In a unanimous opinion by Justice Carol Corrigan, the Supreme Court today “clarif[ies] a bedrock principle of contract law,” concluding that “[p]arties who are jointly and severally liable on an obligation may be sued in separate actions.” The opinion in DKN Holdings LLC v. Faerber reverses the Fourth District, Division Two, Court of Appeal, which had held that “[j]oint and several obligors may not be sued in separate actions when . . . the claim or claims against them are barred by a prior judgment under the claim preclusion aspect of the res judicata doctrine.” The Supreme Court disagrees that the claim preclusion doctrine overrides the joint and several liability doctrine: “Judgment 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.”
The Court of Appeal said that part of a 1957 Supreme Court decision was wrong and “incorrectly states the law.” The Supreme Court does not appreciate the criticism, stating that the Court of Appeal “erred” and pointing out that “[t]he principle it rejected is fundamental to the concept of joint and several liability and is set out in the Restatements of both Contracts and Judgments.”
This should have been “an easy case,” the Supreme Court says, although the court goes on to blame itself for possibly causing confusion by previously using inconsistent “terminology in discussing the preclusive effect of judgments.” From now on, the court pledges to “follow the example of other courts and use the terms ‘claim preclusion’ to describe the primary aspect of the res judicata doctrine and ‘issue preclusion’ to encompass the notion of collateral estoppel.”
