Court Opinion

ID: 9607673
Source: CourtListenerOpinion
Date Created: 2023-08-22 03:01:13.051521+00
Date Added: 2024-06-11T13:28:58.173794
License: Public Domain

RABINOWITZ, Chief Justice,
dissenting.
Tolstrup’s present action for foreclosure is based on Huffman’s default in payments to Tolstrup pursuant to the deed of trust. Tolstrup’s prior counterclaim asserted that he was fraudulently induced into accepting the deed of trust and co-signing the ANBN loan. I do not view the two actions as arising out of the same transaction and therefore would not hold that Tolstrup’s present action for foreclosure is barred by res judicata.
The Restatement (Second) of Judgments § 24 (1982) states that the claim extinguished by a final judgment “includes all rights of the plaintiff to remedies against the defendant with respect to all or any part of the transaction, or series of connected transactions, out of which the action arose.” Comment b to § 24 elaborates on the concept of “transaction”:
In general, the expression connotes a natural grouping or common nucleus of operative facts. Among the factors relevant to a determination whether the facts are so woven together as to constitute a single claim are their relatedness in time, space, origin, or motivation, and whether, taken together, they form a convenient unit for trial purposes.
A judgment on one claim does not bar a subsequent claim if the two claims are not part of the same transaction.1
The majority concludes that “the counterclaim for fraud and the foreclosure action both arose from the same transaction: Tolstrup’s co-signing of the $80,000 loan.” Tolstrup’s counterclaim for fraud clearly arose out of the co-signing. Tolstrup alleged that he had been fraudulently induced to co-sign the loan by Huffman’s misrepresentation of the value of the property which secured Tolstrup’s guarantee. The dismissal of this counterclaim therefore should serve to bar any subsequent dispute as to the validity of the guarantee between Tolstrup and Huffman, and their privies. Res judicata should bar subsequent suits arising out of Tolstrup’s guarantee and co-signing, such as claims of lack of capacity or mistake.
I do not view Tolstrup’s foreclosure action, however, in any fair sense as arising out of the co-signing of the ANBN loan. There is no “common nucleus of operative facts” between the two claims. Tolstrup’s claim in the foreclosure action is based on Tolstrup’s having made payments on the loan and Huffman’s not repaying Tolstrup *1309two-thirds of his payments, as required by the deed of trust. This claim has nothing to do with the circumstances surrounding the co-signing.2

. See, e.g., Gallagher v. Frye, 631 F.2d 127 (9th Cir.1980) (Mandamus action in state court to require employer to reinstate fired employee with backpay does not preclude subsequent civil rights suit for damages for wrongful discharge. The mandamus action arose out of the employer’s failure to comply with a Civil Service Board order while the damages suit arose out of the employer’s attempts to discharge the employee in the first instance. It was not necessary to litigate in the mandamus action the merits of the underlying termination. Although the second claim could have been brought at the same time as the first claim, joinder of the claims would have been permissive, not compulsory); Bankers Trust Co. v. Pacific Employers Insurance Co., 282 F.2d 106 (9th Cir.1960) (Action obtaining judgment fixing amount of loss under insurance policy does not bar subsequent action for misrepresentation of the value of the policies. The two actions are maintained by entirely different facts; the first action depending on proof of the contract, plaintiffs performance and defendant’s failure to perform, while the second depending on proof of fraud in the inducement of the contract); Chrysler Corp. v. Fedders Corp., 519 F.Supp. 1252 (D.N.J.1981) (Action obtaining partial summary judgment that plaintiff owned defendant’s stock as part of the consideration for sale of company and that defendant owed plaintiff dividends and interest from the stock, did not bar subsequent action alleging that defendant entered into agreement for the stock conveyance as part of a fraudulent conspiracy to obtain corporate assets without proper consideration. The initial claim for dividends and interest was an "independent obligation,” separate from whatever breaches may have occurred with respect to the underlying contract).

. To illustrate the point, if Tolstrup had not made a payment on the ANBN loan, or if Huffman had not failed to repay Tolstrup under the deed of trust, Tolstrup still would have been able to bring his claim for fraud. The fraud claim was available to Tolstrup from the moment he co-signed the loan. However Tolstrup’s foreclosure action could not arise until he had actually made payments and Huffman had failed to repay.
The fact that Tolstrup had made some of his payments on the ANBN loan at the time he pleaded the fraud counterclaim should not mean that dismissal of that counterclaim bars the foreclosure action if the two claims are not part of the same transaction. See, e.g., Gallagher, 631 F.2d 127; Bankers Trust Co., 282 F.2d 106; Chrysler Corp, 519 F.Supp. 1252. If Huffman had assaulted Tolstrup, the dismissal of the fraud counterclaim would not bar a subsequent assault claim even if Tolstrup could have brought an assault claim at the time he brought his fraud counterclaim.