Opinion ID: 2570630
Heading Depth: 1
Heading Rank: 4

Heading: History of claim and issue preclusion

Text: The meaning of the term res judicata has evolved over time in the judicial system and confusion continues among courts as to what res judicata encompasses. [5] In some jurisdictions the term includes both claim and issue preclusion, while in other jurisdictions claim and issue preclusion are separated, with res judicata referring to claim preclusion and collateral estoppel referring to issue preclusion. [6] There is a growing trend towards separating the two legal doctrines and referring to them as claim and issue preclusion in order to avoid confusion. [7] This change of terminology to claim and issue preclusion is useful, as the two doctrines have different preclusive effects. [8] Nevada's caselaw has similarly blurred the concepts of claim and issue preclusion but has moved towards adopting the terminology of claim and issue preclusion as separate legal doctrines. For many years the term res judicata was used to refer to either claim or issue preclusion. In the seminal res judicata case, University of Nevada v. Tarkanian , the court recognized a difference between claim and issue preclusion but still stated that both claim and issue preclusion fell under the doctrine of res judicata, stating that the concepts were two different species of res judicata. [9] The Tarkanian court enunciated the three-factor test outlined above but stated that the factors applied to res judicata generally; the court did not create different tests for claim and issue preclusion. The court, however, went on to outline differences between claim and issue preclusion. In addressing claim preclusion, the Tarkanian court stated that the doctrine is triggered when a judgment is entered. A valid and final judgment on a claim precludes a second action on that claim or any part of it. [10] Further, the court recognized that the claim preclusion doctrine embraces all grounds of recovery that were asserted in a suit, as well as those that could have been asserted, and thus has a broader reach than the issue preclusion doctrine. [11] In regards to issue preclusion, the Tarkanian court noted that it could apply when issues addressed in an earlier suit arose in a later suit between the parties. In order for issue preclusion to apply, there must be a common issue that was actually decided and necessary to the judgment in the earlier suit. . . . [12] This court emphasized that [t]he doctrine provides that any issue that was actually and necessarily litigated in one action will be estopped from being relitigated in a subsequent suit. [13] Following the Tarkanian decision, this court again addressed claim and issue preclusion in Executive Management v. Ticor Title Insurance Co. [14] In Executive Management, the court recognized that the term res judicata refers to only claim preclusion [15] and reiterated the explanation of differences between claim and issue preclusion previously outlined in Tarkanian. [16] The court held that the three-part test stated in Tarkanian applied to issue preclusion only, not claim preclusion. [17] While no definitive test for claim preclusion was set forth, the opinion contains the following summary: Pursuant to the rule of claim preclusion, a valid and final judgment on a claim precludes a second action on that claim or any part of it. Claim preclusion applies when a second suit is brought against the same party on the same claim. . . . We have further stated that the modern view is that claim preclusion embraces all grounds of recovery that were asserted in a suit, as well as those that could have been asserted, and thus has a broader reach than issue preclusion. [18] Thereafter, in LaForge v. State, University System , this court reaffirmed that the Tarkanian three-factor test only applied to issue preclusion. [19] It also clarified issue preclusion further, stating that [i]ssue preclusion may apply `even though the causes of action are substantially different, if the same fact issue is presented.' [20] The LaForge opinion did not discuss claim preclusion. The lack of a clear test for claim preclusion was further evident in Ayala v. Caesars Palace, when, in a footnote citing to Executive Management, the court stated that the test for claim preclusion was the same as for issue preclusion, except that it embraces not only the grounds of recovery that were asserted in the prior suit but those that could have been asserted. [21] This statement conflicted with the holding in Executive Management that the test pronounced in Tarkanian was only for determining whether issue preclusion applies. Finally, in Edwards v. Ghandour, [22] this court recently articulated a four-factor test for applying claim preclusion: (1) whether the parties are the same, (2) whether the first and second complaint are based on the same set of common facts, (3) whether the same relief is sought in the two complaints, and (4) whether an identity of causes of action exists between the two complaints. [23] Edwards cites to a 1965 opinion, Zalk-Josephs Co. v. Wells Cargo, Inc., [24] as support for this test. While Zalk-Josephs relied on these factors to conclude that res judicata applied in that case, the factors were referred to in an effort to show the similarity between the cases filed, not as a strict test for application of claim preclusion. Thus, Edwards improperly relied on Zalk-Josephs for its four-factor test, when that case did not provide sufficient authority to support such a test. [25] Furthermore, while