The doctrine of res judicata, or claim preclusion, bars a second action by parties and those in privity with them on matters actually litigated in a previous suit, as well as claims that could have been litigated in the prior suit through the exercise of diligence.
In a broad sense, res judicata is the generic term used to describe a group of related concepts governing the conclusive effect given final judgments. There are two principal categories within this doctrine: (1) claim preclusion (res judicata); and (2) issue preclusion (collateral estoppel).
What Elements Establish Res Judicata?
Res judicata is an affirmative defense. To establish res judicata, the defendant must demonstrate:
- a prior final judgment on the merits by a court of competent jurisdiction;
- identity of parties or those in privity with them; and
- a second action based on the same claims as were raised or could have been raised in the first action.
Res Judicata vs. Collateral Estoppel
The general doctrine of res judicata consists of two principal categories: (1) res judicata or claim preclusion; and (2) collateral estoppel or issue preclusion. The doctrines of res judicata and collateral estoppel are not one and the same.
Res judicata precludes a second action by the parties or their privies on matters actually litigated and on causes of action or claims that arise out of the same subject matter and could have been litigated in the first suit.
On the other hand, collateral estoppel prohibits relitigation of particular issues already resolved in a prior suit.
To invoke the doctrine of collateral estoppel, a party must establish:
- the facts sought to be litigated in the first action were fully and fairly litigated in the prior action;
- those facts were essential to the judgment in the first action; and
- the parties were cast as adversaries in the first action.
Moreover, although mutuality is no longer required between the parties, the party against whom collateral estoppel is asserted must have been a party or in privity with a party in the prior litigation.
Res Judicata
Res judicata, also known as claim preclusion, prevents the relitigation of a claim or cause of action that was adjudicated and resolved by a final judgment, as well as all related matters that with the use of diligence could or should have been litigated in the prior suit.
Texas and The Transactional Approach
Texas follows the transactional approach to res judicata. The transactional approach results in claim preclusion if a defendant does not bring as a counterclaim any claim arising out of the transaction or occurrence that is the subject matter of the opposing party’s suit.
Under this approach, Texas courts examine the factual bases, not the legal theories, presented in the cases. The main concern is whether the cases share the same nucleus of operative facts. In determining whether the facts arose out of a single transaction, Texas courts consider whether the facts are related in time, space, origin, or motivation, and whether they form a convenient unit for trial.
Privity
Res judicata applies when a party in the second suit is in privity with a party in the first suit. Privity connotes those who are so connected with a party to the judgment in the law such that the party to the judgment represented the same legal right. A party can be in privity in at least three ways:
- it can control an action even if it is not a party to it;
- its interests can be represented by a party to the action; or
- it can be a successor-in-interest, deriving its claim through a party to the prior action.
Privity is not, however, established by the fact that a party happens to be interested in the same question or in proving the same facts.
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