In the Supreme Court of Georgia
Decided: May 11, 2015
S14G1223. BOSTICK v. CMM PROPERTIES, INC. et al.
HINES, Presiding Justice.
This Court granted certiorari to the Court of Appeals in Bostick v. CMM
Properties, 327 Ga. App. 137 (755 SE2d 895) (2014), to consider whether the
Court of Appeals erred when it found an identity of parties (or their privies)
sufficient to permit the application of res judicata. See OCGA § 9-12-40.1 For
the reasons which follow, we find that the Court of Appeals erred in this regard,
and consequently, we reverse and remand.
The facts as found by the Court of Appeals are the following. In January
1992, Diversified Capital Management, Inc. (“Diversified”) leased premises
designated as a grocery store to James Bostick (“Bostick”). In August 1992,
1
OCGA § 9-12-40 provides:
A judgment of a court of competent jurisdiction shall be conclusive between the same parties
and their privies as to all matters put in issue or which under the rules of law might have
been put in issue in the cause wherein the judgment was rendered until the judgment is
reversed or set aside.
Diversified assigned its rights as lessor to Ingram Timber Enterprises, L.P.
(“Ingram”). In October 2000, Bostick, with the approval of Ingram, subleased
the property to CMM Properties, Inc. (“CMM”). The sublease was subject to all
the terms of the original lease, referred to by the parties as the “master lease.”
In June 2005, Ingram filed suit in superior court against CMM and three
individual guarantors of the sublease (collectively “the CMM parties”), but not
against Bostick. Ingram claimed default under the terms of the master lease and
sublease, and sought liquidated damages under paragraph 22 of the master lease.
The trial court granted summary judgment to the CMM parties, finding that the
purported liquidated damages sought under paragraph 22 constituted a void and
unenforceable penalty. Ingram never appealed that final judgment.
In January 2010, Ingram filed a complaint for rent and breach of contract
against Bostick, seeking the same liquidated damages sought in the first suit.
Then in November 2010, Bostick filed a third-party complaint against the CMM
parties, claiming that if he was liable to Ingram, then the CMM parties were
liable to him.2 The CMM parties moved for summary judgment, asserting, inter
2
In December 2012, Ingram filed an amendment to its complaint for rent and breach of
contract, invoking, inter alia, other remedy provisions of paragraph 22 of the master lease.
2
alia, res judicata based on the judgment in the first lawsuit. Before the trial court
ruled on the summary judgment motion, Ingram and Bostick entered into a
consent judgment, which provided that Ingram was entitled to judgment in
excess of $1 million, but that Ingram would not attempt to collect such
judgment. Instead, the consent judgment would be satisfied by Bostick pursuing
the case against the CMM parties. They agreed that Ingram would get two-thirds
and Bostick one-third of any amount collected from the CMM parties.
Subsequently, the trial court granted the CMM parties’ motion for summary
judgment, finding that res judicata precluded the suit; that the remedy provisions
of the master lease were void and unenforceable penalties; and that under the
terms of the consent judgment between Ingram and Bostick there was no real
threat of liability for Bostick, and thus, no secondary liability to be recovered by
the third-party action.
Bostick appealed to the Court of Appeals, arguing, inter alia, that he was
not a party to the first lawsuit, therefore, it could not preclude him in the second
one. The Court of Appeals affirmed, and as to the issue of res judicata, found
that Bostick and the CMM parties were privies, and therefore, that Bostick was
3
bound by the judgment in the first lawsuit.3
This analysis by the Court of Appeals and its consequent conclusion are
fatally flawed because they are premised on a basic misconception of the
doctrine of res judicata. As noted, the doctrine provides that the judgment of
a court competent to render it is conclusive as to the same parties and their
privies and in regard to all matters actually put in issue or which might have
been lawfully put in issue in the action in which the judgment was rendered.
OCGA § 9–12–40. The purpose of res judicata is to “[prevent] the re-litigation
of all claims which have already been adjudicated, or which could have been
adjudicated, between identical parties or their privies in identical causes of
action.” Body of Christ Overcoming Church of God v. Brinson, 287 Ga. 485,
486 (696 SE2d 667) (2010), quoting Karan v. Auto–Owners Ins., 280 Ga. 545,
546 (629 SE2d 260) (2006). As OCGA § 9-12-40 reflects, there are three
requirements which must be satisfied in order for res judicata to apply: there
must be identity of the cause of action, identity of the parties or their privies, and
previous adjudication on the merits by a court of competent jurisdiction.
3
In Division 1 of its opinion, the Court of Appeals ruled in favor of Bostick on an issue of
venue, but such ruling is not a part of this granted certiorari. In Division 3, the Court of Appeals
determined that it need not address the remaining claims of error given its holding in Division 2
based upon res judicata.
4
Church of God v. Brinson, supra at 486, quoting Karan v. Auto–Owners Ins.,
supra at 546. It is axiomatic that the party against whom the doctrine of res
judicata is raised as a bar to the subsequent suit must have had a full and fair
opportunity to litigate the issues in the first action. Fowler v. Vineyard, 261 Ga.
