William Neundorfer & Co., Inc. v. Don B. Lash, 83-LW-3421

• Decision Date: 10 February 1983
• Docket Number: 44768,83-LW-3421
• Parties: WILLIAM NEUNDORFER & CO., INC., ET AL., APPELLANTS, v. DON B. LASH, APPELLEE.
• Court: Ohio Court of Appeals

WILLIAM NEUNDORFER & CO., INC., ET AL APPELLANTS, v. DON B. LASH, APPELLEE.

No. 44768.

83-LW-3421 (8th)

Court of Appeals of Ohio, Eighth District Cuyahoga

February 10, 1983

APPEAL FROM COMMON PLEAS COURT No. 028,189.

For plaintiffs-appellants: Joseph W. Diemert.

For defendant-appellee: Wm. H. Wallace and Keith L. Carson.

JOURNAL ENTRY AND OPINION

MARKUS J.

This cause came on to be heard upon the pleadings and the transcript of the evidence and the record in the Common Pleas Court, and was argued by counsel for the parties; and upon consideration, the court finds no error prejudicial to the appellant and therefore the judgment of the Common Pleas Court is affirmed. Each assignment of error was reviewed and upon review the following disposition made:

The trial court granted defendant's motion to dismiss this action as barred by the doctrine of res judicata. Plaintiffs assert on appeal that their present action for damages, allegedly resulting from defendant's breach of a sales contract, is not barred by a previous Texas judgment granting specific performance for the same sales contract. We conclude that we are required to give the Texas judgment full faith and credit, and to accord that judgment the same effect as Texas courts would give it. Believing that Texas courts would find plaintiffs' present action has merged into the prior Texas judgment, we affirm.

In 1979, five individuals executed a sales contract with defendant, in which defendant agreed to sell them seventy three percent of the outstanding stock of an Ohio manufacturing corporation doing business in Texas. When defendant failed or refused to perform, those individuals sued defendant in a Texas court. In addition to certain preliminary relief, their suit asked for specific performance of the contract; "for the damages caused to Plaintiffs by Defendant's breach of the Agreements for "such other relief, general and special, legal and equitable to which Plaintiffs may show themselves justly entitled."

When the Texas suit was filed, it also sought temporary relief for a corporate plaintiff distributor which was owned and operated by the individual plaintiffs, asserting that defendant should be prevented from disrupting product sales by the manufacturing corporation to the plaintiff distributor corporation during the pendency of the Texas lawsuit. Immediately before the Texas trial, the corporate plaintiff filed for and was granted a "nonsuit," or dismissal without prejudice.

The Texas court then conducted a non-jury trial and granted a judgment for the individual plaintiffs. The Texas judgment ordered defendant to comply with the stock sales agreement denied defendant any relief on a cross action against the plaintiffs, and made no provision or order for any monetary damages allegedly sustained by plaintiffs. Apparently neither party appealed from that Texas judgment, so it remains in full effect. Indeed, the parties' briefs indicate that the stock has been transferred in compliance with the Texas judgment, so that judgment has been fully satisfied.

In 1981, the five individual plaintiffs and the corporate plaintiff filed suit in the Cuyahoga County Common Pleas Court, seeking damages resulting from defendant's breach of the same contract.®1¯ Their complaint attached and incorporated the stock sales agreement, their Texas pleading and the Texas court's judgment. Defendant's motion to dismiss that complaint, on the ground that the damage action was barred by res judicata, was granted.

Footnote 1 Plaintiffs' Ohio complaint averred:

"7. As a direct and proximate result of the willful and/or fraudulent, and intentional breach of contract by the defendant, the plaintiffs were damaged in the sum of One Million Five Hundred Thousand Dollars ($1,500,000.00).

"10. As a direct and proximate result of the breach of contract by the defendant, the plaintiff Wm. Neundorfer & Co., Inc. was damaged extensively."

Other allegations in the Complaint describe the nature or type of damages already sustained.

Plaintiffs' contentions on appeal are interrelated, so we will consider them together:

I. THE TRIAL COURT ERRED IN GRANTING DEFENDANT'S MOTION TO DISMISS ON NOVEMBER 19, 1981 AS THE DOCTRINE OF RES JUDICATA DOES NOT APPLY WHERE THERE ARE SEPARATE CAUSES OF ACTION.

II. THE TRIAL COURT ERRED IN GRANTING DEFENDANT'S MOTION TO DISMISS ALL PARTIES ON NOVEMBER 19, 1981, WHERE ONE PARTY HAD BEEN DISMISSED WITHOUT PREJUDICE IN A PRIOR ACTION.

