Davis v. Marshall Homes, Inc.

Present: Hassell, C.J., Lacy, Keenan, Koontz, Kinser, and
Lemons, JJ., and Carrico, S.J. *

ANITA LEE DAVIS
OPINION BY CHIEF JUSTICE LEROY R. HASSELL, SR.
v. Record No. 020421 February 28, 2003

MARSHALL HOMES, INC. AND
MARSHALL MEREDITH, INDIVIDUALLY

FROM THE CIRCUIT COURT OF THE CITY OF VIRGINIA BEACH
Robert B. Cromwell, Jr., Judge

I.

In this appeal, we consider whether the doctrine of res

judicata bars a plaintiff's action to recover damages because

of the defendants' alleged failure to pay deed of trust notes

when the plaintiff had unsuccessfully filed a prior motion for

judgment for actual fraud against the defendants.

II.

In 1999, plaintiff, Anita Lee Davis, filed a motion for

judgment against Marshall Meredith, Inc., Marshall Homes,

Inc., Marshall Meredith, individually, Perpetual Homes, Inc.,

and John M. Scott. Plaintiff pled in her motion for judgment

that these defendants committed acts of actual fraud against

her.

Plaintiff alleged that on several occasions in 1995 she

loaned money to defendants for the purpose of purchasing

Chief Justice Carrico presided and participated in the
*

hearing and decision of this case prior to the effective date
of his retirement on January 31, 2003.
various real properties that defendants agreed to refurbish

and sell for a profit. Plaintiff alleged that defendants

intentionally misrepresented to her the value of the real

properties and deceived her because even though they told her

that they would "refurbish" each property, defendants never

intended to do so. Plaintiff stated in her motion for judgment

that "[a]t the time of each request [by defendants] for a loan

and representation as to the value of each real estate, the

defendants knew that the actual value of the real estate was

less than what they represented to the plaintiff, and as a

result of this misrepresentation, the plaintiff lent them

money for the purpose of the defendants purchasing the

property, with additional funds available for refurbishing the

property, at a 10% rate of interest. Further, not only did

the defendants know that the value of the property was

substantially less than what they had represented, they also

knew at the time of the purchase that they were not going to

refurbish the property and/or sell it for profit resulting in

the plaintiff being left with the property and an outstanding

Note based on an inflated property value."

Plaintiff stated in her motion for judgment that she

sought "judgment against the defendants, jointly and

severally, in the amount of $528,486.00 representing the

2
amount of the inflated price of the real estate, $250,000.00

in punitive damages, attorney's fees, pre and post judgment

interest and any and all other costs expended herein."

Subsequently, plaintiff's motion for judgment for actual fraud

was dismissed with prejudice against defendants Marshall

Meredith, Inc., Marshall Homes, Inc., and Marshall Meredith,

individually.

In 2001, plaintiff filed her present action. She alleged

in her amended motion for judgment that Marshall Homes, Inc.,

and Marshall Meredith, individually, executed four separate

deed of trust notes and that these defendants "failed and

refused to make any payments on the [notes]" and that the

defendants "surrendered" the properties that secured the deed

of trust notes to plaintiff. Plaintiff alleged that she

"spent money to improve the properties for sale and incurred

net losses . . . after the sale of each property." Plaintiff

requested a "judgment against the defendants, jointly and

severally, in the amount of One Hundred Sixty Four Thousand,

Two Hundred Twenty Dollars and Seventy Six Cents

($164,220.76), plus interest at 10% per annum through date of

sale, as well as interest accruing thereafter on the loss at

9% per annum, attorney's fees, and any and all other costs

expended herein."

3
 Defendants filed a plea of res judicata and asserted that

plaintiff's action was barred because the circuit court had

entered an order that dismissed with prejudice her prior

action for actual fraud. Defendants argued that the factual

allegations and damages claimed in the fraud action were based

upon the same facts and damages described in the breach of

contract action. The circuit court agreed with the defendants

and entered an order that sustained the plea of res judicata

and dismissed plaintiff's action with prejudice. Plaintiff

appeals.

III.

A.

The principles that this Court must apply to our

resolution of this appeal are well established and familiar.

We have repeatedly stated that "[t]he bar of res judicata

precludes relitigation of the same cause of action, or any

part thereof, which could have been litigated between the same

parties and their privies." Smith v. Ware, 244 Va. 374, 376,

421 S.E.2d 444, 445 (1992). Accord Scales v. Lewis, 261 Va.

379, 382, 541 S.E.2d 899, 901 (2001); Flora, Flora & Montague,

Inc. v. Saunders, 235 Va. 306, 310, 367 S.E.2d 493, 495

(1988); Bates v. Devers, 214 Va. 667, 670-71, 202 S.E.2d 917,

920-21 (1974). We have consistently held that a litigant who

seeks to bar a claim based upon the defense of res judicata

4
must establish four elements: identity of the remedy sought;

identity of the cause of action; identity of the parties; and

identity of the quality of the persons for or against whom the

claim is made. State Water Control Bd. v. Smithfield Foods,

Inc., 261 Va. 209, 214, 542 S.E.2d 766, 769 (2001); Balbir

Brar Assoc., Inc. v. Consolidated Trading and Serv. Corp., 252

Va. 341, 346, 477 S.E.2d 743, 746 (1996); Wright v. Castles,

232 Va. 218, 222, 349 S.E.2d 125, 128 (1986).

We have also stated that:

"The judicially created doctrine of res judicata
rests upon public policy considerations which favor
certainty in the establishment of legal relations,
demand an end to litigation, and seek to prevent the
harassment of parties. . . . The doctrine prevents
'relitigation of the same cause of action, or any
part thereof which could have been litigated,
between the same parties and their privies.' . . .
A claim which 'could have been litigated' is one
which 'if tried separately, would constitute claim-
splitting.'
" 'Claim-splitting' is bringing successive
suits on the same cause of action where each suit
addresses only a part of the claim. Jones v. Morris
Plan Bank of Portsmouth, 168 Va. 284, 291, 191 S.E.
608, 610 (1937). Courts have imposed a rule
prohibiting claim-splitting based on public policy
considerations similar to those underlying the
doctrine of res judicata: avoiding a multiplicity
of suits, protecting against vexatious litigation,
and avoiding the costs and expenses associated with
numerous suits on the same cause of action."

Bill Greever Corp. v. Tazewell Nat'l Bank, 256 Va. 250, 254,

504 S.E.2d 854, 856-57 (1998).

5
 The doctrine of res judicata only applies if the cause of

action a plaintiff asserts in the pending proceeding is the

same as the cause of action asserted in the former proceeding.

City of Virginia Beach v. Harris, 259 Va. 220, 229, 523 S.E.2d

239, 243 (2000). And, the litigant who asserts the defense of

res judicata has the burden of proving by a preponderance of

the evidence that the claim is precluded by a prior judgment.

Scales, 261 Va. at 383, 541 S.E.2d at 901.

