Alexander J. Walker, Jr. v. Aaron Day ( 2020 )

NOTICE: This opinion is subject to motions for rehearing under Rule 22 as well
as formal revision before publication in the New Hampshire Reports. Readers are
requested to notify the Reporter, Supreme Court of New Hampshire, One Charles
Doe Drive, Concord, New Hampshire 03301, of any editorial errors in order that
corrections may be made before the opinion goes to press. Errors may be
reported by e-mail at the following address: reporter@courts.state.nh.us.
Opinions are available on the Internet by 9:00 a.m. on the morning of their
release. The direct address of the court’s home page is:
http://www.courts.state.nh.us/supreme.
THE SUPREME COURT OF NEW HAMPSHIRE
___________________________
Hillsborough-northern judicial district
No. 2019-0236
ALEXANDER J. WALKER, JR.,
v.
AARON DAY
Argued: January 28, 2020
Opinion Issued: April 14, 2020
Devine, Millimet & Branch, Professional Association, of Manchester
(Matthew R. Johnson and Devin K. Bolger on the brief, and Mr. Johnson
orally), for the plaintiff.
Boyle | Shaughnessy Law PC, of Manchester (Peter L. Bosse and
Jonathan P. Killeen on the brief, and Mr. Killeen orally), for the defendant.
DONOVAN, J. The plaintiff, Alexander J. Walker, Jr., appeals orders of
the Superior Court (Nicolosi, J.) dismissing his claim of conspiracy to defame
on res judicata grounds after finding privity between the defendant, Aaron Day,
and other defendants in a separate defamation action. On appeal, the plaintiff
argues that the trial court erred by: (1) deciding the privity issue at the motion
to dismiss stage; and (2) applying the First Circuit Court of Appeals’ privity
standard, rather than New Hampshire precedent, to determine privity. We
agree that the trial court erred by applying the privity standard used by the
First Circuit, and, therefore, vacate the trial court’s ruling and remand.
The record supports the following facts. The plaintiff filed a defamation
lawsuit against an individual and his company (defamation defendants). The
trial court entered a final judgment in favor of the plaintiff on the issue of
liability on May 25, 2017. Following a bench trial on the issue of damages, the
court awarded the plaintiff damages in the amount of $5,000,000 on April 12,
2018. The defamation defendants appealed that decision, which was affirmed
by this court on February 7, 2019.
On August 31, 2017, while the plaintiff’s defamation action was pending,
the plaintiff filed a lawsuit against the defendant, alleging a claim of conspiracy
to commit defamation and seeking enhanced compensatory damages. The
complaint described the defamation, which provided the basis for the
conspiracy claim, in much the same terms as the complaint in the separate
defamation action, but also alleged facts to support the conspiracy claim. The
defendant moved to dismiss the conspiracy action on the grounds of, inter alia,
res judicata, arguing, in part, that he was in privity with the defamation
defendants for res judicata purposes.
Before ruling on the motion, the court explained that application of res
judicata requires a finding of: (1) privity between parties; (2) the same cause of
action; and (3) a final judgment rendered in the first action. The court
concluded that privity existed due to the nature of the co-conspirator
relationship between the defendant and the defamation defendants, and the
cause of action was the same, but no final judgment had been rendered in the
defamation action at that time. Therefore, the court denied the motion and
stayed the case until a final judgment was issued in the defamation action.
The plaintiff moved for reconsideration, arguing that the record at the
motion to dismiss stage was insufficient to support a finding of privity, and the
court improperly relied upon First Circuit precedent in its ruling. The court
denied the plaintiff’s motion because it remained convinced that the First
Circuit’s privity standard, see Airframe Systems, Inc. v. Raytheon Co., 601 F.3d
9, 17-18 (1st Cir. 2010), was appropriate given the circumstances. Further,
the court ruled that the plaintiff’s argument that privity was improperly
determined at the motion to dismiss stage was “a new argument that is not a
proper one to raise on reconsideration, and [it was] denied on [that] basis.”
On May 16, 2018, the defendant filed a renewed motion to dismiss,
which was denied because the defamation action was on appeal with this
court. The defendant again renewed his motion after this court affirmed the
judgment in the defamation case. The plaintiff used that opportunity to restate
the arguments he had advanced previously. Based upon the same reasoning
set forth in its prior orders, the trial court granted the motion to dismiss on res
judicata grounds, and this appeal followed.
