Nunnery v. Brantley Const. Co., Inc.

• Decision Date: 25 March 1986
• Docket Number: No. 0738,0738
• Citation: 345 S.E.2d 740,289 S.C. 205
• Court: South Carolina Court of Appeals
• Parties: Robert NUNNERY, d/b/a Nunnery Roofing Company and Roofing Enterprises of South Carolina, Inc., Respondents, v. BRANTLEY CONSTRUCTION CO., INC., and the American Arbitration Association, Inc., of which Brantley Construction Co., Inc., is Appellant. . Heard

Page 740

345 S.E.2d 740

289 S.C. 205

Robert NUNNERY, d/b/a Nunnery Roofing Company and Roofing Enterprises of South Carolina, Inc., Respondents, v. BRANTLEY CONSTRUCTION CO., INC., and the American Arbitration Association, Inc., of which Brantley Construction Co., Inc., is Appellant.

No. 0738.

Court of Appeals of South Carolina.

Heard March 25, 1986.

Decided June 23, 1986.

Rudolph C. Barnes, Jr. of Barnes, Alford, Stork & Johnson, Columbia, for appellant.

John E. Miles, Sumter, for respondents.

GOOLSBY, Judge.

Robert Nunnery, who does business as Nunnery Roofing Company, and Roofing Enterprises of South Carolina, Inc., brought suit against Brantley Construction Company, Inc., and the American Arbitration Association, Inc., to enjoin arbitration proceedings brought before the Association by Brantley against Nunnery and Roofing Enterprises. The circuit court granted the injunction and Brantley appeals. We affirm.

The dispositive issue on appeal concerns whether the principles of res judicata bar Brantley from arbitrating its claim that Nunnery and Roofing Enterprises performed defective roofing work.

Brantley, a general contractor, subcontracted with Nunnery on August 18, 1980, to roof a building owned by the Department of the Navy at the Marine Air Station near Beaufort, South Carolina. Article 3 of the contract provides in part:

All work by [Nunnery] must be completed so as to meet [Brantley's] schedule. If [Nunnery] ... fails to complete the work within the time specified, it is agreed ... that [Nunnery] shall pay as ... liquidated damages suffered by [Brantley] the amount of $25.00 per day for each day ... of the job delayed.

In January, 1982, Nunnery brought an action against Brantley alleging Brantley owed him $6,190.98 on the roofing contract. Brantley counterclaimed alleging that Nunnery "failed to perform [the roofing] work properly causing rejection of the same and the removal and reinstallation of the rejected roof resulting in extensive delay damages to [Brantley]."

Several months later, on June 7, 1982, Nunnery and Brantley settled the action. The action was dismissed "with prejudice" by a consent order.

On June 18, 1982, the Navy inspected the roof and found a number of leaks. According to the naval officer in charge of the construction, the leaks discovered during the inspection resulted from latent defects and from defective repairs and were previously unknown. The officer conceded, however, that "there were continuing problems with leaks in the roof prior to June, 1982."

The Navy subsequently required Brantley to make extensive repairs to the roof. These repairs cost Brantley $41,253.20.

On March 6, 1984, Brantley, pursuant to the arbitration provisions of its contract with Nunnery, served a Demand for Arbitration upon Nunnery and Roofing Enterprises, Nunnery's successor in interest. By its demand, Brantley sought "to recover costs of correcting certain defective roofing work provided by ... Nunnery ... and Roofing Enterprises ... under [Nunnery's] subcontract ...." Copies of the arbitration agreement and the demand were filed with the Association.

Upon receiving the arbitration demand, Nunnery and Roofing Enterprises brought the instant action. They obtained a temporary restraining order on March 16, 1984.

Following a hearing conducted on April 24, 1984, the circuit court on July 3, 1984, issued an order permanently enjoining Brantley and the Association from proceeding to arbitrate Brantley's claim. The circuit court held that principles of res judicata bar Brantley from arbitrating its claim and that Brantley waived its right to seek arbitration by filing a counterclaim in the prior action, defending the claim brought by Nunnery, settling the suit, and agreeing to dismiss both actions with prejudice.

Brantley contends the circuit court committed error in using res judicata principles to enjoin it from arbitrating its claim against Nunnery and Roofing Enterprises for defective performance.

Our Supreme Court in Bagwell v. Hinton, 205 S.C. 377, 400, 32 S.E.2d 147 156 (1944), held that the following elements must be shown in order to establish the plea of res judicata:

(1) The parties must be the same or their privies; (2) the subject matter must be the same; and (3) while generally the precise point must be ruled, yet where the parties are the same or are in privity the judgment is an absolute bar not only of what was decided but of what might have been decided.