Applying these well-established principles, we hold that

the circuit court erred in concluding that plaintiff's cause

of action for breach of contract is barred by the doctrine of

res judicata. As we have already stated, the litigant who

asserts the doctrine of res judicata as a bar to the

plaintiff's claim must show, among other things, the "identity

of the cause of action." In this case, defendants cannot

satisfy this requirement.

In her first cause of action, plaintiff alleged acts of

actual fraud on the part of the defendants. The basis of

plaintiff's actual fraud claim was that she was damaged

because of her reliance upon defendants' misrepresentations of

the values of collateral that secured the deed of trust notes.

We have held "that a 'litigant who prosecutes a cause of

action for actual fraud must prove by clear and convincing

evidence: (1) a false representation, (2) of a material fact,

6
(3) made intentionally and knowingly, (4) with intent to

mislead, (5) reliance by the party misled, and (6) resulting

damage to the party misled.' " Prospect Dev. Co., Inc. v.

Bershader, 258 Va. 75, 85, 515 S.E.2d 291, 297 (1999) (quoting

Bryant v. Peckinpaugh, 241 Va. 172, 175, 400 S.E.2d 201, 203

(1991)); accord Richmond Metro. Auth. v. McDevitt Street

Bovis, Inc., 256 Va. 553, 557-58, 507 S.E.2d 344, 346 (1998);

Evaluation Research Corp. v. Alequin, 247 Va. 143, 148, 439

S.E.2d 387, 390 (1994); Winn v. Aleda Constr. Co., Inc., 227

Va. 304, 308, 315 S.E.2d 193, 195 (1984).

A review of the motion for judgment in the fraud action

reveals that plaintiff would have been required to establish

by clear and convincing evidence that defendants approached

her and requested loans for the purpose of refurbishing and

selling the real properties for a profit, defendants

misrepresented the values of the real properties, plaintiff

relied upon defendants' misrepresentations and loaned funds to

defendants for the purchases of the real properties,

defendants purchased the properties at their actual values,

defendants never intended to honor their promises to plaintiff

that they would "refurbish and sell the properties," and

plaintiff incurred damages related to the misrepresentations.

In her later contract action to recover for losses

sustained because of defendants' failure to pay the deed of

7
trust notes, plaintiff would have been required to prove, by a

preponderance of the evidence, the existence of the notes, the

defendants' failure to pay the notes, and damages.

We reject defendants' contention that plaintiff only had

one cause of action, and that plaintiff improperly split her

single cause of action because the "same evidence" was

necessary to prove plaintiff's fraud and breach of contract

claims. Defendants are incorrect for numerous reasons. This

Court held in Brown v. Haley, 233 Va. 210, 216, 355 S.E.2d

563, 567 (1987), that "[t]he test to determine whether claims

are part of a single cause of action is whether the same

evidence is necessary to prove each claim." Application of

this test compels us to conclude that plaintiff did not split

her causes of action.

In her fraud action, plaintiff would have had to present

evidence of the deed of trust notes and defendants' failure to

satisfy those notes to show that she was damaged as a result

of the misrepresentations. However, this evidence does not

satisfy the remaining elements that plaintiff would have had

to prove to establish a prima facie case of actual fraud by

clear and convincing evidence. The mere fact that some

evidence relevant in plaintiff's action for fraud may be

relevant to prove her distinct and separate contract claim for

nonpayment of the deed of trust notes does not, for purposes

8
of res judicata, mean that plaintiff only has one cause of

action. Evidence of defendants' failure to satisfy the deed

of trust notes does not prove that defendants made false

representations of the values of the real properties

intentionally and knowingly, with the intent to mislead

plaintiff. Evidence of defendants' failure to satisfy the

deed of trust notes does not establish plaintiff's reliance

upon defendants' alleged misrepresentations.

It is a fundamental principle of jurisprudence that

evidence which is not relevant is not admissible. Most of the

evidence necessary to prove plaintiff's fraud action would

have been inadmissible at a trial of plaintiff's contract

action because of the lack of relevance. Surely, the circuit

court would have committed error during a jury trial of

plaintiff's contract action had the court permitted plaintiff

to present evidence of defendants' acts of actual fraud.

Additionally, much of the evidence that plaintiff would

have to present to establish damages in her breach of contract

action is different from and not relevant to the damages she

alleged in her fraud case. In her fraud action, plaintiff

sought to recover damages based upon defendants' alleged

misrepresentations of the values of the collateral that

secured the deed of trust notes, and she sought punitive

damages. In contrast, in plaintiff's breach of contract case,

9
she sought to recover money spent to improve the real

properties and net losses she incurred after she sold the

properties that she received from defendants in lieu of

foreclosure.

Our prior decisions plainly illustrate the principle that

a plaintiff's assertion of separate and distinct causes of

action will defeat a defense of res judicata. For example, in

Brown v. Haley, supra, we considered whether the doctrine of

res judicata barred the plaintiffs' suit to enforce an implied

easement. 233 Va. at 212, 355 S.E.2d at 565. In that case,

Rufus R. Brown and Sallie W. Brown filed an action at law for

ejectment against the defendants and/or their privies. The

Browns alleged in the ejectment action that Dayton A. Haley

and Lucy S. Haley had no interest in certain land. The

circuit court ruled that the Browns were entitled to "sole

possession" of the land. Subsequently, the Haleys filed an

amended motion for declaratory judgment and bill of complaint

against the Browns and requested that the circuit court

declare that the Haleys possessed an easement to cross the

Browns' land. The circuit court held that the Haleys had an

implied easement over the Browns' land. The Browns argued

before this Court that the doctrine of res judicata barred the

maintenance of the Haleys' suit for the declaration of an

10
implied easement because of the prior ejectment action. Id.

at 213-15, 355 S.E.2d at 566-67.

We observed in Haley that a judgment in favor of a

litigant bars relitigation of the same cause of action and any

part thereof that could have been litigated between the same

parties and their privies, but we explained that "[t]he

barring of a cause of action 'which could have been litigated'

is not directed to an unrelated claim which might permissibly

have been joined, but, to a claim which, if tried separately,

would constitute claim-splitting." Id. at 215-16, 355 S.E.2d

at 567 (quoting Bates, 214 Va. at 670-71 n.4, 202 S.E.2d at

920-21 n.4).

We stated that "[t]he test to determine whether claims

are part of a single cause of action is whether the same

evidence is necessary to prove each claim." Haley, 233 Va. at

216, 355 S.E.2d at 567. Applying this test, we held that the

doctrine of res judicata did not bar the Haleys from

prosecuting their suit to establish an implied easement. We

emphasized that ejectment is an action at law to determine

title and the right of possession of real property, whereas an

easement is a privilege to use the land of another in a

particular manner and for a particular purpose. We held that

the existence of an easement is not relevant to the issue of

title. We observed that ejectment involves ownership rights

11
and the proof necessary to establish this action generally

consists of documents that vest title, whereas the proof

necessary to establish the existence of an implied easement

generally consists of facts that gave rise to the easement.

