May 6, 2015
TRENA GARRISON AND THOMAS GARRISON
JAMES CONSTRUCTION GROUP, LLC AND XYZ INSURANCE COMPANY
APPEALED FROM THE NINETEENTH JUDICIAL DISTRICT COURT, IN AND FOR THE PARISH OF EAST BATON ROUGE, STATE OF LOUISIANA. DOCKET NUMBER C601074. HONORABLE TIMOTHY KELLEY, JUDGE.
Greg A. Rozas, Brad G. Wood, Baton Rouge, Louisiana, Attorneys for Plaintiffs/Appellants, Trena Garrison and Thomas Garrison.
Douglas K. Williams, Thomas R. Temple, Jr., Druit G. Gremillion, Jr., Baton Rouge, Louisiana, Attorneys for Defendant/Appellee, James Construction Group, LLC.
BEFORE: WHIPPLE, C.J., GUIDRY, PETTIGREW, MCDONALD, MCCLENDON, WELCH, HIGGINBOTHAM, CRAIN, THERIOT, HOLDRIDGE, AND CHUTZ, JJ. Theriot, J. concurring in part and dissenting in part. Holdridge, J. agreeing in part and dissenting in part for reasons assigned. Pettigrew, J. concurs in part, dissents in part and assigns reasons.
[2014 0761 La.App. 1 Cir. 2]
In this appeal, plaintiffs in a personal injury lawsuit appeal a judgment, granting peremptory exceptions raising the objections of res judicata and no right of action, and dismissing their suit against an alleged tortfeasor. For the following reasons, we reverse and remand.
FACTUAL AND PROCEDURAL BACKGROUND
On April 21, 2010, Trena Garrison was riding as a passenger on a motorcycle driven by her husband, Thomas Garrison, on O'Neal Lane in Baton Rouge, Louisiana, when Mr. Garrison lost control of the motorcycle and crashed. [R2] On July 13, 2010, for consideration of $25,000, Mrs. Garrison released Mr. Garrison; his insurer, State Farm Insurance; and " all other persons, firms or corporations" from " any and all claims" resulting from the April 21, 2010 accident (original release). [R36]
On September 16, 2011, Mrs. Garrison signed an amended release document, reiterating her release of Mr. Garrison and State Farm Insurance in exchange for $25,000, but specifically reserving her rights against James Construction and others [2014 0761 La.App. 1 Cir. 3] who may be liable to her for claims related to the April 21, 2010 accident (amended release). [R37] Later, James Construction filed a peremptory exception raising the objection of res judicata as to Mrs. Garrison's claims, contending the original release barred the assertion of her claims against James Construction, and the amended release was ineffective at preserving any such claims. [R26, 29-30] After the Garrisons opposed the exception, the trial court held a hearing and indicated that it considered James Construction's exception as one raising the objections of res judicata and no right of action. [R88] After the hearing, the trial court signed a judgment on January 22,
2014, granting exceptions of res judicata and no right of action and dismissing the Garrisons' claims with prejudice. [R67]
The Garrisons devolutively appeal the adverse judgment, arguing the trial court erred in granting the exception of res judicata and indicating that their argument also implicitly challenges the trial court's granting of the exception of no right of action.
COMPROMISE AND RES JUDICATA
A release of a claim, when given in exchange for consideration, is a compromise. Labiche v. Louisiana Patients' Compensation Fund Oversight Board, 98-2880 (La.App. 1 Cir 2/18/00), 753 So.2d 376, 380. A compromise is a contract whereby the parties, through concessions made by one or more of them, settle a dispute or an uncertainty concerning an obligation or other legal relationship. LSA-C.C. art. 3071. A compromise precludes the parties from bringing a subsequent action based upon the matter that was compromised. LSA-C.C. art. 3080. Thus, a valid compromise may form the basis for an objection of res judicata. Rivett v. State Farm Fire and Casualty Company, 508 So.2d 1356, 1359 (La. 1987); also see Brown v. Drillers, Inc., 93-1019 (La. 1/14/94), 630 So.2d 741, 746 n.5.
