This case turns on the legal doctrine of res judicata, which bars relitigation of the same cause of action between the same parties where there is a prior judgment. For the doctrine to apply, three elements must be met: (1) the parties must be the same or in privity with one another; (2) the same cause of action must be before the court in both instances; and (3) a final judgment on the merits must have been rendered in the first action.
In this case, the plaintiff was a co-defendant with the Town of Littleton and the State of New Hampshire in an earlier action brought by pedestrians who were hit as they crossed the road. The pedestrians settled with the driver (the plaintiff in this case) and with the town and the state, agreeing not to take further action against them. While res judicata bars the pedestrians from taking further action on the case against any of the defendants, it does not bar the driver from suing his co-defendants: the town and the state. This is because the second case does not involve the same parties as the first case. In the first case the plaintiffs were the pedestrians, and in the second case the plaintiff is the driver. Thus, all three elements needed for res judicata to apply were not met, and the case against the town and the state could proceed.
It is useful for town officials to keep in mind that when settling cases, all parties, including co-defendants, should execute releases relinquishing any rights they may have to take future action against the town for the same cause of action.