TIB-THE INDEPENDENT BANKERS BANK v. GOERKE

Citation: 2023 OK 61Docket: 2023 OK 61 531 P.3d 114

Court: Supreme Court of Oklahoma; May 31, 2023; Oklahoma; State Supreme Court

Original Court Document: View Document

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TIB-The Independent Bankers Bank initiated a foreclosure action against Kyle E. Goerke and included his brother, Joseph K. Goerke, as a defendant due to a mortgage held on the property. The trial court granted summary judgment in favor of Joseph Goerke, ruling that the claims were barred by claim splitting and claim preclusion because Joseph was named in a previous foreclosure action that had been dismissed with prejudice. This decision was affirmed by the Court of Civil Appeals. However, upon certiorari, the Supreme Court of Oklahoma concluded that TIB's claim against Joseph Goerke was not barred by claim preclusion, resulting in the vacating of the Court of Civil Appeals' opinion and reversing the trial court's judgment. The background indicates that TIB had previously filed a foreclosure action in 2015, which included claims against Joseph due to a right of first refusal but dismissed those claims at his request, leading to the contention that the 2016 foreclosure action was improperly barred. The court found that TIB’s new claim regarding Joseph's mortgage interest in the 2016 action was valid, as it had not been previously asserted.

The District Court found that TIB sought a ruling in the 2015 foreclosure to establish its mortgage's superiority over Goerke's interest and that its dismissal of Goerke was a judgment on the merits. TIB had record notice of Goerke's mortgage and attempted to assert its claim again in the 2016 foreclosure, which was barred by claim preclusion and claim splitting doctrines. TIB received a final judgment against Goerke on May 12, 2021, and filed a Petition in Error on June 1, 2021, which was assigned to the Court of Civil Appeals (COCA) on July 14, 2021. COCA directed the parties to address whether Goerke, representing himself as an attorney, had an ethical duty to disclose his mortgage interest in the first foreclosure and whether his failure to do so constituted a fundamental error affecting the claim preclusion and claim splitting defenses. Goerke argued that TIB had acknowledged knowledge of his mortgage before the first foreclosure. TIB confirmed the mortgage was noted in the title report but claimed its counsel was unaware of it during the 2015 filing. COCA affirmed the District Court’s judgment. TIB's Petition for Certiorari raised several issues, including misattribution of counsel's mistakes, the agreement for dismissal, mortgage priority determination, litigant duties concerning claims, and failure to apply waiver or estoppel doctrines. The standard of review for the summary judgment order is de novo.

Legal questions in the Petition for Certiorari are reviewed de novo, involving an independent examination of the issues. The doctrine of claim preclusion prevents the re-litigation of issues that were or could have been raised in a prior action that resulted in a judgment on the merits. For claim preclusion to apply, there must be: (1) a final judgment on the merits from a prior action, (2) the same parties or those in privity, and (3) the claim in the latter action must arise from the same transaction or occurrence. A dismissal with prejudice can constitute a judgment on the merits if based on an agreement between the parties. However, the Court of Civil Appeals (COCA) found no specific agreement regarding the dismissal of the 2015 foreclosure, only a mutual understanding. TIB contested COCA's finding, referencing a precedent that clarified the necessity of extrinsic evidence when doubt exists about the intent of a dismissal. The record revealed no extrinsic evidence that TIB's dismissal of Goerke’s claim was meant to bar future litigation concerning property interest priority. TIB was merely acknowledging Goerke's expired right of first refusal, which does not equate to a settlement agreement. No agreement was alleged or found in the litigation, and Goerke's motion for summary judgment did not claim the dismissal was based on an agreement. Thus, TIB's dismissal does not qualify as a final judgment on the merits for claim preclusion, allowing TIB to pursue its mortgage priority in the 2016 foreclosure action.

Certiorari has been granted, resulting in the vacating of the Court of Civil Appeals' opinion and the reversal of the trial court's judgment. Chief Justice Kane, along with Justices Rowe, Winchester, Edmondson, and Kuehn, concurred in this decision, while Justices Kauger, Combs, Gurich, and Darby dissented. A footnote emphasizes that determining if a dismissal is a judgment on the merits is fact-specific and the ruling should not be deemed conclusive beyond the specifics of this case. The document also references prior cases and discussions relevant to the decision.