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Gushi Brothers Co v Kios [1998] MHSC 3; 2 MILR 120 (26 August 1998)

2 MILR 120

IN THE SUPREME COURT
REPUBLIC OF THE MARSHALL ISLANDS

S.Ct. CIVIL NO. 96-07
(High Ct. Civil No. 1992-032)

GUSHI BROTHERS CO.,
Plaintiff-Appellee,

-v-

JIMMY KIOS, LETAN JELLO and ARTICLE KIOS,
Defendants-Appellants.

APPEAL FROM THE HIGH COURT

AUGUST 26, 1998

FIELDS, C.J.
TAYLOR, A.J. pro tem,¹ and NGIRAKLSONG, A.J. pro tem²

SUMMARY:

This appeal is from a High Court decision that in accordance with the doctrine of res judicata appellants are bound by their prior stipulated dismissal with prejudice. Hence, appellee's land lease and bill of sale are valid, and appellants' attempts to build on the subject land are in violation of those agreements. The Supreme Court affirmed.

DIGEST:

1. RES JUDICATA - Requirements: A party seeking to rely on the doctrine of res judicata, or claim preclusion, must prove that: (1) there has been a final judgment on the merits in a prior suit; (2) the prior suit involves the same parties or their privies; and (3) the causes of action are the same as in the prior suit.

2. JUDGMENTS - Conclusiveness and Finality - dismissal with prejudice: As the trial court noted, it is well established that a stipulation of dismissal with prejudice is a final judgment on the merits and operates the same as any other final judgment for purposes of res judicata.

3. APPEAL AND ERROR - Questions Reviewable - Questions of Law: When a decision is presented to the appellate court, that court is required to reach the appropriate legal conclusion. Whether the trial court has made a proper or an improper decision on an issue of law is irrelevant.

4. APPEAL AND ERROR - Review - Questions of Law: The appellate court reviews questions of law, such as res judicata, de novo.

5. LAND RIGHTS - Alap - Powers and Obligations: Notice to members of the alap's bwij is not necessary for the alap to convey his or her alap rights. It is sufficient that the iroij, iroijedrik where necessary, alap and senior dri jerbal approve of any such alienation or disposition of land rights.

OPINION OF THE COURT BY FIELDS, C.J.

In 1992, appellant Jimmy Kios began construction on a parcel of land on Binbinkan Weto. Appellee Gushi Brothers Co. asked him to stop, explaining that it had leased that land and that Kios had no right to build there, Kios continued construction and appellee filed a lawsuit seeking injunctive relief. After four years of proceedings, the case went to trial. The trial court held that Kios's construction activities violated appellee's lease. Kios appealed, arguing that the court made several errors in its application of res judicata and other issues of law and custom. We disagree and affirm.

I. BACKGROUND

In 1985, Chuji Chutaro, owner of appellee Gushi Brothers Co., entered into negotiations with Letan Jello concerning the lease of two lots of land on Binbinkan Weto (Lots "A" and "B"). A lease was prepared and signed by the three individuals with property interests in the land: Henry Muller, Letan Jello and Article Kios. On April 30, 1985, the lease was filed with the court and Chutaro began making the payments as specified in the lease. A month later, Chutaro entered into a further agreement with the three land owners concerning a third lot of land in the same vicinity (Lot "C"). The land owners and Chutaro signed an "addendum" to the original lease that contained payment terms identical to those in the original lease. The "addendum" was filed with the court on June 3, 1985. In 1987, Jello offered to sell his rights on Binbinkan Weto to Chutaro. Chutaro accepted and a bill of sale was prepared and signed by Jello. Chutaro continued to pay Muller and Kios in accordance with the lease and the addendum.

In 1988, Jello sued Chutaro, claiming that the original lease, the addendum and the bill of sale should be void because he did not understand them when he signed them (Civil Action No, 1988-223). On February 8, 1989, Jello and Chutaro reached a settlement agreement pursuant to which Jello acknowledged the validity of the lease, the addendum and the bill of sale but retained ownership rights to the "ocean side" of the property where he and his family lived. Jello and Chutaro, both represented by counsel, stipulated to a dismissal of the case with prejudice and filed the dismissal with the court on February 10, 1989.

In 1992, appellant Jimmy Kios began construction of a dwelling on Lot C. On April 8, 1992, appellee Gushi Brothers Co. filed this case against Jimmy Kios seeking injunctive relief requiring Kios to stop building. Kios denied having leased any portion of Lot C to Chutaro or Gushi Brothers Co. and filed counterclaims asserting that the lease and the addendum by which Gushi Brothers Co. asserted rights to the land were invalid. Gushi Brothers Co. filed a motion asserting that Jimmy Kios had no standing to assert any claim to Lot C because he held no alap or dri jerbal title. The court, former Chief Justice Rutledge presiding, denied the motion in an order dated February 18, 1993, but ordered that Jello (the alap) and Article Kios (the senior dri jerbal) had to be joined as necessary parties. After they became defendants in the case, Jello and Article Kios filed counterclaims against plaintiff asserting that the lease and its addendum were invalid. Plaintiff answered and in September 1994 moved for summary judgment. Former Chief Justice Philippo denied the motion on November 23, 1995.

