Eight Arlington Street, Llc v. Arlington Land Acquisition-99, Llc

• Decision Date: 03 August 2007
• Docket Number: 061928BLS1
• Citation: 2007 MBAR 289
• Parties: Eight Arlington Street, LLC by First Taunton Financial Corp. v. Arlington Land Acquisition-99, LLC et al.
• Court: Massachusetts Superior Court

2007-MBAR-289

Eight Arlington Street, LLC by First Taunton Financial Corp. v. Arlington Land Acquisition-99, LLC et al.

No. 061928BLS1

Superior Court of Massachusetts

August 3, 2007

Opinion No.: 99180

As-is Docket Number: 06-1928 BLS1

Venue Suffolk

Judge (with first initial, no space for Sullivan, Dorsey, and Walsh): van Gestel, Allan, J.

Opinion Title: MEMORANDUM AND ORDER ON MOTION FOR SUMMARY JUDGMENT

This matter is before the Court on the Defendants' Motion for Summary Judgment, Paper #11. The motion is premised on a claimed violation of the rule against claim splitting and the doctrine of res judicata.

BACKGROUND

On September 30, 2003, First Taunton Financial Corp. ("First Taunton") filed an action against Arlington Land Acquisition-99, LLC ("ALA") and Sean P McGrath ("McGrath") in Superior Court. First Taunton Fin. Corp. v. Arlington Land Acquisition-99, LLC Civil No. 03-4449 BLS (the "First Action"). In the First Action First Taunton sought direct, personal damages from defendants ALA and McGrath for allegedly mismanaging ALA and committing financial improprieties. Eight Arlington Street, LLC ("Eight Arlington") was also a defendant in the First Action. This Court granted ALA and McGrath's motion for partial summary judgment on all of First Taunton's claims for direct damages within Counts I-VII of the complaint in the First Action because First Taunton should have proceeded derivatively on behalf of ALA not directly for itself [20 Mass. L. Rptr. 556].

First Taunton then moved to amend its complaint in the First Action to assert claims for derivative damages. This Court denied First Taunton's motion to amend because it would have been unfair and prejudicial to the defendants, and wasteful of the Court's time. This Court noted that First Taunton should not have waited until a year after the close of discovery and a heavily litigated motion for partial summary judgment to try to ameliorate this deficiency in the complaint.

Subsequently, First Taunton filed this second action. In it First Taunton attempts to derivatively assert Eight Arlington's claims for damages arising from the same alleged financial mismanagement against ALA and McGrath.

DISCUSSION

Rule 56(c) of the Massachusetts Rules of Civil Procedure, 365 Mass. 824 (1974), provides that summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." We view the evidence in the light most favorable to the nonmoving party. See BayBank v. Bornhofft, 427 Mass. 571, 573 (1998).

Vittands v. Sudduth, 49 Mass.App.Ct. 401, 405-06 (2000).

Thus summary judgment is granted where, viewing the evidence in the light most favorable to the non-moving party, there are no issues of genuine material fact, and the moving party is entitled to judgment as a matter of law. Cabot Corporation v. AVX Corporation, 448 Mass. 629, 636-37 (2007); Hakim v. Massachusetts Insurers' Insolvency Fund, 424 Mass. 275, 281 (1997); Kourouvacilis v. General Motors Corp., 410 Mass. 706, 716 (1991); Cassesso v. Commissioner of Correction, 390 Mass. 419, 422 (1983); Mass.R.Civ.P. 56(c). "[T]he moving party must establish that there are no genuine issues of material fact, and that the non-moving party has no reasonable expectation of proving an essential element of its case." Miller v. Mooney, 431 Mass. 57, 60 (2000). See also Pederson v. Time, Inc., 404 Mass. 14, 17 (1989).

While we examine the record in its light most favorable to the nonmoving party, Foster v. Group Health, Inc., 444 Mass. 668, 672 (2005), "[c]onclusory statements, general denials, and factual allegations not based on personal knowledge [are] insufficient to avoid summary judgment" (citations omitted). Cullen Enters., Inc. v. Massachusetts Prop. Ins. Underwriting Ass'n., 399 Mass. 886, 890 (1987). "If the opposing party fails properly to present specific facts establishing a genuine, triable issue, summary judgment should be granted." Id.

O'Rourke v. Hunter, 446 Mass. 814, 821-22 (2006).

" '[T]he party moving for summary judgment in a case in which the opposing party will have the burden of proof at trial is entitled to summary judgment if he demonstrates... that the party opposing the motion has no reasonable expectation of proving an essential element of that party's case.' Wheatley v. American Tel. & Tel. Co., 418 Mass. 394, 397 (1994), quoting Kourouvacilis v. General Motors Corp., 410 Mass. 706, 716 (1994)." Symmons v. O'Keefe, 419 Mass. 288, 293 (1995). See also DiPietro v. Sipex Corp., 69 Mass.App.Ct. 29, 36 (2007).

