Clusiau v. Clusiau Enterprises (CA1 7/8/10)

This opinion concerns the preclusive effect of a small-claims judgment.

Clusiau’s uncle arranged to have his company, Clusiau Enterprises (CEI), make monthly payments of $350 to her for life. When CEI stopped paying she sued it for breach of contract in the small claims division of the Justice Court. Neither party had counsel. Clusiau won. Apparently, she collected that judgment but then CEI stopped paying again. She sued again (and the case moved to Superior Court because of a counterclaim not at issue on appeal). Clusiau argued that CEI was collaterally estopped by the first judgment. The trial court agreed and gave her summary judgment on liability.

The question on appeal was whether in the first case CEI had a “full and fair opportunity and motive to litigate the issue.” If it did, collateral estoppel would apply. Restatement (Second) of Judgments §28 says that the lack of a right to appeal, “differences in the quality or extensiveness of the procedures followed in the two courts,” and jurisdictional issues can be factors in this.

The opinion holds that the first judgment did not collaterally estop CEI. It reviews the reasons why small-claims courts are not like others: there is no appeal; there is no jury; hearing officers need have only minimal qualifications; there are no attorneys or motions, nor any discovery; the rules of procedure and evidence don’t apply.

In addition, the small claims division had jurisdiction over only seven month’s worth of Clusiau’s payments; to give its judgment preclusive effect would effectively expand its jurisdiction.

Clusiau argued that CEI could have hired a lawyer in the first case and moved out of small claims. But the court says that a litigant should not have to do that simply because more or bigger claims might be filed later.

A footnote mentions that this opinion applies only to small-claims cases won by the plaintiff; the issues may be different if the plaintiff loses.

This may sound like a no-brainer but the issue was the subject of some major bickering when the ALI was considering the present Restatement of Judgments. The Reporter originally didn’t think – nor did many of the law professors who make up the ALI – that, other than the lack of a right to appeal, the circumstances of the first case should make much difference. They gave some ground on that but the illustrations, cited in this opinion, mostly reflect their views: a court with a $500 jurisdictional limit and no rules shouldn’t have preclusive effect but a property-damage judgment in a $2000 court with “substantially” standard rules can – even on an unrelated, multimillion-dollar, personal-injury case. The real-world decisions that real-world clients have to make in real-world cases are generally not things that the folks in the ivory towers care to spend much time knowing or thinking about.

(link to opinion)