Phoenix Newspapers, Inc. v. Department of Corrections, State of Ariz.

• Decision Date: 18 March 1997
• Docket Number: No. 1,CA-CV,1
• Citation: Phoenix Newspapers, Inc. v. Department of Corrections, State of Ariz., 934 P.2d 801, 188 Ariz. 237 (Ariz. App. 1997)
• Parties: , 239 Ariz. Adv. Rep. 17 PHOENIX NEWSPAPERS, INC., and Randall Collier, Plaintiffs-Appellants, v. DEPARTMENT OF CORRECTIONS, STATE OF ARIZONA, Samuel A. Lewis and Michael Arra, Defendants-Appellees. 96-0255.
• Court: Arizona Court of Appeals

Page 801

934 P.2d 801

188 Ariz. 237, 239 Ariz. Adv. Rep. 17

PHOENIX NEWSPAPERS, INC., and Randall Collier, Plaintiffs-Appellants, v. DEPARTMENT OF CORRECTIONS, STATE OF ARIZONA, Samuel A. Lewis and Michael Arra, Defendants-Appellees.

No. 1 CA-CV 96-0255.

Court of Appeals of Arizona Division 1, Department B.

March 18, 1997.

[188 Ariz. 239] Grant Woods, Attorney General by Charles S. Pierson, Assistant Attorney General, for Defendants-Appellees.

Morrison & Hecker by James F. Henderson, Tyler Q. Swensen, William P. French, for Plaintiffs-Appellants.

OPINION

LANKFORD, Judge.

Phoenix Newspapers, Inc. and its reporter, Randall Collier, ("the Newspapers") appeal from the trial court's dismissal of their complaint and from an award of attorneys' fees.

In 1994, the Newspapers sought a declaratory judgment that the Arizona Department of Corrections ("ADOC") Director's Management Order 89-21 ("DMO 89-21") and the ADOC Internal Management Policy for "Release of Information to the News Media" unconstitutionally discriminate against media representatives by denying them prison visitation privileges enjoyed by the general public. In addition, the Newspapers sought an injunction against ADOC's enforcement of the DMO against the Newspapers and all members of the media.

Following dismissal of the Newspapers' 1994 complaint, they filed a new action. The 1995 complaint again sought declaratory and injunctive relief, claiming that DMO 89-21 unconstitutionally denies media representatives equal access to visitation of inmates.

The issues presented on appeal are as follows:

1. Did the trial court err in dismissing the Newspapers' 1995 complaint as barred by res judicata?

2. Did the trial court err in dismissing the Newspapers' 1995 complaint for failure to state a claim upon which relief could be granted?

3. Did the trial court err in awarding attorneys' fees to defendants pursuant to Ariz.Rev.Stat.Ann. ("A.R.S.") section 12-349?

We hold that the Newspapers' second complaint, filed in 1995, is not barred by the first judgment under existing Arizona law. Accordingly, we reverse the trial court's ruling that the 1995 complaint is barred by res judicata. However, we affirm the trial court's dismissal of the Newspapers' 1995 complaint for failure to state a claim upon which relief could be granted. We reverse the trial court's award of attorneys' fees to defendants.

Stated briefly, the facts and procedural history of this case are as follows. ADOC's DMO 89-21, the subject of both lawsuits, prohibits visitation of inmates except by five classes of persons. Media representatives, based on their status as news reporters alone, do not fall within any class permitted visitation. ADOC's Internal Management Policy identifies a prison liaison, designated by the Director, to coordinate responses to news media inquiries. The Newspapers claimed that these policies unconstitutionally discriminate against media representatives by denying them visitation privileges afforded members of the general public.

In the first action, the trial court ruled that DMO 89-21 confers no right of visitation upon the public. Accordingly, the court rejected the Newspapers' claim that media representatives, as members of the public, were entitled to visitation. The court dismissed the complaint for failure to state a claim upon which relief could be granted.

The Newspapers then moved to amend the 1994 complaint. They sought to include a new claim: DMO 89-21 violates the Arizona Constitution by granting privileges to certain citizens and classes of citizens while denying those privileges to the general public. The trial court denied the motion to amend. Although the court's minute entry suggested that it had found no merit in the amended complaint, the court declined to include language in its formal dismissal order that the court was "in essence finding that the proposed amended complaint would not state a claim against defendants upon which relief can be granted."

In 1995, the Newspapers filed the second complaint. The new complaint asserted essentially the same claim proposed by the motion to amend the 1994 complaint. The trial court granted the State's motion to dismiss on two grounds: (1) The complaint was barred by res judicata because of the dismissal of the 1994 complaint; and (2) the complaint failed to state a claim upon which relief could be granted. In addition, the court ordered the Newspapers to pay the State's attorneys' fees as a sanction. The Newspapers appeal both the dismissal and the fee award. We have jurisdiction pursuant to A.R.S. section 12-120.21(A).

I.

