `[T]he party identity criterion of res judicata does not require complete identity, but only that the party against whom res judicata is asserted was either a party or in privity with a party to the prior action[.]' Dairyland Ins. Co. v. Jackson, 566 So.2d at 725 (quoting Whisman v. Alabama Power Co., 512 So.2d 78, 82 (Ala. 1987)). Our caselaw requires that there is a substantial identity of parties in the two actions. Ex parte Ford Motor Credit Co., 772 So.2d 437, 440 (Ala.2000). Substantial identity requires that the `parties be identical, sometimes referred to as the mutuality of estoppel requirement.' Stewart v. Brinley, 902 So.2d 1, 10 (Ala. 2004) (quoting McMillian v. Johnson, 878 F.Supp. 1473, 1520 (M.D.Ala.1995)). CNH is incorrect that the presence of the Department of Industrial Relations as one of the defendants in the unemployment-compensation action destroys the element of substantial identity of the parties in this case. CNH was adverse to McDonald in the unemployment-compensation action and is currently adverse to McDonald in this civil action. Therefore, CNH and McDonald satisfy the mutuality-of-estoppel requirement. The fourth and final element of res judicata is that the same cause of action must be present in both actions. McDonald argues that the two actions are the same for res judicata purposes because, she says, the conduct CNH claims was fraudulent and dishonest arises out of the same nucleus of operative facts. McDonald asserts that [b]oth the Coosa case (along with the administrative hearing) and the Tallapoosa case share one central issue: the reason for McDonald's discharge, i.e., the sufficiency of the evidence of her alleged defalcation. McDonald's brief at 20. CNH contends that the causes of action in the unemployment-compensation action and the civil action are not the same actions because, it says, the two actions serve different purposes. The purpose of the unemployment-compensation action was to determine McDonald's eligibility for unemployment benefits, but in the civil action CNH seeks monetary compensation for the fraudulent theft that CNH alleges McDonald engaged in while she was a CNH employee. We disagree. Discussing the same-cause-of-action element of res judicata, this Court has noted that `the principal test for comparing causes of action [for the application of res judicata ] is whether the primary right and duty or wrong are the same in each action.' Old Republic Ins. Co. v. Lanier, 790 So.2d 922, 928 (Ala.2000) (quoting Wesch v. Folsom, 6 F.3d 1465, 1471 (11th Cir.1993)). This Court further stated: `Res judicata applies not only to the exact legal theories advanced in the prior case, but to all legal theories and claims arising out of the same nucleus of operative facts.' 790 So.2d at 928 (quoting Wesch, 6 F.3d at 1471). As a result, two causes of action are the same for res judicata purposes `when the same evidence is applicable in both actions.' Old Republic Ins. Co., 790 So.2d at 928 (quoting Hughes v. Martin, 533 So.2d 188, 191 (Ala.1988)). In Broughton v. Merchants National Bank, 476 So.2d 97 (Ala.1985), this Court held that the same-cause-of-action requirement was satisfied under circumstances similar to those here. In that case, Elliott Broughton, an heir of the decedent, challenged the settlement of the decedent's estate because, he alleged, Merchants Bank, the administrator and executor of the estate, had mismanaged the assets of a living trust, thereby depriving Broughton of a portion of his testamentary disposition. The probate court disagreed and found that Merchants had properly administered Mrs. Broughton's estate. 476 So.2d at 99. Instead of appealing the decision of the probate court, Broughton filed a new complaint in the Mobile Circuit Court alleging negligence, willful and wanton neglect, reckless mismanagement of the trust, fraud, and conspiracy to defraud. Broughton contended that the doctrine of res judicata did not apply because he had not raised the tort claims in the contest challenging Merchants Bank's handling of the estate. 476 So.2d at 99-100. The trial court held that Broughton's claims were barred by the doctrine of res judicata, and this Court affirmed that decision, stating that the allegations asserted by Broughton in the probate court and the claims he now asserts in this case arose from the same nucleus of circumstances, those being Merchants' handling of the trust and the estate, as well as the alleged conflict of interest or fraud resulting therefrom. 476 So.2d at 102. This Court also concluded that the two actions were the same for res judicata purposes because Broughton ha[d] not presented in this action any new or different evidence from that which he presented in the probate court. 476 So.2d at 102. In this case, CNH defended against McDonald's unemployment-compensation action by arguing that her dishonest and criminal acts defrauded CNH of over $1,000,000 and disqualified her for unemployment-compensation benefits. After the hearing officer determined that McDonald was eligible to receive unemployment-compensation, CNH brought a civil action in the Tallapoosa Circuit Court alleging, among other charges, that McDonald had committed fraud, conspiracy to commit fraud, and civil theft. Like the conduct at issue in Broughton, the conduct that formed the basis of CNH's defense in the unemployment-compensation action and the conduct that forms the basis of CNH's claims in the civil action both arise out of the same nucleus of operative facts. Moreover, CNH would have to present substantially the same evidence in its civil action that it presented in its unemployment-compensation action because both cases require evidence directed at proving that McDonald defrauded CNH. CNH further contends that the unemployment-compensation action and this civil action are not the same cause of action for res judicata purposes because the standard of proof applied in the unemployment-compensation action