Brief Fact Summary.
After Hankin (Plaintiff), an attorney, prevailed in a suit against his client, Spilker (Defendant) over promissory notes Defendant gave Plaintiff as payment for legal services, he moved for summary judgment in subsequent litigation over additional promissory notes.
Synopsis of Rule of Law.
Although the general rule of res judicata would ordinarily prohibit litigating the issue of liability in successive suits on a series of promissory notes, when those notes are between an attorney and client public policy dictates that the issue of liability be litigated in each action.
Plaintiff was an attorney who did legal work for Defendant. Defendant gave Plaintiff a series of promissory notes as payment for that work. Defendant refused to pay one of the notes, claiming that Plaintiff’s fee was unconscionable and that Plaintiff had already been overpaid. Plaintiff sued and was awarded judgment. When the other promissory notes became due, Plaintiff again sued and moved for summary judgment. Defendant raised the issue of misrepresentation and the trial court denied Plaintiff’s motion for summary judgment and found for Defendant. The appellate court reversed and Defendant appealed.
In subsequent litigation between an attorney and his client over promissory notes given as payment for legal services, does res judicata prevent the client from relitigating liability in each action?
(Washington, J.) No. Although the general rule of res judicata would ordinarily prohibit litigating the issue of liability in successive suits on a series of promissory notes, when those notes are between an attorney and client public policy dictates that the issue of liability be litigated in each action. Agreements between attorneys and their clients are examined more closely than others. The court below should have followed this policy and reexamined Defendant’s defenses in each successive action. Reversed.
This case illustrates the flexibility of the application of collateral estoppel. This flexibility comes from the very nature of collateral estoppel, in that it arises in different causes of action than the original litigation. When an issue is litigated in two different causes of action, the court in the second action should recognize that new or extrinsic factors may change the outcome in the new litigation. This judicial flexibility was approved by the U.S. Supreme Court in Commissioner v. Sunnen, 333 U.S. 591 (1948).