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Releases: Applicability of Res Judicata and Collateral Estoppel

October 15, 2021

Wang v. 1624 U Street, Inc. et al. involves a motion to dismiss petitioner’s claim for negligence, breach of contract and nuisance based on the defense of res judicata and collateral estoppel which was granted by the lower court.

The D.C. Court of Appeals noted that neither res judicata or collateral estoppel applied to the present case and reversed the lower court’s order. Res judicata prohibits the relitigation of the same claim between the same parties. The following factors are considered in determining whether res judicata bars a claim: (1) the claim is adjudicated with finality; (2) the present claim is the same as the claim which was or could have been previously raised in the prior adjudication; and (3) the party against whom the claim was asserted was the same party or in privity with the party in the prior case. In Wang, the petitioner objected to the renewal of the respondent’s alcohol license before the board of Alcoholic Beverage Control Board (“ABC”) in an administrative hearing. The petitioner then filed suit as a result of continued noise complaints and alleged a breach of the settlement agreement between petitionr and respondent executed after petitioner’s objection was noted before the ABC. The respondent claimed that the existence of the settlement agreement prevented petitioner’s civil claims. The Court rejected this argument. The Court stated the settlement agreement must specifically state that the parties intend and agree to preclude pursuit of future civil actions in exchange for the agreed upon consideration. In Wang, the settlement agreement made no reference to any preclusion of civil claims and instead only stated the petitioner was precluded from making any other protests or objections before the ABC against the respondent.

For collateral estoppel, a claim may be precluded if the issues are the same as those which were determined in a prior action. The following factors are considered in determining whether collateral estoppel bars a claim: (1) the issue involved was actually litigated; (2) the issue was determined by a valid, final judgment on the merits; (3) there was a full and fair opportunity for litigation by the parties and their privies; and (4) the determination of issues was essential to the judgment. The court specifically noted that collateral estoppel will not apply in Wang as the basis for dismissing the petitioner’s civil litigation was the executed settlement release. Settlement agreements, ordinarily, will not preclude the litigation of an issue unless the parties specifically intend for the issue to be precluded. The agreement must evidence that the parties intended to terminate the litigation of all claims and resolve the issues involved in a claim with finality for collateral estoppel to apply to a settlement agreement. The Wang settlement agreement is completely silent on the issues involved in the petitioner’s civil litigation.