Chaney Bldg. Co. v. City of Tucson, 18338-PR
| Decision Date | 06 March 1986 |
| Docket Number | No. 18338-PR,18338-PR |
| Citation | 148 Ariz. 571,716 P.2d 28 |
| Parties | CHANEY BUILDING CO., Plaintiff/Appellee, v. CITY OF TUCSON, Defendant/Appellant. |
| Court | Arizona Supreme Court |
Norris L. Ganson, Monroe & Kofron, P.C., by John E. Kofron, Tucson, for plaintiff/appellee.
Frederick S. Dean, Tucson City Atty., Tobin Rosen, Asst. Tucson City Atty., Tucson, for defendant/appellant.
This is a case involving the construction of a fire station in Tucson, Arizona. John R. Kulseth Associates, Ltd. (Kulseth) entered into a contract with the City of Tucson (Tucson) dated October 27, 1980, to furnish architectural services for the design of a structure known as Fire Station 7. On January 27, 1982, Chaney Building Co., Inc. (Chaney) entered into a contract with Tucson to build Fire Station 7. The contract contained a provision which required Chaney to complete the building within 245 days, but this provision was later extended 45 days by a contract change order. However, Chaney did not complete the building within the agreed upon time frame and as of February 28, 1983, the building was 97% complete according to Tucson's estimate for payment.
On April 28, 1983, Chaney received a letter from Tucson notifying Chaney that the building contract between the two parties was terminated as of May 5, 1983. The letter read in part, "[Tucson] will no longer accept your firm's unending delay in completing the work in the above-mentioned project". Tucson hired another contractor to complete the project using retention money withheld from Chaney's contract. Tucson claimed certain work on the building was done improperly by Chaney, but the main factor relied upon by Tucson in the termination of the contract was the delay in the completion of the project.
Chaney filed suit against Tucson alleging breach of contract. Chaney claimed that it had performed its obligations under the contract and was owed $142,554.81 by Tucson. Chaney subsequently filed an amended complaint, again seeking relief against Tucson for breach of contract and against Kulseth for negligence. Chaney alleged that Kulseth negligently prepared the plans and specifications for the building and "as a result of errors in the plans and specifications [Chaney] incurred additional costs beyond the contract bid price". Shortly before trial, Chaney, Tucson and Kulseth executed a stipulation for the dismissal of Kulseth from the action with prejudice. The record on review gives no indication of the underlying reasons for the stipulation.
A jury trial proceeded between Chaney and Tucson. Chaney's first witness was its president, Earl Chaney, who offered testimony regarding problems with the plans and specifications. This subject was a designated topic in the parties' pretrial statement. Three days into trial Tucson objected to testimony regarding the adequacy of the plans and moved for a mistrial. The motion was supported by Arizona case law on the subject of collateral estoppel. Tucson argued that since Kulseth had been dismissed with prejudice and the claim against Kulseth was for negligent preparation of the plans, it was error for Chaney to introduce evidence of defects in the plans. Tucson further argued that the dismissal of Kulseth operated as an adjudication on the merits "of the fact that there was no negligence" in the design plans. The trial court overruled the objection and denied the motion for mistrial.
The trial continued with testimony from both sides introduced on the issue of whether the delays were attributable to Chaney or the plans. The instructions given to the jury made it clear that the claim asserted against Tucson was for breach of contract and a verdict was returned in favor of Chaney in the amount of $67,790.07.
The court of appeals reversed based on the trial court's alleged error in refusing to grant Tucson's motion for mistrial. We disagree with the appeals court opinion and vacate Chaney Building Co. v. City of Tucson, 148 Ariz. 583, 716 P.2d 40, (1985). We have jurisdiction pursuant to Ariz. Const. art. 6, § 5(3) and Ariz.R.Civ.App.P. 23.
The issue before this Court is whether Kulseth's valid dismissal with prejudice can be given collateral estoppel effect to bar litigation on the breach of contract claim between Chaney and Tucson. We hold it can not.
Under the doctrine of res judicata, a judgment "on the merits" in a prior suit involving the same parties or their privies bars a second suit based on the same cause of action. Lawlor v. National Screen Service Corp., 349 U.S. 322, 326, 75 S.Ct. 865, 867, 99 L.Ed 1122 (1955); Industrial Park Corp. v. U.S.I.F. Palo Verde Corp., 26 Ariz.App. 204, 206, 547 P.2d 56, 58 (1976). Collateral estoppel or issue preclusion is applicable when the issue or fact to be litigated was actually litigated in a previous suit, a final judgment was entered, and the party against whom the doctrine is to be invoked had a full opportunity to litigate the matter and actually did litigate it, provided such issue or fact was essential to the prior judgment. Industrial Park Corp. v. U.S.I.F. Palo Verde Corp., supra, 26 Ariz.App. at 209, 547 P.2d at 61; Moore Drug Co. v. Schaneman, 10 Ariz.App. 587, 589, 461 P.2d 95, 97 (1969); Restatement (Second) of Judgments § 27.
When an issue is properly raised by the pleadings or otherwise, and is submitted for determination, and is determined, the issue is actually litigated. Restatement (Second) of Judgments § 27 comment d. However, in the case of a judgment entered by confession, consent or default, none of the issues is actually litigated. Id., comment e. A judgment entered by stipulation is called a consent judgment, Cochise Hotels v. Douglas Hotel Operating Co., 83 Ariz. 40, 47, 316 P.2d 290, 295 (1957), and may be conclusive, with respect to one or more issues, if the parties have entered an agreement manifesting such intention. § 27 comment e. Because the issues involved in the Kulseth dispute were never actually litigated, one of the prerequisites to giving a judgment collateral estoppel effect is patently absent. Nothing is adjudicated between parties to a stipulated dismissal. See James, "Consent Judgments as Collateral Estoppel," 108 U.Pa.L.Rev. 173, 192 (1959) ().
Tucson could have possibly raised the doctrine of collateral estoppel had there been any litigation of issues between Chaney and Kulseth. Standage Ventures, Inc. v. State, 114...
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