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Construction Law

: The South Carolina Construction Law Blog

Failure to Raise All Related Claims at Once May Preclude Parties from Bringing Any Remaining Claims Later

By Ryan McCabe

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            The legal doctrine of res judicata or claim preclusion precludes parties from bringing suit for claims they should have brought up in earlier suits. "Res judicata" is a Latin phrase that means a matter already adjudged.

            A simple example of the application of the doctrine is an owner who sues a builder for negligence in constructing his house (first suit). The court awards damages to the owner. The owner then brings a second suit, bringing claims of breach of implied warranties against the contractor (second suit). The owner is precluded from bringing the second suit against the contractor because he should have brought all claims in the first suit.

            Under res judicata, subsequent claims are precluded if: (1) the judgment in the first suit was on the merits or final; (2) the parties in the first and second suit are either identical or in privity; and (3) the claims in the second suit arise "out of the same transaction or series of transactions" as the claims in the first suit. Bouchat v. Bon-Ton Dep't Stores, Inc., 506 F.3d 315, 326-27 (4th Cir. 2007) (citation omitted).

            An important point to remember is that some construction contracts mandate certain procedures as initial steps to resolve claims between parties. If one of the party refuses to take part in such mandatory procedures, that party may lose its right to bring any claims against the other party later.

            The South Carolina Court of Appeals dealt with this issue in 2004 when it barred a contractor's defective work claims against a subcontractor. See Palmetto Homes, Inc. v. Bradley, 357 S.C. 485 (Ct. App. 2004). The construction contract mandated the American Arbitration Association rules to govern arising disputes between the parties. Therefore, the Court held that the contractor had to either submit his claims to the arbitration proceeding or be barred by res judicata. The contractor could not bring a second suit to assert claims either actually arbitrated, or claims that could have been arbitrated. See id. at 495-96.

             This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.

Full post as published by The South Carolina Construction Law Blog on May 19, 2009 (boomark / email).