The issue presented is whether a judgment rendered in one case is admissible as evidence in a subsequent case against a party who was not a party in the first case.
The complaint in this matter alleges legal malpractice in connection with a real estate transaction in which defendant represented the plaintiffs.
The facts are as follows. On September 11, 1987, plaintiffs entered into a contract to sell their home to Winston Riley and Maryann Masnik. The contract contained the traditional attorney review clause. On September 14, 1987, plaintiffs retained defendant, Richard Zuvich, as their attorney to review the contract and represent their interests in the transfer of the property. On September 16, 1987, Zuvich was instructed by plaintiffs to cancel the contract. On that date, he orally notified the attorney for the buyers that the contract was cancelled and at the same time sent to the buyer's attorney, via certified mail, return receipt requested, a written notice of cancellation. Plaintiffs thereafter entered into a second contact for the sale of the property to another person. Defendant also represented plaintiffs in that transaction. After entering into the second contract, plaintiffs received a letter from the Riley/Masnik attorney informing them that the original contract remained valid and in effect because it had not been cancelled in accordance with the terms of the contract.
In November 1987, Riley/Masnik brought suit, in chancery, for specific performance alleging that their contract with plaintiffs had been improperly cancelled and was therefore still in force and effect.
The trial took place in July 1989. Defendant attorney, Richard Zuvich, testified at the trial as a fact witness with respect to the cancellation of the contract. The court entered judgment
for specific performance. The judgment stated, in part, that there "had not been a modification of the attorney review clause by agreement between Mr. Bisogno, Riley and Masnik's attorney, and Mr. Zuvich relating to the method of cancellation notice utilized."
Plaintiffs now seek to introduce the judgment into evidence in this case.
Plaintiffs contend that because the issue of whether the contract with Riley and Masnik was properly cancelled, the premise of this suit, has been decided in the prior suit, defendant is precluded from again having the issue decided in this suit. He argues the doctrine of issue preclusion (collateral estoppel).
Defendant responds that this case is not governed by the doctrine of collateral estoppel because he was not a party to the first suit and therefore he may litigate the issue as it pertains to the malpractice claim against him.
Collateral estoppel is defined in the Restatement, Judgments ...