[2014 0761 La.App. 1 Cir. 4] In Ortego v. State, Department of Transportation and Development, 96-1322 (La. 2/25/97), 689 So.2d 1358, 1363, the Supreme Court stated that a party claiming res judicata based on a compromise agreement must have been a party to the compromise. Relying on this statement, several appellate courts have held the same. For example, in Five N Company, L.L.C v. Stewart, 02-0181 (La.App. 1 Cir. 7/2/03), 850 So.2d 51, 62, this court specifically rejected a plea of res judicata made by defendants/exceptors who " were neither parties to the compromise agreement nor successors to any of the parties or property rights involved in the compromise agreement." The Five N Company court stated, " because [the exceptors] have not established the 'identity of the parties' element that is required for res judicata, the compromise agreement and related judgment do not preclude this suit." Id.
Accord Hines v. Smith, 44,285 (La.App. 2 Cir. 8/12/09), 16 So.3d 1234, 1238-39, writ denied, 09-2001 (La. 12/11/09), 23 So.3d 922; Spires v. State Farm Mutual Automobile
Insurance Company, 08-573 (La.App. 3 Cir. 11/5/08), 996 So.2d 697, 700, writ denied, 08-2871 (La. 2/6/09), 999 So.2d 783; and Carrie v. Louisiana Farm Bureau Casualty Insurance Company, 04-1001 (La.App. 4 Cir. 2/16/05), 900 So.2d 841, 844, writ denied, 05-0711 (La. 5/6/05), 901 So.2d 1099. Further we note the general principle that, if there is any doubt as to its application, the exception of res judicata must be overruled. Pierrotti v. Johnson, 11-1317 (La.App. 1 Cir. 3/19/12), 91 So.3d 1056, 1063.
In its opposition to the Garrisons' appeal, James Construction relies on the case of Tyler v. Roger, 08-2468 (La.App. 1 Cir. 6/12/09), 11 So.3d 1243, 2009 WL 1655840 (unpublished opinion), in which this court affirmed a judgment granting an insurer's exception of res judicata based on a prior release executed by the plaintiff to which the insurer was not a party. In Tyler, the plaintiff was involved in an automobile accident and filed a suit [2014 0761 La.App. 1 Cir. 5] for damages against the driver of the other vehicle and his automobile insurer. She later amended her petition to add her own uninsured motorist (UM) insurer as a defendant. In due course, Ms. Tyler signed a release and settled her claims with the defendant driver and his insurer. Her UM insurer responded with an exception of res judicata, claiming it had been released from the lawsuit pursuant to the release executed by Ms. Tyler and the settling defendants. The trial court granted the UM insurer's exception and dismissed Ms. Tyler's claims against her UM insurer. On appeal, Ms. Tyler argued that her UM insurer could not raise res judicata, because it was not a party to the release. In light of the broad " plain" language of the release agreement, however, the Tyler court determined the UM insurer was released from liability for any claims Ms. Tyler had against it and affirmed the trial court judgment. The Tyler majority opinion did not address whether the UM insurer could properly assert res judicata when it was not a party to the release.
In a dissenting opinion in Tyler, Judge Guidry disagreed with the majority opinion, citing Ortego, because there was no evidence that Ms. Tyler's UM insurer was a party to the compromise executed by Ms. Tyler and the settling defendants. In a concurring opinion in Tyler, Judge Gaidry opined that the compromise agreement contained a stipulation pour autrui in favor of Ms. Tyler's UM insurer, and the
UM [2014 0761 La.App. 1 Cir. 6] insurer was entitled to avail itself of the benefit of the release. Although Judge Gaidry did not directly state so, his reasoning implies that, even though Ms. Tyler's UM insurer was not a principal party to the compromise agreement, it could still properly assert res judicata, because it was a third party beneficiary to the compromise agreement.