2
We first address the plaintiff’s argument that the trial court erred, as a
matter of law, by applying the First Circuit’s privity standard. The doctrine of
res judicata precludes the litigation in a later case of matters actually decided,
and matters that could have been litigated, in an earlier action between the
same parties for the same cause of action. Sleeper v. Hoban Family P’ship, 157
N.H. 530, 533 (2008). For the doctrine to apply, three elements must be
established: (1) the parties must be the same or in privity with one another; (2)
the same cause of action must be before the court in both instances; and (3) a
final judgment on the merits must have been rendered in the first action. Id.
Only privity, the first element, is at issue on appeal. The applicability of res
judicata is a question of law that we review de novo. Id.
The plaintiff argues that the trial court erred by applying the First
Circuit’s standard to determine privity between the defendant and the
defamation defendants. In response, the defendant advances three arguments:
(1) the trial court’s ruling is in harmony with New Hampshire law; (2) the
unique circumstances of this case warranted an expanded application of
privity; and (3) the interests of judicial economy and finality of litigation are
best served by an expanded application of privity. We agree with the plaintiff,
and we conclude that the First Circuit’s privity standard is inconsistent with
New Hampshire law.
We disagree with the defendant’s assertion that the trial court’s ruling is
consistent with the law of res judicata and privity in New Hampshire.
Although, under New Hampshire law, res judicata generally does not apply to
nonparties to the original judgment, this rule is subject to exceptions. Sleeper,
157 N.H. at 533. Nonparty preclusion may be based on a variety of pre-
existing substantive legal relationships between the person to be bound and a
party to the judgment. Id. “The substantive legal relationships justifying
preclusion are sometimes collectively referred to as privity, although we have
used the term more broadly to refer to a functional relationship, in which, at a
minimum, the interests of the non-party were in fact represented and protected
in the prior litigation.” Id. at 534 (quotations and citation omitted); see
Aranson v. Schroeder, 140 N.H. 359, 368-69 (1995); Daigle v. City of
Portsmouth, 129 N.H. 561, 571 (1987).
By contrast, the First Circuit has “long held that claim preclusion applies
if the new defendant is closely related to a defendant from the original action—
who was not named in the previous law suit, not merely when the two
defendants are in privity.” Airframe, 601 F.3d at 17 (quotation omitted). Thus,
under the law of the First Circuit, “privity is a sufficient but not a necessary
condition for a new defendant to invoke a claim preclusion defense,” Airframe,
601 F.3d at 17, whereas New Hampshire law provides that a nonparty is
“bound by the doctrine of res judicata only if he is in privity with a bound
party.” Waters v. Hedberg, 126 N.H. 546, 549 (1985) (emphasis added).
3
The defendant nonetheless argues that the trial court was justified in
adopting the First Circuit’s privity standard because res judicata must be
determined on a case-by-case basis, and the “unique scenario” of successive
litigation against co-conspirators justified an expanded application of privity.
Similarly, the trial court determined “that the First Circuit’s standard in
Airframe is appropriate” because, in the context of “closely related” parties, it
strikes the proper balance between allowing a plaintiff the opportunity for full
recovery and strategic choices, and the need for finality of judgment, fairness,
and judicial economy. We disagree.
We have long adhered to the general rule that plaintiffs may pursue joint
wrongdoers successively until the judgment has been satisfied. See Zebnik v.
Rozmus, 81 N.H. 45, 47 (1923) (“[T]he rule most widely followed is that
judgment and execution against one is not a bar to a judgment against another
also liable unless the judgment is satisfied. Such is the law here.” (citations
omitted)); Fowler v. Owen, 68 N.H. 270, 271 (1895) (“For such acts they were
jointly and severally liable. The plaintiff was at liberty to sue either of them
separately.”); Hyde v. Noble, 13 N.H. 494, 501 (1843) (“The injured party has a
right to pursue all who have done the wrong, until he obtains a satisfaction for
it.”); Snow v. Chandler, 10 N.H. 92, 94 (1839). Of course, that general rule
may not apply if the elements for the application of a more specific rule, such
as res judicata, are met. However, in light of the general rule, the defendant’s
argument that the plaintiff should be barred from bringing the conspiracy
action against him merely because he could have raised it in the suit against
the defamation defendants is not persuasive.
Moreover, we have previously rejected the assertion that co-conspirators,
by virtue of their relationship alone, are in privity for preclusion purposes. See
Aranson, 140 N.H. at 369. In Aranson, the “trial court apparently agreed . . .
that [the defendant] was in privity with the underlying defendants because he
. . . acted as a co-conspirator in” creating and presenting a “false” defense in
the underlying case. Id. In vacating and remanding the trial court’s privity
ruling, we observed that the plaintiff presented no evidence to support a finding
that the defendant had exerted any control over the underlying litigation such
that the defendant should be bound by the determination against the
underlying defendants as though he participated in the litigation, and that the
relationship of co-conspirators, “standing alone, does not warrant a
determination that [the defendant’s] involvement in the underlying action was
so significant as to constitute control.” Id. Similarly, here, neither party’s
pleading asserted that the defendant exerted any control over the earlier
litigation, and his relationship as a co-conspirator with the defamation
defendants, standing alone, does not warrant such a finding.
