2 MILR 58

IN THE SUPREME COURT
REPUBLIC OF THE MARSHALL ISLANDS

S.Ct. CIVIL NO. 94-08
(High Ct. CIVIL No. 1993-075)

SOUTH SEAS MARINE CORPORATION,
Plaintiff-Appellant,

-v-

FRANCIS REIMERS,
Defendant-Appellee.

APPEAL FROM THE HIGH COURT

MARCH 8, 1995

ASHFORD, C.J.
WALSH, A.J. pro tem,1 and HOUSEL, A.J. pro tem2

SUMMARY:

The Supreme Court affirmed the Order of the High Court (1) dismissing Plaintiff's Motion to Disqualify Defendant's counsel based on his previous representation of Plaintiff and access to corporate records, and (2) sustaining Defendant's Motion to Dismiss Plaintiff's Complaint for breach of warranty, wrongful termination of lease and tortious interference with prospective contractual advantage. The ruling was based upon determination of the same issues between the same parties in a prior case.

DIGEST:

1. APPEAL AND ERROR - Review - Discretionary Matters - Disqualification of Attorneys: The standard of review of a court's ruling on a motion for an attorney disqualification is abuse of discretion.

2. ATTORNEYS - Disqualification - Prejudice: An attorney is not disqualified if his previous representation of the opposing party did not involve disclosure to him of confidential information prejudicial to that party in the pending case.

3. RES JUDICATA - Requirement: The final judgment on the merits in a previous action involving the same parties and substantially the same issues precludes litigating issues that were or should have been presented in the previous action.

4. SERVICE OF PROCESS - Constructive Service: Service on opposing party is valid where statutory and rule procedures are fully complied with.

5. ATTORNEYS - Representation: A corporation represented by a non-attorney throughout the trial and appellate proceeding cannot claim error for such representation where the question was not presented to or decided by the lower court.

6. APPEAL AND ERROR - Questions Reviewable - Record and Proceedings Not in Record: An appeal is limited to the record of evidence introduced and proceedings taken in the lower court.

OPINION OF THE COURT BY HOUSEL, A.J.

Plaintiff appeals from orders of the High Court dismissing his motion to disqualify Defendant's counsel and dismissing Plaintiffs claims. Plaintiff appeared by its President in the trial court, Corrade Guaschino, but was required to be represented by counsel on this appeal. Plaintiff claims damages against the Defendant for:

(1) Breach of warranty of ownership of Anorak Island with iroij, alap and dri jerbal rights.

(2) Wrongful termination of the lease of said property to Plaintiff.

(3) Tortious interference with Plaintiff's prospective contract to market lease rights.

Defendant denied Plaintiff's claims and alleged 16 affirmative defenses including res judicata. Defendant counterclaimed against Plaintiff for damages for unpaid rental, unauthorized use of the leased premises, interference with Defendant's rights to use them, and attempted sale or assignment of the leasehold interest in violation of the lease. Defendant sought termination of the lease and judgment for his attorney's fees.

Before trial, Defendant moved to dismiss Plaintiff's action with prejudice on the ground of res judicata and Plaintiffs failure to assert his claims in the prior action. Plaintiff moved to disqualify Defendant's counsel for previous representation of Plaintiff and access to Plaintiffs records.

At the hearing on the motions, no evidence was offered or introduced by Plaintiff. In statements to the Court, he argued for disqualification of Defendant's counsel alleging previous representation of Plaintiff in a civil action involving title to a boat, access to corporate bylaws and unspecified private papers relating to buying and selling Plaintiff's corporate shares, and advice on proposed sale of Plaintiff's shares to investors. Defendant's counsel stated that all documents referred to are public records; that while employed by the law firm retained by Plaintiff, he represented Plaintiff only on the boat case, which was totally unrelated to the present action; and that he did not represent Plaintiff for over five years before Plaintiff's complaint here was filed.