In light of Ortego and this court's opinion in Five N Company, and resolving any doubt against the application of res judicata, we disagree with the Tyler majority insofar as it affirmed a judgment in favor of a party based on res judicata when that party was not a party to the compromise underlying the basis of res judicata objection. Further, we decline to extend Judge Gaidry's reasoning in his Tyler concurrence to the present case by finding that the release executed by Mrs. Garrison contained a stipulation pour autrui in favor of James Construction. Although James Construction may choose to later assert this as a defense to the Garrisons' action, we express no opinion regarding the merits of that defense, as that issue is not before us at this time.
Thus, we conclude we are bound to follow Ortego and Five N Company, which require that a party asserting res judicata based on a compromise agreement must have been a party to the compromise agreement. To the extent Tyler conflicts with this principle of law, we overrule that decision. Accordingly, because James Construction was not a party to the original release signed by Mrs. Garrison, it cannot raise the objection of res judicata in this case.
RIGHT OF ACTION
We next turn to the trial court's alternative basis for ruling in favor of James Construction and dismissing the Garrisons' claims; that is, the trial court interpreted James Construction's exception as raising the objection of no right of action. The [2014 0761 La.App. 1 Cir. 7] peremptory exception pleading the objection of no right of action tests whether the plaintiff has any interest in judicially enforcing the right asserted. LSA-C.C.P. art. 927(A)(6). Simply stated, the objection of no right of action tests whether this particular plaintiff, as a matter of law, has an interest in the claim sued on. OXY USA Inc. v. Quintana Production Company, 11-0047 (La.App. 1 Cir. 10/19/11), 79 So.3d 366, 376, writ denied, 12-0024 (La. 3/2/12), 84 So.3d 536. The exception does not raise the question of the plaintiff's ability to prevail on the merits nor the question of whether the defendant may have a valid defense. Id. To
prevail on an objection of no right of action, the defendant must show the plaintiff does not have an interest in the subject matter of the suit or legal capacity to proceed with the suit. Whether a plaintiff has a right of action is ultimately a question of law; therefore, it is reviewed de novo on appeal. Id.
Mrs. Garrison clearly had an interest in bringing this suit for personal injuries, since she was a party who allegedly sustained injuries in the motorcycle accident. Injured persons constitute a class of persons to which the law affords a remedy. Morris v. Fleniken, 473 So.2d 319, 320 n.2. (La.App. 1 Cir. 1985). The fact that Mrs. Garrison's recovery against James Construction might ultimately be barred, because of the rights she gave up by signing the original release, does not change her interest in the subject matter of this suit. Id. Rather, a release constitutes a defense. Boudreaux v. Government Employees Insurance Company, 454 So.2d 135, 137 (La.App. 1 Cir. 1984), writ denied, 462 So.2d 1245, 462 So.2d 1253 (La. 1985). The objection of no right of action may not be used to argue that a plaintiff is without interest simply because the defendant has a defense to the action. Id. Thus, based on our de novo review, we conclude the trial court also erred in rendering judgment in favor of James Construction based on a finding that Mrs. Garrison had no right of action.
Although James Construction may raise the original release as a defense to the Garrisons' suit, it may not do so via the exceptions of res judicata and no right of [2014 0761 La.App. 1 Cir. 8] action. Therefore, we are constrained to reverse the trial court's judgment.
For the reasons assigned, we hold that a party claiming res judicata based on a compromise agreement must have been a party to the compromise. We overrule this court's opinion in Tyler v. Roger, 08-2468 (La.App. 1 Cir. 6/12/09), 11 So.3d 1243, 2009 WL 1655840 (unpublished opinion). The trial court's January 22, 2014 judgment, granting James Construction's peremptory exceptions raising the objections of res judicata and no right of action, and dismissing the claims of Trena and Thomas Garrison with prejudice, is reversed. This matter is remanded to the trial court for further proceedings consistent with this opinion. Costs of the appeal are assessed to James Construction Group, LLC.
REVERSED AND REMANDED.
CONCURS IN PART AND DISSENTS IN PART, AND ASSIGNS REASONS.
