Present: All the Justices
RANDOLPH O. REED
v. Record No. 941420 OPINION BY JUSTICE ELIZABETH B. LACY
June 9, 1995
LEWIS S. LIVERMAN, SR.
From the Circuit Court of Middlesex County
John M. Folkes, Judge
In this appeal, we consider whether an order dismissing
with prejudice an action to collect on a promissory note is
conclusive as to a subsequent action on the same promissory
note.
On March 4, 1991, Randolph O. Reed and David C. Eanes,
Jr., executed a promissory note payable to Lewis S. Liverman,
Sr., in the amount of $74,000. Eanes and Reed failed to meet
their payment obligation and, on July 3, 1991, Liverman filed a
motion for judgment against them, jointly and severally. This
motion for judgment alleged that Reed and Eanes "failed and
refused to pay the balance due on [the] indebtedness after
repeated demands for payment."
On August 23, 1991, the action was settled by an agreement
between the parties, but the case was not removed from the
docket. Pursuant to the agreement, Eanes was to transfer
certain real estate in settlement of his obligation and Reed
was to pay Liverman the sum of $37,000. It is undisputed,
however, that Reed did not pay Liverman at the time the
agreement was executed nor did he pay Liverman at any time
thereafter.
On May 22, 1992, Liverman filed a second motion for
judgment again seeking recovery on the 1991 promissory note.
In this motion for judgment, Liverman alleged that although
Eanes had paid Liverman $37,000 on the note, Reed had "failed
to pay the balance of the note or any part thereof . . . and
has continued to fail to so pay up to the present." Only Reed
was named as a defendant in Liverman's second motion for
judgment.
Reed filed a demurrer, stating, in part, that Liverman's
action was prohibited because his first lawsuit was still
pending in the same court. In response to the demurrer,
Liverman initially, but unsuccessfully, attempted to
unilaterally nonsuit his first action. He then moved the trial
court to dismiss the action "with prejudice." On March 3,
1993, the trial court entered an order pursuant to which the
first action was "dismissed against all parties, with
prejudice." Liverman personally signed the order with the
notation "I ask for this."
Reed then filed a plea of res judicata, alleging that
Liverman's second action on the note was barred by dismissal of
the first action with prejudice. The trial court denied this
plea, finding that there were no facts "either on the face of
the record or shown by extrinsic evidence which support a
finding that Suit No. 1 was determined on its merits." The
trial court further found that Liverman's "obvious reason for
moving for the dismissal of Suit No. 1 was the filing of the
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Demurrer to Suit No. 2 on the ground of two suits pending on
the same promissory note" and stated that "the phrase, 'with
prejudice', does not terminate Liverman's right to have his day
in court upon the merits of his case." The case against Reed
proceeded to a bench trial and final judgment for Liverman in
the amount of $37,000 was entered on July 26, 1994.
On appeal, Reed asserts that the trial court erred in
failing to sustain his plea of res judicata. In response,
Liverman argues that the trial court correctly determined that
his second action was not barred because a determination on the
merits had not been reached in the first action. Liverman also
contends that the expression "with prejudice" in a dismissal
order should not be conclusive when it is included erroneously,
as he alleges was done in this case.
Dismissal of a suit with prejudice is defined as "an
adjudication on the merits, and final disposition, barring the
right to bring or maintain an action on the same claim or
cause." Black's Law Dictionary 469 (6th ed. 1990) The record
in this case shows that both the first and second motions for
judgment sought recovery from Reed based solely on the March,
1991 promissory note. The question before us is whether the
dismissal with prejudice of Liverman's first action stemming
from settlement of the dispute, rather than from an
adjudication of the claim, bars prosecution of his second
motion for judgment.
