New Supreme Court Opinion Re: Joint Several Liability and Claim Preclusion in a Contract Action
The California Supreme Court issued an opinion in DKN Holdings LLC v. Faerber (July 13, 2015, S218597) __ Cal.4th __, analyzing whether a separate contract action against a party who is jointly and severally liable is barred after entry of judgment against one of the contracting parties. (Slip opn., p. 1.) The Supreme Court held that “[a]lthough a breach of contract may constitute a single wrong, the plaintiff has separate breach of contract claims against each of the defendants alleged to be jointly and severally liable.” (Id. at pp. 1-2.)
The Supreme Court reasoned that “there is no conflict between doctrines of claim preclusion and joint and several liability.” (Slip opn., p. 4.) “[C]laim preclusion applies only to the relitigation of the same cause of action between the same parties or those in privity with them.” (Id. at p. 11, italics in original.) Whether two lawsuits involve the same primary right is irrelevant. (Ibid.) “Parties who are jointly and severally liable on a contract may be sued in separate actions.” (Id. at p. 4.) Thus, “[j]udgment in the first action does not bar judgments in later actions, even when they allege the same claim of wrongdoing, as long as the suits are against different parties.” (Ibid., italics in original.)
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