Shum v. Gaudreau

• Decision Date: 31 August 1989
• Citation: 317 Md. 49,562 A.2d 707
• Parties: Siu Leung SHUM v. D.L. GAUDREAU. 2 Sept. Term 1989.
• Court: Maryland Court of Appeals

Page 49

317 Md. 49

562 A.2d 707

Siu Leung SHUM v. D.L. GAUDREAU.

2 Sept. Term 1989.

Court of Appeals of Maryland.

Aug. 31, 1989.

Charles J. Muskin, Glen Burnie, for petitioner.

No argument on behalf of respondent.

Argued before MURPHY, C.J., and ELDRIDGE, COLE, RODOWSKY, McAULIFFE, ADKINS and BLACKWELL, JJ.

ADKINS, Judge.

We here consider the res judicata effect of a landlord's action for repossession of premises and unpaid rent on a subsequent action by the landlord to recover for the cost of repairing damage done to the leased premises during the term of the tenancy. The issues presented arise from a dispute between respondent D.L. Gaudreau ("Landlord") and petitioner Siu Leung Shum ("Tenant"). Landlord leased property to Tenant on 18 September 1985. The rented parcel, 1459 Fairfield Loop Road in Anne Arundel County, Maryland, was a residence. But Tenant, owner of an Annapolis-area restaurant, did not rent the property to use as a home. Instead, he rented the property because it was "close to work, [to use] as an office, sometimes I would take an afternoon break ... there."

During the first year of the lease, Tenant decided that the property was not suitable as an office and used the property as a dormitory for some of his restaurant employees. The lease was renewed for a second year (for the year ending 30 September 1987) on 5 September 1986.

During the summer of 1986, Tenant complained to Landlord about the house's lack of water supply. In response, a new well was drilled. A water conditioner system was installed in October 1987. ¹ In June 1987 Landlord wrote a letter to Tenant advising the latter that the home was in "deplorable condition due to the number of people" living there. Landlord requested that the home be cleaned and repaired. On 2 September 1987 and throughout that month and early October, Landlord made extensive repairs to the property. Tenant did not pay the September rent and vacated the premises some time between 24 and 30 September.

On 22 September 1987, pursuant to Maryland Code (1988 Repl.Vol., 1988 Cum.Supp.), Real Property Article, § 8-401, Landlord brought an action against Tenant in the District Court of Maryland sitting in Anne Arundel County. He sought repossession of the property and a judgment for one month's rent. On 29 September he obtained that relief, including personal judgment against Tenant for $550, the rent found to be due.

That case is not the one we have before us. The present matter arises from a contract action, instituted by Landlord in the District Court of Maryland sitting in Anne Arundel County on 13 October 1987. There, Landlord alleged that Tenant had caused damage to the property in the amount of $9,200.

This amount allegedly due by Tenant was based on damage to the floors in the living room and kitchen, damage to walls of the home, to the stove and refrigerator, and to doors in the interior of the home; required pest extermination; and the cost of hauling furniture abandoned by Tenant. Landlord also requested reimbursement for costs, incurred both before and after Tenant's departure, for lawn and gardening services (because of the Tenant's failure to maintain the lawn as required by the lease) and for septic tank service. Finally, the Landlord requested reimbursement for the new well and water conditioner system. The District Court, after a trial, awarded Landlord $6,500. It gave no explanation of the basis for liability or the computation of damages. Tenant appealed to the Circuit Court for Anne Arundel County, questioning the sufficiency of the evidence to support certain damages claimed by Landlord and asserting that the contract action was barred by res judicata.

After a hearing on the record made in the District Court, the circuit court reversed and remanded the case to the District Court for a new trial. The circuit court held that the District Court had failed to set forth adequate findings of fact or law from which the circuit court could "understand what weight was given by the trier of fact to the items [of damage] or the values of same; nor was there any reasoning in law as to the ultimate conclusions." With regard to res judicata, however, the court held that there was no basis for the argument because the earlier action for rent and repossession, pursuant to § 8-401, and the subsequent contract action for damages to the property "are two separate causes of action." We granted certiorari to determine whether the action instituted on 13 October 1987 is barred by res judicata and if it is not, whether the circuit court was correct in remanding the case to the District Court for a new trial. 315 Md. 223, 554 A.2d 351 (1989).