The judgment for specific performance was rendered in a Texas state court, and we are required by the federal Constitution to give that judgment "full faith and credit." U.S. Constituion, Art. IV, Sec. 1. We must examine the res judicata effect of that judgment under Texas law and give it that same effect in our courts. Titus v. Wallick (1938), 306 U.S. 282; Miller v. Bock Laundry Machine Co. (1980), 64 Ohio St. 2d 265. If the claim merges with the judgment under Texas law, we must accept that the same result exists here. Cf. Milwaukee County v. M. E. White Co. (1935), 296 U.S. 268; Restatement, Conflict of Laws, Sec. 450, comments f, g.

Under Texas law, a plaintiff's cause of action merges into a judgment he obtains on that cause of action, and it is thereafter extinguished as an independent justiciable matter. Thomas v. First National Bank (Tex. Civ. App., 1933), 57 S.W.2d 262; Bankers Life Co. v. Quarles (Tex. Civ. App., 1935), 88 S.W.2d 613. In other words, the plaintiff's cause of action ceases to be actionable after he obtains a judgment on that cause of action. His rights arising from the original transaction to create that cause of action are limited to enforcement of the resulting judgment. Litton v. Waters (Tex. Civ. App., 1942), 161 S.W.2d 1095.

A "cause of action" has been defined by numerous Texas courts for res judicata purposes. In Connellee v. Magnolia Petroleum Co. (Tex. Civ. App. 1932), 54 S.W.2d 577, at 580, the court quoted with approval from a Rhode Island decision:

"A cause of action does not consist of facts, but of the unlawful violation of a right which the facts show. The number and variety of the facts alleged do not establish more than one cause of action so long as their result, whether they be considered severally or in combination, is the violation of but one right by a single legal wrong."

See also Galbreath v. Farrell (Tex. Civ. App., 1925), 275 S.W. 238, at 241.

Quoting an early Texas Supreme Court decision in Foster v. Wells (1849), 4 Tex. 101, 104, the court said in Davis v. Biggs (Tex. Civ. App., 1944), 182 S.W.2d 1017, at 1019:

"[A] judgment 'is not only final as to the matter actually determined, but as to every other matter which the parties might litigate in the cause, and which they might have had decided."'

See also Hunt v. Burrage (Tex. Civ. App., 1942), 163 S.W.2d 218, at 219; Nichols v. Dibrell (1884), 61 Tex. 539, at 541.

In Puls v. Clark (Tex. Civ. App., 1947), 199 S.W.2d 811, at 815, the court concluded:

"A litigant is not entitled to have a second trial of issues that were determined in a former suit merely because in the second suit he seeks other relief and may have even a different purpose. So long as the grievances or wrongs complained of are in legal effect the same, the cause of action is the same and the judgment in the first suit stands as a bar to further examination of the matter. [citations omitted]"

See also American Nat. Ins. Co. v. Warnock (Tex. Civ. App., 1940), 143 S.W.2d 624, at 629; Gulf Reduction Corp. v. Bayles Galvanizing & Pl. Co. (Tex. Civ. App., 1970), 456 S.W.2d 476, at 479-80.

A plaintiff cannot enforce part of his rights to obtain part of his available remedies for a cause of action and there after assert additional rights for additional remedies on the same cause of action. Barnett v. Maida (Tex. Civ. App., 1975), 523 S.W.2d 325; Connellee v. Magnolia Petroleum Co. (Tex. Civ. App., 1932), 54 S.W.2d 577; Cole v. Wadsworth (Tex. Civ. App., 1964), 376 S.W.2d 13.

An attempt to divide a plaintiff's rights and remedies for a single cause of action constitutes the "splitting" of his cause of action, which Texas law will not allow. W. C. Belcher Land Mortgage Co. v. Norris (Tex. Civ. App., 1903), 78 S.W. 390; Whitney v. Parish of Vernon (Tex. Civ. App., 1913), 154 S.W. 264. In Mallory v. Dawson Cotton Oil Co. (Tex. Civ. App., 1903), 74 S.W. 953, at 954, the court said:

"Our opinion is that where a plaintiff sees fit to file separate actions in different courts, on parts of an entire and indivisible contract, and takes judgment in one case, his cause of action on the contract is satisfied, and the judgment may be pleaded in bar in the other actions; and the order in which the suits may have been instituted is entirely immaterial."

According to Texas law, a plaintiff may recover consequential damages for the breach of a contract in the same action that he obtains specific performance of that contract. Foust v. Hanson (Tex. Civ. App., 1981), 612 S.W.2d 251. From the preceding definition of a "cause of action," we construe Texas law to mean that a claim for incidental or consequential damages is part of the same single cause of action for breach of a sales contract as the related claim for specific performance of that same contract.

Therefore, we believe Texas courts would conclude that the present plaintiffs have obtained a judgment which constitutes a replacement for all their rights and remedies resulting from this defendant's breach of the sales contract involved here. If that judgment was insufficient, plaintiffs should have asserted a timely appeal in Texas. Having failed to do so, they have no further remedy for their cause of action from that breach in Texas or in Ohio, beyond enforcement of their Texas judgment.

Plaintiffs...