A Trap for the Unwary:  Denial of a Motion to Amend to Add Claims May Be Res Judicata. 
by Roger T. Manwaring

Where a party files a motion to amend seeking to add a claim, and the court denies that motion, common sense argues that the party should be able to bring that claim in a separate action (so long as the statute of limitations has not run). Claim preclusion (baring claims which were or could have been asserted in a prior action) appears to be inapplicable because the plaintiff tried to join the new claim in the existing action and was rebuffed. While this makes sense, it is not the law.

A plaintiff who assumes, after denial of a motion to amend, lets the matter drop on the assumption that a separate action can be filed takes a serious risk. To protect his or her rights to later assert the claim, the plaintiff must appeal the denial of the motion to amend.

It is well established that a denial of a motion to amend can operate as a final judgment with preclusive effect. 18 Fed. Prac. & Proc. Juris.2d §4412 (Wright and Miller state: “An order that denies leave to amend the pleadings to advance an additional part of a claim partially asserted might seem to fall within the principle that a plaintiff should be free to bring a second action on a theory that could not be advanced in the first action. It appears well-settled, however, that claim preclusion bars a second action on the part excluded from the first action.”) . See also Shahidi v. Michael, 2005 Mass. App. Div. 152, 2005 WL 3294663, *2 (11/22/05) (“the denial of a motion to amend to add a claim in the first action must be challenged directly by way of appeal. Failure to do so may result in claim preclusion in the second action”); Restatement (second) of Judgments, §26 com. “b” (1982).

By appealing the denial, the plaintiff assures that the claim will be heard on the merits, either in the present action if the appellate court reverses, or in a future action in which res judicata will not act as a bar.

If you have questions regarding this or any other legal matter, please contact Roger T. Manwaring at rtm@barronstad.com or (617) 531-6584.