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Dismissal with Prejudice Is Not Res Judicata
Description Texas high court reversed holdings that dismissal with prejudice, in breach of contract action, pursuant to pre-trial settlement by parties was res judicata as to contract issues that arose later when one party claimed the settlement had not been fulfilled.
Topic Court Procedure
Key Words Res Judicata, Dismissal with Prejudice, Breach of Contract
C A S E   S U M M A R Y
Facts Business partners were in a dispute that resulted in litigation. Prior to trial there was a settlement that included the statement that the "parties ... desire to dismiss the claims which they had, each against the other, with prejudice." Trial court dismissed suit with prejudice. After settlement, one party claimed the others failed to live up to their obligations and sued. Trial court dismissed and appeals court agreed that defendants were entitled to summary judgment on ground of res judicata. Plaintiff appealed.
Decision Reversed. "As a general matter, a judgment dismissing with prejudice a claim for a declaration that a contract is valid does not amount to a declaration that the contract is invalid and does not preclude an action for subsequent breaches."
Citation Martin v. Martin, Martin & Richards, Inc., 42 Tex.Sup.Ct.J. 21 (Sup. Ct., Tex., 1998)

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