The defendant next argues that Aranson is inapposite because: (1)
Aranson involved a plaintiff’s use of offensive preclusion, whereas this case
involves defensive preclusion; and (2) the conspiracy activity alleged in Aranson
4
occurred during the earlier litigation, not prior to it, as is the case here. The
defendant’s observations, while accurate, do not render Aranson inapposite.
Our decision in Aranson was based upon the relationship that was alleged to
have created privity between the parties, not when the wrongdoing occurred.
See id. at 368-69. Further, the defendant has offered no persuasive argument
as to why the facts of this case compel a different result from the conclusion we
reached in Aranson, simply because this case involves defensive rather than
offensive preclusion. Thus, the defendant’s arguments are unavailing.
The defendant also argues, and the trial court agreed, that the trial
court’s expanded application of privity best serves the interests of judicial
economy and finality of litigation. To be sure, the doctrine of res judicata seeks
to “avoid repetitive litigation in order to promote judicial economy and a policy
of certainty and finality in our legal system.” Osman v. Gagnon, 152 N.H. 359,
362 (2005). These interests, alone, however, cannot be dispositive in all cases.
See Northern Assur. Co. of America v. Square D Co., 201 F.3d 84, 89-90 (2d
Cir. 2000) (acknowledging that “the scarcity of judicial resources alone does not
justify denying a party the opportunity to litigate a claim” (quotations omitted)).
Taking into account our long-standing general rule permitting plaintiffs to
pursue joint wrongdoers successively when the judgment has not been
satisfied, and our decision in Aranson, we conclude that the interests of
judicial economy and finality do not require an expanded application of privity
in this case.
Finally, the defendant argues that, even if we reject the First Circuit’s
privity standard, the trial court’s ruling can be upheld on alternative grounds
because the defendant and the defamation defendants are in privity under the
“substantive legal relationship” exception to the general rule against nonparty
preclusion within our res judicata jurisprudence. See Sleeper, 157 N.H. at
533. We disagree.
The United States Supreme Court, as well as this court, has recognized
that “nonparty preclusion may be justified based on a variety of pre-existing
‘substantive legal relationship[s]’ between the person to be bound and a party
to the judgment.” Taylor v. Sturgell, 553 U.S. 880, 894 (2008) (citation
omitted); see Brooks v. Trustees of Dartmouth College, 161 N.H. 685, 690
(2011). In Taylor, the Supreme Court noted that “[q]ualifying relationships
include, but are not limited to, preceding and succeeding owners of property,
bailee and bailor, and assignee and assignor.” Taylor, 553 U.S. at 894; see
Sleeper, 157 N.H. at 533 (“Qualifying relationships include that between a
property owner and his successor in interest.”).
Relying primarily on Taylor, the defendant contends that “[a]lleged co-
conspirators satisfy the substantive legal relationship exception” because the
relationship is one that rests upon “a theory of mutual agency.” However, the
relationships identified in Taylor are not premised upon a theory of agency.
5
Rather, they are rooted in property law and involve relationships in which the
parties’ legal interests are aligned such that they are nearly indistinguishable.
See Taylor, 553 U.S. at 894 (“These exceptions originated as much from the
needs of property law as from the values of preclusion by judgment.” (quotation
omitted)). The relationship of co-conspirators is not rooted in property law, and
while the interests of co-conspirators may align in achieving the conspiracy’s
goals, we cannot conclude that their legal interests are always similarly
aligned. Therefore, the relationship between co-conspirators, standing alone,
does not qualify for the “substantive legal relationship” exception. There may
be circumstances in which co-conspirators qualify for the “functional
relationship” exception, see Sleeper, 157 N.H. at 534, but in Aranson we
decided that such a relationship is not sufficient in all cases. Aranson, 140
N.H. at 368-69.
In light of our conclusion that the trial court erred, as a matter of law, by
applying the First Circuit’s standard to determine whether privity existed in
this case, we need not consider the plaintiff’s alternative argument that the
trial court erred by making its privity determination at the motion to dismiss
stage of the litigation. Accordingly, we vacate the ruling of the trial court and
remand for further proceedings consistent with this opinion.
Vacated and remanded.
HICKS, BASSETT, and HANTZ MARCONI, JJ., concurred.
6