Id. at 215-17, 355 S.E.2d at 567-68.

We noted that the elements that the Haleys were required

to prove to establish their claim of an implied easement could

not be proven by the facts presented in the ejectment action

that showed that the Browns were the owners of the disputed

land. Id. at 217, 355 S.E.2d at 568. We held that the

ejectment action and the proceeding to establish an implied

easement "were not part of the same cause of action because

there was no identity of facts necessary to prove each claim."

Id.

In the present case, just as in Haley, the doctrine of

res judicata is simply not applicable. The facts necessary to

prove plaintiff's action for actual fraud are different from

the facts she must prove for her action based upon nonpayment

of the deed of trust notes. In the present appeal, as in

Haley, there is "no identity of facts necessary to prove each

claim." Id.

We also observe that our holding today is consistent with

our decision in Smith v. Ware, supra. In Ware, we considered

whether the doctrine of res judicata barred a claim to recover

12
dower and damages asserted by a litigant who had

unsuccessfully filed a motion for judgment for unlawful

detainer. 244 Va. at 375, 421 S.E.2d at 445. Presley M.

Smith and Pauline A. Smith were husband and wife. Mr. Smith,

sole record owner of the real estate where the couple resided,

died testate and his will and codicil were probated in

November 1982. The will devised the residence to Mr. Smith's

sister, Ellen Smith Ware. A codicil contained a provision

which devised to Mrs. Smith the balance of a debt owed to Mr.

Smith if any money remained after the estate's expenses were

paid. The expenses exceeded the balance of the debt, and Mrs.

Smith received nothing from her husband's estate. Id. at 375-

76, 421 S.E.2d at 445.

Ware notified Mrs. Smith that she had to vacate the

residence. Mrs. Smith left the premises and filed a motion

for judgment for unlawful detainer. The circuit court ruled

that the unlawful detainer action was barred by the applicable

statute of limitations, and the case was dismissed.

Subsequently, Mrs. Smith filed a bill of complaint against

Ware seeking commutation of her dower interest in the

residence and damages for withholding of her dower interest.

Ware argued that the doctrine of res judicata barred any

recovery. The circuit court agreed and dismissed the suit.

Id. at 376, 421 S.E.2d at 445.

13
 We disagreed with the circuit court's holding that the

doctrine of res judicata precluded relitigation of the same

cause of action or any part thereof, which could have been

litigated between the same parties and their privies. We

held, among other things, that the doctrine of res judicata

did not bar Mrs. Smith's second suit because the cause of

action in the second suit differed from the cause of action in

the first proceeding. We stated:

"The causes of action are . . . different.
Mrs. Smith asserted a right to occupy the property
in her motion for judgment for unlawful detainer.
There, she relied upon former Code § 64.1-33 . . .
which permitted a surviving spouse to reside in the
marital residence without charge for rent, repairs,
taxes, or insurance until dower or curtesy was
assigned. Mrs. Smith, in her bill of complaint,
seeks a commutation of her dower interest. She pled
a different cause of action, relying upon former
Code § 64.1-37 . . . ."

Id. at 377, 421 S.E.2d at 446. Just like the plaintiff in

Ware, the plaintiff in this case filed separate causes of

action and thus the doctrine of res judicata does not bar her

subsequent cause of action.

We recognize that in Flora, Flora & Montague, Inc. v.

Saunders, supra, we held that the doctrine of res judicata

barred a plaintiff from prosecuting a subsequent cause of

action for breach of contract. 235 Va. at 311, 367 S.E.2d at

496. However, our decision in Saunders is clearly

distinguishable from the present appeal. In 1961, Willis E.

14
Board owned a tract of land that contained about 200 acres

located in Franklin County near the waters of the Roanoke

River. Board and his wife, Annie L. Board, Saunders'

predecessors in title, executed an option agreement with John

Hatcher Ferguson and John Hatcher Ferguson, Jr., who were

Flora, Flora & Montague, Inc.'s (Flora's) predecessors in

title. Pursuant to the agreement, the Boards granted the

Fergusons a 10-year option to purchase a portion of the

Boards' land, containing about 100 acres, subject to certain

conditions. The Fergusons notified Saunders that they

intended to exercise the option, but he refused to convey the

real estate as provided in the option agreement. Id. at 307-

08, 367 S.E.2d at 493-94.

In July 1971, the Fergusons filed a suit against Saunders

for specific performance of the agreement. While the specific

performance suit was pending, the Fergusons assigned the

option agreement to Flora and others, who were added as

complainants. The amended bill of complaint in this suit (the

first suit) contained a general recitation about the option

agreement and stated that "[a] copy of [the] Option is

attached hereto and made a part hereof." Id. at 308-09, 367

S.E.2d at 494. The circuit court entered an order that Flora

and the Fergusons were entitled to specific performance of the

15
contract and the option agreement. Id. at 309, 367 S.E.2d at

494.

In 1984, Flora filed a suit in chancery against Saunders

and requested that the court enforce certain terms of the

option agreement that was the basis of the first suit and

enter a decree that would require Saunders to convey to Flora

certain land and easements. Saunders filed a plea of res

judicata, and the circuit court, after an ore tenus hearing,

sustained the plea and dismissed the cause. Id. at 307, 367

S.E.2d at 493.

We held that the circuit court properly sustained the

plea of res judicata because "Flora could maintain only one

suit to compel specific performance of the option agreement.

The agreement's subject matter related solely to the sale of a

tract of land and necessary appurtenances thereto. Indeed,

the first suit was instituted to have the court 'grant

specific performance of [the] Contract,' not a part thereof.

Moreover, the option agreement was attached to and made a part

of the bill of complaint." Id. at 311, 367 S.E.2d at 496. We

held that Flora sought "to make severable an indivisible

contract. Flora had but one cause of action; thus, Flora's

claim had to be determined in one suit." Id.

Unlike the circumstances in Saunders, the present case

does not involve an attempt by a plaintiff to file two

16
separate lawsuits based upon the breach of one indivisible

contract. Rather, as we have already stated, plaintiff's two

lawsuits involved two separate and distinct causes of action.

B.

Our decision today also is supported by our holding in

Allstar Towing, Inc. v. City of Alexandria, 231 Va. 421, 344

S.E.2d 903 (1986). In Allstar, for purposes of res judicata,

we adopted a definition of the term "cause of action" as "an

assertion of particular legal rights which have arisen out of

a definable factual transaction." Id. at 425, 344 S.E.2d at

906 (quoting Bates v. Devers, 214 Va. 667, 672 n.8, 202 S.E.2d

917, 921 n.8 (1974)). We concluded in Allstar that the

doctrine of res judicata did not bar a second action involving

a challenge to the award of a contract by a municipality. In

support of our holding, we emphasized that the two actions did

not involve the same "definable factual transaction," noting

that "the facts giving rise to the second cause of action were

not even in existence when the first action was heard and

decided on the merits." Allstar, 231 Va. at 425, 344 S.E.2d

at 906.