differs from that applied in this civil suit. CNH points to language in the written decision of the appeals division of the Department of Industrial Relations that [t]he evidence does not show conclusively that the claimant misappropriated company funds or knowingly aided and abetted others in the theft of funds. CNH argues that this language illustrates that the appeals division applied a conclusive-evidence standard of proof in the unemployment proceeding and further contends that this conclusive-evidence standard is higher than the preponderance-of-the-evidence standard applied in civil cases. CNH argues that res judicata should not preclude it from bringing its claim against McDonald, because, it argues, CNH may be able to satisfy the lower preponderance-of-the-evidence standard. The language from the decision of the appeals division, however, is the only evidence CNH provides to substantiate its claim that the standard of proof in an unemployment-compensation proceeding is a conclusive-evidence standard. CNH does not cite any statute or caselaw that demonstrates that the standard of proof in unemployment-compensation proceedings is higher than the preponderance-of-the-evidence standard in civil cases. [6] `When an appellant fails to cite any authority for an argument on a particular issue, this Court may affirm the judgment as to that issue, for it is neither this Court's duty nor its function to perform an appellant's legal research.' Ex parte Showers, 812 So.2d 277, 281 (Ala.2001) (citing City of Birmingham v. Business Realty Inv. Co., 722 So.2d 747, 752 (Ala.1998)). Nor does CNH present an argument that the standard of proof in unemployment-compensation proceedings is higher than the general preponderance-of-the-evidence standard. [7] Therefore, because CNH has not demonstrated that the standard of proof in an unemployment-compensation proceeding is higher than that in a civil action, we are not persuaded that the two proceedings are different causes of action for res judicata purposes. We conclude that the four requirements for the application of res judicata have been satisfied and that CNH's claims against McDonald are barred. Because we find that CNH's civil action is barred by res judicata, we do not address McDonald's separate collateral estoppel argument. CNH asserts further that even if the affirmative defenses of res judicata and collateral estoppel are available to McDonald, she should be judicially estopped from raising those defenses because, it says, McDonald's argument that § 6-5-440 required CNH to elect whether to pursue its civil action in Tallapoosa County or its administrative appeal in Coosa County is inconsistent with her argument that the civil action is barred by the doctrine of res judicata. CNH contends that McDonald's maneuver in invoking the election statute forced it to choose between (1) pursuing the administrative appeal and attempting to disqualify McDonald from unemployment-compensation benefits, and (2) dismissing the administrative appeal, which permitted McDonald to receive unemployment benefits but which presumably was going to allow CNH to seek monetary damages for fraud and other claims in its civil action. McDonald, however, argues that she did not change her position throughout the course of the two proceedings because, she says, she has consistently maintained that the administrative appeal in the Coosa Circuit Court and the civil action in the Tallapoosa Circuit Court were the same cause of action. McDonald contends that under § 6-5-440, Ala.Code 1975, CNH is not permitted to pursue the same cause of action in two separate actions, and that she therefore properly exercised the statutory prerogative to have CNH elect which action it chose to pursue. For judicial estoppel to apply, `(1) a party's later position must be `clearly inconsistent' with its earlier position; (2) the party must have been successful in the prior proceeding so that judicial acceptance of an inconsistent position in a later proceeding would create `the perception that either the first or second court was misled' (quoting Edwards v. Aetna Life Ins. Co., 690 F.2d 595, 599 (6th Cir.1982)); and (3) the party seeking to assert an inconsistent position must derive an unfair advantage or impose an unfair detriment on the opposing party if not estopped. 532 U.S. at 750-51, 121 S.Ct. 1808. No requirement of a showing of privity or reliance appears in the foregoing statement of factors to consider in determining the applicability of the doctrine of judicial estoppel. Middleton v. Caterpillar Indus. Inc., 979 So.2d 53 (Ala.2007) (quoting Ex parte First Alabama Bank, 883 So.2d 1236, 1246 (Ala. 2003) (citing in turn New Hampshire v. Maine, 532 U.S. 742, 121 S.Ct. 1808, 149 L.Ed.2d 968 (2001))). We are not persuaded that judicial estoppel applies here. The procedural history supports McDonald's claim that she has maintained consistent positions throughout the two proceedings. She initially argued that the civil action pending in the Tallapoosa Circuit Court should have been transferred to the Coosa Circuit Court because the civil action and the administrative appeal were in fact two civil actions pending against her for the `same cause of action.' McDonald's brief at 24. After we held that the transfer was not authorized by § 6-5-440, Ala.Code 1975, McDonald asserted that CNH was required to elect which action it wished to pursue, because CNH was not entitled to pursue the same action against her in two different courts. Thus, McDonald never altered her position that the two cases were the same cause of action. After the decision of the hearing officer became final, McDonald raised the defense of res judicata on the ground that the Tallapoosa action had already been litigated. Thus, McDonald has maintained a consistent position, and we conclude that McDonald is not judicially estopped from raising the affirmative defenses of res judicata and collateral estoppel.