Dakota, Mn & E. R. v. Acuity

• Decision Date: 09 August 2006
• Docket Number: No. 23601.,23601.
• Citation: 720 N.W.2d 655,2006 SD 72
• Court: South Dakota Supreme Court
• Parties: DAKOTA, MINNESOTA & EASTERN RAILROAD CORPORATION, Plaintiff and Appellee, v. ACUITY, a Mutual Insurance Co. f/k/a Heritage Mutual Insurance Company, d/b/a Heritage Insurance, Defendant and Appellant.

720 N.W.2d 655

2006 SD 72

DAKOTA, MINNESOTA & EASTERN RAILROAD CORPORATION, Plaintiff and Appellee, v. ACUITY, a Mutual Insurance Co. f/k/a Heritage Mutual Insurance Company, d/b/a Heritage Insurance, Defendant and Appellant.

No. 23601.

Supreme Court of South Dakota.

Argued March 21, 2006.

Decided August 9, 2006.

COPYRIGHT MATERIAL OMITTED

Brian J. Donahoe and Meredith A. Moore of Cutler & Donahoe, Sioux Falls, South Dakota, Attorneys for plaintiff and appellee.

Gary P. Thimsen and Jennifer L. Wollman of Woods, Fuller, Shultz & Smith, Sioux Falls, South Dakota, Attorneys for defendant and appellant.

LOVRIEN, Circuit Judge.

[¶ 1.] Dakota, Minnesota and Eastern Railroad (DM & E) sued its automobile insurance company, Acuity, alleging that the negligence of an unidentified and uninsured motorist caused an accident involving a vehicle driven by DM & E employee Julian Olson (Olson) and that the business automobile policy issued by Acuity to DM & E covered the loss. A Beadle County jury found for DM & E and the trial court entered judgment accordingly. We affirm.

FACTS AND PROCEDURE

[¶ 2.] On July 28, 1998, DM & E employee Olson was operating a motor vehicle within the scope of his employment on I-90 near Rapid City. Olson was involved in a serious rollover accident which rendered him a paraplegic. DM & E held a business automobile policy with Acuity which was in effect on the day of Olson's accident.

[¶ 3.] Olson brought suit against DM & E under the Federal Employers' Liability Act, 45 U.S.C. § 51 et seq (FELA), for negligent maintenance of the vehicle's Hy-Rail System.¹ DM & E tendered defense of the suit to Acuity. Acuity refused. The case went to trial. On the last day of trial, before the jury reached a verdict, a settlement was reached between Olson and DM & E.

[¶ 4.] DM & E then brought a declaratory judgment action against Acuity to determine whether Acuity was obligated to defend and provide coverage for Olson's FELA action against DM & E. Acuity claimed that coverage was barred due to valid policy exclusions. The trial court agreed and granted summary judgment in favor of Acuity. It concluded that the employee indemnification and employer's liability exclusion in the policy barred coverage for Olson's accident. We affirmed the trial court's grant of summary judgment in DM & E v. Heritage Mut. Ins. Co., 2002 SD 7, 639 N.W.2d 513 (DM & E I).

[¶ 5.] During the pendency of DM & E (I), Olson brought a products liability suit against the manufacturer of the Hy-Rail system. That lawsuit was settled in April 2003. On July 26, 2001, also during the pendency of DM & E (I), DM & E brought the present Uninsured Motorist (UM) action against Acuity. DM & E claimed the negligence of an unidentified and uninsured motorist was the cause of Olson's accident.

[¶ 6.] On November 21, 2001, Acuity moved to dismiss the present action based upon res judicata and collateral estoppel. Acuity also moved for summary judgment, claiming it had no obligation under the policy to pay uninsured motorist benefits to DM & E for injuries suffered by a DM & E employee. DM & E moved to hold the case in abeyance until this Court decided DM & E (I). On February 28, 2002, after our decision in DM & E (I), the trial court denied Acuity's motion to dismiss. In April 2002 Acuity filed an application for stay and petition for discretionary appeal. Both motions were denied. On February 3, 2004, the trial court dismissed Acuity's motion for summary judgment. In April 2004 Acuity filed a second application for stay and petition for discretionary appeal. These motions were denied on April 5, 2004.

[¶ 7.] On April 9, 2004, DM & E moved to amend its complaint to add a cause of action for bad faith. The motion was granted. Acuity moved to bifurcate the bad faith and UM claim. The motion to bifurcate was granted. After the trial court ruled on preliminary discovery motions in the bad faith matter, the parties agreed to suspend any further action on that claim until resolution of the UM claim.

[¶ 8.] The UM claim was tried on January 24-25, 2005, in Beadle County, Huron, South Dakota. The jury returned a verdict in favor of DM & E, finding an unidentified motorist negligently caused Olson's accident. An amended partial judgment was filed on February 15, 2005. Over Acuity's objection, DM & E sought and was granted prejudgment interest. Acuity moved for judgment notwithstanding the verdict and a new trial. Both motions were denied. Acuity filed its notice of appeal on April 6, 2005. While a number of issues were raised by Acuity on appeal, we conclude that only a few issues merit discussion.

ANALYSIS

ISSUE ONE

[¶ 9.] Did the trial court err in failing to grant Acuity's motion to dismiss based upon res judicata and collateral estoppel?