In Allstar, we did not adopt a transactional analysis

test when we decided whether the claims at issue were barred

by the doctrine of res judicata. We were not even required to

consider whether to use such a test because, as we just

17
stated, the facts that gave rise to the second cause of action

in Allstar were not in existence when the first cause of

action arose. Moreover, just one year after this Court

decided Allstar, we implicitly rejected the transactional

analysis test in Brown v. Haley, supra, when we stated that

"[t]he test to determine whether claims are part of a single

cause of action is whether the same evidence is necessary to

prove each claim." 233 Va. at 216, 355 S.E.2d at 567.

Therefore, in accordance with our precedent, we explicitly

reject the application of the transactional analysis test when

deciding whether a claim is barred by res judicata. See,

e.g., Smithfield Foods, 261 Va. at 214, 542 S.E.2d at 769;

Ware, 244 Va. at 376, 421 S.E.2d at 445; Saunders, 235 Va. at

310-11, 367 S.E.2d at 495; Haley, 233 Va. at 216, 355 S.E.2d

at 567.

In the present appeal, while the facts supporting both

the fraud and contract actions arose from defendants' efforts

to procure financing of the properties, we nevertheless

conclude that those facts did not arise out of the same

"definable factual transaction." The alleged

misrepresentations by defendants constituted a separate

definable factual transaction. This separate definable

factual transaction consisted of alleged misrepresentations of

the values of the properties and future development plans

18
designed to obscure the actual values of the properties as

collateral in order to obtain the money later secured by the

notes. The contract action arose from a distinct and separate

definable factual transaction limited to breach of the terms

and conditions appearing on the face of the notes as well as

the damages related to the failure to satisfy the notes.

Thus, the contract claim before us is not defeated by the

doctrine of res judicata on the grounds that it arose from the

same "definable factual transaction" as the fraud claim.

Rather, the existence of separate "definable factual

transactions" supporting the two claims before us requires

rejection of the doctrine of res judicata.

Additionally, for purposes of res judicata, a "cause of

action" involves an assertion of particular legal rights

arising out of a definable factual transaction. In this case,

plaintiff's fraud and contract actions arose from different

definable factual transactions and, just as important, these

actions constituted assertions of different particular legal

rights. Clearly, the right to enforce a contract is a

separate and distinct particular legal right from the right to

enforce an action for fraud.

IV.

Accordingly, we will reverse the judgment of the circuit

court and remand this case for a trial on the merits.

19
 Reversed and remanded.

JUSTICE KINSER, with whom JUSTICE LACY and JUSTICE LEMONS
join, dissenting.

The sole issue in this appeal is whether the breach of

contract claim is part of the “same cause of action” as the

fraud claim and thus “could have been litigated” with the

motion for judgment alleging fraud. Because I conclude that

both claims assert legal rights that arose out of the same

“definable factual transaction,” I respectfully dissent and

would affirm the circuit court’s judgment sustaining the plea

of res judicata.

The majority first holds that the doctrine of res

judicata does not bar Davis’ breach of contract claim because

the defendants did not show “identity of the cause of action.”

The majority next holds that this Court’s decision in Allstar

Towing v. City of Alexandria, 231 Va. 421, 344 S.E.2d 903

(1986), supports its conclusion that Davis did not split her

cause of action because the breach of contract claim did not

arise out of the same “definable factual transaction” as the

fraud claim. In reaching these two conclusions, the majority

cites numerous cases to support the “principle that a

plaintiff’s assertion of separate and distinct causes of

action will defeat a defense of res judicata.” The majority

20
does not, however, consider the impact of Virginia’s

separation of law and equity upon the application of the res

judicata bar. In my view, the principles of res judicata

cannot be properly applied in this case without addressing

that issue.

Res judicata is a judicially-created doctrine premised

upon public policies favoring certainty in legal relations, an

end to litigation, and the prevention of harassment of

parties. Bates v. Devers, 214 Va. 667, 670, 202 S.E.2d 917,

920 (1974). However, as I will demonstrate, these policies

cannot be fully realized in Virginia because of certain

procedural barriers that restrict the application of the

doctrine of res judicata. Those barriers include the

separation of law and equity and the absence of a compulsory

counterclaim rule. Prior to 1977, the inability to join tort

and contract claims in the same proceeding also limited the

use of the res judicata bar. When such barriers are not

implicated in a particular situation, such as the present one,

our decision in Allstar Towing provides the analytical

framework for deciding whether the res judicata bar applies.

I will now review the relevant cases that lead me to these

conclusions and, in doing so, will explain why I respectfully

dissent.

21
 “The doctrine [of res judicata] is firmly established in

our jurisprudence and should be maintained where applicable.”

Ward v. Charlton, 177 Va. 101, 115, 12 S.E.2d 791, 796 (1941);

accord Bates, 214 Va. at 670, 202 S.E.2d at 920. This Court

has explained the effect of the doctrine:

When the second suit is between the same parties as the
first, and on the same cause of action, the judgment in
the former is conclusive of the latter not only as to
every question which was decided, but also as to every
other matter which the parties might have litigated and
had determined, within the issues as they were made or
tendered by the pleadings or as incident to or
essentially connected with the subject matter of the
litigation, whether the same, as a matter of fact, were
or were not considered. As to such matters a new suit on
the same cause of action cannot be maintained between the
same parties.

Gimbert v. Norfolk Southern R.R. Co., 152 Va. 684, 689-90, 148

S.E. 680, 682 (1929), quoted in Allstar Towing, 231 Va. at

424, 344 S.E.2d at 905. Stated differently, the doctrine

“bars the relitigation of the same cause of action, or any

part thereof which could have been litigated, between the same

parties and their privies.” Bates, 214 Va. at 670-71, 202

S.E.2d at 920-21. A claim that “ 'could have been

litigated’ ” is one that, if tried separately, would amount to

“ ‘claim-splitting.’ ” Id. at 670 n.4, 202 S.E.2d at 920 n.4;

accord Bill Greever Corp. v. Tazewell Nat’l Bank, 256 Va. 250,

254, 504 S.E.2d 854, 856 (1998).

22
 For many years, this Court has held that a party

asserting the res judicata bar must establish identity of the

cause of action as well as identity of the remedy sought,

identity of the parties, and identity of the quality of the

persons for or against whom the claim is made. See Ferebee v.

Hungate, 192 Va. 32, 36, 63 S.E.2d 761, 764 (1951); Mowry v.

City of Virginia Beach, 198 Va. 205, 211, 93 S.E.2d 323, 327

(1956); Wright v. Castles, 232 Va. 218, 222, 349 S.E.2d 125,

128 (1986); Smith v. Ware, 244, Va. 374, 376, 421 S.E.2d 444,

445 (1992). However, it was not until our decisions in Bates

v. Devers and Allstar Towing that we defined the term “cause

of action.”