The doctrine of res judicata, otherwise known as claim preclusion, "makes a valid, final judgment conclusive on the parties and their privies, and bars further litigation of all matters that were or should have been adjudicated in the action." Jarosz v. Palmer, 436 Mass. 526, 533-34 n.3 (2002), quoting Heacock v. Heacock, 402 Mass. 21, 23 (1988). The three elements that must be met for claim preclusion to apply are: (1) identity or privity of the parties to the present and prior actions; (2) identity of the cause of action; and (3) a prior final judgment on the merits. Kobrin v. Board of Registration in Med., 444 Mass. 837, 843 (2005). Here, the defendants, as the parties moving for summary judgment on the basis of res judicata, bear the burden of establishing its elements. Fabrizio v. U.S. Suzuki Motor Corp., 362 Mass. 873, 873-74 (1972); TLT Constr. Corp. v. A. Anthony Taupe & Assocs., Inc., 48 Mass.App.Ct. 1, 5 (1999).

The rule against claim splitting is "distinct from but related to" the doctrine of res judicata. Curtis v. Citibank, 226 F.3d 133, 138 (2d Cir. 2000); see also Natick Auto Sales, Inc. v. Department of Procurement and Gen. Serv's., 47 Mass.App.Ct. 625, 632 (1999) ("The two actions launched... are an example of claim splitting, warranting invocation of the doctrine of claim preclusion"); Roche v. Roche, 22 Mass.App.Ct. 306, 309 (1986) ("what the proceedings present below is a question of claim splitting resulting in claim preclusion"); Mongeau v. Boutelle, 10 Mass.App.Ct. 246, 251 (1980) ("the prohibition against claim splitting... is sometimes called 'claim preclusion' "). The principle of claim splitting provides that "the entry of a 'valid and final judgment extinguishes... all rights of a plaintiff to remedies against the defendant with respect to all or any part of the transaction, or series of transactions, out of which the action arose.' " Boyd v. Jamaica Plain Co-Operative Bank, 7 Mass.App.Ct. 153, 163 (1979), quoting Restatement (Second) of Judgments §61(1) (Tent. Draft No. 5, 1978).[1]

Claim splitting precludes subsequent claims even if a plaintiff presents new evidence, grounds, or theories of the case in a second action. Id. This rule is now comprehended within Mass.R.Civ.P. 12(b)(9).[2] "Whether expressed as claim preclusion or as a rule against claim splitting, the doctrine presupposes that a claimant has had an opportunity to assert his claims against a given defendant, and either has failed to assert those claims or has asserted the claims and had them adjudicated adversely." Day v. Kekorian, 61 Mass.App.Ct. 804, 811 (2004).

A. Identity or Privity of Parties

There must be an identity or privity of the parties to the present and prior actions for claim preclusion to be applied. TLT Constr. Corp., 48 Mass.App.Ct. at 5. "There has to be a 'sufficient legal identity' between the interest of the person allegedly represented and the prior litigant for the later claim to be precluded." Mongeau, 10 Mass.App.Ct. at 250, quoting Rudow v. Fogel, 376 Mass. 587, 589 (1978). See Boyd, 7 Mass.App.Ct. at 158 (holding that the current party was "sufficiently identified" with the parties to the prior litigation). Accordingly, "a nonparty to a prior adjudication can be bound by it only where the nonparty's interest was represented by a party to the prior litigation." TLT Construction Corp., 48 Mass.App.Ct. at 6, quoting Massachusetts Prop. Ins. Underwriting Ass'n v. Norrington, 395 Mass. 751, 754 (1985).

In cases involving multiple parties, however, the legal identity required is "a very close relationship bordering on a complete identity of interest between the individuals in question." Mongeau, 10 Mass.App.Ct. at 252, quoting Allan D. Vestal, Claim Preclusion and Parties in Privity: Sea-Land Servs. v. Gaudet in Perspective, 60 Iowa L. Rev. 973, 976 (1975). Massachusetts courts require very close relationships to establish privity for purposes of claim preclusion in the multiparty context because its implications are drastic. Mongeau, 10 Mass.App.Ct. at 252 n.5. Claim preclusion requires the litigant in the second suit to completely step into the shoes of the earlier litigant, and accept its recovery or loss. Id.

Generally a party that litigates in one legal capacity is not thereby impeded from litigating in other capacities. Rudow, 376 Mass. at 589. This rule "safeguard[s] the integrity of such representative functions." Id. at 589 n.3, quoting Restatement (Second) of Judgments §80, cmt. a (Tent. Draft No. 2, 1975). For example, in Rudow, a plaintiff's prior action against a defendant did not prevent him from later suing that defendant on behalf of his son. Id. at 589 n.3. Therefore, while litigating a claim in one capacity against a defendant, a party need not raise other claims that arose in the context of a separate legal capacity. M.J. Flaherty Co. v. United States Fid. & Guar. Co., 61 Mass.App.Ct. 337, 340 (2004). In M.J. Flaherty, the plaintiff theoretically could have litigated its claims against a company in the company's capacity, as an...