Brault v. Smith
| Decision Date | 29 March 1984 |
| Docket Number | No. 83-194,83-194 |
| Citation | 209 Mont. 21,679 P.2d 236,41 St.Rep. 527 |
| Court | Montana Supreme Court |
| Parties | Kelly J. BRAULT, Plaintiff and Appellant, v. Richard Dale SMITH, Alice Smith, Engine Rebuilders, Inc., a Mont. corp., W.D. Hirst, James H. Sadler, & Missoula Bank of Montana, Defendants and Respondents. |
Raymond W. Brault, Helena, for plaintiff and appellant.
Datsopoulos, MacDonald & Lind, Ronald B. MacDonald, Missoula, for Smith & Engine Rebuilders.
Patterson, Marsillo, Tornabene & Schuyler, John Dostal, Missoula, for Hirst.
Worden, Thane & Haines, Patrick G. Frank, Missoula, for Bank of Montana.
Appellant Kelly Brault filed a complaint on May 9, 1980, in the Missoula County District Court alleging libel, slander, contract losses and abuse of process. The defendants in that action, Richard and Alice Smith, Engine Rebuilders, Inc., W.D. Hirst, James Sadler and the Missoula Bank of Montana (hereinafter referred to as respondents) filed motions to dismiss. After oral argument the District Court issued an order of dismissal from which Kelly Brault appeals.
The allegations in appellant's complaint concerned a prior suit filed in the Missoula County District Court in April 1974. See Engine Rebuilders v. Seven Seas Import-Export (Mont.1980), 615 P.2d 871, 37 St.Rep. 1406. This prior action arose from a contract entered into by Seven Seas Import-Export & Mercantile, Inc. (hereinafter Seven Seas), and Engine Rebuilders, Inc. The contract provided that Seven Seas would construct a commercial garage for Engine Rebuilders. When financial problems prevented Seven Seas from timely completing the building, Engine Rebuilders filed suit alleging defendant Seven Seas had misappropriated monies from a trust fund established for the purpose of construction.
Seven Seas at the time of the contract and lawsuit was a closely held corporation consisting of Raymond Brault and his family. The plaintiff and appellant in the present action, Kelly Brault, is the son of Raymond Brault and was a shareholder of Seven Seas in 1974. Kelly Brault at the time Engine Rebuilders was filed was a minor and upon motion of his attorney, father and codefendant, was dismissed from that action.
Raymond Brault was adjudicated bankrupt in California in March 1977. On January 18, 1978, Raymond Brault and Seven Seas filed an amended answer to the original complaint, counterclaim, and third-party claim against the same respondents listed in this cause of action. Respondents Alice and Dick Smith were the primary shareholders of Engine Rebuilders, Mr. Sadler and Mr. Hirst, their counsel of record, and the Missoula bank was the lending institution involved in the building construction.
The counterclaim brought by Raymond Brault and Seven Seas alleged essentially the same cause of actions brought by shareholder Kelly Brault in the present action: libel, slander, contractual interference, conspiracy, negligence and conversion. On September 14, 1979, the District Court dismissed these counterclaims of Seven Seas on the basis of the relevant statute of limitations. This Court affirmed. Engine Rebuilders, supra.
Having attained the age of majority, Kelly Brault filed the present lawsuit as a former shareholder of Seven Seas. Defendants' motion to dismiss was granted by the Missoula County District Court on various grounds including res judicata, collateral estoppel, privilege and failure to state a claim upon which relief can be granted.
Basing our decision primarily on the doctrine of res judicata, we affirm the dismissal of appellant's complaint.
The allegations of Kelly Brault all stem from actions surrounding the filing of the 1974 lawsuit by Engine Rebuilders. The appellant was originally named as a defendant in that suit which charged the Braults personally and doing business as Seven Seas with fraudulently appropriating construction funds for personal use. Specifically in this appeal, Kelly Brault contends that respondents sent a letter to a potential Wyoming customer explaining the pending suit in Montana, thereby causing contractual interference with the customer. Additionally, Kelly Brault argues the business reputation of the company was damaged when notice of the lawsuit was published in a local credit bureau's "green sheet."
Appellant argues that his damages in the present suit are personal in nature and therefore distinguishable from the damages litigated by his father and Seven Seas in the prior suit. However, on closer examination, appellant's claimed injuries, particularly those arising from the alleged damage to the good will of Seven Seas and contractual interference, are indistinguishable from any other shareholder's injury.
In his complaint appellant pled mental anguish, mental suffering and reduced enjoyment of life. However, on appeal, appellant has apparently conceded the District Court's conclusion that such damages are not actionable in that they arose from a judicial complaint clothed with absolute privilege. Appellant has confined his argument before this Court to libel and slander damages flowing from the letter allegedly sent to the Wyoming customer of Seven Seas. Nonetheless, we affirm the District Court order of dismissal ruling the original complaint privileged and finding no personal defamation. Section 27-1-804(2), MCA. As to damage claims flowing from any publications collateral to the complaint, the doctrine of res judicata precludes recovery.
The basic proposition embraced by the doctrine of res judicata has always remained the same: a party should not be able to relitigate a matter he or she has already had an opportunity to litigate. This policy reflects the notion that a lawsuit should not only bring justice to the aggrieved parties but provide a final resolution of the controversy. Wellman v. Wellman (Mont.1982), 643 P.2d 573, 39 St.Rep. 752.
This Court has enunciated the principles of res judicata, including collateral estoppel, on numerous occasions. In Gessel v. Jones (1967), 149 Mont. 418, 421, 427 P.2d 295, 296, we noted:
Res judicata technically only pertains to situations where a cause of action or claim has been previously litigated. For this reason, it is referred to in contemporary legal vernacular as claim preclusion. Its counterpart where a specific issue has been litigated is collateral estoppel or issue preclusion. Both concepts are intermixed in this appeal; the doctrine of res judicata will be used in its broader sense, as a collective term, encompassing both issue and claim preclusion.
A decade after Gessel in Meagher County Newlan Creek Water District v. Walter (1976), 169 Mont. 358, 361, 547 P.2d 850, 852, we recognized that issue or claim preclusion was applicable to not only the parties to the prior action but their privies:
"... The doctrine of res judicata states that a final judgment on the merits by a court of competent jurisdiction is conclusive as to causes of action or issues thereby litigated, as to the parties and their privies ..."
In Fox v. 7L Bar Ranch Co. (Mont.1982), 645 P.2d 929, 39 St.Rep. 862, this Court summarized the necessary criteria for applying the doctrine of res judicata. These criteria are: (1) the parties or privies must be the same; (2) the subject matter of the action must be the same; (3) the issues must be the same and relate to the same subject matter; and (4) the capacities of the persons must be the same in relation to the subject matter and issues between them.
Appellant's strongest argument against application of res judicata in this suit is that the parties are not the same. Kelly Brault was dismissed from the original suit. This argument must fail, however, because Kelly Brault, as a shareholder, was a privy to the corporate party Seven Seas in Engine Rebuilders. A privy is broadly defined as one who has an interest in an action. Black's Law Dictionary, 5th Ed. at 1077 (1979). In reference to a judgment it applies to one whose interest has been legally represented at trial. 46 Am.Jur.2d Judgments, § 532 at 686. Kelly Brault without a doubt had an interest in the previous action. He was a shareholder in a closely-held family corporation involved in a suit over property of the corporation. Seven Seas through its counsel, appellant's father, represented the interests of its shareholders including Kelly Brault.
Other jurisdictions have found privity to exist between a corporation and its shareholders and a decree against the corporation...
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