Chapman Nursing Home, Inc. v. McDonald

• Decision Date: 16 November 2007
• Docket Number: 1060543.
• Citation: 985 So.2d 914
• Court: Alabama Supreme Court
• Parties: CHAPMAN NURSING HOME, INC. v. Cathy Ann Boddie McDONALD.

985 So.2d 914

CHAPMAN NURSING HOME, INC. v. Cathy Ann Boddie McDONALD.

1060543.

Supreme Court of Alabama.

November 16, 2007.

Donald R. Jones, Jr., Montgomery, for appellant.

John K. Johnson, Rockford, for appellee.

SEE, Justice.

Chapman Nursing Home ("CNH") appeals from a summary judgment entered in favor of Cathy Ann Boddie McDonald. The trial court found that CNH's claims of fraud and civil theft were barred by the affirmative defenses of res judicata and collateral estoppel. We affirm on the basis that CNH's claims are barred by the doctrine of res judicata.

Facts and Procedural History

In March 2003, CNH terminated the employment of Cathy Ann Boddie McDonald and James Chapman. McDonald had been employed as a bookkeeper, and her job responsibilities included accepting and depositing the checks of residents at CNH. CNH accused both McDonald and Chapman of endorsing and cashing checks that were payable to CNH. CNH claims that because of Chapman and McDonald's actions, CNH has been deprived of over $1,000,000.

After CNH terminated McDonald's employment, McDonald applied for unemployment compensation pursuant to § 25-4-1 et seq., Ala.Code 1975. A hearing officer of the Department of Industrial Relations, the administrative agency that determines unemployment-compensation eligibility, heard McDonald's claim. The hearing officer found that McDonald was eligible to receive unemployment-compensation benefits despite CNH's argument that McDonald was not eligible because, CNH argued, she engaged in dishonest and criminal acts.¹ CNH appealed the hearing officer's decision to the hearings and appeals division of the Department of Industrial Relations. CNH and McDonald were represented by counsel on appeal, and both parties presented testimony and admitted documents into evidence. The appeals division affirmed the decision of the hearing officer and stated that "[t]he evidence does not show conclusively that the claimant misappropriated company funds or knowingly aided and abetted others in the theft of funds." CNH applied for leave to appeal that decision to the board of appeals pursuant to § 25-4-92(c), Ala.Code 1975. The board of appeals denied CNH's application for leave to appeal. CNH promptly appealed to the Coosa Circuit Court pursuant to § 25-4-95, Ala. Code 1975, which provides that the appropriate circuit court for judicial review of the decision of a hearing officer of the Department of Industrial Relations is the circuit court in the county where the claimant resides. The statute specifies that the trial in the circuit court is de novo.

While the appeal of the hearing officer's decision was pending in the Coosa Circuit Court, CNH brought a civil action against McDonald and James Chapman in the Tallapoosa Circuit Court alleging fraud, negligence/wantonness, conspiracy to commit fraud, breach of fiduciary duty, suppression, and civil theft. McDonald moved to dismiss the civil action or, in the alternative, to transfer the civil action pursuant to § 6-5-440, Ala.Code 1975, from the Tallapoosa Circuit Court to the Coosa Circuit Court. Section 6-5-440 provides:

"No plaintiff is entitled to prosecute two actions in the courts of this state at the same time for the same cause and against the same party. In such a case, the defendant may require the plaintiff to elect which he will prosecute, if commenced simultaneously, and the pendency of the former is a good defense to the latter if commenced at different times."

The Tallapoosa Circuit Court granted McDonald's motion to transfer. CNH then petitioned this Court for the writ of mandamus asking this Court to set aside the transfer order. We held that the transfer was not authorized by § 6-5-440 and issued the writ of mandamus. Ex parte Chapman Nursing Home, Inc., 903 So.2d 813 (Ala.2004).

At the time, CNH's administrative appeal from the decision of the hearing officer was still pending in the Coosa Circuit Court. The civil action in the Tallapoosa Circuit Court did not immediately go to trial, and the case was twice set for a docket call. On December 29, 2005, McDonald moved the trial court pursuant to § 6-5-440 to require CNH to elect which action it chose to pursue.² McDonald contended that the Tallapoosa and Coosa County actions required similar factual resolutions, and, as a result, that CNH was not entitled to pursue simultaneous actions under the statute. CNH responded by notifying the Tallapoosa Circuit Court that "[p]laintiff elects to prosecute the above styled action in Tallapoosa County." Following CNH's election to pursue its civil action in the Tallapoosa Circuit Court, the Department of Industrial Relations moved the Coosa Circuit Court to dismiss CNH's administrative appeal pending in that court.³ The Coosa Circuit Court granted that motion and dismissed CNH's appeal.