I.

In MPC, Inc. v. Kenny, 279 Md. 29, 367 A.2d 486 (1977), we stated the rule of res judicata:

"The doctrine of res judicata is that a judgment between the same parties and their privies is a final bar to any other suit upon the same cause of action, and is conclusive, not only as to all matters that have been decided in the original suit, but as to all matters which with propriety could have been litigated in the first suit...."

279 Md. at 32, 367 A.2d at 488-489 (quoting Alvey v. Alvey, 225 Md. 386, 390, 171 A.2d 92, 94 (1961)) [ellipsis and emphasis added in MPC, Inc.]. See generally Restatement (Second) of Judgments §§ 17, 18 (1982). We are concerned here with the concept of claim preclusion. See generally Kent County Bd. of Educ. v. Bilbrough, 309 Md. 487, 489-490, 525 A.2d 232, 233 (1987). ² We must first determine whether the contract action instituted by Landlord on 13 October 1987 is the "same cause of action" as the one he instituted pursuant to § 8-401 of the Real Property Article on 21 September 1987.

A.

In Bilbrough, Judge Rodowsky, writing for the Court, discussed at length the test to be used in determining whether two claims are the same cause of action. We approved of the "transaction" approach found in § 24 of the Restatement (Second) of Judgments (1982). ³ 309 Md. at 499, 525 A.2d at 238. Section 24 explains (1) When a valid and final judgment rendered in an action extinguishes the plaintiff's claim pursuant to the rules of merger or bar (see §§ 18, 19), the 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.

(2) What factual grouping constitutes a "transaction", and what groupings constitute a "series", 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.

This approach is proper when " 'parties have ample procedural means for fully developing the entire transaction in the one action....' " Bilbrough, 309 Md. at 499, 525 A.2d at 238 (quoting Restatement (Second) of Judgments § 24, comment a). As a result of our decision in Bilbrough, " '[t]he law of res judicata now reflects the expectation that parties who are given the capacity to present their "entire controversies" shall in fact do so.' " Id.

B.

We apply the factors listed in § 24(2) to the instant case. At the core of both this action and the earlier one is the lease. This contract to a large extent determines the rights and duties of both parties. Breaches of the lease by the Tenant--failure to pay rent and failure to perform other covenants of the lease ⁴--gave rise to both actions. Certainly then, the "facts are related in time, space, [and] origin." Also, the two actions could easily form a convenient trial unit because they both arise from the same contract. This conclusion is consistent with our prior holdings in cases involving two claims arising out of a single contract.

For example, in Rosenstein v. Hynson, 157 Md. 626, 147 A. 529 (1929), the plaintiff sued and received a judgment against the defendant for a portion of an amount owed under a contract for the sale of a piano. The plaintiff then brought a replevin action to recover the piano because of the remaining unpaid installments. The Court held that

In suing for a part only of the installments in arrears, when he was entitled to sue for all, the plaintiff disregarded the sound and settled rule that a fully accrued cause of action for the breach of a single contract must not be subdivided for the purposes of separate suits against the same party. The object of the rule is to protect a defendant from the vexations and burdens incident to a duplication or multiplication of actions to enforce a liability for which one suit would be sufficient. The consequence of a violation of the rule is that a judgment recovered for part of the accrued indebtedness sued for separately may be pleaded to a suit for the residue of the claim, which is treated as being merged in the recovery procured in the first litigation.

157 Md. at 628, 147 A. at 529.

In Olmstead v. Bach, 78 Md. 132, 27 A. 501 (1893), an employee entered into an employment contract to work for one year and receive a weekly salary for his services. Two months into the term, the employer refused to allow the employee to work, thus breaching the contract. Nine days after the breach, the employee sued for one week's pay and received a judgment for that amount. The employee then instituted a second action for the balance of the wages due under the contract.

The Court noted that the contract was indivisible, and that the parties expected the contractual relationship to continue unbroken for one year, rather than to be a weekly or at-will arrangement. 78 Md. at 144, 27 A. at 503. Thus, it was held that the employee should have maintained one action for the breach of the contract--the second action on the contract was barred. Id. at 151, 27 A. at 505. Other cases hold similarly. See, e.g., Mildred Davis, Inc. v....