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Davila v. Nickell10/26/2005
nt action.
The Louies instead argue that the court erred in denying their motion for non-suit on the res judicata doctrine based on a pleading defect. Specifically, the Louies argue Barraza could not rely on the settlement agreement to avoid the res judicata bar because "Barraza never sued the Louies (or Sun Villa) for breach of the contract," or alleged in his complaint that the Louies were parties to the agreement. (Underscoring omitted.)
This argument is conceptually flawed. The Louies incorrectly presume Barraza was required to plead and prove a breach of contract claim to successfully defeat the Louies' defense that Barraza's second action was barred by res judicata and/or the statute of limitations. An affirmative claim that the Louies breached the October 1997 settlement agreement would have permitted Barraza to recover contract damages if Barraza proved the Louies were bound by the agreement and breached the agreement. However, recovery of these damages was not a prerequisite for Barraza to prevail on a separate legal issue at trial-the issue whether the res judicata doctrine and/or the statute of limitations barred Barraza's action.
To the extent the Louies claim they had no notice they were required to litigate the issues surrounding the October 1997 settlement agreement because of the lack of an affirmative contract claim against them, this contention is contradicted by the record. Because the accident occurred in 1996 and the lawsuit was not filed until 2000, Barraza's counsel acknowledged at trial that Barraza could not recover against each defendant unless he proved that each defendant was bound by the October 1997 settlement agreement and that the agreement had been breached in a manner permitting him to reopen the lawsuit.
The record reflects that the Louies' counsel fully understood this relevance of the settlement agreement at trial. For example, on the first day of trial, the court and the parties discussed at length that the Louies' res judicata and statute of limitations defenses required the resolution of factual issues pertaining to the October 1997 settlement agreement. Consistent with these discussions, during trial the Louies' counsel elicited testimony from witnesses concerning the meaning of the October 1997 settlement agreement, who was bound by it, and the type of breach that would have permitted Barraza to "reopen" the lawsuit and "proceed on this original complaint with no limitation on his recovery." Likewise, in support of the Louies' non-suit motion on their res judicata/statute of limitations defenses, the Louies' counsel affirmatively stated he understood the court's ruling that these defenses were dependent on the resolution of factual issues concerning the October 1997 settlement agreement.
The critical factual predicate missing from the Louies' appellate argument is that the October 1997 settlement agreement was relevant to two entirely distinct legal issues at trial: (1) Barraza's breach of contract claim against the Joadd defendants; and (2) the defendants' (Joadd defendants, Louies and Sun Villa Inc.) res judicata/statute of limitations defenses and Barraza's avoidance of those defenses. The fact that Barraza did not seek to affirmatively recover on the first legal issue does not mean he could not prevail on his claims on the second legal issue.
Accordingly, although Barraza never identified the Louies as parties to the breach of contract action as alleged in his complaint, it does not follow this circumstance entitled the defendants to prevail as a matter of law on their res judicata and/or statute of limitations defenses.
C. Barraza's Amendment of Contract Claim
In a r
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