Johnson & Lechman-Su, PC v. Sternberg

Issue preclusion may not be used against a party in a current proceeding where the issue was not fully litigated due to the prior case being reversed and remanded on appeal.

Defendant Sternberg retained Plaintiff Lechman-Su to represent her in a dissolution action, after which she failed to pay attorney fees owed to Plaintiff. Plaintiff then filed this action to collect the fees by foreclosing on a personal property lien. Defendant filed a malpractice action against Defendant, which was dismissed in favor of Plaintiff with prejudice. Plaintiff then filed for summary judgment because Defendant's only defense for non-payment of attorney fees was the malpractice claim. Summary judgment was granted under ORCP 21 A(8) (failure to state a claim) and ORCP 21 A(9) (untimely claim) despite the fact that Defendant notified the court of her appeal of the malpractice decision. The court held issue preclusion prevented Defendant from raising the malpractice issue, which had already been decided. On appeal, Defendant argued the trial court erred in granting summary judgment based on issue preclusion. The Court held that because the malpractice decision had been reversed and remanded, the trial court's basis for summary judgment was invalid due to the matter no longer satisfying all of the factors set out in Nelson v. Emerald People's Utility Dist. Those factors include: the issue in both proceedings must be identical and must have been actually litigated and essential to a final decision on the merits in the prior proceeding, the party sought to be precluded must have had a full and fair opportunity to be heard and was a party or in privity with a party in the prior proceeding, and the prior proceeding was the type to which the court would give preclusive effect. Because the malpractice case was reversed and remanded, it was not actually litigate and essential to a final decision on the merits and so does not satisfy all Nelson factors. Reversed and remanded.