Today, Judge Jolly ruled on a Motion to Dismiss in Essa Commercial Real Estate, Inc. v. Five Trees, LLC, in which the issues involved defenses of issue preclusion based on an Arbitration Award.
The Court determined that the Award was entitled to collateral estoppel effect — even though the Defendants had not been parties to the arbitration — and dismissed a number of Plaintiff’s claims. It also held, however, that the Plaintiff could seek to enforce the Award against the Defendants.
The Award had been obtained by the Plaintiff against two members of a limited liability company based on an agreement which they had executed before the formation of the LLC. Plaintiff contended that the agreement had been assumed by the LLC, and sought to make in the Business Court the same claims against the LLC and two of the other organizers of the LLC as it had made in the arbitration. In the alternative, the Plaintiff sought to enforce the Award against the Defendants.
The Defendants argued that the Award, and a subsequent settlement agreement based on the Award, were a complete bar to Plaintiff’s claims based on collateral estoppel, res judicata, and the "one satisfaction doctrine."
In assessing the collateral estoppel defense, the Court compared the claims made in the Arbitration to the claims made in the Amended Complaint, and found them to be identical. It further determined that the Plaintiff had "a full and fair opporutnity to litigate these issues."
The Court concluded that "the doctrine of collateral estoppel serves to bar [the Plaintiff] from relitigating the issue of its damages resulting from breach of the Agreements and/or those services it provided to the Project before it ceased providing such services." It therefore dismissed the claims which had been decided in the arbitration proceeding.
The Court found, however, that the Plaintiff was not barred from seeking to enforce against the Defendants the Award itself, because there were issues about whether the Award had been satisfied. The Court stated that the settlement of the Award contained "numerous contingencies." The claims on the Award were therefore not precluded by either res judicata or by the "one-satisfaction doctrine."