In Bates, we explained that the scope of the term “cause

of action” may vary depending on the context but that, for

purposes of res judicata, it is the “assertion of particular

legal rights which have arisen out of a definable factual

transaction.” 214 Va. at 672 n.8, 202 S.E.2d at 921 n.8.

Thus, we held in Bates that a claim alleging breach of a 1968

instrument and claims based on earlier, separate instruments

were “ ‘distinct divisible claims, depending on separate

contracts, made at different times and upon different

principles; and the evidence to support one [was] not

necessary to support the other, but much of it that would be

material to sustain the one would be irrelevant to the

23
other.’ ” Id. at 672, 202 S.E.2d at 922 (quoting Kelly v.

Board of Public Works, 66 Va. (25 Gratt.) 755, 762-63 (1875)).

In that holding, we implicitly recognized that the legal

rights asserted by the plaintiff did not arise out of a single

“definable factual transaction.”

The definition of the term “cause of action” enunciated

in Bates was central to our subsequent decision in Allstar

Towing. In its first case, Allstar challenged a determination

by the City of Alexandria that Allstar was a “ ‘non-

responsible’ bidder.” 231 Va. at 425, 344 S.E.2d at 906. In

a subsequent case filed by Allstar after the City had issued a

second invitation to bid, Allstar sought relief on the basis

that the City had awarded the contract to a bidder that

allegedly did not satisfy certain specifications. Id.

Because the facts underlying the second cause of action were

not even in existence when the first case was decided, we

concluded that “the legal rights asserted in the second action

arose from a factual transaction that was different from the

factual transaction giving rise to the assertion of legal

rights in the first action.” Id.

One year after Allstar Towing, we decided Brown v. Haley,

233 Va. 210, 355 S.E.2d 563 (1987). There, the plaintiffs,

Dayton A. and Lucy S. Haley and others, asked the court to,

among other things, declare that they had an easement to cross

24
the property of Rufus R. Brown to reach the waters of a lake

and to enjoin the defendants from impeding access to the lake.

233 Va. at 214, 355 S.E.2d at 566. However, invoking the

principles of res judicata, Brown asserted that a prior

ejectment action at law filed by him and Sallie W. Brown

against the Haleys barred the second litigation concerning the

easement. Id.

We disagreed with Brown, finding that the “proof

necessary to support the [ejectment] action consist[ed] of the

documents which vest title in the owner and any other evidence

related to the issue of title[;]” whereas, “[t]he existence of

an easement is not relevant to the issue of title.” Id. at

217, 355 S.E.2d at 568. The easement claimed in the second

action could not have been established by the facts that

proved ownership of the property in the ejectment action. Id.

“The two claims . . . were not part of the same cause of

action because there was no identity of facts necessary to

prove each claim.” Id.

Nor was there an identity of remedies because the two

claims could not have been brought in one proceeding. If the

Haleys had asserted what would have been a counterclaim in the

ejectment action, the court could not have granted the

requested relief regarding the easement in that action since

the relief was equitable in nature and the ejectment action

25
was at law. Id. at 218, 355 S.E.2d at 568. Therefore, the

plaintiffs’ recourse was to file the separate suit in equity.

Id. If we had accepted Brown’s position, the practical effect

would have been to implement, albeit implicitly, a compulsory

counterclaim rule.

The holding in Brown did not mention the definition of

the term “cause of action” adopted the year before in Allstar

Towing for good reasons. That definition was not relevant in

Brown because of our distinction between law and equity and

its impact upon the application of the res judicata bar. That

impact is exemplified by our decision in Wright v. Castles,

decided after Allstar Towing and before Brown.

The issue in Wright was the effect of a chancery suit for

injunctive relief upon a subsequent action at law seeking

compensatory and punitive damages. 232 Va. at 220, 349 S.E.2d

at 127. In the chancery suit, the plaintiff sought to enjoin

the defendant from interfering with the plaintiff’s use of a

certain road. Id. The bill of complaint contained no prayer

for an award of damages. Id. In the subsequent action at

law, the plaintiff alleged that the defendant had falsely and

maliciously slandered his title by interfering with the use of

the same road, and that the defendant had tortiously

interfered with the consummation of a contract to sell the

plaintiff’s land. Id.

26
 Although we acknowledged that the same events gave rise

to both proceedings, id., meaning that both claims arose out

of a single “definable factual transaction,” we, nevertheless,

refused to apply the res judicata bar. Declining the

defendant’s invitation to abrogate Virginia’s distinction

between law and equity, we pointed out that a party seeking

monetary damages in a tort case must bring the action on the

law side of the court. Id. at 222, 349 S.E.2d at 128.

However, a party asking for injunctive relief must sue in

equity. Id. Thus, we concluded that “a chancery suit is not

res judicata to a subsequent law action unless the very matter

in controversy in the pending action was decided in the prior

suit.” Id.

The decision in Wright, rather than that in Allstar

Towing, also provided the foundation for our refusal to apply

the res judicata bar in Smith v. Ware. There, the plaintiff

initially filed a motion for judgment for unlawful detainer,

seeking not only possession of the residence in which she had

resided after her husband’s death but also damages. 244 Va.

at 375, 421 S.E.2d at 445. The trial court ruled that the

statute of limitations barred the unlawful detainer action.

Id. at 376, 421 S.E.2d at 445. The plaintiff then filed a

bill of complaint seeking commutation of her dower interest in

27
the residence and also damages for withholding that interest.

Id.

We reversed the trial court’s judgment that res judicata

barred litigation of the second suit. Id. Citing Wright but

not Allstar Towing, we held that there was neither an identity

of remedies nor an identity of causes of action as between the

motion for judgment for unlawful detainer and the bill of

complaint for commutation of the plaintiff’s dower interest.

Id. In the unlawful detainer action, the plaintiff sought

possession of the property based on the provisions of former

Code § 64.1-33; whereas, in the chancery suit, she asked for a

commutation of her dower interest, relying upon former Code

§ 64.1-37. Id. at 377, 421 S.E.2d at 446.

In contrast, the decision in Allstar Towing had a bearing

on our application of the res judicata bar in Flora, Flora &

Montague, Inc. v. Saunders, 235 Va. 306, 367 S.E.2d 493

(1988), because the law-equity distinction was not a factor.

There, a vendee first sought specific performance of an option

agreement to purchase real estate and asked the court to

convey the property at issue. Id. at 309, 367 S.E.2d at 494.

The second suit, also filed in chancery, involved the vendee’s

claim that, among other things, it was entitled to use certain

rights-of-way, pursuant to the option agreement, over the

28
residual land owned by the vendor. Id. at 310, 367 S.E.2d at

495.

