Funny Guy, LLC v. Lecego, LLC
293 Va. 135
| Va. | 2017Background
- The Funny Guy, LLC (Funny Guy) performed IT work for Lecego, LLC and claimed unpaid fees (~$75,790). Dispute arose after contract termination.
- In 2014 Funny Guy sued claiming a settlement agreement (alleging Lecego promised to pay ~$73,290) and the trial court sustained a demurrer, finding no meeting of the minds — dismissal on the merits.
- In 2015 Funny Guy filed a second suit asserting breach of the original oral contract and, alternatively, quantum meruit, seeking the same unpaid compensation (about $75,790).
- Lecego pleaded res judicata under Virginia Rule 1:6, arguing the alternative theories could have been joined in the first suit; the trial court dismissed the second suit with prejudice.
- The Virginia Supreme Court affirmed, holding Rule 1:6 bars later suits arising from the same conduct/transaction/occurrence when claims could have been joined under joinder statutes.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Rule 1:6 bars Funny Guy’s second suit asserting oral-contract and quantum-meruit claims after losing on a settlement theory in the first suit | The second suit involves a different claim (oral contract/quantum meruit) and thus is not precluded by the first judgment on the alleged settlement | The claims all arise from the same underlying payment dispute and could have been joined in the first action; Rule 1:6 therefore bars the later suit | Held: Rule 1:6 bars the second suit — the claims arose from the same conduct/transaction/occurrence and should have been joined in the first action |
| Proper scope/test for claim preclusion under Rule 1:6 — transactional approach vs. Davis same-evidence test | Davis’s same-evidence rule prevents preclusion where different evidence would be needed | Rule 1:6 restores the transactional (same-transaction/occurrence) approach aligned with joinder statutes; evidence identity is not dispositive | Held: Adopted pragmatic transactional test (same conduct/transaction/occurrence); Rule 1:6 supersedes Davis’s restrictive same-evidence exclusion |
| Whether non-monetary settlement terms or small numeric differences between claimed amounts create separate transactions | Those differences (non-monetary provisions, $2,500 reduction) made the settlement a distinct transaction | The differences are ancillary to the same core payment dispute and do not create a separate transaction for res judicata purposes | Held: Such differences were immaterial — the core dispute (payment for services) was the same |
| Whether evidentiary rules or jury issues (e.g., Rule 2:408) prevent joinder of settlement and underlying claims in one action | Joinder would force plaintiff to litigate inconsistent evidentiary paths and undermine settlement benefits | Trial courts have tools (severance, limiting instructions, separate hearings) to address evidentiary concerns; joinder/Rule 1:6 still applies when claims arise from same transaction | Held: Evidentiary concerns do not defeat Rule 1:6; courts may manage sequencing or limit evidence as needed |
Key Cases Cited
- Davis v. Marshall Homes, Inc., 265 Va. 159, 576 S.E.2d 504 (Va. 2003) (applied restrictive same-evidence test for claim preclusion)
- Fox v. Deese, 234 Va. 412, 362 S.E.2d 699 (Va. 1987) (adopted broad same-transaction/occurrence joinder approach)
- Lee v. Spoden, 290 Va. 235, 776 S.E.2d 798 (Va. 2015) (discusses issue and claim preclusion elements)
- Bates v. Devers, 214 Va. 667, 202 S.E.2d 917 (Va. 1974) (pre-Rule 1:6 res judicata decision applying same-evidence analysis)
- Hart Steel Co. v. Railroad Supply Co., 244 U.S. 294 (U.S. 1917) (res judicata as fundamental policy conserving judicial resources)