Before Terry, Steadman, and Ruiz, Associate Judges.
The opinion of the court was delivered by: Associate Judge Terry
Notice: This opinion is subject to formal revision before publication in the Atlantic and Maryland Reporters. Users are requested to notify the Clerk of the Court of any formal errors so that corrections may be made before the bound volumes go to press.
Appeal from the Superior Court of the District of Columbia Hon. Ellen S. Huvelle, Trial Judge
Submitted September 25, 199
Dissenting opinion by Associate Judge Ruiz at p. ----.
Terry, Associate Judge: The trial court dismissed appellant's action for fraudulent misrepresentation and breach of contract on the ground of res judicata. On appeal he contends that the court erred in granting appellees' motion to dismiss because res judicata does not apply to claims that were previously dismissed without prejudice. Given the particular and somewhat unusual facts of this case, we affirm.
This case arises from a retail lease agreement dated July 16, 1992, between appellant, Henry Shin, and appellees, Portals Confederation Corporation and Republic Properties Corporation (collectively "the landlords"). Appellant agreed to lease 580 square feet of retail space in a large office building at 1250 Maryland Avenue, S.W., in which he intended to operate a dry-cleaning business. *fn1 The lease provided that it would become effective on "the first date on which at least twenty percent of the rentable area of the Office Space is leased and occupied by tenants" and that the landlords would partially abate the rent until "at least fifty percent of the rentable area of the Office Space is leased and occupied by tenants." On June 7, 1993, the landlords notified Mr. Shin that twenty percent of the building had been leased, and he began to pay the reduced rent. In February 1994 the landlords advised him that they had leased more than fifty percent of the office space, which meant that he was then obliged to pay the full rent, beginning in March 1994. Mr. Shin, however, failed to pay the full rent, continuing instead to pay only the reduced rent, and in January and February 1995 he did not pay any rent at all.
On November 30, 1994, Republic Properties Corporation, the general partner in the partnership which managed the building, filed a complaint against Mr. Shin in the Landlord and Tenant Branch of the Superior Court, seeking payment of the partially unpaid rent and possession of the leased premises. Shin filed an answer to the complaint, along with a counterclaim alleging misrepresentation. After Republic orally moved to strike the counterclaim pursuant to Super. Ct. L&T Rule 5 (b), *fn2 appellant voluntarily withdrew it without prejudice. A bench trial was then held before Judge Henry Kennedy, in which the main issue was the meaning of the phrase "leased and occupied" in the lease agreement. Judge Kennedy found that the lease was fully integrated and that a reasonable person would interpret "leased and occupied" to refer to the time at which the tenants have a legal right to possess the property, not when the property is actually physically occupied. *fn3 Therefore, on May 24, 1995, Judge Kennedy granted a judgment of possession for Republic and entered a monetary judgment against Mr. Shin in the amount of $26,058.62, representing unpaid rent and related charges.
On December 19, 1995, almost seven months after resolution of the landlord-tenant dispute, Mr. Shin filed the instant action against the landlords, alleging fraudulent misrepresentation and breach of contract *fn4 and seeking rescission of the lease agreement and money damages. The landlords filed a motion to dismiss on the ground of res judicata, and Shin filed an opposition. The trial court, concluding that Shin's claim arose from the same "common nucleus of facts" as the landlord-tenant proceeding and that appellant could have raised his claim as a defense in that proceeding, granted the motion. Shin then noted this appeal.
Whether the trial court correctly applied res judicata principles to the facts of this case is a legal issue that we decide de novo. See Osei-Kuffnor v. Argana, 618 A.2d 712, 713 (D.C. 1993). Under the doctrine of res judicata, or claim preclusion, "a prior judgment on the merits raises an absolute bar to the relitigation of the same cause of action between the original parties or those in privity with them." Goldkind v. Snider Brothers, Inc., 467 A.2d 468, 473 (D.C. 1983) (citations omitted). The doctrine bars relitigation "not only as to every ground of recovery or defense actually presented in the action, but also as to every ground which might have been presented . . . ." Cromwell v. County of Sac, 94 U.S. 351, 353 (1877) (emphasis added); accord, e.g., Molovinsky v. Monterey Cooperative, Inc., 689 A.2d 531, 533 (D.C. 1996); Faulkner v. Government Employees Insurance Co., 618 A.2d 181, 183 (D.C. 1992); Goldkind, supra, 467 A.2d at 473 n.10.
"A defendant seeking dismissal of a complaint on res judicata grounds bears the burden of persuasion on two separate issues. First, he must demonstrate that the prior decision on which he bases his res judicata claim was a decision on the merits; second, he must establish that the earlier litigation was based on the same cause of action." Amos v. Shelton, 497 A.2d 1082, 1084 (D.C. 1985) (citations omitted).
Appellant contends that res judicata does not apply to this case because his counterclaim in the landlord-tenant action was dismissed (by him) without prejudice. It is certainly true that "[t]he crucial element of res judicata is a final judgment on the merits . . . and it is beyond dispute that a dismissal without prejudice does not determine the merits." Interdonato v. Interdonato, 521 A.2d 1124, 1131-1132 n.11 (D.C. 1987) (citations omitted). In addition, in Pipher v. Odell, 672 A.2d 1092, 1095 (D.C. 1996), we held that the plaintiffs' cause of action, which arose out of the same transaction as a cross-claim which they had brought in an earlier proceeding and which had been dismissed without prejudice, was not barred by res judicata because "a dismissal of a claim without prejudice does not bar a subsequent suit of issues arising out of the same cause of action." Id.; see ...