We held that the second suit was barred by the doctrine

of res judicata. Id. The vendee had but one cause of action

to compel specific performance of the option agreement because

the agreement’s subject matter concerned the sale of the land

and the necessary appurtenances thereto. Id. at 311-12, 367

S.E.2d at 496. In other words, there was a single “definable

factual transaction” out of which both claims arose.

We did not apply the doctrine of res judicata in Brown,

Wright, and Smith because the respective plaintiff in each of

those cases sought a remedy that was not available in a prior

proceeding due to the separation of law and equity. These

cases unquestionably demonstrate that the distinction between

law and equity limits the application of the res judicata bar

in Virginia. Indeed, that distinction was the essence of the

Wright decision. However, the separation of law and equity

did not play a role in Bates or Flora, nor is it a factor in

the case before us. Like the plaintiffs in Bates and Flora,

Davis sought relief on the same side of the court in both of

her cases.

A jurisdiction’s separation of law from equity is

recognized in the Restatement of Judgments (Second) § 26(1)(c)

(1982), as an exception to the general rule concerning claim-

29
splitting. The rule that “a valid and final judgment rendered

in an action extinguishes the plaintiff’s claim . . . ,

includ[ing] all rights of the plaintiff to remedies against

the defendant with respect to all or any part of the

transaction . . . out of which the action arose,” id. at § 24,

does not apply when:

[t]he plaintiff was unable to rely on a certain theory of
the case or to seek a certain remedy or form of relief in
the first action because of the limitations on the
subject matter jurisdiction of the courts or restrictions
on their authority to entertain multiple theories or
demands for multiple remedies or forms of relief in a
single action, and the plaintiff desires in the second
action to rely on that theory or to seek that remedy or
form of relief[.]

Id. at § 26(c). Instead, the rule against claim-splitting is

predicated on the assumption that the jurisdiction
in which the first judgment was rendered was one
which put no formal barriers in the way of a
litigant’s presenting to a court in one action the
entire claim including any theories of recovery or
demands for relief that might have been available to
him under applicable law.

Id. at § 26(1)(c) cmt. c. One of the formal barriers

referenced in the Restatement is the separation of law and

equity. Id.; see also id. at § 25 cmt. i.

That such formal barriers affect the rule against claim-

splitting is not a new concept in Virginia. In Bates, where

we first defined the term “cause of action” for res judicata

purposes, this Court acknowledged that procedural barriers can

restrict the application of res judicata principles. There,

30
we cited the Restatement of Judgments §§ 47, 62, 83 (1942), in

our discussion of a claim that “could have been litigated.”

214 Va. at 671, 202 S.E.2d at 921. Comment c to § 62 provided

that “[a]s a result of one tortious act or breach of contract

there may be a number of invasions of a single interest or of

different interests.” Restatement of Judgments § 62 cmt. c

(1942). To decide whether there is a single cause of action

arising from the tortious act or breach of contract, the first

question, being one of procedure, was whether a plaintiff “can

recover in one action for all of the harms or breaches of

contract[.]” Id. “[I]f because of procedural rules separate

actions must be brought,” a judgment for one invasion would

not prevent an action for others wrongs. Id.

However, if all claims could have been brought in one

proceeding, the next question concerned the effect of a

judgment for one invasion or breach on other claims not

included in that action. Id. “This [was] a question of

substantive law. The answer depend[ed] upon whether the

events or series of events [were] regarded as constituting one

inseparable cause of action at the time of the judgment.” Id.

In addition to the separation of law and equity, another

procedural barrier affected the application of the res

judicata bar in the past when tort and contract claims could

not be joined in the same proceeding in Virginia. See, e.g.,

31
Standard Products Co. v. Wooldridge & Co., Ltd., 214 Va. 476,

481, 201 S.E.2d 801, 805 (1974); Kavanaugh v. Donovan, 186 Va.

85, 93, 41 S.E.2d 489, 493 (1947). However, in 1977, the

General Assembly eliminated that barrier with the enactment of

§ 8.01-272. In pertinent part, that statute provides that

“[a] party may join a claim in tort with one in contract

provided that all claims so joined arise out of the same

transaction or occurrence.” In Code § 8.01-281, the General

Assembly also authorized the pleading of alternative facts and

theories of recovery “provided that such claims, defenses, or

demands for relief so joined arise out of the same transaction

or occurrence.”

As we stated in Fox v. Deese, 234 Va. 412, 423, 362

S.E.2d 699, 705 (1987), those statutes “represented a radical

departure from the common-law pleading rule[.]” Similarly,

our implementation in Allstar Towing of the concept that a

cause of action, for purposes of res judicata, must be viewed

in terms of a “definable factual transaction” was a shift in

our res judicata jurisprudence to the approach employed by a

majority of jurisdictions:

The present trend is to see [a] claim in factual
terms and to make it coterminous with the transaction
regardless of the number of substantive theories, or
variant forms of relief flowing from those theories, that
may be available to the plaintiff; regardless of the
number of primary rights that may have been invaded; and
regardless of the variations in the evidence needed to

32
 support the theories or rights. The transaction is the
basis of the litigative unit or entity which may not be
split.

Restatement of Judgments (Second) § 24(1) cmt. a. See also,

Williamson v. Columbia Gas & Electric Corp., 186 F.2d 464,

469-70 (3rd Cir. 1950); Ramseyer v. Ramseyer, 569 P.2d 358,

360 (Idaho 1977); Kent County Bd. of Educ. v. Bilbrough, 525

A.2d 232, 236 (Md. 1987); Eastern Marine Constr. Corp. v.

First Southern Leasing, Ltd., 525 A.2d 709, 712 (N.H. 1987).

Our shift was consistent with the General Assembly’s

transactional approach employed in Code §§ 8.01-272 and –281,

as evidenced by its use of the language “same transaction or

occurrence.” Both concepts, “definable factual transaction”

and “same transaction or occurrence,” advance public policies

embracing judicial economy, ending litigation, providing

certainty in legal relationships, and preventing party

harassment. However, a transactional approach must “strike a

delicate balance between, on one hand, the interests of the

defendant and the courts in bringing litigation to a close

and, on the other hand, the interests of the plaintiff in the

vindication of a just claim.” Restatement of Judgments

(Second) § 24 cmt. b.

The transactional analysis utilized in Allstar Towing is

limited by the distinction between law and equity. In

determining whether the principles of res judicata bar a

33
particular proceeding, the Allstar Towing definition of the

term “cause of action” becomes relevant only when the law-

equity distinction is not in play. In other words, legal

rights asserted in two separate cases could arise out of a

single “identifiable factual transaction,” as they clearly did

in Wright, but the second proceeding would not be barred if

the relief sought therein was not available in the prior

proceeding due to the separation of law and equity. See

Wright, 232 Va. at 222, 349 S.E.2d at 128. I believe that is

the reason Allstar Towing was not mentioned in the Brown,

Wright, and Smith decisions.

The majority, however, states that this Court did not

adopt a transactional approach in Allstar Towing. I disagree.