[¶ 10.] Acuity claims that DM & E (I) settled, or should have settled, all of the issues between the parties and that the trial court committed error when it refused to grant Acuity's motion to dismiss based upon the doctrines of res judicata and collateral estoppel. We affirm the trial court's decision to deny Acuity's motion to dismiss.

[¶ 11.] This Court's review of such motions is well settled. Our standard of review of a trial court's grant or denial of a motion to dismiss is the same as our review of a motion for summary judgment: is the pleader entitled to judgment as a matter of law. See Jensen Ranch, Inc. v. Marsden, 440 N.W.2d 762, 764 (S.D.1989).

Summary judgment is authorized "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law." SDCL 15-6-56(c). We will affirm only when there are no genuine issues of material fact and the legal questions have been correctly decided. Bego v. Gordon, 407 N.W.2d 801, 804 (S.D.1987). All reasonable inferences drawn from the facts must be viewed in favor of the non-moving party. Morgan v. Baldwin, 450 N.W.2d 783, 785 (S.D.1990). The burden is on the moving party to clearly show an absence of any genuine issue of material fact and an entitlement to judgment as a matter of law. Wilson v. Great Northern Ry. Co., 83 S.D. 207, 212, 157 N.W.2d 19, 21 (1968).

Holzer v. Dakota Speedway, Inc., 2000 SD 65, ¶ 8, 610 N.W.2d 787, 792 (citing Kimball Investment Land, Ltd. v. Chmela, 2000 SD 6, ¶ 7, 604 N.W.2d 289, 292 (citing Mattson v. Rachetto, 1999 SD 51, ¶ 8, 591 N.W.2d 814, 816-17 (quoting Estate of Shuck v. Perkins County, 1998 SD 32, ¶ 6, 577 N.W.2d 584, 586))). We make an independent review of the record and are not bound by the trial court's factual assessments in granting summary judgment. Spenner v. City of Sioux Falls, 1998 SD 56, ¶ 7, 580 N.W.2d 606, 609; Carpenter v. City of Belle Fourche, 2000 SD 55, ¶ 6, 609 N.W.2d 751, 756.

[¶ 12.] Res judicata and collateral estoppel are two distinct doctrines. Nelson v. Hawkeye Ins. Co., 369 N.W.2d 379, 380 (S.D.1985); Schell v. Walker, 305 N.W.2d 920, 922 (S.D.1981). While these two doctrines are very similar in nature, they produce different results. Schell, 305 N.W.2d at 922.

[¶ 13.] Collateral estoppel prevents relitigation of issues that were actually litigated in a prior proceeding. Id. It also precludes a party which

successfully maintains a certain position in a legal proceeding . . . from later assuming a contrary position simply because that party's interests have changed, especially if the change works to the prejudice of one who acquiesced in the position formerly taken by that party.

Watertown Concrete Products, Inc. v. Foster, 2001 SD 79, ¶ 10, 630 N.W.2d 108, 112 (citing New Hampshire v. Maine, 532 U.S. 742, 749, 121 S.Ct. 1808, 149 L.Ed.2d 968 (2001)). The purpose of collateral estoppel is to "protect the integrity of the judicial process by prohibiting parties from deliberately changing positions according to the exigencies of the moment." New Hampshire, 532 U.S. at 749-50, 121 S.Ct. 1808. This Court has held that three elements must be satisfied in order to apply collateral estoppel: (1) the later position must be clearly inconsistent with the earlier one; (2) the earlier position was judicially accepted, creating the risk of inconsistent legal determinations; and (3) the party taking the inconsistent position would derive an unfair advantage or impose an unfair detriment to the opponent if not estopped. Watertown Concrete Products, 2001 SD 79, ¶ 12, 630 N.W.2d at 112.

[¶ 14.] We conclude that the doctrine of collateral estoppel is inapplicable here. The uninsured motorist issue was not "actually litigated" in the prior proceeding, DM & E (I). In addition, DM & E took no position in DM & E (I) that is clearly inconsistent with its position in this case. In both cases it maintained that Olson's accident was caused by something other than a malfunction of the Hy-Rail System equipment. The trial court did not err by refusing to grant Acuity's motion to dismiss based on the doctrine of collateral estoppel.²

[¶ 15.] Res judicata prevents the relitigation of a claim or issue that was "actually litigated or which could have been properly raised." Nelson, 369 N.W.2d at 381; see also Keith v. Willers Truck Serv. Inc., 64 S.D. 274, 266 N.W. 256 (1936). Res judicata is founded upon two premises: "A person should not be twice vexed for the same cause and public policy is best served when litigation has a repose." Black Hills Mfg. Inc. v. Felco Jewel Ind., Inc., 336 N.W.2d 153, 157 (S.D. 1983). In Commissioner of Internal Revenue v. Sunnen, 333 U.S. 591, 597, 68 S.Ct. 715, 719, 92 L.Ed. 898 (1948), the United States Supreme Court noted that:

The general rule of res judicata applies to repetitious suits involving the same cause of action. It rests upon considerations of economy of judicial time and public policy favoring the establishment of certainty in legal relations. The rule provides that when a court of competent...