Smith v. Jenkins

Decision Date06 July 1989
Docket NumberNo. 88-207.,88-207.
Citation562 A.2d 610
PartiesHugh H. SMITH, et al., Appellants, v. Charles R. JENKINS, et al., Appellees.
CourtD.C. Court of Appeals

C. Alexander Hewes, Jr., pro se., with whom Paul R. Pearson, was on the brief, for appellants.

Craig N. Goodrich, with whom Lee Calligaro, Washington, D.C., was on the brief, for appellees.

Before MACK, NEWMAN and SCHWELB, Associate Judges.

MACK, Associate Judge:

This suit for damages arose from the sale of partnership shares in a Maryland real estate venture. In prior appeals, we upheld the trial court's personal jurisdiction in this matter, Smith v. Jenkins, 452 A.2d 388 (D.C. 1982), and its order denying a motion to dismiss on grounds of forum non conveniens, Jenkins v. Smith, 499 A.2d 128 (D.C. 1985) (en banc). Appellants, who prevailed in each of the previous actions, now appeal from the trial court's order dismissing the action on grounds of res judicata and collateral estoppel (claim preclusion and issue preclusion). We affirm.

A. The Underlying Transactions

The complaint alleges that on or about September 30, 1973, appellees Charles R. Jenkins and William E. Esham, Jr. formed a limited partnership with Robert S. Bounds1 called Herring Landing Limited, in which they were the general partners. Under the agreement, there were three general partnership shares and seventeen limited partnership shares. The purpose of the partnership was to acquire title to certain real property located in West Ocean City, Maryland, for investment and development. Appellants Hugh H. Smith, C. Alexander Hewes and Augmentation, Inc., a Maryland corporation, allegedly signed on as limited partners on October 31, 1973, with the understanding that the purchase price of the property was to be $400,000. Nevertheless, on November 8, 1973, the property was sold for $300,000 to the Skyline Development Corporation, a company controlled by appellee Jenkins. In the same transaction, Herring Landing Limited purchased the property from Skyline for $400,000, allegedly without the knowledge of appellants. Skyline thereafter executed a check to appellee Bounds for $49,000.

In the fall of 1976, Bounds, in violation of the partnership agreement, secretly and without the knowledge or consent of Jenkins or Esham undertook to assign his limited partnership shares in Herring Landing Limited to Dr. Rufus Johnson as collateral for a debt. In April 1977, Dr. Johnson, concerned with Bounds' financial difficulties, met with Jenkins and Esham and offered to purchase their partnership shares for $25,000 each, thereby becoming sole general partner in Herring Landing Limited. To pay for the shares, Dr. Johnson, his wife, and Ocean Holiday Investments, Inc., a corporation controlled by Dr. Johnson, executed two promissory notes.

After Dr. Johnson agreed to purchase the general partnership shares but before consummation of the agreement, Jenkins and Esham transferred the funds in the partnership's bank account to the trust account of the partnership's attorney, Paul Ewell, with instructions to distribute the funds among the then-existing partners after paying all outstanding bills. The transaction between Dr. Johnson and appellees was completed on May 16, 1977. However, upon learning that the partnership funds had been distributed to the former partners before the deal was closed, Dr. Johnson, acting through Ocean Holiday, demanded that they repay the partnership monies.

B. The Maryland Litigation

In July 1978 the Johnsons and Ocean Holiday withheld payments due on the promissory notes. Jenkins and Esham filed an action in Maryland for payment on the notes, and the Johnsons and Ocean Holiday counterclaimed, alleging fraud, mismanagement, and conversion of partnership property, and seeking a setoff against obligations under the promissory notes.2 Later the Johnsons and Ocean Holiday amended the counterclaim to add a claim against Ewell. Specifically, the counterclaim contended that Jenkins breached his fiduciary duty to the partnership by profiting, through Skyline, from the sale of the West Ocean City real estate to Herring Landing; that Jenkins, Esham and Ewell made an improper distribution of partnership assets in May 1977; that Ewell engaged in legal malpractice in executing the improper distribution of May 1977; that Jenkins, Esham and Ewell failed to file an amended partnership certificate in connection with the 1976 sale of the general partnership shares to the Johnsons and Ocean Holiday, thereby "damag[ing them] in connection with their purchase of partnership shares"; that Jenkins and Esham abused their general partnership powers to obtain an exorbitant profit from the 1976 sale of their shares; that the Johnsons and Ocean Holiday were entitled to prejudgment interest on the $100,000 obtained and withheld from the partnership by Jenkins in 1973; and that the Johnsons and Ocean Holiday were entitled to punitive damages against Jenkins, Esham and Ewell.

