Opinion ID: 2543348
Heading Depth: 3
Heading Rank: 2

Heading: Evelyn's Claims

Text: [¶ 27] The district court also dismissed Evelyn's claims. Like Lee, Evelyn maintained the appellees' wrongful conduct caused her to suffer damages including attorneys' fees from Lee's criminal case, damage to credibility and reputation, loss of value from a potential civil case, loss of consortium because of Lee's jail sentence, and civil tax penalties and interest. The district court ruled Evelyn was in privity with Lee in the criminal case because her claims derived entirely from Lee's conviction. The district court, therefore, concluded collateral estoppel barred her claims. [¶ 28] Collateral estoppel may be applied to one who was a party to the prior proceeding or to one who was in privity with a party. Tenorio, 931 P.2d at 238-39. Privity exists when there is a close or significant relationship between the party and the nonparty. Gambocz v. Yelencsics, 468 F.2d 837, 841 (3d Cir.1972); see also Seamon v. Bell Telephone Company of Pennsylvania, 576 F.Supp. 1458, 1461 (W.D.Pa.1983), aff'd, 740 F.2d 958 (3d Cir.1984); Restatement (Second) of Judgments § 85 cmt. f (1982). When a nonparty's interests are sufficiently represented by a party, the nonparty is considered to be a privy, and the preclusive effects of res judicata and collateral estoppel will apply to bar a subsequent action by a nonparty. First Options of Chicago, Inc. v. Kaplan, 913 F.Supp. 377, 383-84 (E.D.Pa. 1996); Eubanks v. Federal Deposit Insurance Corporation, 977 F.2d 166, 170 (5th Cir.1992); Restatement (Second) of Judgments § 85(2) (1982). A nonparty is adequately represented in a prior action when a party is so closely aligned to her interests as to be her virtual representative. Eubanks, 977 F.2d at 170. Thus, when the nonparty's claims derive from the claims asserted by the party, the nonparty will be bound by the prior judgment against the party. Id. [¶ 29] Most of Evelyn's asserted damages were actually injuries suffered by Lee; i.e., attorneys' fees from Lee's criminal case, damage to reputation and credibility, and loss of value from a potential civil case. It is questionable whether Evelyn could individually assert those claims for damages. In any event, we agree with the district court that, as to those claims, Evelyn was in privity with Lee. [¶ 30] In order to prove the damages from Lee's conviction were caused by the appellees' wrongful conduct, Evelyn had to establish that Lee relied upon the appellees' advice and services. As we stated earlier in this opinion, that issue was fully litigated in the criminal case. The jury determined Lee acted willfully and did not rely in good faith upon the appellees' advice and services. Evelyn's claims derived entirely from Lee's conviction, and her interests were identical with Lee's interests in the criminal case. Evelyn is, therefore, bound by the determinations made in the criminal case. [¶ 31] Evelyn also presented a claim for loss of Lee's consortium while he served his prison term. In Wyoming, a claim for loss of consortium is derivative of the injured party's claim. See, e.g., Massengill v. S.M.A.R.T. Sports Medicine Clinic, P.C., 996 P.2d 1132, 1137 (Wyo.2000); Verschoor v. Mountain West Farm Bureau Mutual Insurance Company, 907 P2d 1293, 1301 (Wyo.1995). Therefore, if the injured party's claim fails, the loss of consortium claim must also fail. Massengill, 996 P.2d at 1137. The district court correctly concluded that, because Lee's claims were barred, Evelyn could not maintain her loss-of-consortium claim. [¶ 32] Finally, Evelyn asserted the appellees' wrongful conduct caused her to incur civil tax penalties and interest. Illustration 11 of Restatement (Second) of Judgments § 85 (1982) recognizes the spouse of a person convicted of tax fraud may be independently liable for civil penalties and the criminal judgment is not preclusive against the spouse: 11. [The husband] is convicted of the crime of fraudulently understating his income tax liability. The government then brings a civil action against [the wife], [the husband's] spouse, to recover a civil penalty based upon the same tax return. The judgment in the criminal prosecution is not preclusive against [the wife] as to issues concerning [the wife's] liability for the penalty. [¶ 33] The Tenth Circuit Court of Appeals has similarly recognized that spouses are separate and distinct income taxpayers even when they file joint tax returns. Tavery v. United States, 897 F.2d 1032, 1034 (10th Cir.1990). Consequently, a tax liability determination against one spouse is not preclusive against the other spouse in a subsequent case. Id. `[A] wife who files a joint return with her husband is not a party privy to her husband in [income tax] litigation.' Id. (quoting Henry M. Rodney v. Commissioner of Internal Revenue, 53 T.C. 287, 307, 1969 WL 1680 (1969)). [¶ 34] Applying this rationale to the case at bar, we conclude, with regard to her individual liability for civil tax penalties, Evelyn was not in privity with Lee. Thus, Evelyn's claims against the appellees for wrongful conduct which resulted in civil tax penalties being assessed against her are not barred as a result of Lee's criminal conviction.