We first consider whether the doctrine of res judicata bars the second complaint. Res judicata is a question of law and is therefore reviewed de novo. Timothy Berg et al., 1 Arizona Appellate Handbook § 3.5.2.5.1 at 1995-3-15 (Jefferson L. Lankford & Paul G. Ulrich eds., 3d ed. 1992, 1995 supp.); see generally Horizon Resources Bethany Ltd. v. Cutco Indus., Inc., 180 Ariz. 72, 881 P.2d 1177 (App.1994) (appellate court is not bound by the trial court's conclusions of law).

The res judicata issue reveals itself to be even more complex than the parties present it. Part of the difficulty is that most Arizona cases apply an antiquated "same evidence" test for defining the "same cause of action." The other problem is that the trial court not only refused to permit the Newspapers to amend their complaint to add a new theory, but declined to clearly express its reason for doing so.

For an action to be barred, it must be based on the same cause of action asserted in the prior proceeding. Chaney Bldg. Co. v. City of Tucson, 148 Ariz. 571, 573, 716 P.2d 28, 30 (1986); Nienstedt v. Wetzel, 133 Ariz. 348, 355, 651 P.2d 876, 883 (App.1982). Arizona has applied a rather restrictive test to resolve this question: If no additional evidence is needed to prevail in the second action than that needed in the first, then the second action is barred. See Rousselle v. Jewett, 101 Ariz. 510, 421 P.2d 529 (1966); Wilson v. Bramblett, 91 Ariz. 284, 371 P.2d 1014 (1962); Pierpont v. Hydro Mfg. Co., 22 Ariz.App. 252, 526 P.2d 776 (1974). Such cases adopting the "same evidence" test were consistent with the first Restatement of Judgments § 61 (1942), which adopted the test.

The same evidence test has fallen into disuse in recent years. See Ross v. International Bhd. of Elec. Workers, 634 F.2d 453 (9th Cir.1980) (applying Arizona law and identifying "same evidence" test, but stating that dispositive question was whether litigant previously had a fair opportunity to litigate the claim); Heinig v. Hudman, 177 Ariz. 66, 865 P.2d 110 (App.1993) (applying Restatement (Second) of Judgments § 24 (1982)). Nevertheless, we stated as recently as 1982 that "Arizona case law is clear" that this test governs. Bill v. Gossett, 132 Ariz. 518, 522, 647 P.2d 649, 653 (App.1982).

The Restatement (Second) of Judgments and the clear majority of courts now employ a "transactional" test for determining whether the cause of action is the same. Section 24 of the current Restatement provides:

[T]he claim extinguished includes all rights of the plaintiff to remedies against the defendant with respect to all or any part of the transaction, or series of connected transactions, out of which the action arose.

What factual grouping constitutes a "transaction", [sic] and what groupings constitute a "series", [sic] are to be determined pragmatically, giving weight to such considerations as whether the facts are related in time, space, origin, or motivation whether they form a convenient trial unit, and whether their treatment as a unit conforms to the parties' expectations or business understanding or usage.

The modern trend also clearly favors this transactional test. Restatement (Second) § 24, cmt. a; 1B JAMES W. MOORE ET AL., MOORE'S FEDERAL PRACTICE p 0.410 at III-193 n. 24 (2d ed. 1991) (most federal circuits have adopted transactional test); Durhan v. Neopolitan, 875 F.2d 91, 94 (7th Cir.1989) (most federal courts use transactional test). The same evidence test is regarded as too narrow, failing to fully serve the res judicata policy of precluding the reassertion of claims. See Snell v. Mayor and City Council of Havre de Grace, 837 F.2d 173, 176 (4th Cir.1988); Durhan, 875 F.2d at 94. It allows litigants to recast their claims under new theories, implicating somewhat different facts than those involved in the prior action. "[O]nly slight variations of the facts to support different theories of the same incident can result in a court finding different causes of action, thus thwarting the purposes of res judicata." Barr v. Resolution Trust Corp., 837 S.W.2d 627, 630 (Tex.1992) (adopting Restatement (Second) § 24). Instead, the transactional test focuses on whether the new claim arises out of the same "transaction or occurrence" that was the subject of the original action. Id.; see MOORE ET AL., supra p 0.410 at III-193-94 (stating that any difference between Restatement (Second) § 24 and Rule 13(a), Fed.R.Civ.P. definitions of "transaction or occurrence" is insignificant); cf. Ariz.R.Civ.P. 13(a) (compulsory counterclaim rule).

Applying the old Arizona rule results in no preclusion. The Newspapers assert a new theory in their second action, supported by some additional facts. Indeed, at least one fact asserted in the second action directly contradicts a fact essential to the first. In the first, the Newspapers alleged that the general public was granted visitation, while in the second, it asserted that the public was denied that privilege. Unfortunately, that approach permits the Newspapers--and any other plaintiff--to avoid preclusion merely by posturing the same claim as a new legal theory. The undesirability of such a succession of litigation, unfair to defendant and burdensome to the legal system, is obvious.

In contrast, the modern rule prevents such relitigation. If the new claim is closely related to the...