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We considered this issue in Virginia Concrete Co. v. Board
of Supervisors, 197 Va. 821, 91 S.E.2d 415 (1956), and stated
that "as a general proposition a judgment of dismissal which
expressly provides that it is 'with prejudice' operates as res
judicata and is as conclusive of the rights of the parties as
if the suit had been prosecuted to a final disposition adverse
to the plaintiff." Id. at 825, 91 S.E.2d at 418. The Virginia
Concrete opinion also noted that such a dismissal commonly
implies "not only the termination of the particular action or
proceeding then before the court but also the right of action
upon which it is based." Id. Nevertheless, the words "with
prejudice" are not always a bar to a subsequent action, but
must be considered in light of the circumstances in which they
are used. In Virginia Concrete, the res judicata bar was not
applicable because the attorneys for the appellee did not have
the authority to consent to the entry of the decree in issue.
Id. at 825, 829, 91 S.E.2d at 418, 421.
In this case, Liverman's counsel prepared a draft order
which specifically included the language "with prejudice" and
which was circulated to opposing counsel 13 days in advance of
its presentment to the trial court. Significantly, Liverman
had prepared an earlier draft order with which he hoped to
nonsuit his action "without prejudice." Furthermore, the order
indicates that Liverman himself appeared before the trial court
and signed the dismissal order. While Liverman's purposeful
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actions in seeking dismissal of his action with prejudice may
have been ill-advised and the consequences of his actions
unintended, there is no justification in this record to support
Liverman's contention that the phrase "with prejudice" was
erroneously or inadvertently chosen. Accordingly, the trial
court erred in concluding that the order terminating the first
action was not res judicata as to this subsequent action on the
same promissory note.
Because we find that Liverman's second action on the
promissory note is barred by the doctrine of res judicata, we
do not address Reed's additional assignments of error. The
decision of the trial court will be reversed and final judgment
will be entered for Reed.
Reversed and final judgment.
JUSTICE COMPTON, with whom JUSTICE WHITING and JUSTICE HASSELL
join, dissenting.
I disagree on two grounds with the majority's ruling
sustaining Reed's plea of res judicata.
First, the Court does not have a sufficient record to
sustain the plea. In Bernau v. Nealon, 219 Va. 1039, 1041, 254
S.E.2d 82, 84 (1979), the Court held that whether a former
adjudication is affirmatively or defensively asserted, the record
of the prior action must be offered in evidence. Id. The record
in the first action in the present case was never offered in
evidence in support of Reed's plea. The only portion of the
record from the 1991 action, the dismissal of which forms the
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basis of the plea, contained in the manuscript record filed in
this Court is a copy of the notice of motion for judgment and the
dismissal order entered in 1993. Certainly there exist other
portions of the record in a case that had been pending for almost
two years. And, the duty to introduce that record rested on
appellant Reed, not on appellee Liverman. Id. at 1043, 254
S.E.2d at 85.
The Bernau rule is clear, unequivocal, and contains no
exceptions; it is an established rule of civil procedure, both
trial and appellate. The majority chooses to disregard that
settled precedent. I would follow it, and would dismiss the
appeal.
Second, even if the Court has a sufficient record, I do not
agree that the plea should be sustained. The words "with
prejudice" appearing in an order of dismissal are not always
conclusive against the plaintiff. Their effect is determined by
the conditions under which they are used. Virginia Concrete Co.
v. Board of Supervisors, 197 Va. 821, 825, 91 S.E.2d 415, 418
(1956).
The burden was upon Reed to establish the validity of his
plea of former adjudication. The trial judge wrote: "The record
in Suit No. 1 does not reveal any evidentiary hearing,
dispositive motions, orders, etc., . . . which touch upon the
issues raised by the pleadings. Liverman's obvious reason for
moving for the dismissal of Suit No. 1 was the filing of the
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Demurrer to Suit No. 2 on the ground of two suits pending on the
same promissory note."
In my opinion, Reed has not established the validity of his
plea. Rather, the record affirmatively shows the conditions
under which the words "with prejudice" were used in the order,
and they were not used to extinguish the plaintiff's right of
action against Reed. That dismissal was merely a vehicle to
eliminate one of two pending actions brought on the same
promissory note. Upon this ground, I would affirm the judgment
of the trial court.
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