Opinion ID: 2602290
Heading Depth: 3
Heading Rank: 1

Heading: Are Defendants Privies of MBI?

Text: ¶ 20 The legal definition of a person in privity with another, is a person so identified in interest with another that he represents the same legal right. Searle Bros. v. Searle, 588 P.2d 689, 691 (Utah 1978). Thus, privity depends mostly [on the parties'] relationship to the subject matter of the litigation. Missouri Mexican Prods., Inc. v. Dunafon, 873 S.W.2d 282, 286 (Mo.Ct. App.1994). Following this rationale, final adjudication of plaintiff's claims bars subsequent litigation concerning the same subject matter against officers or owners of a closely held corporation, partners, co-conspirators, agents, alter egos or other parties with similar legal interests. See Lesser v. Gray, 236 U.S. 70, 74, 35 S.Ct. 227, 59 L.Ed. 471 (1915) (disallowance of a bankruptcy claim against bankrupt partnership was res judicata in subsequent lawsuit against individual partner); see also Alman v. Danin, 801 F.2d 1, 4 (1st Cir.1986) (holding individual defendants, who were alter egos of corporation, liable based on privity and judgment against corporation); Circle v. Jim Walter Homes, Inc., 654 F.2d 688, 692 (10th Cir.1981) (stating that subsidiary in privity with parent and sister corporation); Hellman v. Hoenig, 989 F.Supp. 532, 536-38 (S.D.N.Y.1998) (holding that privity exists between corporate defendant and officers and directors). ¶ 21 It is undisputed that the corporate defendants in this case are affiliates, subsidiaries, or parent companies of MBI, that Kalenuik, Bolduc, and Jurak own and direct all the Matol entities, and that Garrett organized MCC. Thus, the corporate defendants are sister corporations of MBI and the individual defendants are principals, officers and employees of MBI. In these respective capacities, defendants defended MBI in the C-36 proceeding. In addition, the causes of action in this case stem from the same alleged conduct, obligations, and legal theory as the claims against MBI in the C-36 proceeding. Thus, defendants' legal rights and interests are identical with those of MBI, meeting the legal definition of a person in privity with another as set forth in Searle Brothers. ¶ 22 In addition, Press has argued throughout this litigation that defendants are so identified in interest with each other that their legal rights have no separate legal existence. In fact, in its brief to this court, Press admits that [d]efendants' joint liability . . . is based, in part, on a corporate disregard and piercing the corporate veil theory that the three individual owners operated all of the various Matol entities as a partnership, creating new corporations and changing their cash flow at will. Thus, Press's attempt to retract its previous allegations of privity in an effort to prevent dismissal of this case seems disingenuous at best. See Futura Dev. Corp. v. Centex Corp., 761 F.2d 33, 43-44 (1st Cir.1985) (stating that plaintiff cannot . . . claim liability on the basis of an alter ego theory while at the same time denying that the defendants have sufficient identity of interest). Based on the foregoing, we conclude the district court's determination of privity in this case is correct, and agree that given the circumstances, [p]laintiff is precluded from claiming that [d]efendants are not in privity with one another.