Edwards finally sets forth a test for claim preclusion, the test is overly rigid in light of the purposes of claim preclusion previously established by this court. In particular, the third factor could be interpreted in such a way that a party could avoid claim preclusion by merely adding an additional claim for relief in their second suit. Such an outcome contradicts the purpose of the claim preclusion doctrine, which is to obtain finality by preventing a party from filing another suit that is based on the same set of facts that were present in the initial suit. As a result of this lack of clarity in our caselaw regarding the factors relevant to determining whether claim or issue preclusion apply, we take this opportunity to establish clear tests for making such determinations. We now specifically adopt the terms of claim preclusion and issue preclusion as the proper terminology in referring to these doctrines. This will help avoid confusion and interchanging use of the two separate doctrines and follows the trend adopted among several courts, including the United States Supreme Court. [26] In so doing, we incorporate the proper rules established by this court for each doctrine. In light of this clarification, Ayala and Edwards both contain statements regarding the application of claim preclusion that are now incorrect. We begin by setting forth the three-part test for determining whether claim preclusion should apply: (1) the parties or their privies are the same, (2) the final judgment is valid, [27] 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. [28] These three factors, in varying language, are used by the majority of state and federal courts. [29] This test maintains the well-established principle that claim preclusion applies to all grounds of recovery that were or could have been brought in the first case. [30] For application of the issue preclusion doctrine, we affirm the validity of the three factors outlined in Tarkanian, but we now add a fourth factor to that test to better clarify the distinction between claim and issue preclusion. Specifically, the fourth factor requires that the issue was actually and necessarily litigated. In both Tarkanian and Executive Management, this court recognized this requirement for issue preclusion but did not include it as a factor in the test for issue preclusion. [31] Accordingly, the following factors are necessary for application of issue preclusion: (1) the issue decided in the prior litigation must be identical to the issue presented in the current action; (2) the initial ruling must have been on the merits and have become final; . . . (3) the party against whom the judgment is asserted must have been a party or in privity with a party to the prior litigation; [32] and (4) the issue was actually and necessarily litigated. Thus, while claim preclusion can apply to all claims that were or could have been raised in the initial case, issue preclusion only applies to issues that were actually and necessarily litigated and on which there was a final decision on the merits. The reason for this distinction is because claim preclusion applies to preclude an entire second suit that is based on the same set of facts and circumstances as the first suit, while issue preclusion, as stated in LaForge, applies to prevent relitigation of only a specific issue that was decided in a previous suit between the parties, even if the second suit is based on different causes of action and different circumstances. [33] While both claim and issue preclusion could apply in some lawsuits, there is a clear need for both doctrines. As stated above, claim preclusion may apply in a suit to preclude both claims that were or could have been raised in a prior suit, while issue preclusion would not preclude those issues not raised in the prior suit. Likewise, there are situations in which issue preclusion may apply but claim preclusion would not. This situation occurred in United States v. Stauffer Chemical Co. [34] The Stauffer case involved an issue of whether private contractors were authorized representatives under the Clean Air Act for purposes of conducting inspections. [35] The Environmental Protection Agency had attempted to inspect a plant using private contractors, but the company that owned the plant refused to allow the inspection when the private contractors would not sign a nondisclosure of trade secrets agreement. [36] The United States Supreme Court determined that the issue of whether private contractors were authorized representatives had been decided in a previous suit involving the same company and the government but which involved a refusal to allow private contractor inspectors at a different plant location. [37] Based on this prior suit, the Court held that the government was precluded from relitigating this issue under the issue preclusion doctrine. [38] While claim preclusion could not have applied because the two suits involved completely different occurrences at different locations, the authorized representatives issue was the same in both cases, was decided on the merits in a final decision, involved the same government party, and was actually and necessarily litigated. [39] Thus, issue preclusion applied to prevent relitigation of the issue. [40] In the present matter, while issue preclusion does not apply because there was no litigation of the actual merits, in applying the claim preclusion test to the present matter, we conclude that the district court properly granted summary judgment in favor of Ruby.