08 Jul Partial Motions For Summary Judgement Lack Res Judicata Effect In Refiled Cases
Imagine litigating a case all the way through discovery. Because of your hard work in discovery, you were able to eliminate some of Plaintiff’s claims (i.e., punitive damages claim). Once the discovery is over, you prepare a strong Motion for Partial Summary Judgment that is eventually granted by the Court. You are proud of all the hard work that you’ve put in, in order to eliminate some of Plaintiff’s claims. Your clients are pleased they can focus on fewer claims during trial. Then, Plaintiff files a voluntary dismissal without prejudice.
Within the next six months, Plaintiff refiles his Complaint pursuant to O.C.G.A. § 9-2-61. In his complaint, Plaintiff raises the same claims, including the claims that were dismissed pursuant to your Motion for Partial Summary Judgment. You automatically move the Court to dismiss those [previously dismissed] claims on res judicata grounds. Seems that the claims will likely be dismissed, right?
Not so fast. In Shan Fu v. Reed, the Court opined that res judicata applies when there is (1) [an] identity of the cause of action; (2) [an] identity of the parties of their privies; and (3) [a] previous adjudication on the merits by a court of competent jurisdiction. The Court decided that the prior court’s order on summary judgment did not constitute “a final judgment on the merits.”
The Court analyzed O.C.G.A. § 9-11-54, the Georgia law governing summary judgment, and reasoned that a judgment as to one or more but fewer than all of the claims is not a final judgment and lacks res judicata effect unless the trial court expressly directs the entry of final judgment. O.C.G.A. § 9-11-54(b). Because the prior court’s order did not explicitly direct the entry of final judgment on the claims eliminated by the Partial Motion for Summary Judgment, the Court determined that the prior court’s order lacks res judicata effect.
The problem with the Court’s decision in Shan Fu v. Reed is that the state trial courts seldom provide the “explicit directive” cited in O.C.G.A. § 9-11-54(b), which means that plaintiffs have the ability to refile and relitigate any claim originally filed, even if the claim was previously litigated and decided by a court of competent jurisdiction. This clearly places a financial strain on defendants and has a negative impact on judicial efficiency. More importantly, it just does not appear to be fair.
It is impossible to predict when a Plaintiff will voluntarily dismiss a case, and they can do so at any time, including on the eve of trial. Litigants hoping to preserve hard-fought victories on claims dismissed via partial summary judgment should ask that the Courts enter their orders pursuant to the explicit directive of O.C.G.A. § 9-11-54(b). Getting that language in your orders may be difficult, but a strong argument can be made that it aids judicial economy if the plaintiff decides to dismiss and refile, which may help incentivize the inclusion of that language in the court’s orders.
Adjusters on files should ask their attorneys to push for orders that dispose of claims on partial summary judgment to include language reflecting a dismissal on the merits. Should the case get dismissed and refiled, the litigation costs will be lower for the second lawsuit, as the issues dismissed on partial summary judgment will have been actually disposed of, even under the holding in Shan Fu. In cases where a plaintiff can refile in a different venue, having issues disposed of on the merits will prevent the possibility of an inconsistent judgment, and may disincentivize forum shopping on the part of the plaintiff.
The case is Shan Fu v. Reed, 13 F.Supp.3d 1371 (2014).