Court Opinion

ID: 9705537
Source: CourtListenerOpinion
Date Created: 2023-08-26 01:10:53.237124+00
Date Added: 2024-06-11T15:24:06.937451
License: Public Domain

Allen, C.J.,
concurring and dissenting. The majority holds today that small claims judgments have no preclusive effect on future litigation. I dissent because this per se rule encourages needless relitigation, wastes resources of litigants and courts, was not addressed by either party, and will undoubtedly prove unfair in some cases. I concur with the majority that seller is not precluded from bringing this breach of contract claim on the ground that it did not pursue this as a counterclaim in small claims court. I would reverse the summary judgment on damages only.
Collateral estoppel, or issue preclusion, prevents a party from relitigating a specific issue that has necessarily been decided in a previous action. Berisha v. Hardy, 144 Vt. 136, 138, 474 A.2d 90, 91 (1984). The purpose of this doctrine is to promote the finality of judgments and conserve the resources of courts and litigants. See id. As the majority notes, issue preclusion is appropriate when:
*474(1) [it] is asserted against one who was a party or in privity with a party in the earlier action; (2) the issue was resolved by a final judgment on the merits; (8) the issue is the same as the one raised in the later action; (4) there was a full and fair opportunity to litigate the issue in the earlier action; and (5) applying preclusion in the later action is fair.
Trepanier v. Getting Organized, Inc., 155 Vt. 259, 265, 583 A.2d 583, 587 (1990). The party opposing the use of issue preclusion must show that relitigation of the issue is appropriate. Id. at 265-66, 583 A.2d at 587-88.
The parties agree on the presence of the first three factors. They disagree on whether the issue of liability was fully and fairly litigated in small claims court, and on whether it would be fair to apply issue preclusion. To determine whether a party has met these two criteria, the court must look to the specifics of each case and consider several factors, including (1) the choice of forum, (2) the incentive to litigate, (3) the foreseeability of future litigation, (4) the procedural opportunities available in each forum, and (5) the legal standards and burdens employed in each action. Id. at 265, 583 A.2d at 587.
In this case, buyer selected the small claims forum, and was aware of the substantial claim in superior court when he chose to proceed in small claims court. Moreover, buyer knew that the small claims court judgment might be binding in superior court. Thus, the superior court claim was foreseeable and provided incentive to vigorously litigate the breach of contract issue in small claims court. Further, both parties were represented by counsel in the small claims court action through appeal, and the substantive law governing the breach of contract claim imposed the same evidentiary burden in both courts. On this record, I conclude that buyer has failed to meet his burden of showing that his opportunity in small claims court was not full and fair, and therefore, he should be precluded from relitigating the breach of contract issue.
Although in many cases it may be appropriate to allow relitigation of issues decided by the small claims court, this is not one of them. Rather than adopt a rule declaring no small claims judgment is final, issue preclusion should be decided on the facts of each case. See id. Only a case-by-case approach adequately takes into consideration the underlying policy considerations of conserving resources of courts and litigants, and promoting finality of judgments, while insuring fairness to all parties. Shaid v. Consolidated Edison Co., 467 N.Y.S.2d 843, 851 (App. Div. 1983). The per se rule adopted by the majority *475today will waste resources and prove to be unfair in some cases, considerations that might have come to light had either party addressed such a rule in their briefs.
The majority presents four reasons to adopt the rule that small claims judgments do not preclude relitigation of issues in subsequent cases. First, they rely on the Restatement (Second) of Judgments § 28(3) (1982) and comment d, which states that small claims procedures “may be wholly inappropriate to the determination of the same issues when presented in the context of a much larger claim.” (Emphasis added.) Illustration 7 indicates further, however, that a finding of a small claims court is not conclusive because it “operates informally without pleadings, counsel, or rules of evidence,” a rationale that is not necessarily applicable in all cases.
Second, the majority relies on several out-of-state cases, which similarly conclude that small claims judgments are not conclusive because in these proceedings there are no attorneys, no pleadings, no legal rules of evidence, no juries, and no formal findings. See Sanderson v. Neimann, 110 P.2d 1025, 1030-31 (Cal. 1941); New Milford Block Co. v. Ericson, 206 A.2d 487, 490 (Conn. Cir. Ct. 1964). The Sanderson court specifically notes that the small claims statute before it required the parties to represent themselves “without the aid of attorneys.” 110 P.2d at 1030. In contrast to the circumstances illustrated in the Restatement and presented in Sanderson and New Milford, here, the parties were represented by counsel, seller had the right to request trial by jury, 12 V.S.A. § 5535, and the small claims court made formal findings of fact and conclusions of law. There is nothing before us to indicate that the trial in the small claims court was in any way inadequate.
The third basis for the majority’s per se rule is that 12 V.S.A. § 5533(c) establishes that judgments on small-claim counterclaims have no preclusive effect. The majority maintains that it would be inconsistent and unfair not to apply a similar rule to claims-in-chief. The Legislature has, however, specifically addressed counterclaims only. Today’s rule renders § 5533(c) mere surplusage. See Trombley v. Bellows Falls Union H.S., 160 Vt. 101, 104, 624 A.2d 857, 860 (1993) (we presume language is inserted in statute advisedly and do not construe it in way that renders significant part pure surplusage). Moreover, under Trepanier issue preclusion is applicable only when it would be fair.
The final reason for the per se rule is that the majority does not want to chill the use of small claims court by subjecting plaintiffs to *476the risk that an adverse small claims judgment will establish liability to the opponent on a larger claim brought in superior court. Instead, today’s rule will require a party to relitigate the same issues in the more complex and costly superior court regardless of the nature of the proceedings in small claims court, the fairness to either party, or the impact on judicial economy. I therefore dissent.
I would reverse the summary judgment on damages, however, because seller failed to show that it was entitled to judgment as a matter of law. See Price v. Leland, 149 Vt. 518, 521, 546 A.2d 798, 796 (1988) (party moving for summary judgment has burden of proof); V.R.C.P. 56(c) (moving party must show that there is no genuine issue of material fact and that it is entitled to judgment as matter of law). Although buyer failed to “set forth specific facts showing that there is a genuine issue for trial,” V.R.C.P. 56(e), seller presented no legal theory entitling it to recover the full contract price plus consequential damages resulting from buyer’s failure to assume seller’s leasehold. Seller failed to meet its burden of proof.
I would affirm the judgment as to liability and reverse and remand the judgment as to damages.