Opinion ID: 1288202
Heading Depth: 1
Heading Rank: 6

Heading: transactional approach to res judicata

Text: In ascertaining the proper test to be applied to the element of res judicata requiring identity of the cause of action, the Majority properly applies the transactional test, which was in place in Virginia at the time the complaint in the action underlying this appeal was filed in the Circuit Court of Boone County: October 1998. [7] Indeed, in April 1996, relatively close in time to the period pertinent to this action, the Supreme Court of Virginia applied the transactional approach to the issue of res judicata in the case of Waterfront Marine Construction, Inc. v. North End 49ers Sandbridge Bulkhead Groups A, B and C, 251 Va. 417, 468 S.E.2d 894, 904 (1996), wherein the Supreme Court of Virginia observed that even though the first demand described only specific defects, the doctrine of res judicata applies to all claims which could have been brought, thereby preventing a party from splitting his cause of action. (Emphasis added). Furthermore, Virginia courts have recognized that, both traditionally and during the period of time relevant to this case, Virginia has applied the transactional approach. The Virginia Supreme Court applies the... transactional analysis in considering the scope of a transaction for the application of res judicata.... In Trout v. Commonwealth Transp. Commissioner, 241 Va. 69, 73, 400 S.E.2d 172 (1991), the Supreme Court discussed this broad transactional concept: An action and a cause of action are quite different. Action is defined by Code § 8.01-2, as noted above.[ [8] ] We defined cause of action in Roller v. Basic Construction Co., 238 Va. 321, 327, 384 S.E.2d 323, 326 (1989), as a set of operative facts which under the substantive law, may give rise to a right of action. Virginia follows the transaction rule set forth in the Restatement of Judgments 2d, § 24 for purposes of defining cause of action. One cause of action may give rise to myriad rights of action, e.g., breach of contract, breach of warranty, negligence, and statutory claims; however, if the rights of action arise from the same operative set of facts and could legally be asserted therein, they are all the same cause of action for purposes of the application of the doctrine of res judicata. Lake Holiday Country Club, Inc. v. Teets, Nos. 00-44, 00-46, 00-47, & 00-70, 2001 WL 34037926, at  (Va.Cir.Ct.2001). See also Cherokee Corp. of Linden, Virginia, Inc. v. Richardson, Chancery No. 95-130, Chancery No. 96-34, now Law No. L-96-148, 1996 WL 1065553, at  1 (Va.Cir.Ct. June 5, 1996) (As can be seen, Virginia follows the transaction rule set forth in the Restatement of Judgments 2d, § 24 for purposes of defining 'cause of action.'); Davis v. Marshall Homes, Inc., 265 Va. 159, 576 S.E.2d 504, 515 (2003) (Kinser, J., dissenting) (observing, in case which post-dated the present action, that majority opinion overruled transactional approach that previously applied, commenting [i]n truth, the effect of the majority's explicit rejection of a transactional approach is to overrule our decision in Allstar Towing. However, the majority does not explain why this precedent should be cas[t] aside.). The dissent argues that the transactional approach was not so clearly established in Virginia; however, the dissent points to no case that would apply to the instant action and require application of a rule other than the transactional approach. Furthermore, the dissent contains notable error. For example, the dissent represents that the case of Flora, Flora & Montague, Inc. v. Saunders, 235 Va. 306, 367 S.E.2d 493 (1988), applied the best evidence test. To the contrary, Saunders actually set out the transactional approach as the appropriate test: A valid, personal judgment on the merits... bars relitigation of the same cause of action, or any part thereof which could have been litigated, between the same parties and their privies A claim arising from an indivisible contract cannot be split and made the subject of separate actions, ... but, being a single cause of action, must be litigated in one suit.... The law does not permit the owner of a single or entire cause of action or an entire or indivisible demand ... to divide or split that cause or demand so as to make it the subject of several actions. The whole cause must be determined in one action. If suit is brought for a part of a claim, a judgment obtained in that action precludes the plaintiff from bringing a second action for the residue of the claim, notwithstanding the second form of action is not identical with the first, or different grounds for relief are set forth in the second suit. This principle not only embraces what was actually determined, but also extends to every other matter which the parties might have litigated in the case. Saunders, 367 S.E.2d at 495 (quotations and citations omitted). The dissent also incorrectly implies that Bates v. Devers, 214 Va. 667, 202 S.E.2d 917 (1974), utilized the same evidence test. Bates, in fact, applied the transactional approach as demonstrated by that Court's finding that [a] valid, personal judgment on the merits in favor of defendant bars relitigation of the Same [sic] cause of action, or any part thereof which could have been litigated, between the same parties and their privies. (Citing Restatement of Judgments §§ 47, 62, 83 (1942)). 202 S.E.2d at 920-21. In a footnote, the Bates Court went on to state that [a] `cause of action', for purposes of res judicata, may be broadly characterized as an assertion of particular legal rights which have arisen out of a definable factual transaction.  202 S.E.2d at 921 n. 8 (emphasis added). [9] As the Majority opinion correctly notes, the Boone County action is barred by res judicata under the transactional approach that is applied pursuant to Virginia law, because the claims asserted in the instant action arise from the same operative set of facts involved in the earlier Virginia action.