In 1996, this case went to trial in front of Chief Justice Cadra. On December 5, 1996. The court entered an order finding that the original lease, the addendum and the bill of sale were all valid and that Jimmy Kios's activities on Lot C were in violation of those agreements. Defendants appealed bringing this case before the Supreme Court.

II. DISCUSSION

In their opening brief, appellants raised a multitude of alleged errors in the trial court's opinion. Later, appellants narrowed their attack to two issues. (1) the trial court's application of principles of res judicata; and (2) the trial court's application of custom and law to the facts presented.

A. Res Judicata

The trial court found that the February 1989 stipulated dismissal of Letan Jello's lawsuit against Chuji Chutaro was res judicata with respect to Jello's and Jimmy Kios's claims concerning the validity of the lease and addendum to Lot C. According to appellants, however, the stipulated dismissal was not a final judgment subject to the rules of res judicata because the parties reached the settlement agreement without any court involvement. Appellants contend that it is improper to give any res judicata effect to a dismissal that was never reviewed by a judge. In addition, appellants argue that the trial court should not have raised the res judicata issue at trial because that issue had been resolved already by the previous judges in the case.

[1,2] A party seeking to rely on the doctrine of res judicata, or claim preclusion, must prove that: (1) there has been a final judgment on the merits in a prior suit; (2) the prior suit involves the same parties or their privies; and (3) the causes of action are the same as in the prior suit. See Zaion, et al., v. Peter and Nenam, 1 MILR (Rev.) 228, 234-5 (Jan 24, 1991).

As the trial court noted, it is well established that a stipulation of dismissal with prejudice is a final judgment on the merits and operates the same as any other final judgment for purposes of res judicata. See 9 C. Wright & A, Miller, Federal Practice & Procedure § 2367 (1995); Citibank N.A. v. Data Lease Financial Corp., 904 F.2d 1498, 1501-02 (11th Cir. 1990); Nemaizer v. Baker, 793 F.2d 58, 60-61 (2d Cir. 1986); Astron Indus. Assn. v. Chrysler Motors Corp., 405 F.2d 958, 960 (5th Cir. 1968). The fact that the court did not become involved in the prior suit makes no difference. Pursuant to MIRCP 33, the parties were permitted to stipulate to a dismissal without the court's involvement or its approval. See MIRCP 33(a)(1)(ii) ("[A]n action may be dismissed by the plaintiff without order of court ... (ii) by filing a stipulation of dismissal signed by all parties who have appeared in the action.").

The 1989 stipulated dismissal stated explicitly that it was "with prejudice." That dismissal constitutes a final judgment on the merits in the suit between Chuji Chutaro and Letan Jello. Other than Jello, however, the present case involves different parties. Thus, it is necessary to analyze whether the parties in this case are privies of Chutaro and Jello. There is little dispute that Gushi Brothers Co. is a privy of Chutaro; Chutaro is the owner of that company.

The trial court found that Jimmy Kios was a privy of Letan Jello, but that Article Kios was not. Appellants have not contested the court's decision on the privity issue, except to the extent that they argue that Article Kios was in privity with Letan Jello. It is unclear why appellants would chose to maintain that Article Kios is a privy of Letan Jello; the effect of such an admission is to make Article Kios bound by the 1989 stipulated dismissal. Nonetheless, appellants have taken such a position and appellee agrees with it. Because there is no longer a dispute between the parties on this issue, we will treat Article Kios as a privy of Jello.

Finally, we must determine whether the causes of action in this suit are the same as those in the prior suit. In Jello's 1988 lawsuit against Chutaro, Jello claimed that the original lease. The addendum and the bill of sale were void. In this suit, Gushi Brothers Co. requested injunctive relief against Jimmy Kios on the grounds that it had a valid lease to Lot C and that Jimmy Kios had no legal right to build there. Jimmy Kios and later, Letan Jello and Article Kios, counterclaimed on the basis that the lease and the addendum were invalid. These counterclaims were the same claims raised by Jello in his 1988 suit. Thus, in each lawsuit the claims focused on the validity of the lease and the addendum. We hold that the causes of action are the same and find no error in the trial court's application of res judicata.

Appellants maintain that even if the trial court did not err in its res judicata analysis, that it should not have raised the issue of res judicata at trial after the two previous trial judges on the case had ruled that appellee's res judicata