Opinion ID: 6535638
Heading Depth: 3
Heading Rank: 1

Heading: Validity of the Trust

Text: [¶15] The district court did not reach the merits of Lisa's challenge to the trust's validity. On this issue, the district court ruled: Robert Redland and Lisa Kimsey challenged the legality and validity of the 1989 Trust in Redland 1. The Supreme Court held it to be a valid and binding Trust. Although they now attack the validity of the Trust on other grounds, it should have been done at the time of the original challenge. Each of the beneficial owners have relied on the efficacy of the Trust, have purchased their share of the Trust, and some have made other improvements to Trust property. (Emphasis added.) The district court's ruling implies it is based on estoppel principles, though the court did not specify whether its decision rested on res judicata (also referred to as claim preclusion), collateral estoppel (also referred to as issue preclusion), or judicial estoppel grounds. Regardless, we may affirm the district court's decision on any proper ground appearing in the record. Redland II , ¶ 17, 346 P.3d at 866 (citations omitted). Application of res judicata, collateral estoppel, or judicial estoppel is a question of law that we review de novo. Ultra Res., Inc. v. Hartman , 2015 WY 40 , ¶ 58, 346 P.3d 880 , 900 (Wyo. 2015) (citation omitted). [¶16] Res judicata bars the relitigation of claims or causes of action that were or could have been raised in the prior litigation. See, e.g. , Pokorny v. Salas , 2003 WY 159 , ¶ 12, 81 P.3d 171 , 175 (Wyo. 2003) (citations omitted); Cermak v. Great W. Cas. Co. , 2 P.3d 1047 , 1054 (Wyo. 2000) (citations omitted). Res judicata serves several purposes: to promote judicial economy and finality, prevent repetitive litigation, avoid inconsistent results, and increase certainty in judgments. 46 Am. Jur. 2d Judgments § 444 (Nov. 2018 Update) ; Tozzi v. Moffett , 2018 WY 133 , ¶ 16, 430 P.3d 754 , 759-60 (Wyo. 2018) (citations omitted); In re Paternity of JRW , 814 P.2d 1256 , 1264 (Wyo. 1991) (citations omitted). [¶17] Four elements must be met for res judicata to apply: (1) identity in parties; (2) identity in subject matter; (3) the issues are the same and relate to the subject matter; and (4) the capacities of the persons are identical in reference to both the subject matter and the issues between them. Tozzi , ¶ 16, 430 P.3d at 760 (citation omitted). Lisa concedes element one is met because the  parties in the prior and current litigation are the same. However, she contends that res judicata is inapplicable and does not bar her claim that the trust is invalid because she participated in Redland I in her individual capacity, not as trustee, and solely in relation to the validity of certain lease agreements and not as to the validity of the trust. [¶18] In analyzing whether res judicata bars Lisa's invalid trust claim, a more detailed review of the issues involved in Redland I is helpful. In Redland I , Lisa's siblings sued Lisa in her individual capacity to void leases that Robert, as trustee, granted to Lisa and her husband without approval of the co-trustee, as required by the 1995 Amendment. Redland I , ¶ 39, 288 P.3d at 1183 . The amended complaint specifically sought declaratory judgment that [t]he Redland Family Trust requires any action of the trust to be approved by two trustees and any action taken without that approval is void; and that the lease of trust lands Robert Redland made to Lisa and Mike Kimsey is void for failure to obtain approval by two trustees. Id. Robert, individually and as trustee, counterclaimed and requested declaratory relief that the trust, as amended, was void for violating the rule against perpetuities. Id. ¶¶ 39-41, 288 P.3d at 1183 . After a five-day bench trial, the district court determined the trust was valid and, pursuant to the parties' 2010 Stipulation, the court approved the trust amendment to appoint a tie-breaker trustee. Redland I , ¶¶ 44-45, 288 P.3d at 1184-85 . The court also voided the lease agreements because they lacked the required co-trustee approval. Id. The parties did not further challenge the twice-amended trust's validity, thereby accepting both the 1995 Amendment and the 2010 stipulated amendment as valid and binding. Id. ¶¶ 4-6, 46, 288 P.3d at 1177-78, 1185 . [¶19] As these facts make clear, the Redland Family Trust, as amended, is the subject matter of both Redland I and the present litigation, thus satisfying res judicata element two. Likewise, the validity of the amended trust was an issue in Redland I and is an issue in the present litigation. Robert expressly requested the court void the amended trust in Redland I , albeit on different grounds than those now alleged, see infra ¶23. Moreover, the