Opinion ID: 2570630
Heading Depth: 1
Heading Rank: 5

Heading: Application of claim preclusion bars appellant's second suit

Text: As established above, for claim preclusion to apply the following factors must be met: (1) the same parties or their privies are involved in both cases, (2) a valid final judgment has been entered, and (3) the subsequent action is based on the same claims or any part of them that were or could have been brought in the first case. In this case, the first factor for claim preclusion is not in disputethe parties are identical in both the first and second case. As regards the other two factors, Five Star contends that they are not met because the dismissal in the first case was not decided on the merits and therefore cannot serve to preclude the second suit; and as the second suit sought both breach of contract and specific performance, while the first case only raised specific performance, claim preclusion does not apply. Five Star also argues that regardless of whether the factors are met, public policy concerns weigh in favor of allowing this case to proceed to trial. We conclude that Five Star's arguments lack merit for a number of reasons. [41] First, Five Star challenges the preclusive effect of the dismissal in the first suit by arguing that it was not a decision on the merits and nothing in the court order or the rule on which the dismissal in the first suit was based indicate that the dismissal was with prejudice. NRCP 41(b) resolves the question of whether the dismissal in the first case holds preclusive effect. NRCP 41(b) states, in relevant part, that [u]nless the court in its order for dismissal otherwise specifies, a dismissal under this subdivision and any dismissal not provided for in this rule, other than a dismissal for lack of jurisdiction, for improper venue, or for failure to join a party under Rule 19, operates as an adjudication upon the merits. As the dismissal in the first suit was based on a rule other than NRCP 41 and was not based on the lack of jurisdiction, improper venue, or failure to join a party exceptions, it falls under the any dismissal not provided for in this rule language and, thus, operates as an adjudication upon the merits. [42] While the United States Supreme Court has held that the adjudication upon the merits portion of FRCP 41(b), which is nearly identical to NRCP 41(b), does not automatically provide a basis for claim preclusion, [43] such is the recognized result in cases involving dismissal for failure to comply with court orders. [44] Furthermore, even under the Supreme Court's decision interpreting the adjudication upon the merits phrase, preclusion would apply in this case, as the Supreme Court ruled that the phrase is meant to preclude the refiling of the same claim in the same court in which the dismissal occurred. [45] As both lawsuits involved here were filed in Nevada state courts, it is clearly proper to give preclusive effect to the dismissal of the first suit. [46] Such a result supports the policy reasons behind claim preclusion. As stated in Restatement (Second) of Judgments section 19, comment a, the purposes of claim preclusion are based largely on the ground that fairness to the defendant, and sound judicial administration, require that at some point litigation over the particular controversy come to an end and that such reasoning may apply even though the substantive issues have not been tried, especially if the plaintiff has failed to avail himself of opportunities to pursue his remedies in the first proceeding.. . . Consequently, the dismissal in the first suit is properly considered a final judgment for claim preclusion purposes. Next, Five Star's argument that claim preclusion cannot apply because the second suit included an additional claim for breach of contract damages is erroneous. As explained above, claim preclusion applies to prevent a second suit based on all grounds of recovery that were or could have been brought in the first suit. Since the second suit was based on the same facts and alleged wrongful conduct of Ruby as in the first suit, the breach of contract claim could have been asserted in the first suit. As a result, claim preclusion applies, and the district court properly granted summary judgment in favor of Ruby.