Property Law

Paul F. Sherman, Esquire

Identity of parties in both lawsuits requirement was not met, even though it could have been, so that prior litigation did not preclude present suit. Res judicata does not apply to merge and bar the case still pending.  Lauber-Clayton, LLC v. Novus Properties Co., No. 98302 (Mo. App. E.D. February 26, 2013), Mooney, P.J.

Present and prior litigation involved numerous corporate entities, including three “Lauber” entities and five “Novus” entities, all concerning a commercial real estate transaction. Plaintiff Lauber-Clayton (“L-C”) and Novus Holdings owned a building as tenants in common. L-C testified it hired Novus Properties in October 2005 as listing broker to sell the property. In May 2006, L-C sold its 26% interest in the building to Sebelski Holdings, LLC for $160,000. Three months later, Sebelski and Novus Holdings sold the building for the full asking price of $1,500,000. L-C claims it was duped by Novus Holdings, Sebelski and others in a prior lawsuit – but did not name Novus Properties Co. – concerning this building and that case settled. Defendant Novus was a defendant severed out concerning a companion shopping center matter. This suit is by L-C against defendant Novus Properties for attorney fees and balance remaining damages on claims of negligence, breach of contract, fraud and breach of fiduciary duty in failing to disclose the $1,500,000 offer for the building. The trial court sustained defendant Novus Properties’ motion for summary judgment on res judicata grounds, with argument that it could/should have been a party in the prior litigation.

Summary judgment was reversed on appeal because Defendant Novus Properties was severed so that identity of parties (one of four “identities” which must occur for res judicata to apply) was obviously lacking in the earlier suit. Moreover, the prior case made no claim against defendant Novus Properties for the building in that prior suit. Perhaps privity existed between defendant Novus Properties and the others sufficient to intervene so as to preclude as an exception, but those facts were not presented so the summary judgment is reversed.

Held: Summary Judgment reversed, cause remanded to proceed.