Opinion ID: 2257541
Heading Depth: 1
Heading Rank: 3

Heading: The Foundation for Applying Collateral Estoppel

Text: When ensuring that the foundational requirements of collateral estoppel have been met, we apply the test quoted above and consider whether: (1) the issue [was] actually litigated and (2) determined by a valid, final judgment on the merits; (3) after a full and fair opportunity for litigation by the parties or their privies; (4) under circumstances where the determination was essential to the judgment, and not merely dictum. Davis, 663 A.2d at 501 (internal citations omitted). The first, second, and fourth elements of this test are easily satisfied. The issue of whether prostitution was taking place on the premises was actually litigated and determined in the landlord-tenant action; indeed, Judge Rankin characterized it as a core finding. This determination was essential to the judgment and that judgment was certainly final, having been appealed to this court and upheld in an unpublished memorandum of judgment. Of the four elements, only the thirdwhether there was a full and fair opportunity for litigation by the parties or their privies presents any real issue in the present case. The main thrust of Modiri's argument is that he was not a party to the landlord-tenant action and, therefore, cannot be bound by the decisions reached in that case. While it is true that appellant was not a party to the previous action, the third part of our test actually applies to the parties or their privies.  Davis, 663 A.2d at 501 (emphasis supplied). See Howard Univ. v. Lacy, 828 A.2d 733, 736 (D.C.2003); Newell, 741 A.2d at 36; Smith v. Jenkins, 562 A.2d 610, 617 (D.C.1989). As explained in MOORE'S FEDERAL PRACTICE, the Parklane Hosiery criteria for assessing fairness of course presume that the defendant (and party to be bound) in the second action was either a party in the prior action, or was in privity with a party to the prior action, and that issue preclusion is otherwise applicable. 18 id. at § 132.04[2][c][iii], p. 132-165 (emphasis added; footnotes omitted). The crucial question in this case is whether appellant Modiri was in privity with the original defendant, Creative Hairdressers. A privy is one so identified in interest with a party to the former litigation that he or she represents precisely the same legal right in respect to the subject matter of the case. Smith, 562 A.2d at 615. The orthodox categories of privies are `those who control an action although not parties to it . . . ; those whose interests are represented by a party to the action. . . ; [and] successors in interest. Id. (quoting Lawlor v. National Screen Serv., 349 U.S. 322, 329 n. 19, 75 S.Ct. 865, 99 L.Ed. 1122 (1955)). [4] 18 MOORE'S FEDERAL PRACTICE § 132.04[1][b][iv] at p. 132-148 (defining the three types of sufficiently close relationships that establish privity as 1) a successor to a party's property interest; 2) a nonparty that controlled the original suit; and 3) a nonparty whose interests were represented in the original suit). As the trial court recognized, Creative Hairdressers represented during the landlord-tenant action the same legal interest that Modiri now asserts. Creative Hairdressers defended the suit by attempting to demonstrate that Modiri was not conducting an illegal business. It should have been clear that if Creative Hairdressers lost and was evicted, the subtenants would, likewise, be evicted. Similarly, had Creative Hairdressers defeated the action, Modiri would have benefitted. Indeed, the attorney for Creative Hairdressers asked Modiri to testify about activities at the tanning/massage parlor, but Modiri declined, sending, instead, the manager he claimed was more familiar with the everyday running of the business. Although this witness was called to testify on behalf of Creative Hairdressers, its attorney later acknowledged that she virtually made the case for prostitution. This turn of events required the attorney to argue against [his] own witness during closing arguments. There is ample evidence that Modiri knew about the original landlord-tenant litigation. Modiri admitted that he was told of the prostitution allegations in early March, and Benson Fischer testified that he had several conversations with Modiri warning that eviction and serious financial repercussions would follow if Modiri was engaged in illegal activity. Fischer's recollection of these conversations is corroborated by a letter from Fischer to Modiri dated March 6, 2001. Barry Haberman, the attorney for Creative Hairdressers, testified that he kept Modiri informed about the litigation, which commenced on March 17, 2001, and, as mentioned earlier, asked Modiri to testify. Although Modiri knew of the action no later than March and the landlord-tenant decision was not issued until May 10, Modiri made no effort to involve himself more formally in the litigation. He wanted as much as possible to keep his name out of the controversy. However, this reticence does not undermine the conclusion that Modiri shared a common interest in the litigation with Creative Hairdressers. See Smith, 562 A.2d at 617 (Smith's nonparticipation in that suit does not negate the fact that he was in privity with parties who actually represented his interests. . . .). The conclusion that Modiri's interests were aligned with those of Creative Hairdressers is driven home by the fact that they shared the same lawyer. Although Barry Haberman appeared on behalf of Creative Hairdressers in the landlord-tenant litigation, he and Creative expected that Modiri would pay his fees. Moreover, Haberman directly represented Modiri. Judge Rankin concluded that Farzad Michael Modiri retained the services of Barry Haberman, Esquire, to participate in the landlord/tenant action on his behalf for the purpose of defeating the landlord's contention that illegal activities were occurring on the third floor of the leased premises. Modiri vigorously contests this finding on appeal, but it certainly is not clearly erroneous. [5] To the contrary, it is solidly supported by the record. We therefore conclude that Modiri was in privity with the original defendant, Creative Hairdressers. It is the very nature of non-mutual collateral estoppel that at least one party to the new lawsuit was not a party to the previous litigation. The case now before us appears somewhat unusual because neither the plaintiff nor the defendant was a party to the landlord-tenant litigation. Rather, each stands in privity with a party to that action. We have never faced this permutation of collateral estoppel in the District of Columbia, at least in a published opinion. However, decisions in other jurisdictions have