The doctrine of res judicata or claim preclusion can trip up an unwary plaintiff, as illustrated by a recent decision from the Supreme Court of Appeals of West Virginia.

In Beahm v. 7-Eleven, Inc., 2008 WL 4386838 (W. Va., September 26, 2008), the plaintiffs appealed from summary judgment in the defendants’ favor.  The underlying tort was a leak from an underground storage tank at a 7-Eleven gas station in January 2000.  Originally, eight property owners filed suit based on the leak, which they claimed contaminated their property starting in February 2000. They filed their action in state court, but it was removed to federal court based on diversity between the parties. Proctor v. 7-Eleven, Inc., Civil Action No. 3:02-CV-0021 (N. D. W. Va. 2002) 

The Proctor plaintiffs tried to add the Beahms as plaintiffs in December 2002 based on a continuing tort theory, but in February 2003, the district court denied the motion to add the Beahms and two other plaintiffs on the grounds the statute of limitations had expired.  The Fourth Circuit Court of Appeals denied the proposed plaintiffs’ extraordinary writ of mandamus.

The Beahms filed their own suit in state court on January 24, 2003 against 7-Eleven and Melissa Spinks, a non-diverse defendant.  The Beahms’ action proceeded concurrently with the Proctor action until the state court entered a stay pending the outcome in Proctor, as the two actions involved identical questions of fact and law and involved the same types of claims, issues, parties, lawyers, and experts.

On April 26, 2005, the district court in Proctor granted the defendants’ motion for summary judgment on the grounds that the plaintiffs had not sustained any recoverable damages.  The plaintiffs appealed the court’s determination that they had no recoverable damages, but not its denial of their motion to amend to add the Beahms.  The Fourth Circuit affirmed the district court’s ruling on May 18, 2006.  Proctor v. 7-Eleven, Inc., 180 Fed.Appx. 453 (4th Cir. 2006).

Shortly after the state court lifted the stay in the Beahms’ case, it granted summary judgment on the defendants’ behalf, finding that res judicata barred the action.  The court also denied the plaintiffs’ motion for reconsideration.

In its per curiam opinion, the Supreme Court identified the issue as whether the circuit court correctly held that res judicata barred the plaintiffs’ claims, and cited Blake v. Charleston Area Med. Ctr., Inc., 498 S.E.2d 41 (W. Va. 1997), for the three elements that must be satisfied in order for res judicata to apply:

First, there must have been a final adjudication on the merits in the prior action by a court having jurisdiction of the proceedings.  Second, the two actions must involve either the same parties or persons in privity with those same parties.  Third, the cause of action identified for resolution in the subsequent proceeding either must be identical to the cause of action determined in the prior proceeding or must be such that it could have been resolved, had it been presented, in the prior action.

The parties agreed that Blake’s first element of a final adjudication on the merits in the prior action was satisfied by the district court’s final judgment in Proctor.  The parties differed as to the second and third elements, however. 

For the second element, the Court found that the plaintiffs were the same as the Proctor plaintiffs’, even though they plaintiffs had tried unsuccessfully to join that lawsuit.  On this point, I think the Beahms were harmed by their admission in their writ to the Fourth Circuit that, by not moving to join the Proctor action, they "risk[ed] the barring of their claims by res judicata and/or collateral estoppel."

For the third element, the plaintiffs tried to distinguish their cause of action from the Proctor plaintiffs’ in order to avoid a finding that the causes of action were identical, but the Supreme Court disagreed:

Appellants contend that the instant action is different than Proctor because the properties’ damages in the two cases are different, the damages were discovered at different times, and there was an invasion of harmful vapors in the Council on Aging’s Senior Center [the Council was also a plaintiff in the Beahms’ lawsuit].  We find Appellants’ argument disingenuous, and the differences between the two cases too insignificant to avoid claim preclusion.

Based on the facts of Beahm, the Supreme Court’s caution that “the application of res judicata is dependent on the distinctive characteristics of a particular case” is an understatement.