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HEADNOTE: Robert S. Cochran, Jr., et al. v. Griffith Energy Services, Inc., et al., No. 87, September Term, 2011 CIVIL PROCEDURE -- RES JUDICATA: When a nonparty in a previous lawsuit has a direct interest in the suit, and their interests are adequately represented in the suit, they are barred under res judicata from bringing a new suit in which their claims are derived solely from and inextricably intertwined with the claims adjudicated in the previous suit.

Circuit Court for Prince George's County Case No. CA10913725

IN THE COURT OF APPEALS OF MARYLAND No. 87 September Term, 2011

ROBERT S. COCHRAN, JR., ET AL. v. GRIFFITH ENERGY SERVICES, INC., ET AL.

Bell, C.J., Harrell Battaglia Greene Adkins McDonald Raker, Irma S. (Retired, Specially Assigned), JJ.

Opinion by Adkins, J.

Filed: May 1, 2012

In this case, we apply the principles of res judicata in deciding whether a pair of adult children ("Petitioners") may proceed with a lawsuit against an energy company that spilled heating oil in their parents' home. Their parents ("Cochran Parents" or "Parents") had previously sued Griffith Energy Services ("Griffith"), the same company, and won a judgment after a jury trial. The Circuit Court for Washington County dismissed the Petitioners' lawsuit, holding, inter alia, that Petitioners' claims were barred by res judicata. The Court of Special Appeals ("CSA") affirmed in an unreported opinion, reaching only the res judicata issue. Petitioners appealed, and we granted certiorari on the following question presented: Will Maryland allow a defendant who commits fraud during litigation to continue to escape liability, even when that fraud inflicted actual harm on the victims independent of the litigation, victims who are not owners and do not have the power to test the property?1 We will affirm and hold that the Petitioners' claims are barred by res judicata.

Facts and Legal Proceedings

1

In their brief, Petitioners reformulated the question into four: A. Did the circuit court err by treating the respondents' dispositive motion as a motion to dismiss, when matters outside the complaint were presented to and relied upon by the court in granting that motion? B. Did the circuit court err by holding that the petitioners were barred from instituting suit under the doctrine of res judiciata? C. Did the circuit court err by holding that the fraud counts were barred because the defendants owed no duty to the petitioners? D. Did the circuit court err by holding that the claim for damages is barred?

This case is the second iteration of a lawsuit against Griffith Energy Services, arising out of a 2002 fuel oil spill in the basement of the Cochran household. The first lawsuit was filed by the Cochran Parents against Griffith, including claims for negligence and breach of contract. Although Petitioners here were not parties to that suit, Petitioner Elizabeth Ingoe testified at the trial, and Griffith took the deposition of Petitioner Robert Cochran, Jr. In the course of the first litigation, Griffith had the home tested, in May 2006, and the results showed more than a 300 percent increase in benzene levels. Griffith and its attorneys failed to disclose this information to the Cochran Parents until late 2006. When Griffith made the disclosure, the Cochran Parents amended their lawsuit to include a claim that Griffith fraudulently concealed the contamination levels in the home. The Cochran Parents further alleged that Griffith and its lawyers had affirmatively misrepresented that the test results showed improvement in the benzene levels. The Circuit Court granted summary judgment on the fraud claim, opining: "To say the [Cochran Parents] had a right to rely on any representation in such a highly contested and contentious case . . . stretches credulity to the point that it no longer exists." The Circuit Court also said the fraud allegations were inadequately pled. The case went to trial on the negligence and breach of contract claims, and the Cochran Parents prevailed. Their jury award, in the low six figures, was affirmed by the CSA in an unreported opinion, filed July 2, 2008. Although the Cochran Parents appealed the summary judgment on the fraud claim, the intermediate appellate court affirmed the judgment of the Circuit Court.

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Apparently not satisfied with the verdict obtained by their parents, in May 2009, Petitioners filed suit against Griffith and its attorneys ("Respondents") for fraud and negligent supervision.2 In their complaint, as facts common to all counts alleged, Petitioners claimed to have suffered "loss of use of the lower portion of the home . . . emotional distress, concern, anxiety, and loss of enjoyment of the use of the home, and past, present, and future concern, anguish and anxiety regarding the health effects which may have been inflicted upon them." Respondents moved to dismiss the lawsuit, and the Circuit Court for Washington County granted that motion in an order filed March 2, 2010. The Circuit Court ruled that Petitioners' claims were barred by res judicata; that Respondents owed Petitioners no duty to disclose the results of the air quality test; and that the Petitioners did not allege any legally cognizable damages. Petitioners timely appealed to the CSA, raising four issues: 1. Did the circuit court err by treating the appellees' dispositive motion as a motion to dismiss, when matters outside the complaint were presented to and relied upon by the court in granting that motion? 2. Did the circuit court err by holding that the appellants were barred from instituting suit under the doctrine of res judicata? 3. Did the circuit court err by holding that the fraud counts were barred because the defendants owed no duty to the appellants? 4. Did the circuit court err by holding that the claim for damages is barred?

The suit was filed in the Circuit Court for Prince George's County but transferred in 2009 to the Circuit Court for Washington County. 3

2

In an unreported opinion, the intermediate appellate court affirmed, reaching only the first two issues. First, the court held that the Circuit Court properly treated Respondents' motion as a motion to dismiss, even though it relied on matters outside the pleadings. Second, the court held that Petitioners' claims were barred under res judicata, as the three elements of that doctrine were present: Petitioners' claims raised the same issues as the Cochran Parents' lawsuit; Petitioners were in privity with the Cochran Parents; and the first lawsuit was finally adjudicated on the merits. Petitioners filed a petition for certiorari, which we granted on November 18, 2011. See Cochran v. Griffith Energy Servs., 423 Md. 450, 31 A.3d 919 (2011).

Discussion In reviewing a lower court's ruling on a motion to dismiss, we must determine whether the court was "legally correct." See, e.g., Napata v. Univ. of Md. Med. Sys. Corp., 417 Md. 724, 732, 12 A.3d 144, 148 (2011). We accept all well-pled facts in the complaint, and reasonable inferences drawn from them, in a light most favorable to the nonmoving party. See id. We also interpret Maryland case law to review whether the lower courts' conclusions were correct as a matter of law. See, e.g., Montgomery Pres., Inc. v.

Montgomery County Planning Bd., 424 Md. 367, 372, 36 A.3d 419, 422 (2012). The doctrine of res judicata "bars the relitigation of a claim if there is a final judgment in a previous litigation where the parties, the subject matter and causes of action

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are identical or substantially identical as to issues actually litigated and as to those which could have or should have been raised in the previous litigation." R & D 2001, LLC v. Rice, 402 Md. 648, 663, 938 A.2d 839, 848 (2008) (citations and quotation marks omitted); see also Anne Arundel County Bd. of Ed. v. Norville, 390 Md. 93, 106

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