The Court found no grounds for disqualification of Defendant's counsel and denied Plaintiff's Motion to Disqualify. Plaintiff stated he was filing an immediate appeal to the Supreme Court for dismissal of Plaintiff's counsel. Following further argument by Plaintiff, he left the courtroom, notwithstanding that he was warned by the trial judge (a) that an interlocutory appeal of the order denying the Motion to Disqualify likely would not be entertained by the appellate court and (b) that Defendant's Motion to Dismiss would be heard immediately and he should remain in the courtroom to protect Plaintiffs interests. The Court then proceeded to consider Defendant's Motion to dismiss Plaintiffs complaint.

Defendant introduced evidence establishing constructive service on Plaintiff in High Court Civil Action No. 1991-116 and copies of the file in that case. The parties there were identical to those in this case, the same lease is involved and the evidence there was substantially the same as that argued for though not introduced by Plaintiff in this case. A default judgment was entered in Civil No. 1991-116. Among other things, it terminated the lease on which Plaintiff relies.

[1] Disqualification of Counsel. The standard of review of a court's ruling on a motion for an attorney disqualification is abuse of discretion. Kabua v. Kabua, 1 MILR (Rev.) 96 (Apr 18, 1988).

Both this action and the previous action in High Court Civil No. 1991-116 stem from the same nucleus of facts. The rights established by the Order of Dismissal in that case would be impaired by ruling for Plaintiff on his claims in this action.

[2] An attorney may not represent a party against a former client if the matters involved are substantially related and confidential information was obtained on those matters which would be prejudicial to the former client. However, an attorney will not be disqualified where the evidence fails to establish receipt of confidential information.

"There must be a substantial relationship between the subject matter of the present and the former representations in order for an attorney to be disqualified from representing a client." 7A C.J.S. Attorney & Client § 160

"An attorney is not prevented from representing a subsequent client against a former client, where the duties required of him do not conflict with those required in the first employment." Shaw v. Bill, 95 U.S. 10 (1877)

Defendant's counsel was not precluded from representing Defendant in this case. The matters on which his counsel previously represented Plaintiff were substantially different from those in this case and Plaintiff failed to establish that Defendant's attorney had acquired any confidential information in the prior matter detrimental to the Plaintiff in the current matter.

[3] (2) Res Judicata. The defense of res judicata is available when there is a final judgment on the merits in a previous action involving the same parties and substantially the same claims, facts or issues:

A judgment rendered by a court of competent jurisdiction on the merits is a bar to any future suit between the same parties or their privies, on the same cause of action, in the same or another court, as long as it remains unreversed and not in any way vacated or annulled, whether it depends on federal, general or local law. 50 C.J.S. Judgments § 598.

As stated in many cases, the doctrine of res judicata is that an existing final judgment rendered upon the merits, without fraud or collusion, by a court of competent jurisdiction, is conclusive of causes of action and of facts or issues thereby litigated, as to the parties and their privies, in all other actions in the same or any other judicial tribunal of concurrent jurisdiction. 46 Am Jur 2d, Judgments § 514.

In Fellowship of Christ Church v. Thorburn, 758 F.2d 1140 (1985), the lower court found appellants did not have an opportunity to defend prior to entry of the judgment. Also, that appellants had adequate opportunity to raise the issue following entry of the judgment and could have and did not move for a new trial. The federal court stated:

Appellants challenge the district courts holding that res judicata bars relitigation under § 1983 of their claim, which has been finally determined in state court. The appellants contend that res judicata does not bar their claim primarily because they never received an evidentiary hearing in state court, and secondarily because not all of the federal plaintiffs participated in and are bound by the state litigation. We find these contentions to be without merit, and affirm the district court....

As a general matter, the doctrine of res judicata forecloses relitigation of matters that were determined, or should have been raised, in a prior suit in which a court entered a final judgment on the merits. See Migra v. Warren City School Dist., 465 U.S. 75, 104 S.Ct. 892, 894 n. 1, 79 L.Ed.2d 56 (1984).