I respectfully concur with the results reached by the majority. However, I respectfully disagree with the majority overruling Tyler. The facts of the Tyler case and the facts of this case are easily distinguishable, and it was not necessary for this court to overrule Tyler.
Theriot, J. agreeing in part and dissenting in part.
I agree with the reversal of the trial court judgment regarding the exception of res judicata.
I disagree with the majority opinion regarding the exception of no right of action. I agree and adopt the reasoning of my colleague, J. Holdridge, and his analysis of the exception of no right of action. However, in this particular case, rather than affirm the trial court judgment sustaining the exception of no right of action, I find it is appropriate to remand the matter to the trial court for a hearing in order to afford Mrs. Garrison the opportunity to controvert the exception of no right of action.
HOLDRIDGE, J., agreeing in part and dissenting in part.
While I agree with the reversal of the trial court judgment regarding the exception of res judicata, I disagree with the majority opinion insofar as it states that an exception of no right of action may not be used to question whether Mrs. Garrison has a right to bring this suit for personal injuries.
The exception of no right of action is designed to test whether the plaintiff has a real and actual interest in the action. La. C.C.P. art. 927(6). Unlike the exception of no cause of action, evidence may be received under the exception of no right of action for the purpose of showing that the plaintiff does not possess the right she claims or that the right does not exist. Teachers' Retirement System of Louisiana v. Louisiana State Employees' Retirement System, 456 So.2d 594, 597 (La.1984); Robertson v. Sun Life Financial, 2009-2275 (La.App. 1 Cir. 6/11/10), 40 So.3d 507, 511. In this case, evidence was introduced showing that Mrs. Garrison entered into a compromise agreement wherein she " release[d] and forever discharge[d] all ... persons, firms or corporations liable or, who might be claimed to be liable, ... from any and all claims, demands, damages, actions, causes of action or suits of any kind or nature whatsoever," with " the express purpose of precluding forever any further or additional claims arising out of the ... accident."
Compromises are favored under the law and are intended to put an end to litigation. Consequently, compromises have a preclusive effect. Preclusion means to " to prevent the presence, existence, or occurrence of make impossible." That said, it appears entirely appropriate that, under the facts of this case, the compromise can form the basis of an exception of no right of action, and I am unaware of any impediment in the positive law that would forbid it.
The majority opinion relies on dicta from the cases of Morris v. Fleniken, 473 So.2d 319, 320 n.2. (La.App. 1 Cir. 1985). Boudreaux v. Government Employees Insurance Company, 454 So.2d 135, 137 (La.App. 1 Cir. 1984), writ denied, 462 So.2d 1245, 462 So.2d 1253 (La. 1985) for the proposition that a compromise is a defense and thus is not properly the object of an exception of no right of action. However, those decisions were rendered thirty years ago. Since then, there have been changes in the law. Louisiana Code of Civil Procedure article 1005 was amended to remove compromise as an affirmative defense and Official Revision Comment (c) -- 2008 to that article specifically notes that a compromise is a preclusion defense that is properly raised as a peremptory exception of res judicata. The Louisiana Civil Code articles governing compromise have also been amended. Louisiana Civil Code article 3080 specifically addresses the preclusive effect of compromises. It states: " A compromise precludes the parties from bringing a subsequent action based upon the matter that was compromised." Notably, Revision Comment (a) to that article notes that the preclusive effect of a compromise can be raised in a peremptory exception. Most significantly, it in no way limits the objection asserted in the exception to res judicata. The comment also states that La. C.C. art. 3080 " precludes subsequent actions on the subject matter that was the object of the compromise, in accordance with the intent of the parties." Because intent is seldom appropriate for summary judgment, not allowing the parties in the instant matter to raise the issue in a peremptory exception of no right of action will force the parties to continue rather than end litigation, thereby utterly depriving the compromise of its legally-intended preclusive effective.
In sum, while Mrs. Garrison, prior to signing the compromise, had a right of action in bringing a personal injury suit, she now no longer possesses such a right to bring suit. Therefore, I would affirm the trial court judgment sustaining the exception of no right of action.