upheld the application of collateral estoppel when a new plaintiff sued a new defendant. For example, in Iowa, a young man who was driving his father's automobile struck and killed a woman. Dettmann v. Kruckenberg, 613 N.W.2d 238 (Iowa 2000). A criminal trial of the son followed, and he was found guilty of vehicular homicide. Id. at 241. The victim's husband then filed a wrongful death action against the father, the owner of the vehicle. The Supreme Court of Iowa held that the father was in privity with his son and was, therefore, precluded from arguing in the wrongful death action that his son was not driving the car at the time of the collision. Id. at 249. The Iowa court identified several factors which persuaded it to hold that the father was in privity with his son. First, ... [the father] himself testified in the criminal case and therefore had the opportunity to present any relevant evidence concerning the driver issue. Second, an identity of interests existed between [father and son] at the time of the criminal proceeding. [Mr. Kruckenberg], as [the criminal defendant's] father and the vehicle owner, had a great personal interest in seeing that all evidence relevant to [the criminal defendant's] defense was presented in the criminal trial. Additionally, [the father] should have been on notice that he was subject to potential civil liability ... concerning [the son's] fault in causing the accident. Id. In Dettmann, therefore, a new plaintiff, the victim's husband, used a previously adjudicated issue of fact against a new defendant who stood in privity with the original defendant. A to Z Assoc. v. Cooper, 161 Misc.2d 283, 613 N.Y.S.2d 512, 517 (N.Y.Sup.Ct.1993), is a trial court decision with some striking similarities to Dettmann. The plaintiffs, Thomas Andrews, an attorney, and Christ Zois, a psychiatrist, formed a partnership to market Gloria Vanderbilt Cooper's art and designs. They (and their partnership) sued for breach of contract, while Cooper counter-claimed for, among other things, fraud and breach of fiduciary duty. Her allegations were based on the actions of Andrews, who made various improper payments to himself and others while acting as [Cooper's] lawyer and business manager. Id. at 519. Andrews faced disciplinary charges, and the bar found that `by early 1980, and with the able assistance of Dr. Zois, Andrews began misappropriating [Cooper's] assets and diverting them to himself and Dr. Zois. Id. Dr. Zois testified on behalf of his partner, but Andrews was still disbarred. Based upon the bar's findings and the legal principle that an attorney's violation of his ethical duties to his client results in denial of all compensation, id., the trial judge dismissed the breach of contract claims brought by Andrews. During the civil proceedings, Cooper sought to use the issues decided in the attorney discipline case both offensively and defensively. She invoked the finding that funds had been misappropriated to relieve her of any contractual obligation to pay the partners, and she argued that the findings of breach of fiduciary duty and misappropriation of funds barred relitigation of those facts in connection with her counter-claims. The court held that Cooper could use the findings not only against Andrews, the subject of the attorney discipline case, but also against Zois and the partnership, as privity existedthe activities of Andrews were performed on behalf of the partnership, his commissions were paid to the partnership, and a partnership is a traditional relationship of privity. Furthermore, the court found that Zois had participated in the disciplinary hearing; he was called as a witness and testified on Andrews' behalf, and [d]ue to the serious allegations of misconduct committed by him [and various provisions of New York partnership law], Dr. Zois clearly had every incentive to assist Andrews in the disciplinary proceedings. Id. at 517. So, in Cooper, a new plaintiff (Cooper instead of the disciplinary board) sued different defendants (Zois and the partnership) that stood in privity with the original defendant (Andrews) and was allowed to use offensive collateral estoppel to prove essential elements of her suit. Although it arose in a somewhat different procedural posture, [6] we also find the decision in DeLisle v. Avallone, 117 N.M. 602, 874 P.2d 1266 (Ct.App.1994), to be instructive. In DeLisle, a client hired an attorney to exercise a right of redemption of a mortgage. However, the petition for redemption was dismissed because the attorney had not filed it in a timely manner. After failing to overturn that ruling, the client sued the attorney for malpractice, and the trial court precluded the attorney from relitigating the issue of timeliness. Id. at 1268. The Court of Appeals upheld this application of collateral estoppel, concluding that the issue of timeliness had been actually litigated during the first case, when the attorney had been in privity with his client. Id. at 1270. Privity had been established because the attorney had sufficient control over the prior case and an interest in the outcome of the redemption hearing. He knew that an untimely filing could, and ultimately did, subject him to liability. Id. Dettmann, DeLisle, and Cooper parallel the case before us in several ways. Like the father in Dettmann, Modiri had the opportunity to present any relevant evidence concerning whether prostitution was taking place in the space he had leased. That Modiri chose not to testify (unlike the privies in Dettmann and Cooper ), but instead sent the manager of the business, does not negate the fact that he was given the opportunity to present any relevant evidence. Secondly, as we have already discussed, there was a clear identity of interests between the original defendant, Creative Hairdressers, and appellant Modiri. This factor was also emphasized in Dettmann, DeLisle, and Cooper. Furthermore, the terms of his lease [7] put Modiri on notice that he faced potential civil liability if the court determined that prostitution was occurring inside Tan Q. Cf. DeLisle (where the attorney knew that a finding of untimeliness could subject him to an attorney malpractice suit in the future). Thus, in the words of Dettmann, Modiri had, or should have had, a great personal interest in seeing that all evidence relevant to refute the allegations of prostitution was presented in the previous trial. We need not agree with every aspect of the analysis in Dettmann, DeLisle, and Cooper in order to find those decisions helpful. They reinforce our conclusion that the foundational requirements for applying collateral estoppel have been satisfied because Modiri was in privity with Creative Hairdressers.