validity of the 1995 Amendment (which Lisa approved and executed) was squarely at issue when Lisa's siblings requested the district court to declare that the amended trust required two trustees to enter into lease agreements. Because Lisa put the validity of the trust and the 1995 Amendment directly at issue in the present litigation, res judicata element three is also satisfied. [¶20] The fourth and final element requires the capacities of the persons to be identical in reference to both the subject matter and the issues between them. Tozzi , ¶ 16, 430 P.3d at 760 (citation omitted). Lisa contends there is no identity in the capacity of the parties because she participated in Redland I in her individual lessee capacity and participated in the present litigation as an individual beneficiary and as a successor trustee. [¶21] Generally, [a] party appearing in an action in one capacity is not thereby bound by the rules of res judicata in a subsequent action in which the party appears in another capacity. 50 C.J.S. Judgments § 1124 (Dec. 2018 Update) ; see also Restatement (Second) of Judgments § 36 (1982). The general rule does not apply, however, where a party to one action in his or her individual capacity and to another action in his or her representative capacity is in each case asserting or protecting his or her individual rights, where the party will personally benefit from a judgment in his or her representative capacity, or where there is privity between the individual and the representative. 46 Am. Jur. 2d, supra , § 558; see also 50 C.J.S., supra , § 1124 (the judgment is binding where the circumstances were such that all the person's rights or interests, held in any of his or her capacities, were before the court and involved in its decision). We applied this exception in Emerson-Brantingham Implement Co. v. Riverton Elevator Co. , 43 Wyo. 67 , 297 P. 393 , 396-98 (1931) (citation omitted), restating the principle: it may sometimes happen that all the interests of the party, in [her] several capacities, are  before the court in the same litigation; and in that case, the reason of the rule ceases, and [s]he is bound in all characters. Applying that same principle, here, we conclude that Lisa is bound by prior rulings in her individual and successor trustee capacities. [¶22] The trustee and all trust beneficiaries participated in Redland I , which resolved the validity of the Redland Family Trust, as amended. Lisa's individual rights as a trust beneficiary were at issue then and are at issue now, notwithstanding the fact she is no longer an individual lessee and has assumed the additional role of successor trustee. Moreover, Lisa would personally benefit if the district court rendered judgment in Lisa's favor in her capacity as trustee in the present litigation. As Lisa's siblings point out, partition or liquidation of trust assets resulting from termination of the trust would net more for Lisa than if Lisa were required to comply with the amended trust's buyout provision. 11 Lisa is further barred from challenging the validity of the trust by stepping into Robert's representative shoes: [t]he principles of res judicata ... require that a final adjudication remain binding on both the original parties and their successors in interest. Degiacomo v. City of Quincy , 476 Mass. 38 , 369-70, 63 N.E.3d 365 (2016) (citations omitted). Res judicata's fourth element is satisfied under these circumstances. [¶23] The fact that Lisa now challenges the validity of the amended trust on different grounds from those Robert asserted in Redland I does not preclude us from applying res judicata to bar Lisa's invalid trust claim. We have long held that res judicata bars relitigation of claims or causes of action that could have been raised in prior litigation. Goetzel v. State , 2017 WY 141 , ¶ 7, 406 P.3d 310 , 311 (Wyo. 2017) (citation omitted). Lisa identifies no new facts or circumstances to demonstrate she could not have raised her present validity concerns in Redland I . To the contrary, her present challenge asserts dubious federal tax regulation, unlawful purpose, and public policy theories, 12 to relitigate the district court's prior ruling upholding the validity of the amended trust-a ruling she did not appeal having endorsed the 2010 Stipulation. Res judicata precludes such piecemeal litigation: The application of res judicata to those situations where a plaintiff attempts to bring the same claim in a subsequent action  against the same or different defendants has a logical basis: It encourages resolution of the plaintiff's claims in a single action, and it forces parties to abide by their agreements. Eklund v. PRI Envtl., Inc ., 2001 WY 55 , ¶ 19, 25 P.3d 511 , 518 (Wyo. 2001) (emphasis added).