Home / News in Brief / Court reverses res judicata ruling

Court reverses res judicata ruling

We meant what we said about claim splitting in 2003, the Supreme Court of Virginia said today in an unpublished order.

That 4-3 decision in Davis v. Marshall Homes Inc. was regarded by the dissenters and commentators as inconsistent with the court’s earlier res judicata cases, and Winchester Circuit Judge John E. Wetsel Jr. found that the court’s adoption of Rule 1:6 in July 2006 reestablished  “
Virginia’s clearly and repeatedly stated policy against claim splitting.”

The Supreme Court said, however, that the original complaint was filed a few months before Rule 1:6 took effect, so it was inapplicable to the case, and the logic of Davis controlled.

The issue arose when a Winchester neurologist left his practice group and started a competing practice within a mile of his former partners even though an agreement not to compete barred him from opening a practice within 50 miles of the group for three years after he left.

An arbitration panel found the covenant to be so broad as to be unenforceable and awarded the physician $150,000 for business he lost after the practice won an injunction to keep him from practicing.

The physician did not raise a claim in the first arbitration that the practice owed him about $300,000 under his employment agreement with it. He sought a second arbitration to determine that claim, but the practice filed suit alleging that res judicata principles required him to raise it the in first action.

Wetsel agreed, but the Supreme Court said in Landrio v. Neurological Consultants Inc., Record No. 081036, “[I]n this instance, the same evidence is not necessary to prove each of [the physician’s] claims. The circuit court erred in granting the plea of res judicata.”

By Alan Cooper

Leave a Reply