See also Ford v. Watson, 282 S.C. 66, 316 S.E.2d 429 (Ct.App.1984). A dismissal "with prejudice" indicates an adjudication on the merits and, operating as res judicata, precludes subsequent litigation to the same extent as if the action had been tried to a final adjudication. Mumford v. Hutton & Bourbonnais Co., 47 N.C.App. 440, 267 S.E.2d 511 (1980); 46 Am.Jur.2d Judgments § 482 at 645 (1969). Where an action has been so dismissed, the judgment operates, in a subsequent action involving the same subject matter, "so as to conclusively settle not only all matters litigated in the earlier proceedings, but also all matters which might have been litigated therein." Id.

For a judgment to bar the maintenance of a subsequent action, there must be identity of the cause of action as well as identity of the subject matter. Griggs v. Griggs, 214 S.C. 177, 51 S.E.2d 622 (1949); 46 Am.Jur.2d Judgments § 404 at 573 (1969). The pivotal question here, then, is whether the subject matter of the arbitration proceedings and of Brantley's prior counterclaim embrace the same cause of action. See Lowe v. Clayton, 264 S.C. 75, 212 S.E.2d 582 (1975). In determining this issue, we are mindful of the rule that prohibits the owner of a single cause of action from either dividing or splitting the cause of action so as to make it the subject of several causes of action unless the party against whom the cause of action exists consents thereto. See Mitchell v. Federal Intermediate Credit Bank of Columbia, 165 S.C. 457, 164 S.E. 136 (1932); 1 Am.Jur.2d Actions § 127 at 647 (1962).

For the purpose of applying principles of res judicata, a fundamental test used for comparing causes of action is to determine whether the primary right and duty and the delict or wrong are the same in each action. 46 Am.Jur.2d Judgments § 406 at 574-75 (1969). "Under this test, there is but one cause of action where there is but one right in the plaintiff and one wrong on the part of the defendant involving that right." Id. at 575.

When we compare Brantley's counterclaim in the former action with its demand for arbitration in the second proceeding and consider the record before us, we think it manifest that the causes of action are the same.

The counterclaim filed by Brantley in the former action sought to recover as damages the liquidated damages assessed against Brantley by the Navy and other additional costs incurred by Brantley as a result of Nunnery's delay in completing construction of the roof. The demand for arbitration, on the other hand, seeks to recover the costs Brantley sustained for allegedly having to correct "certain defective roofing work" performed by Nunnery and Roofing Enterprises.

Both causes of action arise out of the same contract and involve an alleged breach thereof in that they both question Nunnery's performance under the contract. The fact that Brantley by its counterclaim in the first action chose not to request all the damages it suffered because of Nunnery's breach of the roofing contract does not prevent res judicata from operating to bar Brantley's prosecution of the second action. As our Supreme Court observed in Mitchell, quoting from 34 C.J. Judgments § 1275 at 862 (1924),

"If a defendant, having a demand against plaintiff, pleads it as a ... counterclaim in the action, he must make the most of his opportunity and exhibit his whole damage, for the judgment in the action will prevent him from afterward using the same matter, or any part of it, as a separate cause of action against the former plaintiff ... in any subsequent action between them, whether such ... counterclaim was allowed or disallowed...."

165 S.C. at 465-66, 164 S.E. at 138; see Smith v. Smith, 18 S.C.Eq. (1 Rich.Eq.) 130 (1845).

The record is clear that Brantley's cause of action for an alleged defective roof had accrued before the earlier action was dismissed since it shows that the existence of a serious roofing problem either could have been discovered or reasonably should have been discovered by Brantley prior to the dismissal of the first action. See Dillon County School District Number Two v. Lewis Sheet Metal Works, Inc., 286 S.C. 207, 332 S.E.2d 555 (Ct.App.1985), cert. granted, 287 S.C. 234, 337 S.E.2d 697 (1985), cert. dismissed, 343 S.E.2d 613. As we noted previously, the navy officer in charge of the construction indicated the problem with the roof leaking had been a recurring one and had existed before the first action was terminated.

Thus, Brantley could have litigated in the first action the question of whether the roof was defectively constructed. Because Brantley dismissed the action without having litigated the question and without having obtained Nunnery's consent to split its cause of action for the purpose of preserving this part of its claim, Brantley is precluded from litigating the question of the roof's alleged defective construction in the arbitration proceeding. Brantley "has had [its] day in Court," both as to the question of Nunnery's alleged untimely performance of the roofing contract and as to the question of Nunnery's alleged defective performance of the roofing contract. Graham v. State Farm Fire and Casualty Insurance Co., 277 S.C. 389, 391, 287 S.E.2d 495, 496 (1982).

We do not reach Brantley's contention that the circuit court erred in holding that Brantley waived its right to arbitrate its claim by, among other things, filing a counterclaim in the action brought by Nunnery.

AFFIRMED.

SHAW, J., concurs.

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