The definition of the term “cause of action,” first introduced

in Bates and then explicitly relied upon in Allstar Towing and

Waterfront Marine Constr., Inc. v. North End 49ers Sandbridge

Bulkhead Groups, A, B and C, 251 Va. 417, 434, 468 S.E.2d 894,

904 (1996), employs the phrase “definable factual

transaction.” I find no analytical difference between that

phrase and the phrase “same transaction or occurrence,” which

is the language used by the General Assembly in Code §§ 8.01-

272 and –281 and characterized by this Court as “so plain and

unambiguous that it requires no interpretation.” Powers v.

Cherin, 249 Va. 33, 37, 452 S.E.2d 666, 669 (1995). If use of

34
the language “definable factual transaction” in the definition

of the term “cause of action” was not indicative of this

Court’s decision to use a transactional analysis when deciding

whether to apply the res judicata bar, then what was the

intent of the Court?

In truth, the effect of the majority’s explicit rejection

of a transactional approach is to overrule our decision in

Allstar Towing. However, the majority does not explain why

this precedent should be cast aside. Despite rejecting a

transactional approach and overruling Allstar Towing, the

majority, nevertheless, utilizes the Allstar Towing definition

of the term “cause of action,” and the majority states that

its decision is supported by the holding in that case.

I find no reason to overrule the precedent established in

Allstar Towing. Thus, I conclude that the dispositive inquiry

in this case, since the separation of law and equity is not a

factor, is whether Davis’ claim alleging breach of contract

and the former claim alleging fraud arose out of a single

“definable factual transaction.” In my opinion, they did.

The “definable factual transaction” was the events

surrounding Anita Lee Davis’ loans to Marshall Homes, Inc. and

others for the purpose of purchasing certain parcels of real

estate. In the present motion for judgment, Davis alleged

breach of contract for failure to pay four deed of trust

35
notes. Those notes, signed by Marshall Homes, evidenced the

loans made by Davis to purchase four parcels of real estate

that previously had been deeded to her in lieu of foreclosure

and were executed in conjunction with Davis’ loans to purchase

those properties.

Although the majority asserts that Marshall’s alleged

misrepresentations constituted one “definable factual

transaction” and the terms and conditions of the notes arose

from a separate “definable factual transaction,” those notes

did not come into existence at some later point in time or as

a result of different negotiations between the parties. Even

the majority acknowledges that “the facts supporting both the

fraud and contract actions arose from defendants’ efforts to

procure financing of the properties[.]”

The majority also calls Davis’ claims different legal

rights and emphasizes that the elements of a claim for fraud

are different from the elements of a claim for breach of

contract. However, the determination whether a particular

claim “could have been litigated” in a prior action and is,

thus, barred by the doctrine of res judicata does not depend

on whether the elements of the prior claim and the present

claim are identical. In Jones v. Morris Plan Bank of

Portsmouth, 168 Va. 284, 191 S.E. 608 (1937), this Court

stated:

36
 If suit is brought for a part of a claim, a judgment
obtained in that action precludes the plaintiff from
bringing a second action for the residue of the claim,
notwithstanding [that] the second form of action is not
identical with the first, or different grounds for relief
are set forth in the second suit.

Id. at 291, 191 S.E. at 610 (emphasis added); accord Saunders,

235 Va. at 311, 367 S.E.2d at 495; Snyder v. Exum, 227 Va.

373, 377, 315 S.E.2d 216, 218 (1984); see also Restatement of

Judgments (Second) § 25 and § 24 cmt. c. 1

If the application of res judicata turned on whether the

elements of the legal rights asserted were the same in both

cases, the doctrine would bar only those legal rights based on

the same legal theory and asserting the same grounds for

relief. A claim that “could have been litigated” would

seldom, if ever, be barred. For example, under the majority’s

holding today, a plaintiff could assert claims alleging

intentional interference with contract and business

expectancies, and conspiracy to injure another in trade or

business in separate proceedings without fear of the second

1
The Restatement of Judgments (Second) § 24 cmt. c.
states:

That a number of different legal theories casting
liability on an actor may apply to a given episode does
not create multiple transactions and hence multiple
claims. This remains true although the several legal
theories depend on different shadings of the facts, or
would emphasize different elements of the facts, or would
call for different measures of liability or different
kinds of relief.

37
proceeding being barred by the principles of res judicata even

though the same events gave rise to both claims.

Davis’ “second form of action” as well as the “grounds

for relief” were obviously not identical with the form of

action and grounds of relief set forth in the first case.

Jones, 168 Va. at 291, 191 S.E. at 610. The second case

alleged breach of contract while the first alleged fraud.

Those differences, however, do not change the fact that the

legal rights asserted by Davis arose out of a single

“definable factual transaction.” Allstar Towing, 231 Va. at

425, 344 S.E.2d at 906.

My conclusion is consistent with this Court’s decision in

Waterfront Marine Constr., Inc. v. North End 49ers Sandbridge

Bulkhead Groups A, B and C. Applying the Allstar Towing

definition of the term “cause of action,” we held that a

second arbitration demand was barred by a prior arbitration

award under the principles of res judicata. 251 Va. at 435,

468 S.E.2d at 905. In the first arbitration proceeding, the

landowners asserted a breach of contract based on alleged

design and construction defects in a bulkhead. Id. at 434,

468 S.E.2d at 904. The landowners argued that the second

arbitration demand claiming breach of warranty was not

identical to the first because the bulkhead had not failed at

the time of the first demand. Id. We disagreed and

38
specifically stated that “[l]abeling the claim a breach of

warranty rather than a breach of contract [did] not alter the

nature of the claim.” Id. at 435, 468 S.E.2d at 904.

Similarly, different labeling does not alter the fact that

both of Davis’ claims arose out of a “definable factual

transaction.”

By analyzing identity of the cause of action in terms of

the elements of the legal rights asserted and addressing that

issue apart from the Allstar Towing definition of the term

“cause of action,” the majority is also able to say that the

facts necessary to prove Davis’ claim for fraud were different

from the facts required to establish her breach of contract

claim. In Brown, we stated that “[t]he test to determine

whether claims are part of a single cause of action is whether

the same evidence is necessary to prove each claim.” 233 Va.

at 216, 35 S.E.2d at 567.

However, unlike the majority, I do not believe that the

“same evidence test” should be construed in terms of the

elements of the legal rights asserted, nor should it be

applied so narrowly as to require each piece of evidence to be

exactly the same in both cases. See Restatement of Judgments

(Second) § 25 cmt. b. Otherwise, as I have already stated, a

claim that “could have been litigated” in a prior proceeding

would never be barred. The doctrine of res judicata would

39
apply only when an unsuccessful plaintiff re-files the

identical claim based on the same legal theory.

Thus, I conclude that the focus must be on the evidence

that is “necessary” to successfully prove both claims. Here,

in order to prevail on her fraud claim, Davis had to establish

the existence of the loans, the nonpayment of the notes

evidencing those loans, and the amounts due and owing.