454, 456 (1) (405 SE2d 678) (1991). Thus, at its core, res judicata contemplates
an adversarial proceeding. Lilly v. Heard, 295 Ga. 399, 402 (2) (a) (761 SE2d
46) (2014). Indeed, the existence of an adversarial relationship between co-
parties is a prerequisite for res judicata to apply. Fedeli v. UAP/Ga. Ag. Chem.,
237 Ga. App. 337, 340 (2) (514 SE2d 684) (1999), quoting Fowler v. Vineyard,
supra at 457 (3) (a).
In this case, the Court of Appeals found that Bostick and the CMM parties
were privies, that is, there was an identity of parties for the purpose of res
judicata, and therefore, Bostick was bound by the judgment in the first lawsuit.
But, the CMM parties could not properly assert res judicata against their own
privy. In order to satisfy the identity-of-parties requirement for application of
the bar of res judicata, the alignment of the parties as adversaries must be the
same in both suits; the plaintiff and defendant in the subsequent action must
have been adversaries in the prior suit, otherwise res judicata is inapplicable.
5
See 21A Fed. Proc., L. Ed., § 51:234 (2015), citing Heller Financial v.
Grammco Computer Sales, 71 F.3d 518, 28 U.C.C. Rep. Serv. 2d 1343 (5th Cir.
1996). The only action extant was the third-party complaint filed by Bostick
against the CMM parties. See OCGA § 9-11-14 (a).4 This was so, regardless of
whether it was one for solely indemnity or included direct claims against the
CMM parties. See OCGA § 9-11-18.5 The suit by Ingram against Bostick was
4
OCGA § 9-11-14 (a) provides:
When defendant may bring in third party. At any time after commencement of the action a
defendant, as a third-party plaintiff, may cause a summons and complaint to be served upon
a person not a party to the action who is or may be liable to him for all or part of the
plaintiff's claim against him. The third-party plaintiff need not obtain leave to make the
service if he files the third-party complaint not later than ten days after he serves his original
answer. Otherwise he must obtain leave on motion upon notice to all parties to the action.
The person served with the summons and third-party complaint, hereinafter called the
third-party defendant, shall make his defenses to the third-party plaintiff's claim as provided
in Code Section 9-11-12 and his counterclaims against the third-party plaintiff and
cross-claims against other third-party defendants as provided in Code Section 9-11-13. The
third-party defendant may assert against the plaintiff any defenses which the third-party
plaintiff has to the plaintiff's claim. The third-party defendant may also assert any claim
against the plaintiff arising out of the transaction or occurrence that is the subject matter of
the plaintiff's claim against the third-party plaintiff. The plaintiff may assert any claim against
the third-party defendant arising out of the transaction or occurrence that is the subject matter
of the plaintiff's claim against the third-party plaintiff, and the third-party defendant
thereupon shall assert his defenses as provided in Code Section 9-11-12 and his
counterclaims and cross-claims as provided in Code Section 9-11-13. Any party may move
to strike the third-party claim, or for its severance or separate trial. A third-party defendant
may proceed under this Code section against any person not a party to the action who is or
may be liable to him for all or part of the claim made in the action against the third-party
defendant.
5
OCGA § 9-11-18 provides:
(a) Joinder of claims. A party asserting a claim to relief as an original claim, counterclaim,
cross-claim, or third-party claim may join, either as independent or as alternate claims, as
6
concluded by the consent judgment in favor of Ingram.6 Thus, Bostick was the
party against whom the doctrine of res judicata was sought to be applied, in
order to extinguish the third-party complaint.7 But as a privy of the CMM
parties, the doctrine could not be applied against him because of the lack of an
adversarial relationship in regard to the prior litigation. Even if Bostick is not
deemed to be such a privy of the CMM parties, res judicata is not properly
asserted against him by the CMM parties so as to preclude Bostick’s third-party
complaint because Bostick was not involved in the initial suit brought by
Ingram.8
many claims, legal or equitable, as he has against an opposing party.
(b) Joinder of remedies; fraudulent conveyances. Whenever a claim is one heretofore
cognizable only after another claim has been prosecuted to a conclusion, the two claims may
be joined in a single action; but the court shall grant relief in that action only in accordance
with the relative substantive rights of the parties. In particular, a plaintiff may state a claim
for money and a claim to have set aside a conveyance fraudulent as to him without first
having obtained a judgment establishing the claim for money.
6
In its brief, the CMM parties raise questions of collusion between Ingram and Bostick and
the validity of the consent judgment in regard to the third-party complaint; however, such issues are
not within the confines of this Court’s grant of certiorari.
7
The CMM parties urge that plaintiff Ingram was the party against whom it sought to invoke
the bar of res judicata; however, even if such premise is accepted, it is plain from the opinion of the
Court of Appeals that its analysis presumed that the doctrine was being invoked directly against
third-party plaintiff Bostick.
8
There is no finding that Ingram and Bostick are in privity.
7
Simply, the Court of Appeals erred when it upheld the grant of summary
judgment in favor of the CMM parties and against Bostick on the basis that res
judicata was a bar to Bostick as the CMM parties’ privy. Accordingly, the case
is remanded to the Court of Appeals for reconsideration in light of this opinion.
Judgment reversed and case remanded. All the Justices concur.
8