Doherty v. Federal Deposit Ins. Corporation

Dist. Ct. erred in dismissing on res judicata grounds plaintiff’s action alleging breach of contract and forgery on alleged guaranty contract, where: (1) plaintiff had alleged similar claims as affirmative defenses in prior guaranty action filed by defendant in instant case against plaintiff and others seeking to obtain recovery on same guaranty contract; and (2) defendant had obtained default judgment in guaranty action against another individual and dismissed without prejudice its action against plaintiff in guaranty action. While Dist. Ct. found that res judicata applied so as to dismiss instant action because plaintiff should have asserted such claims in guaranty action, Ct. of Appeals found that res judicata did not apply, since: (1) most cases applying res judicata involve plaintiffs in first action bringing same or similar claims in second action, and not where defendant in first action brings independent claims in second action based on affirmative defenses filed in first action; and (2) default judgment in first action applied to different defendant. Ct. further noted that defendant in instant case never had to address plaintiff’s affirmative defenses in guaranty action, and that even if plaintiff prevailed in instant case, defendant’s interest in guaranty action, i.e., its default judgment, would remain in place.