Although that evidence, without more, would not have

established fraud, it did prove the breach of contract. In

proving fraud, Davis at the same time proved breach of

contract. Under the particular facts of this case, the fraud

claim subsumed the breach of contract claim. For that reason,

I conclude that the same evidence was necessary to prove both

claims.

Finally, I would be remiss if I failed to discuss the

impact of my analysis and conclusions on this Court’s decision

in Carter v. Hinkle, 189 Va. 1, 52 S.E.2d 135 (1949). The

issue presented there was whether a person who had sustained

both property damage and personal injury as the result of a

single negligent act of a defendant could maintain two

separate actions for the injuries or was a judgment obtained

in an action for the property damage a bar to a subsequent

action to recover for the personal injury. Id. at 3, 52

S.E.2d at 136. Aligning ourselves with the minority view,

40
this Court held that the common law rule allowing two actions

in this situation still applied because the General Assembly

had not changed or altered the common law in that respect.

Id. at 12, 52 S.E.2d at 140.

I acknowledge that the separation of law and equity

played no role in that decision. However, I conclude that the

rationale for the holding in Carter remains sound in the

particular situation presented there. In 1977, the General

Assembly abrogated the common law with regard to pleading tort

and contract claims in the same proceeding by enacting Code

§§ 8.01-272 and –281. But, it did not alter the particular

common law rule discussed in Carter even though the enactment

of those statutes promotes judicial economy and an end to

litigation while the common law rule in Carter does not.

Similarly, the General Assembly enacted Code § 8.01-6.1

in 1996. That statute states that an amendment of a pleading

changing or adding a claim or defense relates back to the

original pleading for purposes of the statute of limitations

if, among other things, “the claim or defense asserted in the

amended pleading arose of the conduct, transaction or

occurrence set forth in the original pleading.” The statute

altered the limited definition of the term “cause of action”

41
employed by this Court in Vines v. Branch, 244 Va. 185, 418

S.E.2d 890 (1992). 2

As with the enactment of Code §§ 8.01-272 and –281, the

passage of Code § 8.01-6.1 reflected the General Assembly’s

shift to a transactional approach, but again the General

Assembly left intact the common law rule followed in Carter.

See Weathers v. Commonwealth, 262 Va. 803, 805, 553 S.E.2d

729, 730 (2001) (General Assembly, when acting in an area, is

presumed to know the applicable law as stated by an appellate

court). And, I believe that it did so for good reasons.

After an automobile accident causing injury to person and

property, “[q]uestions involving the rights of automobile

insurance carriers, both liability and collision, rights of

assignees, receivers, trustees in bankruptcy, and subrogees,

render it essential in certain cases to allow one action for

2
In Vines, we concluded that an amendment alleging breach
of contract to a plaintiff’s original motion for judgment in
tort for the recovery of property stated a new cause of cause,
and was thus barred by the applicable statute of limitations,
because different elements needed to be proved and a different
measure of recovery would apply. 244 Va. at 189, 418 S.E.2d
at 893. Notably, both the original motion for judgment and
the amendment arose out of the same transaction, specifically
the events surrounding the plaintiff’s purchase of an
automobile and the defendant’s placing the title of the
vehicle in her name and retaining possession of it.
The majority’s analysis regarding identity of the cause
of action is not consistent with the General Assembly’s
enactment of Code § 8.01-6.1 in response to the decision in
Vines.

42
personal injury and another for property damage.” Carter, 189

Va. at 12, 52 S.E.2d at 140.

For these reasons, I conclude that the doctrine of res

judicata bars litigation of the present case alleging breach

of contract. Therefore, I respectfully dissent and would

affirm the judgment of the circuit court.

JUSTICE LEMONS, dissenting.

I join Justice Kinser’s dissent in every respect and

write separately only to emphasize the potential consequences

of the majority opinion.

In essence, the majority pretends that the Court never

decided Bates or Allstar Towing and ignores the special

definition of “cause of action” adopted for the express

purpose of res judicata analysis. In Bates, 214 Va. at 672

n.8, 202 S.E.2d at 921 n.8, we clearly stated that “[a] ‘cause

of action’, for purposes of res judicata, may be broadly

characterized as an assertion of particular legal rights which

have arisen out of a definable factual transaction.”

In Allstar Towing, we quoted the passage above from

Bates, and in determining that res judicata did not bar the

successive action, we stated the following: “In sum, the legal

rights asserted in the second action arose from a factual

transaction that was different from the factual transaction

43
giving rise to the assertion of legal rights in the first

action.” Allstar Towing, 231 Va. at 425, 344 S.E.2d at 906.

It is unmistakable that the Court embraced a

transactional analysis for the purpose of res judicata. In

doing so Virginia joined the majority of states. Today,

without acknowledging its reversal, the majority ignores the

special definition of “cause of action” for res judicata

purposes and reverts to the national minority on this issue of

great importance to individuals and businesses alike.

It is commonplace for a single transactional event to

provide the foundation for multiple lawsuits. See, e.g.,

Simmons v. Miller, 261 Va. 561, 544 S.E.2d 666 (2001);

Feddeman & Co. v. Langan Assocs., 260 Va. 35, 530 S.E.2d 668

(2000). In the hypothetical case of a business dispute that

spawns multiple theories of recovery, the majority opinion

would permit separate and successive lawsuits between the same

parties on theories of breach of contract, breach of fiduciary

duty, common law conspiracy, statutory conspiracy, common law

fraud, constructive fraud, and conversion. Under the majority

opinion, unless all of the elements are identical, res

judicata would not prohibit successive suits between the same

parties. Of course, the reason there are separate legal

theories is precisely because there are differences in the

elements of the causes of action. While the extent of

44
potential harassment of litigants and misuse of judicial

resources may be affected by the application of collateral

estoppel to narrow the matters subject to proof, and the

expiration of the statute of limitations may preclude a

particular cause of action, the reality of successive suits,

even in different venues, remains a potential consequence of

the majority opinion.

As these causes of action have proliferated in American

law, a restraining concept designed to promote judicial

efficiency and avoid harassment of litigants developed. That

concept was the transactional analysis approach to the

application of the doctrine of res judicata. While a litigant

could pursue multiple theories of recovery, the transactional

approach would permit such multiplicity, but only if the

courts and litigants were required to meet such challenges in

one proceeding. With a transactional analysis, the correct

balance is achieved between access to the courts for

remediation of wrongs and freedom from successive harassment,

while husbanding judicial resources. Perhaps that is why the

majority of jurisdictions have taken such an approach.

Perhaps that is why Virginia did as well in Bates and Allstar

Towing. Perhaps that is why the General Assembly adopted a

transactional analysis as a predicate for Code §§ 8.01-272 and

–281. Perhaps that is why it is so perplexing to witness this

45
inexplicable retreat in the face of such overwhelming

justification for transactional analysis in the application of

res judicata.

I dissent.

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