Nearly eight years elapsed between the filing of the Maryland action and trial on the merits, during which time the Johnsons and Ocean Holiday sold their entire interest in Herring Landing to Augmentation, Inc., one of the original limited partners, for $115,000. The Johnsons and Ocean Holiday also assigned to Augmentation any and all claims they might have against Jenkins, Esham, Bounds, and Ewell. In March 1986 the Maryland trial court entered judgments in favor of Jenkins, Esham and Ewell for the amounts due under the promissory notes, and against the Johnsons, Ocean Holiday, and Augmentation on their counterclaims. That decision was affirmed by unpublished opinion in April 1988 by the Court of Special Appeals of Maryland.

C. The District of Columbia Litigation

Appellants in the action now on appeal, Smith, Hewes, and Augmentation, who were original limited partners in Herring Landing, filed this action in the Superior Court on March 25, 1981, seeking damages arising from misrepresentations made by Robert Bounds on his behalf and on behalf of the other appellees, Jenkins and Esham, in connection with the formation of the Herring Landing partnership and the acquisition of real property in West Ocean City, Maryland. Specifically, the complaint alleged breaches of common-law and statutory fiduciary duties, misrepresentation, fraudulent concealment, conversion, fraud in management, and conspiracy.

After extensive litigation over pretrial motions to dismiss on grounds of the trial court's asserted lack of personal jurisdiction, Smith v. Jenkins, supra, and forum non conveniens, Jenkins v. Smith, supra, appellees moved to dismiss on grounds of res judicata and collateral estoppel. After certain complications which it is unnecessary for us to recite, this motion was ultimately granted on January 29, 1988. This appeal followed.


Appellees have advanced two theories of prior adjudication in support of their contention that the Maryland judgment foreclosed further litigation in this case: res judicata, or claim preclusion, and collateral estoppel, or issue preclusion.3 In determining the applicability of these doctrines to this appeal, our principal task is to unravel the various parties, claims and issues involved in this appeal to determine whether any or all of them are subject to the preclusive effects of the prior litigation in Maryland. At the outset, we note that the pendency of the current litigation prior to the conclusion of that in Maryland does not deprive the latter of any preclusive effect it may have under principles of res judicata or collateral estoppel. Old Colony Trust Co. v. Commissioner of Internal Revenue, 279 U.S. 716, 728, 49 S.Ct. 499, 508, 73 L.Ed. 918 (1929); Chicago, Rock Island & Pactfic Railway Co. v. Schendel, 270 U.S. 611, 616-17, 46 S.Ct. 420, 422, 70 L.Ed. 757 (1926); Agarwal v. Johnson, 25 Cal.2d 932, 603 P.2d 58, 71-72, 160 Cal. Rptr. 141 (1979).

A. Res Judicata or Claim Preclusion

Under the doctrine of claim preclusion, "a judgment `on the merits' in a prior suit involving the same parties or their privies bars a second suit based on the same cause of action." Lawlor v. National Screen Service, 349 U.S. 322, 326, 75 S.Ct. 865, 867, 99 L.Ed. 1122 (1955); Yuen v. Durham, 488 A.2d 1346, 1348 (D.C. 1985); Henderson v. Snider Brothers, Inc., 439 A.2d. 481, 485 (D.C. 1981) (en banc); Habib v. Keats, 286 A.2d 854, 856 (D.C. 1972). Further, "the effect of a judgment extends to the litigation of all issues relevant to the same cause of action between the same parties, whether or not raised at trial." Kaspar Wire Works, supra note 3, 575 F.2d at 535-36; see also Henderson, supra, 439 A.2d at 485. The doctrine is therefore said `to "bar" the relitigation of claims previously adjudicated, and to "merge" into the prior judgment any available claims that plaintiff failed to raise in the, antecedent litigation, preventing their consideration in a new action. Kaspar Wire Works, supra note 3, 575 F.2d at 535.

1. Identity of Claims

Momentarily putting aside the inevitable inquiry into the identity of the parties in the two cases, there can be no doubt that, for our purposes, the underlying claims are identical. A "claim" or "cause of action," for purposes of claim preclusion, comprises "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." RESTATEMENT (SEC-OND) OF JUDGMENTS § 24(1) (1982); see Yuen, supra, 488 A.2d at 1348 ("res judicata bars further claims based on the same transaction"). Further, "[w]hat factual grouping constitutes a `transaction,' and what groupings constitute a `series,' are to be determined pragmatically," considering "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'...

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