Opinion ID: 2554806
Heading Depth: 2
Heading Rank: 1

Heading: Binding Effect of the Settlement Agreement

Text: [¶ 30] Muther and Woods argue that the summary judgment declaring that the J-Lot owners are not bound by the prior settlement agreement was improper because there are genuine issues of material fact regarding whether the J-Lot owners were in privity with the Association or ratified the settlement agreement. In essence, Muther and Woods contend that the settlement agreement in the prior litigation is binding on the J-Lot owners pursuant to the doctrine of res judicata. [¶ 31] We review a court's grant of summary judgment de novo, viewing the summary judgment record in the light most favorable to the nonprevailing party to determine whether it demonstrates that there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Beal v. Allstate Ins. Co., 2010 ME 20, ¶ 11, 989 A.2d 733, 738. A material fact is one having the potential to affect the outcome of the suit. Burdzel v. Sobus, 2000 ME 84, ¶ 6, 750 A.2d 573, 575. To avoid a summary judgment, the party opposing the summary judgment motion must establish a prima facie case for each element of its defense for which it has the burden of proof. Reliance Nat'l Indem., v. Knowles Indus. Servs., Corp., 2005 ME 29, ¶ 9, 868 A.2d 220, 225; see also Van Houten v. Harco Constr., Inc., 655 A.2d 331, 333 (Me.1995) (placing the burden of establishing privity on the party asserting collateral estoppel). [¶ 32] Res judicata bars relitigation of a dispute when (1) the same parties or their privies are involved in both actions; (2) a valid final judgment was entered in the prior action; and (3) the matters presented for decision in the second action were, or might have been, litigated in the first action. Tungate v. Gardner, 2002 ME 85, ¶ 5, 797 A.2d 738, 740 (quotation marks omitted). There is no dispute that the J-Lot owners, with the exception of Beth Hess, were not parties to the prior litigation. The issue here is whether there was privity between the Association and the J-Lot owners. [¶ 33] [P]rivity is created when two or more persons have a mutual or successive relationship to the same rights of property. Id. ¶ 9, 797 A.2d at 741 (alteration in original) (quotation marks omitted). A privity relationship generally involves a party so identified in interest with the other party that they represent one single legal right. Dep't of Human Servs. v. Comeau, 663 A.2d 46, 48 (Me.1995). In order for the doctrine of privity to be invoked, the first litigation must provide substantial protection of the rights and interests of the party sought to be bound by the second. Id. (quotation marks omitted). [¶ 34] In the prior litigation, the interests of the J-Lot owners differed from those of the Association because they held deeded rights to the easement while the Association asserted only prescriptive rights to the easement. In this regard, the J-Lot owners and the Association did not have a mutual or successive relationship to the same rights of property, see Tungate, 2002 ME 85, ¶ 9, 797 A.2d at 741, or a commonality of interest in one single legal right, see Comeau, 663 A.2d at 48. Indeed, the court's judgment in the previous litigation, which we affirmed, did not treat the settlement agreement as binding on the J-Lot owners. See Muther, 2009 ME 37, ¶ 9, 968 A.2d at 542. Concluding that it was not necessary to join the J-Lot owners claiming deeded easement rights, the judgment unequivocally provided: [T]he settlement agreement, by its terms, is binding only upon the individually named parties and Association members.... [T]he resulting judgment does not impair the ability of unnamed individuals to enforce rights that are not derived from Association membership. Id. [¶ 35] Furthermore, in the context of evaluating privity between an association and its members, we recognize the importance of whether, and to what extent, individual members participated in the earlier litigation involving the association [and] ... have authorized the association to represent their individual interests. See Crane v. Comm'r of Dep't of Agric., Food & Rural Res., 602 F.Supp. 280, 285-86 (D.Me.1985) (identifying five factors to determine whether members are in privity with their association for purposes of res judicata). In this case, the J-Lot owners' lack of participation in the prior litigation is evident in their unsuccessful motions to intervene. Additionally, there is no evidence of express authorization by the J-Lot owners to bind them other than in their capacity as Association members, and the motions to intervene suggest the absence of authorization. Muther and Woods's statement of fact asserted that, at a meeting at Beth Hess's home after the settlement conference, the J-Lot owners were informed of the terms of the settlement agreement and ratified the agreement with a round of applause. However, not all of the J-Lot owners were present at that event, and, drawing all reasonable inferences in favor of Muther and Woods, the evidence of applause in this informal context is not a material fact that would establish ratification. See N. Star Capital Acquisition, LLC v. Victor, 2009 ME 129, ¶ 8, 984 A.2d 1278, 1280; Burdzel, 2000 ME 84, ¶ 6, 750 A.2d at 575. [¶ 36] The summary judgment record, viewed in the light most favorable to Muther and Woods, fails to establish a prima facie case that privity existed between the Association and the J-Lot owners. See Reliance Nat'l Indem., 2005 ME 29, ¶ 9, 868 A.2d at 225. The court did not err in granting a summary judgment to the J-Lot owners declaring that they were not bound by the prior settlement agreement.