Facts: Raymond Zolton was injured and his wife killed when they were struck by a vehicle operated by Meier while walking across Main Street at a crosswalk that was alleged to be improperly designed.
Zolton, individually and as executor of his wife's estate, filed suit against Meier, the Town of Littleton and the State of New Hampshire.
The case settled and Zolton executed releases in favor of all of the defendants, but neither the town nor the state required Meier to execute a release in their favor.
Meier then brought an action against the town and the state, alleging that he suffered emotional harm and loss of income as a result of the defendants' negligence in creating the deficient crosswalk. Meier did not seek indemnification or contribution for the settlement he paid to Zolton.
The town and state filed a motion to dismiss based on res judicata. The trial court granted the motion.
Meier appealed, arguing that the claims he raises could only have been raised as cross-claims, which are permissive rather than compulsory. Ruling that the claims are barred by res judicata would in effect create a compulsory cross-claim rule.
Held: Reversed and remanded.
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. In order for the doctrine to apply, the following three elements must be met:
1. The parties must be the same or in privity with on 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 entered.
The Court found that the two actions were not actions between the same parties. Although Zolton, the town and the state were all parties in both cases, for purposes of applying the doctrine of res judicata the "same parties" means "adversarial parties." Co-defendants are not necessarily adversaries. In this case, there was no indication that Zolton and the co-defendants were ever formally arrayed on the opposite side of any issue in the original action. Thus, the two cases were not actions between the same parties.
The Court also held that the cases are not for the "same cause of action," which means the right to recover. Zolton's action to recover damages against Meier, the town and the state, and Meier's action to recover from them for his own emotional damages and economic losses are not the same.