## Facts

- In a prior divorce action between Edlean Searle and Woodey B. Searle, the trial court treated the “Slaugh House” (titled in Woodey’s name) as marital property and awarded it to Edlean.
- Woodey asserted in the divorce that he owned only a one-half interest and that the other one-half belonged to a partnership involving him and his sons.
- The divorce decree became final and was affirmed on appeal.
- After the divorce, Searle Brothers (a partnership) and its individual partners sued Edlean, alleging an undivided one-half interest in the Slaugh House was a partnership asset acquired with partnership funds through the Diamond Hills Motel partnership.
- The trial court dismissed the amended complaint with prejudice, ruling the divorce decree barred the suit under res judicata and collateral estoppel.

## Issues

1. Whether claim preclusion bars a partnership’s later action to assert a property interest in real property distributed in a prior divorce decree when the partnership was not a party to the divorce.
2. Whether issue preclusion bars relitigation of ownership of the property when the partnership was not a party to, and not in privity with a party to, the divorce action.

## Decision

- The Utah Supreme Court reversed the dismissal and remanded for trial on the merits.
- Claim preclusion did not apply because the partnership and its partners, in their asserted ownership capacity, were not parties to the divorce and were not in privity with the divorcing spouse in a representative sense.
- Issue preclusion did not apply because the party to be bound must have been a party to the first action or in privity with such a party, and the partnership’s interests were not legally represented in the divorce.
- A dissent would have treated the partnership as sufficiently involved or represented in the divorce to warrant preclusion.

## Legal Principles

- Claim preclusion requires (1) a final judgment on the merits, (2) the same cause of action, and (3) the same parties or their privies; it bars matters that were or could have been litigated in the first action.
- Issue preclusion bars relitigation of issues actually litigated and determined in a prior action only against a party (or one in privity) who was bound by the prior adjudication.
- Privity for preclusion purposes requires a relationship in which the nonparty’s interests were represented in the prior litigation; participation by a person in an individual capacity does not bind a separate entity or ownership interest absent representation.
- Preclusion doctrines do not bind nonparties who lacked a fair opportunity to litigate their asserted property rights.

## Conclusion

The court held that a divorce decree awarding property between spouses does not, without party status or privity, preclude a separate partnership from litigating its claimed ownership interest in that property, and it remanded for adjudication of the partnership’s claim on the merits.


Searle Bros. v. Searle, 588 P.2d 689 (Utah 1978)