In N.L.R.B. v. Allen, 758 F.2d, 1140 (1985), cert. denied by Allen v. N.L.R.B., 474 U.S. 1101 (1986). The Sixth Circuit, Federal Court of Appeals, stated:

The doctrine of res judicata is intended to 'relieve parties of the cost and vexation of multiple lawsuits, conserve judicial resources, and, by preventing inconsistent decisions, encourage reliance of adjudication.' Allen, 449 U.S. at 94, 101 S.Ct. at 415.

Under Rule 13 (a) of the Marshall Islands Rules of Civil Procedure ("MIRCivP") claims of a defendant against a plaintiff arising out of the same transaction or occurrence sued on must be alleged in a counterclaim in the same action. The purpose of the Rule is to bring related claims into a single litigation and avoid multiplicity of actions. Stancill v. McKensie Tank Lines, Inc., 497 P.2d 529 (1974). In High Court Civil Action 1991-116 (July 22, 1992), Defendant there (Plaintiff here) did not answer the complaint or assert any counterclaim against Defendant here (Plaintiff there). Thus, the Plaintiff, if properly served in the prior action, is precluded from asserting those claims against Defendant now.

(3) Process. The defense of res judicata does not apply if the party against whom it is asserted did not have full and fair opportunity to litigate the issues in the previous case. N.L.R.B. v. Allen, supra. The judgment in High Court No. 1991-116 was by default and Plaintiff claims the substitute or constructive service by Plaintiff in that case was insufficient and that he had no notice of the action and no opportunity to defend it.

The issue of proper service on Plaintiff here (Defendant there) in High Court Civil 1991-116 was examined by the Court in that action and the Court ruled that Plaintiff here (Defendant there) had been "regularly served with Summons and Complaint pursuant to the order of the Court dated May 13, 1992 but had failed to appear." In this case, the High Court stated in its order dismissing Plaintiffs complaint that "Pursuant to order of court, service of the complaint and summons was made on plaintiff (Defendant there) by mail, postage prepaid, to the last known address of plaintiff (Defendant there)."

[4] Substituted or constructive service is available where it is impracticable to obtain actual service upon a party.

Generally, there are two methods of service of original process: actual or personal service, and substituted or constructive service. Where a party cannot be actually served with process, in proper cases service may be effective by a substituted mode under statutes or rules providing therefor....

Due process of law does not necessarily require personal service of notice on parties either resident or nonresident. Use of constructive service for in personam actions is not a per se violation of due process under Fourteenth Amendment. 62B Am Jur 2d, Process § 146.

It is within the power of the legislature to provide for substituted service in case of necessity or if personal service is for any reason impracticable....

Service is complete when all the required acts are done ... it is immaterial that defendant in fact receives no actual notice thereof; and the fact that he does not thereafter personally receive the papers which were so served or that he receives them at a late date ordinarily does not affect the validity of the service. 72 C.J.S. Process § 50.

[5] Plaintiff also contends, only on appeal, that the High Court committed a "fundamental and substantial error" in allowing him to represent South Seas Marine Corporation because he is not an attorney. An appellate court cannot rule on the merits of a question not presented and decided upon by the court appealed from. Clanton, et al. v. MI Chief Elec. Off. (1), 1 MILR (Rev.) 146, 153 (Aug 2, 1989). This question was not raised or presented in the High Court in this case. Further, Plaintiff is estopped from claiming error he himself committed.

[6] An appellate court is limited to the evidence produced and proceedings taken in the lower court. Plaintiff attached exhibits and affidavits to his brief on appeal relating to the issues and substituted service, but introduced no evidence at the trial. There is no basis for this court to reverse the High Court.

We affirm.

_______________

1Honorable Allison A. J. Walsh, Deputy Judge of the Federal Court of Canada, by appointment of the Cabinet.

2Honorable Jerry W. Housel, Court Commissioner and member of the Wyoming State Bar, by appointment of the Cabinet.