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Coen v. CDC Software Corp.

Supreme Court of Georgia

June 29, 2018

COEN
v.
CDC SOFTWARE CORPORATION et al.

          MELTON, Presiding Justice.

         In this matter, Timothy F. Coen filed suit against CDC Software Corporation, Aptean, Inc. (CDC's successor in interest), and four individuals acting as either a board member or general counsel for CDC, for defamation, false light and disclosure of private facts, intentional infliction of emotional distress, and attorney fees. The trial court dismissed Coen's action based on both res judicata and failure to state a claim, referencing an earlier lawsuit filed by Coen for breach of his employment contract with CDC. In an unpublished opinion, the Court of Appeals affirmed, holding:

Coen contends there was no identity of subject matter because the prior contract action pertained to the breach of an employment contract providing for severance pay regardless of the cause of termination, whereas the instant tort case arose out of the contents of [an] SEC Form 6-K [alleged to have been defamatory]. However both actions arose from the underlying circumstances surrounding the termination of Coen's employment with the CDC. As such, the trial court properly concluded the two actions concerned the same subject matter. See, e.g., Doman v. Banderas, 231 Ga.App. 229, 232 (1) (499 S.E.2d 98) (1998).

         Thereafter, we granted Coen's petition for certiorari and posed the following question: Did the Court of Appeals err in its formulation and application of the doctrine of res judicata? For the reasons set forth below, we find that the Court of Appeals did err in its formulation, and, accordingly, we reverse the Court of Appeals' opinion and remand this case for the Court of Appeals to consider the trial court's alternative holding. Under the proper standard, three prerequisites must be satisfied before res judicata applies- (1) identity of the cause of action, (2) identity of the parties or their privies, and (3) previous adjudication on the merits by a court of competent jurisdiction. See, e.g., Morrison v. Morrison, 284 Ga. 112, 116 (3) (663 S.E.2d 714) (2008); Karan, Inc. v. Auto-Owners Ins. Co., 280 Ga. 545 (629 S.E.2d 260) (2006). "Cause of action," in turn, is "the entire set of facts which give rise to an enforceable claim." Morrison, supra, 284 Ga. at 116 (3). In considering the "entire set of facts," we focus on the "wrong" that is asserted. See City of Columbus v. Anglin, 120 Ga. 785, 791 (48 SE 318) (1904) ("Different facts may be alleged, separately or cumulatively, to show the same wrong; and the number and variety of the facts alleged will not make more than one cause of action, so long as but one wrong is shown.").

         1. The underlying facts of this matter are generally undisputed. In May 2012, Coen filed a complaint against CDC alleging causes of action for breach of contract, breach of the duty of good faith and fair dealing, attorney fees, and contractual indemnification. In that contract action, Coen alleged that, after CDC fired him, CDC did not provide him with a severance package mandated by the contract.[1] Coen asserted no claims based in tort in the contract action. On April 5, 2014, in response to Coen's motion for partial summary judgment, the trial court determined that Coen's employment contract with CDC required that Coen be paid the severance package which he had identified. On July 28, 2014, a final judgment was entered in favor of Coen, and, on August 19, 2014, the court awarded Coen attorney fees under OCGA § 9-15-14 (a).

         On March 6, 2013, Coen filed a second lawsuit against CDC, Aptean, and four individual CDC executives in federal court. That lawsuit was dismissed for lack of subject matter jurisdiction. On March 24, 2016, Coen re-filed the tort action in the Superior Court of Fulton County. In this second lawsuit, Coen claimed that he had been harmed by malicious and untrue statements made by CDC and its management in a March 8, 2012 Securities and Exchange Commission Form 6-K Report, which stated that CDC placed Coen on administrative leave "pending the completion and results of an internal investigation related to allegations of unethical conduct, violations of Company policy and protocol and attempts to influence the content and consideration of an internal audit report." Coen maintained that the statements constituted defamation per se. Coen asserted only tort causes of action, seeking a recovery for defamation, false light invasion of privacy and public disclosure of private facts, intentional infliction of emotional distress, and attorney fees.[2] The trial court dismissed this tort action based on res judicata and failure to state a claim. Coen appealed to the Court of Appeals, and the Court of Appeals affirmed on the basis of res judicata, but did not address the alternative ruling of failure to state a claim.

         2. Res judicata in Georgia began as a common law rule, and we have held that OCGA § 9-12-40 is a codification of Georgia's basic common law rule of res judicata. See, e.g., Crowe v. Elder, 290 Ga. 686, 687 (723 S.E.2d 428) (2012). OCGA § 9-12-40 provides:

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.

         As our caselaw has developed over the years, however, terminology we have employed appears, at first glance, to have created two lines of opinions- one line requiring an identity of "subject matter" along with the other prerequisites and one requiring an identity of "cause of action."[3] This tension is evident in Lawson v. Watkins, 261 Ga. 147, 149 (2) (401 S.E.2d 719) (1991), where we observed

that the language used in the [res judicata] 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 in original.) In 1882, the Watkins court observed that

the rule is too well established that an adjudication of the same subject-matter in issue in a former suit between the same parties by a court of competent jurisdiction should be an end of the litigation. See Code of 1882, section 2899. . . . [T]he rule is that judgments are conclusive as to all matters put in issue, or which, under the rules of law, might have been put in issue.

(Citations and punctuation omitted.) Id. at 674-675. Based on this, we stated over a century later that "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." (Emphasis in original.) Lawson, supra at 149 (2).[4]

         The dissent in Lawson, however, questioned the terminology used in the majority's interpretation of OCGA § 9-12-40. The dissent pointed out that

the legislature did not incorporate the holding of Watkins, supra, into statute. The statute does not include the critical qualification of Watkins: "concerning the same subject ...

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