Several months after CNH's administrative appeal in the Coosa Circuit Court had been dismissed, McDonald amended her answer to assert that CNH's civil claims were barred by the affirmative defenses of res judicata and collateral estoppel.⁴ McDonald then moved for a summary judgment, arguing that questions as to her involvement in the alleged fraud and theft had already been decided in the unemployment-compensation hearing. The Tallapoosa Circuit Court agreed with McDonald and, entered a summary judgment in her favor. CNH now appeals.

Standard of Review

"We review the trial court's grant or denial of a summary judgment motion de novo." Smith v. State Farm Mut. Auto. Ins. Co., 952 So.2d 342, 346 (Ala.2006) (citing Bockman v. WCH, L.L.C., 943 So.2d 789 (Ala.2006)). A summary judgment is proper if there is no genuine issue of material fact and the moving party is entitled to a judgment as a matter of law. Rule 56(c)(3), Ala. R. Civ. P. If the movant meets this initial burden, the burden then shifts to the nonmovant to present "substantial evidence" showing that a genuine issue of material fact exists. Ex parte Alfa Mut. Gen. Ins. Co., 742 So.2d 182, 184 (Ala.1999). Substantial evidence is "evidence of such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved." West v. Founders Life Assurance Co. of Florida, 547 So.2d 870, 871 (Ala.1989). In determining whether a genuine issue of material fact exists, this Court views the evidence in the light most favorable to the nonmovant and resolves all reasonable doubts in favor of the nonmovant. Jones v. BP Oil Co., 632 So.2d 435, 436 (Ala.1993). Moreover, "[t]he trial court's ruling on a question of law carries no presumption of correctness, and this Court reviews de novo the trial court's conclusion as to the appropriate legal standard to be applied." Dunlap v. Regions Fin. Corp., 983 So.2d 374, 377 (Ala.2007) (citing Ex parte Graham, 702 So.2d 1215, 1221 (Ala.1997)).

Analysis

CNH argues that the Tallapoosa Circuit Court erred by entering a summary judgment in favor of McDonald on the grounds of res judicata because, it argues, the requirements for res judicata are not satisfied. CNH contends that there is no final judgment on the merits, that the parties in the two actions are not the same, and that the administrative appeal and the civil action are not the same causes of action because different standards of proof apply in the administrative appeal and the civil action. CNH also argues that even if res judicata or collateral estoppel does apply, McDonald should be estopped from raising those affirmative defenses because it was she who compelled CNH to elect which action it would pursue, and it is that election that resulted in the dismissal of CNH's administrative appeal in the Coosa Circuit Court.

We initially address whether the affirmative defenses of res judicata and collateral estoppel apply to procedurally bar CNH's civil action in the Tallapoosa Circuit Court.

"Res judicata and collateral estoppel are two closely related, judicially created doctrines that preclude the relitigation of matters that have been previously adjudicated or, in the case of res judicata, that could have been adjudicated in a prior action.

"`The doctrine of res judicata, while actually embodying two basic concepts, usually refers to what commentators label "claim preclusion," while collateral estoppel ... refers to "issue preclusion," which is a subset of the broader res judicata doctrine.'"

Lee L. Saad Constr. Co. v. DPF Architects, P.C., 851 So.2d 507, 516 (Ala.2002) (quoting Little v. Pizza Wagon, Inc., 432 So.2d 1269, 1272 (Ala.1983) (Jones, J., concurring specially)). Two causes of action are the same for res judicata purposes when the following four elements are satisfied: "(1) a prior judgment on the merits, (2) rendered by a court of competent jurisdiction, (3) with substantial identity of the parties, and (4) with the same cause of action presented in both actions." Equity Res. Mgmt., Inc. v. Vinson, 723 So.2d 634, 636 (Ala.1998). "If those four elements are present, then any claim that was, or that could have been, adjudicated in the prior action is barred from further litigation." Id. (citing Dairyland Ins. Co. v. Jackson, 566 So.2d 723, 725-26 (Ala.1990)).

CNH denies that the first element of res judicata, a prior judgment on the merits, is satisfied because the final judgment McDonald relies upon is the Coosa Circuit Court's dismissal of its administrative appeal. CNH contends that the dismissal was not a prior judgment on the merits because the dismissal order recognized that CNH had elected to pursue the action in the Tallapoosa Circuit Court rather than the Coosa Circuit Court. McDonald responds that there is a final judgment on the merits because, she argues, the hearing officer's findings that McDonald had not engaged in dishonest or criminal behavior became final by operation of law when CNH dismissed its appeal and the statutory time allotted for appeal had elapsed.⁵

We agree with McDonald that CNH's dismissal of its appeal...