Lawson v. Watkins , 261 Ga. 147 ( 1991 )

Fletcher, Justice.

This case involves two former business associates and is the second action between the two arising out of their former business relationship. The subject matter of the present action is title to a racetrack property in Twiggs County which Watkins, appellee, contends he conveyed to Lawson, appellant, in trust in order to quell a controversy concerning operation of the racetrack. Watkins contends that, at the time of the conveyance, Lawson agreed to reconvey the racetrack to Watkins or to anyone whom Watkins might designate.

In the previous action between these parties, Watkins sued Lawson seeking repayment of various loans that Watkins had made to Lawson during their business relationship. Lawson filed a counterclaim seeking to have a promissory note reformed so as to show Watkins as primarily liable on the note with Lawson only secondarily liable as a guarantor. The counterclaim also alleged that the racetrack, which was part of the collateral securing the note, belonged to Lawson and sought to have the holder of the note, a third-party defendant, enjoined from foreclosing on the racetrack until the holder had first gone after other collateral which was actually titled in Watkins’ name.

While no pretrial order was entered in the first action, it is clear from the transcript of that action that, at a conference held in the trial judge’s chambers prior to trial, the trial court and the parties had discussed whether the issue of title to the racetrack would be litigated. The trial court and the parties discussed the matter again after the jury had been selected and at that time, the trial court ruled that:

with regard to the title of the land, that it is not, in fact, raised by the pleadings nor by the counterclaim . . . and even though . . . Mr. Watkins would seek to dispose of that issue at the trial today, . . . that without the agreement of counsel for the defendant [Lawson] to dispose of that issue that it would not be fair and proper for the Court to require that to be dealt with when it has not, in fact, at this point been raised.

Lawson’s attorney refused to agree to the issue of title to the racetrack being disposed of in the first action, contending that Watkins would have to file another suit in order to determine the issue of title.

Among other things, the judgment in the first action reformed the promissory note and enjoined the holder of the note from foreclosing on the racetrack until other collateral belonging to Watkins, which also secured the note, had been pursued. While Lawson was appealing a portion of the judgment in the first action, which portion was completely unrelated to the promissory note or the racetrack, Watkins filed the present action against Lawson.

After Lawson’s appeal of the first action had been decided by the Court of Appeals, Lawson filed a motion to dismiss in the present action, contending, in part, that the issue of title to the racetrack had been dealt with in the prior action and was res judicata. The trial court denied the motion to dismiss as to the racetrack issue and that issue was actually litigated in the present action with the jury finding for Watkins.

1. OCGA § 9-12-40 provides that:

[a] judgment of a court of competent jurisdiction shall be conclusive between the same parties and their privies as to all matters put in issue or which under the rules of law might have been put in issue in the cause wherein the judgment was rendered until the judgment is reversed or set aside.

This is a codification of Georgia’s basic common law rule of res judicata. However, for one action to act as a bar to a subsequent action, the two actions must share certain characteristics. First, the parties to the two actions must be identical and, second, the subject matter of the actions must also be identical.

Here, the parties to the two actions are identical, however, the subject matter of the actions is not. The first lawsuit dealt with a series of debts owed Watkins by Lawson. The present lawsuit deals with title to a racetrack. The racetrack was involved in the first lawsuit only to the extent that Lawson’s counterclaim dealt with reformation of a promissory note for which the racetrack property served as collateral. The racetrack was not the subject matter of the complaint in the first action, nor was it the subject matter of the counterclaim in that action. Because the subject matter of the two actions was not identical, the trial court in the present action correctly denied Lawson’s motion to dismiss as to, the res judicata issue.

2. Our joinder statute, OCGA § 9-11-18, provides for permissive joinder of claims for relief. In the first action, Watkins chose to assert only his claims for relief relating to various loans he had made to Lawson during their business relationship. When Lawson counterclaimed in the first action seeking relief concerning the promissory note, for the sake of judicial economy perhaps it would have been best to have litigated the issue of title to the racetrack in that action. However, the issue had not been joined in the pleadings or in an appropriate pretrial order and, under such circumstances, the trial court in the first action correctly determined, on the day of trial, that the issue could not be litigated unless all parties agreed, which Lawson refused to do.

That the issue of title to the racetrack could have been put in issue in the previous lawsuit does not require a finding, under OCGA § 9-12-40, that the issue is now res judicata. As. we have said previously, OCGA § 9-12-40 is a codification of Georgia’s common law rule of res judicata. The language used in the statute was drawn from Watkins v. Lawton, 69 Ga. 671 (1882), where this court held:

A judgment is conclusive as to all matters put in issue, or which, under the rules of law, might have been put in issue, in a former suit between the same parties concerning the same subject-matter in a court of competent jurisdiction. (Emphasis supplied.)

Thus, one must assert all claims for relief concerning the same subject matter in one lawsuit and any claims for relief concerning that same subject matter which are not raised will be res judicata pursuant to OCGA § 9-12-40.

However, in a situation where, as here, a plaintiff has multiple dealings with a defendant, our law does not require that he assert every separate claim for relief that he may have against the defendant in one single lawsuit or risk losing the claim for relief forever, as would be the case if our joinder statute provided for mandatory rather than permissive joinder. Instead, our law requires that such a plaintiff must bring every claim for relief he has concerning the same subject matter in one lawsuit. He may join several claims for relief arising out of different subject matters in one lawsuit but he is not required to do so and will not be penalized for making a strategic decision to the contrary.

In the previous action, Watkins chose to bring suit against Lawson for every claim for relief he had against Lawson that arose out of loans he had made to Lawson. Watkins chose not to include his claims for relief that arose out of the racetrack which he had given to Lawson in trust. To construe OCGA § 9-12-40 to require the inclusion of all claims for relief which could have been raised under OCGA § 9-11-18, as the dissent suggests, would require compulsory joinder of unrelated claims. Such a construction would not only defeat the purposes for which OCGA § 9-11-18 (a) was enacted but would render the same meaningless.

3. In his supplemental brief, Lawson abandoned all enumerations of error pertaining to requests to charge. Lawson’s remaining enumerations of error are found to be without merit.

Judgment affirmed.

All the Justices concur, except Clarke, C. J., Weltner and Hunt, JJ., who dissent.